marketing plan

Caitlin A. Meuser
Marketing 250
Professor Berger
December 10, 2010
MARKETING PLAN PROJECT

Executive Summary

Apple, Inc. designs, manufactures and markets personal computers (PCs), mobile communication devices, portable digital music and video players, servers, network solutions and related software and services. The company offers different product lines which include Mac computing systems, iPods, iPhone handsets, the iPad portable multimedia and computing device, as well as desktops and software (“Apple, inc. company profile,” 2010).
Apple recently released its newest product, the iPad, which is a revolutionary touch-screen tablet that incorporates all of the uses of a smartphone and personal computer in one single device. It enables users to browse the Internet, use e-mail, play music and games, store photos and watch videos, television and movies. The tablet is 0.5 inches thin, weighs 1.5 pounds and has a 9.7-inch display. The life of the battery is ten hours and lasts up to thirty days. It offers every application that is available in the Apple App Store, including iBooks, which allows readers to read any book of their choice. (Donatelli, 2010). The versatility and high-resolution screen gives the iPad a competitive differentiation when compared to other eReaders that are currently on the market (Marshall, 2010).
The iPad sold approximately 700,000 units on its first day on the market, and is projected to sell approximately 7 million units by the end of 2010 (“Apple iPad creates history,” 2010). Strong iPad sales has led to a rise in revenue and profits for Apple’s fourth fiscal quarter of 2010. Shipments of the iPad totaled 4.19 million units during the fourth quarter, exceeding the 3.27 million units that were shipped in the 3rd quarter. Media tablet sales are projected to reach 19.5 million units this year, growing to 54.8 million units in 2011 (Shah, 2010).

Part I. Description of an Existing Product, Service or Idea

Apple, Inc. designs, manufactures and markets personal computers (PCs), mobile communication devices, portable digital music and video players, servers, network solutions and related software and services. The company offers different product lines which include Mac computing systems, iPods, iPhone handsets, the iPad portable multimedia and computing device, as well as desktops and software. Apple, Inc. distributes a variety of its products online, some of which include music, audio books, music videos, short films and television shows. It sells its products worldwide via online stores, retail stores, direct sales force, and third-party wholesalers and retailers. There are numerous retail stores that distribute Apple products, including (but not limited to) Best Buy, J & R Electronics, Wal-Mart and P.C Richards & Son. Apple, Inc. manages its business in five main operating segments: the Americas, Europe, Japan, retail and other segments and it provides the same type of hardware and software products to each of its operating segments. However, the company mainly operates in the United States in Cupertino, California, where it employs 34,300 employees (“Apple inc company profile,” 2010). The iPad, created and distributed by Apple, Inc. is a touch-screen tablet that was released on April 3, 2010. It sold approximately 700,000 units on its first day on the market, and is projected to sell approximately 7 million units by the end of 2010 (“Apple iPad creates history,” 2010). The iPad was designed in an effective way that meets the demands of its potential consumers. The iPad has a 9.7 inch LED screen which makes this product perfect for browsing the web or watching movies. The multi-touch screen is based on Apple’s iPhone; however, the iPad has a larger surface which makes it very precise and responsive. The versatility and high-resolution screen gives the iPad a competitive differentiation when compared to other eReaders that are currently on the market (Marshall, 2010). It is thin and light – weighing a mere 1.5 pounds – which makes this product easy to carry around. It has ten hours of battery life and wireless 3G networks that offer optimal connectivity and performance (“iPad,” 2010). The iPad offers many features which makes it appealing to its consumers. iPad users can browse the web, send and receive e-mails, store photos, access YouTube and music videos, as well as access their iTunes account (“iPad,” 2010). Apple, Inc. utilizes effective marketing strategies in order to ensure that their product will generate enough interest and demand to be profitable on the market. The company uses Morgan Stanley Research in order to conduct surveys to find out what majority of the population is interested in purchasing Apple’s new product, and how to target the segment of the population that is not interested (Hughes, 2010). A recent survey of 2,500 consumers found that overall, 21% of consumers expressed interest in purchasing the iPad. As shown in Exhibit 2, 35% of those surveyed were interested in purchasing an iPad while 65% were not. Clearly, this survey conducted by Morgan Stanley assists Apple in identifying the most effective marketing strategies for its iPad product. This type of marketing strategy not only enables Apple to determine what segment of the population is not interested in the purchasing its product, but also to evaluate what steps will need to be taken in order to entice those potential consumers into purchasing the iPad.

