Iphone Marketing strategy Essay
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Since its launch, in 2007, and until the end of 2013, Apple sold 500 million iPhones. It’s an impressive number.
- in 2012 alone, Apple sold 120 million iPhones,
in 2013 Apple sold 160 million iPhones.
Without a doubt, the iPhone has become a ‘cult product’, a ‘must have’ device.
Which are the secrets behind the iPhone astounding success?
To understand the spectacular iPhone success, and the iPhone phenomenon, we need to start by analyzing the cellular telephone market in the years immediately before the launch of the first iPhone, And the situation inside Apple.
Before the iPhone launch, infact, Apple was not a cellular telephone manufacturer, and had zero experience in cellular telephones marketing. Its only expertise was in computer hardware, computer software, and in portable music devices (the iPod).
In 2005-2006, the cellular telephone market was considered a mature and saturated market, with narrow margins, dominated by Nokia and Motorola. And by the Blackberry in the high end, especially in the business and corporate world, which were needing email writing, sending and receiving capability on their cellphone, with a suitable keyboard for texting messages.
A mature and saturated market with a fiery competition, such as the cellphone market in 2005-2006, was allowing narrow margins, therefore was unanimously considered unappealing by financial and business analysts.
When rumours came out, in 2005-2006, that Apple was in the process of developing a cellular telephone, financial and business analysts were at best ‘skeptical’. To be true, the consensus among financial analysts was that the ‘Apple cellphone’ would have been a terrible flop. Some of them were privately saying that they were suspecting Apple executives had gone completely mad, to enter such a saturated and non-profitable market.
Very few, among the business analysts, had the more objective attitude to just ‘wait and see’. Then, the day came, and the iPhone was launched. But Apple began with 3 huge, terrible mistakes. We expand on them onwards.
When the iPhone was launched, in June 2007, it made an impact. It impressed. The touch user interface and the sleek and beautiful design by Jonathan Ive and his team made it a masterpiece of technology and design.
The iPhone was decidedly a superior product. had a host of pluses against the competition (Nokia, Motorola, Blackberry) It was a highly innovative product, a different product from the other cellphones on the market at the time. Moreover, it was significantly larger and bulkier than the other cellular telephones in the market, when the market trend, for years, had been to have smaller and smaller cellphones: the smaller cellphone you had, the cooler you were.
The Apple iPhone went decidedly against the trend.
Today, in 2013, with 500 million iPhones sold, and with Apple stock market capitalization at $500 billion, it is easy to affirm that the iPhone has been a game changer. It surely has.
Ultimately, today we can affirm that the appearance of the iPhone on the market caused the death of the Blackberry,
and the loss by Nokia and Motorola of their previously dominant position in the cellular telephone market.
- The reason is simple:
The iPhone is a clearly superior product.
Its touch control features, and its enticing user interface, made the iPhone become a ‘cult product’.
But in 2005-2006, before it came out, things were different. And the perception was different when the iPhone first came out. No-one, in 2006, would have imagined that an ‘Apple cellphone’ would have sold 500 million units in 6 years.. No-one would have thought this even in June 2007, when it was launched.
The first generation iPhone was launched – only in the US – on June 29, 2007. It was subsequently launched in three more markets – UK, Germany and France – 5 months later, in November 2007.
In July 2008 the second generation iPhone, the iPhone 3G, was launched at the same time in the US, Canada, UK, Germany, France,Switzerland, Austria, Ireland, Denmark, Norway, Sweden, Finland, Italy, Spain, Netherlands, Belgium, Australia, New Zealand, Japan, Mexico and Brasil.
The third generation iPhone, the iPhone 3GS, was launched in June 2009.
Each iPhone generation had more features that the previous generation, and had longer battery life, and rendered the previous generation iPhones obsolete.
The fourth generation iPhone, the iPhone 4, was launched in June 2010. The iPhone 4S was launched in October 2011.
The iPhone 5 was launched in September 2012.
The iPhone 5C and 5S were launched in September 2013.
Planned Obsolescence has been a conscious marketing strategy by Apple. Thus, any Apple costumers knows (or pretend not to know) that he buys a product that in 12 months will become old and obsolete.
However, examining the sales data, this ‘planned obsolescence’ strategy paid off for Apple,
But which were the 3 serious marketing strategy mistakes that Apple made when it launched the iPhone?
The 3 Mistakes that Apple made when it launched the iPhone.
To purchase an iPhone, you had to sign a 24 months contract with AT&T. You had to ‘marry’ AT&T.
