Apple iPod: A Marketing Mix Case Study

Contents
Introduction ................................................................................................................................................... 3 SWOT Analysis of Apple ................................................................................................................................ 3 Strengths ................................................................................................................................................... 3 Weaknesses .............................................................................................................................................. 3 Opportunities ............................................................................................................................................ 4 Threats ...................................................................................................................................................... 4 Competition .................................................................................................................................................. 4 Target market ............................................................................................................................................... 5 Marketing Mix in the current Global market ................................................................................................ 5 Product ...................................................................................................................................................... 5 Promotion.................................................................................................................................................. 6 Places ........................................................................................................................................................ 6 Price .......................................................................................................................................................... 7 Conclusion ..................................................................................................................................................... 8 References ..................................................................................................................................................... 9

Introduction
Digital music has entered the life of humans in every possible way. Audio DVDs and downloads have been completely dominating where the cassettes and tapes once were the kings. This advent has been helped by the human desires to fill their idle time with music and dance. This need is being fulfilled by a range of portable devices which are there to play music. These are mainly the music players and the mobile phones with internal mp3 players. Till the start of this decade, Sony was producing their Walkmans and leading the market, but only then Apple came into the picture. Apple Inc, then Apple Computers Inc, was only in computer hardware and software. Their offerings like Mac and MacOS were completely lost in front of the marketing and technology of giants like HP, Dell and Microsoft. Then, Apple started its digital hub strategy, by which Apple began making software for the increasing range of digital devices bought by consumers. Digital cameras, HandyCams and Personal Digital Assistants were having huge markets, but available digital music players were not fully developed, so Apple got into them by developing their own offering. The offering was made in lesser than a year and unveiled on 23 October 2001 which we know as iPod (Apple Inc, 2011).

SWOT Analysis of Apple

Strengths
Sales of iPod have increased quarter to quarter since its launch. The iPod brand perception had also led to increased sales of Macs. Hence, the iPod helped Apple by letting new segments getting other parts of the Apple brand. Apple is one of the highest valued brands in the world, and has garnered hardcore loyal set of enthusiasts.

Weaknesses

Incidents of faulty parts in iPod. Although they have been miniscule in nature , but still impact the overall brand image.

Pressure from music industry to increase download pricing at iTunes

Opportunities

iPhone has given a whole new range of customers to be catered with inbuilt iPod as well as iPhone functionality

Gaining popularity of Podcasts in corporate as well as educational institutions giving iPod as new means of usage

Threats

Highly dynamic market Recession in their biggest markets, namely , USA and Europe Substitution by Cellphones, and also other product ecosystems namely Windows phones and Android.

Vulnerable to leaks of information as they dont own any part of their supply chain (Lowe and Mac, 2011).

Competition
Apple iPod is facing direct as well as indirect competition from its competitors. Talking about direct competition, there are very few competitors like Microsoft Zune, Creative, Sony Walkmans and Philips Music players. Microsoft launched Zune with an impressive target of garnering 40% of complete music industry within 3 years but much to the dismal marketing efforts, it couldnt reach even 2% mark and was discontinued by Microsoft. Sony Walkmans used to dictate the market but were outshined by design as well and functionality. When they tried to catch up, they were pretty late. Talking about Creative and Philips, they are not even in consideration set of Apple Customers. The biggest threat to iPod is coming from cell phones. Similar to the heat of competition given by cell phones to cameras and virtually eating up their market, Cell phones have also replaced iPods with inbuilt music player functionality. Apple itself acknowledged this fact and introduced iPhone, thereby cannibalizing its iPod sales (Lowe and Mac, 2011).

Target market
The basic market for iPod has been teenagers and young adults. It has been segmented via age, gender and inherent desires. People who are enthusiastic towards technology, music and literatures and are interested in carrying GBs of music and other similar files in a stylish, easy to use manner aspire for iPod. The trends which can be associated with the target market of iPod have been street and culture trends which take iPod as a luxury artifact. iPod has transformed music to trendiness, status and fashion. It is seen by the target market as a must have status symbol, a trendy fashion accessory and an increasing necessity ( MacNews, 2010).

Marketing Mix in the current Global market

Product
iPod relies on its product design and inherent technology. The entire hardware is outsourced but the complete assembling is made into an amazing firmware. The look and feel of user interface makes people buy. They buy it just not for utility of music but also as its in vogue. Following are the product features: Looks and User Interface When compared with other similar products in market, the iPod came with touch interface. With a touch based scroll wheel and 4 touch buttons accompanying it, it was so simple to operate it. This was with an awesome operating system and unmatched sound quality which gave music listeners an unprecedented experience. Accessories - A Complete integration Apple has augmented the features of the iPod through various complementary products which help in increasing the product ecosystem. It gives two main advantages. Firstly, the product remains intact. And secondly, User is given more possible options to explore the music. Other than Apple, multiple companies also started with accessories for the iPod as they knew that the trend is going to stay. Some of these accessories are:

Sound system for rooms Camera connector Radio Add-on

Sufficient Choice within Product Line There are multiple variants of iPod. Going by its motto of Having an iPod for everyone", there are different options available on constraints on size, storage and price. The basic functionality has also varied from Shuffle to Nano to Touch. This strategy is used to diversify the product line which has led to higher consumer base and addressing multiple market segments (Wired, 2011).