Part II. Situation Analysis and Market-Product Focus

Situation Analysis:

SWOT Analysis- A SWOT analysis is conducted by a company in order to assess a product’s internal factors, which include its strengths and weaknesses, as well as its external factors, which include the product’s opportunities and threats. The following is a SWOT analysis of the iPad:
Strengths
Weaknesses
-Strong brand image
-Robust financial performance
-Focused research and development driving innovation
-Product recalls
-Fragility
-Cannibalization
Opportunities
Threats
-Strong growth in smartphones market segment
-Continuing growth in demand for mobile PCs
-Intense competition
-Dependence on specific suppliers

STRENGTHS

Strong Brand Image – The Apple brand is well recognized among consumers, and its products generate a high level of brand recognition throughout all of its markets. Its brand ranking improved to 20th position in 2009 from 24 in 2008 and 35 in 2007. Apple’s brand value increased $1,709 million from 2008 to 2009. The company controls its brand image to create a competitive differentiation for its products and increase sales. For example, the iPad sold 700,000 units on its first day of sales in 2010 (“Apple inc company,” 2010). Due to the fact that the iPad is a product of Apple, it will already have strong brand equity and will therefore perform well in the market.
Robust financial performance- Strong iPad sales has led to a rise in revenue and profits for Apple’s fourth fiscal quarter of 2010. Shipments of the iPad totaled 4.19 million units during the fourth quarter, exceeding the 3.27 million units that were shipped in the 3rd quarter. Media tablet sales are projected to reach 19.5 million units this year, growing to 54.8 million units in 2011 (Shah, 2010).
Focused R&D driving innovation-. Apple’s focus on R&D has led to the launch of new products such as the iPad. Apple has been working on a tablet computer for more than ten years, and improved technology has helped the company to finally bring the iPad to the market (Stone, 2010).
WEAKNESSES
Product recalls- The majority of the applications that are available on the iPad depend entirely on the product’s ability to connect to the Internet. Thousands of iPad users have complained that they have been unable to connect to the Internet which could force Apple to recall many units of its newest product. Hundreds of consumers have complained about not being able to access a Wi-Fi signal or re-charge the battery. One customer from Tennessee stated that, “I never imagined how useless this device is without connection – I can basically only type notes in the notepad app” (Smith, 2010).
Fragility- The iPad has proven to be an extremely fragile product, leaving consumers disappointed with the inability of the product to live up to its reputation of being “just like a book.” The iPad overheats very quickly under common weather conditions and therefore does not function for prolonged use outdoors or in other warm conditions. Consumers are unable to utilize their iPads while simultaneously enjoying sunlight because once the product is brought outside, a yellow warning sign pops up that reads, “iPad needs to cool down before you can use it” (Hood, 2010).
Cannibalization- The creation of the iPad has put other Apple products at risk. Charles Golvin, an analyst at Forrester Research, expects the iPad to mostly cannibalize the sales of other Apple products. Products including the iPhone, iPod Touch and the Macbook are indirect competition to the iPad; however the iPad encompasses all of the features that these products have to offer while also providing many more uses to consumers (Stone, 2010).
OPPORTUNITIES
Strong growth in smartphones market segment- Apple gained the third largest segment in the smartphone market in 2009 and with its innovative products such as the iPad, the company is in a position to increase its share in the growing market segment. The iPad attracts consumers from the smartphone market, and as Apple’s market segment continues to increase, the iPad will be able to take advantage of the opportunity to reach and dominate a new niche (“Apple inc company,” 2010)
Continuing growth in demand for mobile PCs- The mobile PC market grew by more than 15% in 2009 due to an increase in consumer market demand. Apple is one of the top five leading players in the mobile PCs market segment, and plans to increase its market share with the launch of the iPad. Many PC users are attracted to the size and functionality of the iPad; thus the product will be able to satisfy the increasing demand of PC consumers (“Apple inc company,” 2010)
THREATS
Intense competition- Competitors of the iPad includes Microsoft, Dell, Hewlett-Packard, Fujitsu, Samsung Electronics, Sony and Toshiba, Acer and others. High competition could cause price erosion for iPad for sales, which could decrease profits and revenues in the long run (“Apple inc company,” 2010) The Amazon Kindle as well as netbooks are direct competition to the iPad because the iPad is often marketed as an “e-reader” or an advanced version of the netbook. The iPad is also in competition with fellow Apple products, including the iPhone and the Macbook Air.
Dependence on specific suppliers- Apple uses third party suppliers for many components used in the development of the iPad. The key components include DRAM, NAND flash-memory and TFT-LCD plat-panel displays. Lack of suppliers for these components will hinder the iPad’s success (“Apple inc company,” 2010)