And many potential costumers did not want this marriage.
you were locked on a 24 months contract with AT&T. An expensive contract. In the end, if you were wanting to buy an iPhone, its real cost was more than 2000 dollars.
Why forcing your costumers to sign a contract with a service provider? And why a single provider, not giving any other choice?
Why not letting your costumers simply buy an iPhone, and let them free to arrange a contract as they please?
Infact, there were numerous complaints by iPhone costumers and potential costumers, on this issue.
Even, a widespread hacking practice took place, significantly called “jailbreak”: on several websites appeared step by step instructions on how to hack the iPhone software to let it operate with a different service provider.
Infact, 3.3 million iPhones were sold in the US between June andl December 2007, but only 2 million contracts were signed with AT&T.
Were did the remaining 1.3 million iPhones go?
It has to be remarked that the iPhone jailbreak practice infurated Apple executives, who, instead of recognized their marketing strategy mistake, criminalized the jailbreaking behaviour, to the point of blackmailing costumers doing the jailbraking.
On June 29, 2007 the iPhone was launched in the US.
It was put on sale only in the US, and in no other nation in the world.
Only in November 2007, 5 months later, the iPhone was launched in a few other countries. To be precise, it was launched in just 3 other countries: UK, Germany and France.
In each of these countries with the same silly formula that Apple used in the US, forcing the costumer to sign a 24 months contract with a service provider. and in each country with a different provider: O2 in the UK, T-Mobile in Germany, Orange in France.
This was a bad marketing choice by Apple. There were millions of potential costumers all around the world who were wanting to buy an iPhone, but couldn’t, because in their own country it was not on sale. Many of them went to such length to ask to their friends in the US – or traveling to the US – to buy one for them. Finally, only on July 11, 2008, one full year after the initial launch in the US, the iPhone was put on sale in other countries, in Europe: Italy, Spain, Switzerland, Austria, Ireland, Denmark, Norway, Sweden, Finland, Netherlands, Belgium; and in Australia, New Zealand, Canada, Japan, Mexico, Brasil. It was already the 3rd generation iPhone, the iPhone 3G and 3GS.
Why so late?
Besides, it is interesting to verify the jam and confusion of different prices, terms and monthly fees charged by the service providers in the
European countries: O2 in the UK, T-Mobile in Germany, Austria and Netherlands, Orange in France, Swisscom in Switzerland, Vodafone in Italy, Telia Sonera in Denmark, Norway, Sweden, Finland.
It was the perfect formula to confuse potential iPhone costumers and push them away. A self-hammering marketing strategy by Apple.
In our opinion, this was a totally wrong marketing strategy by Apple.
Infact, numbers do not lie:
from July 2008 until the end of 2013, Apple sold a total of 500 million iPhones. From June 2007 until December 2007 – when the iPhone was available only in US – only 3.3 million iPhones had been sold.
Mistake #3 – iPhone Pricing.
On June 29, 2007, when the iPhone was launched in the US, its retail price was.$599. Just 3 months after, Apple reduce the iPhone price to $399 – a 33% rebate – . This was an unelegant way to betray and exploit the iPhone early adopters – Apple most faithful costumers. And infact, many of them complained with Apple.
A smart and attentive company must not indulge in such serious mistakes, betraying their most faithful customer base.
Apple had other 3 better options:
Apple could have waited 1 year before reducing the price of the iPhone, or: Apple could have delayed the iPhone launch for 3 months, or: Apple could have set the iPhone retail price at $399, since the initial launch. Besides, in July 2008, the iPhone 3G was sold at $199,
66% less than the launch price of just one year earlier.
This is not a serious pricing policy.
Each of these 3 mistakes constituted a bottleneck factor which confused costumers, and seriously hampered the iPhone sales potential in the first
year and a half.
However, in the following years Apple corrected and amended these mistakes, and things went smoothly and successfully for the company.
Infact, from 2008 until 2013, Apple sold 500 million units.
in 2012 alone, Apple sold 120 million iPhones,
in 2013 Apple sold 120 million iPhones.
The iPhone was also a precursor product of the iPad.
The iPad, infact, has numerous features and technologies which derive from the iPhone, the main one being the touch control system and the user interface. The iPad, infact, is a sort of ‘big brother’ of the iPhone.
The iPhone certainly has been the key product of the spectacular growth of Apple revenues – today at $156 billion in 1 year -, of Apple profits, and stock market capitalization – today at $500 billion, making Apple the #1 company in Wall St.
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