Promotion
The iPod has become sort of a rage because of its intelligent and regular marketing. According to US magazine, Advertising Age, the Apple PR machinery has secured 6,000 iPod and iTunes stores in major publications houses across the globe in a short time period of 6 years. Apple has based its promotion on 3 factors: The Coolness Factor, Design and Simplicity in use. Apple's various modes of promotion are: I) Advertising II) Music featured in the ads III) Signage IV) The Apple.com Product Page (Engadget, 2009)

Places
Retailing Using its retail outlets, Apple has created an experience place in its customers mind. Its first priority has been to make the products, the most wanted in market. This desire is complemented with the experience of customers with its products in the store. The stores are designed according to the way in which people use the Apple products. By acknowledging the context of usage in the design of the store, Apple has encouraged its customers to think about seamless possibilities. Multiple Tie-ups with Companies

Apple has approached promotion of the iPod in a different way from its usual marketing practice. There has been a calculated move by Apple to give away some control to gain access to markets which are way beyond of magnitude their older (Mac) one. Some major partnerships: Collaboration with Hewlett Packard (2004) Integration with Airlines (2006)

Promotional Offers Apple launched the Summer of Music in Japan in 2006 as it gave free vouchers redeemable for downloading free songs from its iTunes store. Also, live performances were presented at the Apple Stores by locally popular bands so as to attract crowds. They also tied up with major audio companies and bands to promote their iPod with them. Its most significant tie-up has been with U2, which has been one of the most iconic bands of this century (Zdnet, 2007) Association with Educational Institutions Apple tied up with major academic universities across the globe to promote iPod as an educational tool also. It was first used in Duke University to explore newer ways of integration with the academic environment and scaling iPod amongst the faculty and students. It was a grand success and the iPod was used as a recording, course content distribution and study support tool in multiple institutions such as Stanford and Georgia.

Price
Apple Pricing Policy
The growing market gave significant incentive for Apple to slash its prices to the lowest possible limit and garner maximum market. They had significant market power but still iPod variants were priced at the same price as their competitors. 20 percent of the price of each unit is allotted for its PR and marketing, still they sell each unit of iPod at about 66 percent profit (Lowe and Mac, 2009).

Skimming Research & Development costs

Apple decided that they should skim huge investments via initial higher pricing of the iPods. It has not hurt them as the iPod prices are still comparable with those of the competitors.

Investment for iTunes

In starting, they needed to find a source of investment for iTunes also. iPod came for the rescue. Apple did not see iPod as a single product. For them, (iPod + iTunes) is a single product. And hence they charged the iPod with development and maintenance fee for iTunes in addition to iPod (Mac Daily news, 2009).

Deliberate higher pricing policy

It has been a policy of Apple to price it higher in countries where the competition has not established. The following features also help in determining prices. Economic Factors Consumers Buying Behavior

Conclusion
Apple has not only delivered iPod as a must have music device but has also successfully placed it in the set of aspirations of teens and youth, thereby, helping it to ask for premium prices in other products and making its complete portfolio profitable. Also, iPod story tells us aspirational value for brand can help it reap benefits for longer terms by generating loyalty and positive word of mouth.

References
Apple Inc, Official website (2011), Available: http://www.apple.com, Last accessed on 15 Nov 2011 Apple Inc (2011), Official Press Releases of Apple (2011), Available: http://www.apple.com/pr , Last accessed on 15 Nov 2011 Apple Inc, (2011), Official iTunes website, Available: http://www.apple.com/itunes/store, Last accessed on 15 Nov 2011 Wired, 2011, Study of iPod grey market, Available:

http://www.wired.com/gadgets/mac/news/2006/08/71639 , Last accessed on 15 Nov 2011 Engadget (2009), Your $200 iPod nano costs about $90 to make", Available: Last accessed on 15 Nov 2011, http://www.engadget.com/2005/09/23/your-200-ipod-nano-costs-about-90-to-

make/, Last accessed on 15 Nov 2011 Zdnet (2007) Apple spends a bundle on iPod ads", Available: http://news.zdnet.com/2100-9584 22-5978598.html, Last accessed on 15 Nov 2011 Lowe and Mac (2011), A Brief history of the iPod", Available:

http://lowendmac.com/orchard/05/1014.html , Last accessed on 15 Nov 2011 MacDaily news (2009), New 'iPod Index' currency measure is based on Apples 2GB iPod Nano cost", Available: http://macdailynews.com/index.php/weblog/comments/12383/, Last accessed on 15 Nov 2011 Marginal Revolution (2009) , The iPod purchasing power parity index", Available: http://www.marginalrevolution.com/marginalrevolution/2007/01/the accessed on 15 Nov 2011 Techtree (2010), Xpress Digital MP3 Player, Available: http://www.techtree.com/India/Xpress Digital MP3 Player/551-53004-571.html, last accessed on 15 Nov 2011 Duke, Duke University iPod First Year Experience Final Evaluation Report, June 2005, Available: http://www.ecs.org/html/Document.asp?chouseid=6210, Last accessed on 15 Nov 2011 MacNews (2010),Apple Stores earn over $4000 per square foot", The Mac Insider, Available: http://www.macnewsworld.com/story/56199.html, Last accessed on 15 Nov 2011 ipod purcha.html, Last