Industry Analysis- Apple, Inc. belongs to the Computers Hardware Industry (NAICS code 334111) and its ticker is “AAPL.” This industry consists of three major segments; including computers (desktops and laptops), peripherals and devices (PDAs, organizers, calculators and satellite navigation), and storage devices (memory sticks and other data storage devices). The key companies that contribute to the operating revenues of the industry include Acer Inc., Apple Inc., Dell Inc., and Hewlett-Packard Company. In 2009, Acer employed 7,000 employees and had $17,347.2 million in revenue, an increase of 5.1% compared to 2008. In the same year, Apple employed 36,800 employees and totaled $42,905 million in revenue, an increase of 14.4% compared to 2008. Dell had 94,300 employees and $52,902 million in revenue, a growth of 13.4%. Hewlett-Packard Company had 304,000 employees with revenue of $114,552 million, a decrease of 3.2% from 2008. Between the periods of 2009 to 2014, the industry is projected to grow 8.4% (“Computer hardware in the united states,” 2010). There are numerous Macro Forces affecting the Computer Industry, including the following:
Cultural analysis- widespread access to the Internet has created a boom in social networking (including Facebook and MySpace) as well as TV, radio and movies through the Internet (“Plunkett’s wireless industry,” 2010). Products (such as the iPad) offering Wi-Fi capability will continue to grow in popularity with current consumers.
Demographic trends- the world’s population is getting larger and older, and the amount of minorities is increasing rapidly. Technology companies will have to be cognizant of and sensitive to the needs of elderly consumers who are unfamiliar with technological devices (Chapter 3 notes).
Technological forces- increased growth in computing power that is distributed over large numbers of small servers (commonly known as “cloud computing”) allows for quick distribution of information, updates and advertising via the Internet (“Plunkett’s wireless industry,” 2010).
Legal / Regulatory forces- There are numerous legal forces affecting the Computers Hardware Industry, including Patent and Copyright Law, Lanham Act, Sarbanes-Oxley and the Trademark Law Revision Act of 1988 (Chapter 3 notes). It is important for leading companies with strong brand equity to abide to the laws preventing copyright infringement.
Economic Forces- GDP is the measure of aggregate economic activity, and directly affects the Computer Industry. There is a projected 2.8% growth in real GDP in 2010 and 2.9% in 2011. Information technology spending represents about 4% of U.S GDP and follows a cyclical trend. Therefore, technology companies will be more successful during times of economic expansion (NetAdvantage, 2010).
Competitor Analysis- Apple’s competitors include Microsoft, Dell, Hewlett-Packard, Fujitsu, Samsung Electronics, Sony and Toshiba, Acer and others. Direct Competition for the Apple iPad includes the Amazon Kindle, Acer’s netbook, Dell’s netbook, and Verizon’s newly launched version of the eReader (“iPad,” 2010). Many of these products offer similar functions but are sold at lower prices. For example, the Amazon Kindle 3G is sold for $189, Verizon’s version of the iPad will be sold at $599.99, while the iPad 3G costs $729. Indirect competition to the iPad includes other Apple products, including, but not limited to, the iPhone, iPod Touch, and the Macbook Air. These products encompass the same idea of a “portable computer” that has Wi-Fi capabilities and numerous applications. Consumers can access music, games, business applications and more on these other Apple products.
Company Analysis- Apple is engaged in the design, manufacture and market of personal computers, and mobile communication devices. It sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers and resellers. Apple’s products can be grouped under different product lines which include the following: iPhone and related products and services, portables, iPod, iPad, desktops, software, hardware and other music related products and services. The company’s two main competitors are Hewlett-Packard and Dell. Hewlett-Packard has a gross margin of 23.59%, revenue of $123,705 million and 304,000 employees, while Dell has a gross margin of 17.51%, 96,000, revenues of $58,204 million, and 96,000 employees. Apple has a gross margin of 35.96%, revenues of $36,537 million, and 34,300 employees (“Apple inc,” 2010).
Demographic Customer Analysis- The iPad targets consumers with annual incomes that are above $50,000 (“Marketing teacher,” 2010). Forty-seven percent of consumers interested in purchasing the iPad are high earners, grossing more than $90,000 per year (Hughes, 2010). iPad customers are males and females ranging from young children to elderly adults.
Psychographic Customer Analysis- Apple markets the iPad toward the upper-middle class, which includes individuals who have a strong regard for higher education, usually having completed undergraduate and graduate levels. iPad consumers are sophisticated and have a strong consumer confidence in Apple products (Marshall, 2010).
Market-Product Focus:
Marketing and Product Objectives- According to Steve Jobs, Apple’s main goal is to “make the best product at aggressive prices.” Because of the huge emphasis placed on the software of devices, the company is able to make the product better even though its price remains the same. The company’s strong brand image and focus on quality and innovation allows Apple to generate new products at competitive prices (Georgescu, 2010). Apple is projected to utilize the same marketing objectives that it did for the iPhone and iPod Touch. Apple will market the product only in the United States and after three to four months will sell the product in other countries (Vertygo, 2010).
Target Markets- The iPad appeals to a wide range of consumers. The primary target market includes the 25-34 year old age range, the secondary target market includes those between the ages of 35 and 44, and the tertiary target market includes consumers 55 and older (Hughes, 2010). The iPad is the perfect solution for bringing computing to older generations because it is simple and easy to learn, and the physical interaction with the device makes interaction with a computer easy (Marshall, 2010). The iPad is not meant to be a niche market product but it is rather planned to be the next mass-market product that everyone will want to own. The product also targets individuals that are constantly on the move, children of all ages, as well as consumers currently using netbooks and the Amazon Kindle (Admin, 2010).
