Product Analysis and Marketing

Hilliard 1 Introduction The Marketing Mix and the Four P’s The Marketing Mix is the combination of strategies and actions decided by a company to promote their product. It consists of four concepts known as the Four Ps: product, price, place, and promotion. Product refers to the actual good or service a company creates and sells. In the case of Apple, they have an extensive line of technology products, including devices, software, content platforms, and accessories. The iPhone will be the primary focus of this paper. For the past ten years, the iPhone has evolved to meet consumer needs and set technology trends thanks to extensive research and development by Apple. Today, the smartphone makes up over 60% of Apple’s annual revenue. With so much riding on one product line, Apple is pressured into continuously revolutionizing the market, which is no easy feat. Most recently, Apple released three new iPhone versions: the 8, 8 plus, and the X. According to CEO Tim Cook, the X is the biggest change in smartphones since the original iPhone in 2007. To analyze the iPhone as a product and Apple’s marketing strategy, the Product section will assess the product line, services and strategies that enhance the product offering, the product life cycle, and the introduction of new products. Price examines a company’s pricing philosophy and strategy. In some markets, price can be a differentiating tactic or a cost cutting race to the bottom. In the smartphone industry, there is a delicate balance between price sensitivity and desire for the latest technology. Being caught in the middle of a price spectrum is difficult and often disastrous for companies; often the choice is either everyday low pricing or premium pricing. Apple opted for a premium pricing strategy, and their high prices helped create their brand essence. They are the prestigious innovators, and if their prices are so high, consumers assume it is because they are the best. Place refers to the channels a company uses to deliver value to their customers. This includes their supply chain, their sales channels and sales force, business partners, and overall logistics. In Apple’s case, it requires a lot of logistical management to oversee their operations, because the first step in their supply chain involves obtaining parts from over 200 suppliers. Many business transactions and partnerships collaborate to manufacture and deliver iPhones to consumers. Once the iPhones are created, there are a variety of purchasing channel options, but probably the most iconic is Apple’s own retail stores. In a time when brick and mortar locations are struggling and consumer preference appears to be shifting to online shopping, Apple Stores’ focus on the experience rather than the product have allowed them to become successful. The last concept is Promotion, which refers to the marketing communications tactics companies use to connect with their target market and encourage purchases. Apple uses a promotional mix of creative advertising, personal selling, and digital marketing to facilitate conversations with their customers and build relationships. The Apple ethos abides by the concept of focusing on the people, and product sales will follow. This concept is clear in their experience-centered advertisements, their personal selling approach in stores, and their ever-growing social media engagement presence. Hilliard 2 Segmentation, Targeting, Positioning and Differentiating Analysis Although Apple has products designed to appeal to consumers worldwide, they adjust some of their strategies for different regions and demographics. Apple segments the markets it serves using a variety of criteria, including geography, age, and affluence. For example, Apple sells older models of its iPhones in developing nations who are just starting to have the proper internet and cellular infrastructure to support smartphones. Smartphones are less expensive in countries in Asia, and Apple has recently shifted its focus to countries like China where it has a smaller market share than in North America. As a result, they have tried to expand their product offerings into a variety of price tiers so iPhones are more affordable. According to Fox News, the Chinese culture both values price and prestige. With Apple’s expanded, multi-price tier product line, they appeal to both qualities. Apple targets the general public with its marketing strategies, but has positioned themselves for success in consumerist cultures like the United States and other European nations and first world countries with significant reliance on technology. Apple has created an advantageous position in these because they have proven themselves as the premium, highest quality technology company. Through their regular cadence in new products releases and significant product development yielding iPhone upgrades annually, consumers turn to Apple for the latest and the best technology. Additionally, Apple has positioned itself on the forefront of technological advancement, and as a result benefits from first mover advantage. For example, when the App Store was created, application companies and other businesses looking to expand into this new technology sector created their software with Apple product infrastructure as a guide. Apple’s operating systems have become the standard among app developers, which gives the App Store the widest variety of applications for smartphones and furthers Apple’s competitive advantage. To differentiate themselves from competitors, Apple emphasizes a variety of distinguishing factors. First, they use their premium level prices to their advantage. They use them as a way to signal consumers that they are the best choice on the market and invoke a sense of prestige. Another distinguishing factor of Apple is their product related diversification. Their variety of devices, operating systems, and services form an ecosystem of technology. Consumers can create a seamless, interconnected digital hub to simplify their lives, while knowing they are buying products of the highest quality and design. Product Analysis Product Line Apple as a company in general carries a variety of products that can be categorized as the following: physical devices, operating systems, software services, digital content services, and third-party Apple compatible accessories. The physical devices sector includes their most well- known products, like Mac computers, iPads, Apple Watches, Apple TV, and their most Hilliard 3 profitable product, the iPhone. Operating systems include iOS, MacOs, WatchOS, tvOS, and software services include the storage software iCloud and mobile payment service Apple Pay. They also have a digital content service sector, which accounts for mobile application and content sources like iTunes, the App Store, iBooks, and their streaming service, Apple Music. Apple also sells chargers, speakers, headphones, and other accessories. Although Apple has a related but diverse line of products, their most popular product is undoubtedly the iPhone. In 2016, the company’s smartphone sales made up 60% of Apple’s total revenue, which was actually a decrease from 2015’s 69%. The iPhone celebrated its tenth anniversary earlier in 2017, and through its decade of existence, it has lived up to Steve Jobs’ original declaration at the MacWorld Conference back in 2007: We’re going to reinvent the phone”. Apple has released fourteen editions of the iPhone in the past ten years (not including regular sized and plus varieties, because the technology is the same besides the screen length). Product Line Assessment One of Apple’s competitive advantages is its related diversification product line strategy. While they create different types of technology, their entire product line cohesively synchronizes users’ lives. Apple loyalists’ lives are streamlined across devices, from their iPhone to their Apple Watch to their Mac laptops, thanks to the unifying software and digital content services designed for all Apple hardware. As Apple CEO Tim Cook explains, "None of us wants to have different platforms in different parts of our lives. We want one, seamless kind of life. And so, I think that is huge for our future." This philosophy defines and guides the Apple product line strategy. In the past five years, Apple has shifted from their product strategy from making the best version of something to making the best version of everything, according to Forbes. More specifically, to properly assess the iPhone as a product, there are several components to account for: variety, design, features, quality, brand name, packaging, and services. Variety, Design, and Features Apple has created fourteen editions of iPhones over its ten-year existence, and has excelled in consistently updating their product on an annual basis, sometimes releasing more than one new edition at a time. Throughout their fourteen primary versions of the iPhone, they have further diversified product specifications through different color or size options. For instance, starting with the iPhone 6 and continuing through the iPhone 7 and 8, Apple has offered a regular size option, a 4.7-inch screen, and a “plus” option, with a 5.5-inch screen. Additionally, there were four different bright color options for the iPhone 5C, and more recent offering come in a range of metallic from matte black to silver to rose gold. Apple has also varied their iPhones by material. The 5C was made of plastic, while other models from the original to the 7 were made of aluminum and the most recent 8 and X are made of glass and stainless steel. Currently, Apple offers 8 variations of the iPhone: 6S, 6S plus, 7, 7 plus, SE, 8, 8 plus, and the X. They vary in size, technological capabilities, features, and price. Apple will vary their iPhone design to meet consumers’ needs. For example, in 2017, they released the iPhone SE because they retired the iPhone 5 but some consumers preferred the smaller screen and size. With the SE, Hilliard 4 Apple incorporated the latest software and smartphone technology into a smaller phone with a 4 inch screen. As far as technological capabilities, Apple’s product line varies in levels of technology.

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