IMC Strategies for building the iPhone 5 brand
Today, Apple has created a nice for itself in the world of mobile phones, music and computing. Having its sharp focus on innovation and technology, coupled with the vision of the late Steve Jobs and Tim Cook, Apple has established itself as one of the most respected and trusted brands in the world. Many analysts say that the ‘i’ in its iPhone, iPod and iPad stands for innovation! It is interesting to note that Apple has never invented any new products. Whether it is an iPod or an iPhone, it just reinvented the product by concentrating on innovative new design, customer appeal and cutting edge technology. In fact, Forbes magazine rated Apple as the world’s most valuable brand with revenues to the tune of $156.6 billion (Forbes, 2014).
The integrated marketing communications stands for the creation and distribution of the intended marketing message to the target audience, through the selected media vehicles such as newspapers, television, internet, social media and sales promotion. In other words, IMC is a part of a marketing communications planning that emphasizes the enhanced value of a comprehensive plan (Kotler, 2011). The different media vehicles are combined to create a message that provides clarity, cohesiveness, and maximum impact to the target audience. This case deals with the analysis of Integrated Marketing Communications for the Apple’s iconic iPhone 5 brand.
Today, several companies are adopting a “360-degree view” of its customers in order to assess the ways in which the companies can create their communication strategies (Kotler, 2011). A situation analysis studies the current market place conditions. It is very important that companies asses their current performance in comparison to the market environment.
Internal Analysis of Apple’s iPhone 5 brand
The first edition of the iPhone was introduced in 29, June, 2007. The Time magazine named it as an ‘Invention of the year’ in 2007 as more than 270,000 iPhones were sold within the first 30 hours of the launch (Marino & Gamble, 2010). After this, Apple launched several upgraded versions of the iPhone that had features such as built in iPod player, global positioning system (GPS) and compatibility with Microsoft exchange. IPhone 5 was the sixth generation of the iPhone and it succeeded iPhone 4S. It was launched at a press event in September 21, 2012. If we carefully analyse the strengths of the product, we could find that:
- Strong brand image: Steve Job had founded Apple in 1971, since then, the company has produced some of the best products, one of them being the iPhone. iPhone had one of the strongest brand images for any technological product that was available in the market.
- Customer reception and strong customer loyalty: Over the years, Apple had created a kind of loyalty where its customers eagerly waited for the new upgraded versions of the iPhone. Apple used to take pre-orders for iPhone and used to receive around a million orders in less than 24 hours. This kind of a response was no less than ‘extraordinary’, as described by Apple.
- Robust design and a great operating system (OS): The iPhone 5 featured Apple’s standard iOS operating system. It was the sixth version of the operating system and was termed as iOS 6. It was a great operating platform where in control elements were based on touch screen switches, buttons and sliders. IOS 6 was faster and more effective than its predecessors and provided smooth access to the App Store, through which its users could download millions of applications for business or leisure purposes. It also included new features such as Passbook and Apple’s in built maps.
- The new and improved ‘Siri’: ‘Siri’ was a facility that allowed its users to operate their iPhones by verbal commands (Apple inc. 2012). This application was improved in the new iOS 6 and it included additional services such as launching new applications and making restaurant reservations.
- New and improved design: iPhone 4 and iPhone 4S had a stainless steel frame, whereas the new iPhone 5 had an aluminium frame, which improved the overall build quality of the smartphone. IPhone 5 was lighter, thinner and sleeker than iPhone 4S, and even had a bigger screen size, which was one of its most prominent features.
- Improved hardware and screen display: The new iPhone came with an ‘A6’ chip; it was about 20% smaller than the previous A5 chip and consumed less battery power. Also, the improved ‘Retina display’ provided better colour saturation than its predecessor (O’Grady, 2012).
- Accessories: Apple’s iPhone 5 features a new ‘Lightning connector’ which replaces the 30-pin connector, which was introduced and used by Apple since 2003. As per the company, the new connector would be smaller and faster than its predecessor. IPhone 5 also comes with a newly designed ‘ear-pods’, that are more ergonomic as compared to the previous headphones. As per the company, the new ear-pods would have a superior sound quality and built as compared to other earphones available in the market.
In spite of so many positive aspects, there were some areas of concerns:
- Competition and intense rivalry from the likes of Samsung Galaxy S3 and Sony Xperia: Apple faced tough competition from the like of Samsung and Sony as their smartphones, Galaxy S3 and Xperia had similar features and were priced lower than the iPhone.
- Production issues: There was some production issues when some of the workers at Apple’s Chinese manufacturing plant, went on strike. This could have lead to some delays in production.
- High average selling price: It was a known fact the all of the Apple products commanded a premium price as compared to its competitors. In the smartphone industry, where Samsung was the market leader in terms of number of sales, it was a challenge for Apple to market its iPhone 5 and persuade its target audience to buy the product.
- Some technical issues related to the new Apple maps and camera: Apple had replaced some of the popular applications like Google-Maps with its own customised map service. This was a sort of risk as Google –Maps were already very popular with the customers.
Apple’s Previous IMC efforts for iPhone
Over the years, Apple Inc, as a whole, has been known to use its IMC programs very effectively and won several awards and recognitions for it too. One of the most famous advertising and promotion campaign for the company was the introduction of its advertisement during the 1984 Super Bowl. The commercial was director by Ridley Scott of Blade Runner fame (Friedman, 1997). The advertisement was run only for once but created a tremendous impact on its potential customers.