Points of Difference- When compared to its competitors, some of the key benefits of the Apple iPad is the wide range of applications that are available for it. There are over 100,000 applications that are instantly available from the iTunes App Store. In addition to these applications, the iPad also provides tools for creating presentations, spreadsheets and documents which gives it a competitive differentiation from competing products such as the Amazon Kindle, iPhones and netbooks. The product also has a voice over screen reader, fingerprint resistant coating, high screen resolution and a SIM card tray, which many competing products lack (Admin, 2010). The iPad has new software functions including web browser, email, videos, iBooks, and games (Jiang, 2010).
Positioning- The iPad is the newest Apple product to be released in the market and has been positioned in the most modern and important place in consumers’ minds. The company positions the product in a way that emphasizes the iPad’s ability to change everyone’s lifestyle, provide the newest technology that competitors lack, and lead the world to a new age (Jiang, 2010). According to Steve Jobs, Apple is “positioning [the iPad] as a pioneer in a new genre of computing, somewhere between a laptop and a smartphone” (Stone, 2010).
Part III. Marketing Program and Future Plans Apple’s marketing strategy consists of taking a popular consumer device and adding business functionality, rather than taking a business computer and trying to add entertainment (Bradley, 2010). The following is the marketing strategy of Apple’s iPad:
Product- The idea for the iPad originated long before the iPhone. Job’s idea for a multi-touch display initiated in the early 2000s, but Apple was currently working on a phone at the time. The prototype was brought to him, but the tablet product was placed on the backburner and development plans were focused on the iPhone before its release in 2007. The iPad was not released until April 2010 (Nakashima, 2010).
The iPad is a revolutionary touch-screen tablet that incorporates all of the uses of a smartphone and personal computer in one single device. It enables users to browse the Internet, use e-mail, play music and games, store photos and watch videos, television and movies. The tablet is 0.5 inches thin, weighs 1.5 pounds and has a 9.7-inch display. The life of the battery is ten hours and lasts up to thirty days. It offers every application that is available in the Apple App Store, including iBooks, which allows readers to read any book of their choice. (Donatelli, 2010). Purchasing an iPad includes not only the iPad itself, but a dock connector to USB cable, a power adapter and documentation. Every iPad includes telephone technical support within 90 days of the iPad purchase. The iPad, its rechargeable battery and all included accessories are covered against defects for one year from the original purchase date by a limited hardware warranty. For $99.00 customers can purchase the AppleCare Protection Plan, which extends technical and hardware coverage for two years. Every iPad includes the Find My iPad service that helps customers to locate their missing iPad on a map by plugging in a passcode. (“ipad,” 2010).
Price- Due to the fact that Steve Jobs has positioned the iPad between the phone and the Macbook, the product has been placed at a price level between the prices of these products. The iPad is sold at different price points for its different models. The iPads with Wi-Fi include the 16GB which is sold at $499, the 32GB sold at $599 and the 64GB sold at $699. iPads with Wi-Fi and 3G include the 16GB sold at $629, the 32GB sold at $729 and the 64GB sold at $829. In addition to these list prices, customers can also purchase a no long-term contract data plan for AT&T which is priced at $14.99/month for 250MB/month and $25.00/month for 2GB/month (“ipad,” 2010). The iPad’s price can be most directly compared to the $99 iPhone and the $999 Macbook, and when looking at this price range it seems that the iPad is priced at a moderate level (Herrman, 2010).
Promotion- The promotional objectives for the iPad are to stimulate awareness and interest of this new, innovative product among consumers, as well as to encourage individuals to invest in the iPad as their only necessary technological advice. Although the iPad may not need an intense amount of advertising because the product is sold under the Apple brand name, the company does utilize numerous promotional tactics in order to attract potential iPad consumers. Social networking is a major component of iPad promotion and is used most frequently by the company because it reaches the largest amount of consumers. Currently, Facebook is offering a promotion where if an individual joins the iPad group and invites twenty other friends to join, they will be placed into a contest to win a free iPad. Apple uses personal selling to promote the iPad in its Apple stores. All Apple employees are trained to be educated on the iPads prices, applications and reasons to purchase the iPad.
Place- The place strategy for the iPad is to execute intensive distribution so that the product is easily available to potential consumers. The massive interest in the Apple iPad following its national and international launch has resulted in limited stock levels from both Apple and their selected retailers (Admin, 2010). Expansion of the iPad to more retail outlets is expected to significantly increase Apple’s sales of the device. Apple will be selling the iPad through expanded distribution channels, as well as international rollouts and increased overall supply. The product is also being sold in all of the 284 Apple stores, as well as online on the company’s website at www.apple.com. Amazon, one of Apple’s largest retailers, also carries the iPad (Jacinto, 2010).
Examples/Tactics/Activities of the Marketing Program

In an attempt to differentiate the iPad from other Apple products, the size and content of the product will be focuses on when selling the iPad. Apple has been selling the iPad as a mobile Internet device with a significantly bigger screen than the iPhone or iPod Touch adds a bonus for potential consumers. The fact that over 1,000 applications are available on the iPad is major selling point, and focusing on these applications such as the iBook, iTunes, games, videos and movies will be a deciding factor for buyers (Ogg, 2010). Apple products such as the iPad are usually placed at higher prices due to the fact that they are under the brand name “Apple” which has a great deal of brand equity. However, the iPad has been placed at a moderate price level in comparison to other Apple products (Jacinto, 2010). For example, the iMac can cost as much as $2,000 while an iPod shuffle costs as little as $49. The most expensive iPad is $699, a reasonable price for this highly innovative product (“ipad,” 2010). The most utilized type of promotion is social networking. In addition to Apple’s promotional giveaways on Facebook, Apple has also recently integrated a Twitter application for the iPad where the product will be advertised. Phil Schiller, Apple’s Vice President for Worldwide Marketing, offered an iPad giveaway for Apple followers on Twitter (“Apple ipad giveaway for twitter followers,” 2010).
After experiencing limited stock of the iPad after the product was released, Apple is taking steps in order to provide proper placement of the iPad. The company has increased its production of the product and is expected to maintain a production level of two million or more units per month (“Admin,” 2010). The company also now allows its largest distributors to sell all six models of the iPad. For example, Tech Data Corporation is a major Apple distributor and generated $24.1 billion dollars in 2009. Recently, Apple allowed Tech Data to sell the iPad to its customers for the first time (“Apple expands iPad,” 2010). Apple has also solidified its lead in the market by placing the iPad into new channels. Wal-Mart, Sam’s club and AT&T stores recently received iPad units, and Verizon will also begin to carry models of the iPad (Adhikari, 2010).

Future Plans Section In order to improve the iPad, I believe that Apple should first improve upon the features that it currently offers. Considering the iPad’s price (starting at $499), it should include features such as a camera, a video camera and voice capabilities. The product should also be manufactured in a way that supports Adobe Flash Player and Web Cam capabilities. iPad’s indirect competition includes the iPhone and PCs, and these products possess all of these features. In order for the iPad to attract consumers from these two segments, I believe it is essential for the iPad to be able to take pictures, videos and support programs that use the Adobe Flash Player. This Flash player is a type of software for viewing animations and movies using computer programs and it is often needed to access PDF files. Due to the fact that iPad users are likely to be using the product for entertainment or business purposes, it is imperative that the consumers are able to easily access animations and PDF business documents on their iPad. An additional way for Apple to increase the competitive differentiation of the iPad would be to implement Amazon’s Wireless Virtual Laser Keyboard into the iPad. Many iPad users become frustrated with the tablet because there is no actual keyboard; users can only type by touching the screen. The Virtual Laser Keyboard can be projected on any flat surface even in direct sunlight. Including this feature on the iPad would allow users to type business documents, send emails and browse the Internet with ease in any location at any time – without having to carry around a separate keyboard. In order to further attract business professionals and corporations, I would recommend that Apple focuses its marketing strategies on its iAd advertising unit. The iPad can be used as a marketing channel itself; businesses and advertising agencies can use the iAd app to advertise their products and services to iPad users. According to Steve Jobs, “The average user spends 30 minutes a day in apps. If we put an ad up every 3 minutes, that’s 10 ads per day” (Kincaid, 2010). Focusing its marketing on the iAd would mutually benefit Apple and the advertising agencies it collaborates with and increase revenues for all parties involved.
References
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