The integrated marketing communication involves planning, creating and sending the required marketing message by a chosen media vehicle to a target audience. In case of marketing its legendary iPhone, the company focused its efforts on creating an IMC campaign that would create curiosity and inquisitiveness in the minds of its potential customers. In this way, the company made use of media vehicles such as print and television to promote its iPhone during the last several years and paid attention to its various brand-customer touch points. If we look at the ways in which Apple utilised its IMC strategies in the past, with reference to iPhone, we can infer the following:
- Press coverage: Apple used press conferences as a medium to give out hints related to its upcoming iPhone models. This created a tremendous buzz among its loyal customers who eagerly awaited its upgraded versions.
- Rumours: The rumours created for iPhone were unbelievable. One of the biggest reasons of its tremendous sales record was the secrecy of the features and looks of iPhone’s latest versions.
- Sales promotions: Although Apple does not indulge in television advertising as compared to its rivals Samsung and Sony; it carries out price promotions that do not hurt its brand image. It introduces seasonal discounts and financing schemes for its customers.
- These discounts and financing schemes are normally promoted through newspapers, peripherals and its worldwide authorised distributors.
- It focused on the ‘self actualization needs’ of the customers (Maslow, 1943) through its IMC campaign.
- Promoting its services and applications through social media vehicles such as Facebook and Twitter: Apple has been promoting the iPhone applications and digital downloads by creating an official Facebook page for iTunes and App Store respectively.
As a result of technological advancements, a whole new range of customer touch points have been created by Apple and with these touch points, its customers be targeted through a focused communication strategy (Duncan and Ouwersloot, 2008).
Analysing the existing Brand Image of iPhone
As per Tim Cook, the chief operating officer of Apple, the company was selling iPhones “as fast as we could make them” (Wall street journal, 2010). Today, iPhone’s brand image is very superior and it has been developed over the past few years with the support of its loyal customer base. Millions of iPhones have been sold in the past few years, and in spite of its high prices, it has consistently beaten market expectations and surpassed all predictions. Iphone’s distinctive IMC campaigns and its innovative design along with a smooth user interface have created a unique position in the minds of the customers. Its customers view the brand as the one which enhances their status in the society. They perceive its value to be much greater than its price, and this is the biggest reason why its brand image is so strong.
In order to succeed in today’s competitive environment, organisations need to fully understand their customers and potential buyers as clearly as possible. The company needs to effectively recognise its prospects and the existing customers (Duncan and Ouwersloot, 2008). Some of the key areas to consider during the customer analysis would be:
- Customer Motivation: Motivation is the driving force within the individual that drive them to action (Schiffman & Kanuk, 2011). Every customer has needs that are either innate or acquired. Innate needs are basic physiological needs while acquired needs and wants are psychological ones that are secondary needs or motives. Apple’s iPhone 5 needs to tap such psychological needs and motives of their customers through its IMC strategy.
- Customer brand decision making: Every customer goes through the stage of brand decision making process before buying the product. The stages of this decision making include recognising a need, information search and identification of product alternatives (Duncan and Ouwersloot, 2008). Apple needs to ensure that it creates such a persuasive message for its iPhone5, that it can effectively tap its prospects who are motivated to seek better value for their monies, and who can easily find the brand information on the Internet, social media or the newspapers.
Apple’s iPhone 5 faces stiff competition from Samsung Galaxy S3 and Sony Xperia Z. Samsung and Sony are the closest rivals to Apple in the smartphone scene today. And thanks to the ongoing patent war between Samsung and Apple, the competition has become even more intense. If we look at the features of both the Galaxy S3 and Xperia Z, we find that they offer a bigger screen size as compared to iPhone5, an equally powerful processor chip, and more streamline functionalities. Moreover, both S3 and Xperia Z operate on the Android operating system, which is the world most favourite OS, even ahead of iPhone’s iOS in terms of sales.
IPhone’s external environments apart from its competitors (as discussed above) consist of:
Customer: Most of its customers live in U.S and European countries; however, Apple has been making several inroads in rising economies like China and India.
Distributors and Suppliers: Apple has several component suppliers located in countries like China and Korea. Its iPhone production is done by Fox Conn, which has a manufacturing plant in Zhengzhou, China (Adam, 2012). It follows a distributorship model for selling iPhones in most of the countries.
IPhone’s internal environment:
The staff at Apple: In 2012 alone, its stores did a total of $16 billion in sales, about 30,000 of the total 43,000 employees in the U.S. works at the stores. Although Apple pays its C-suite handsomely, the same cannot be said about their store employees (Deanin, 2012). Since most of the local employees who sell iPhones are hired for the stores, they receive a little bit of training. Apple offers a minimum pay of $7.25, which is well above the industry average, it also offers employee benefits such as healthcare, 401(k) contribution and company stocks and products at discounted costs (Deanin, 2012).
Moreover, the overall employee morale is pretty good and they are happy to be a part of the company, which is known for its technological innovation and out of the box thinking. Over the past few years, the sustained growth of iPhone sales were important for the company’s financial performance, since it contributed for $5.33 billion of company’s third quarter 2010 revenues of $15.7 billion. That was more than 1/3 of the total revenues (Marino & Gamble, 2010).
Analysing the marketing mix implications for iPhone 5
Product: iPhone 5 is a Smartphone that has a superior built, colour display, battery life, screen size and hardware as compared to its predecessor, the iPhone4S. It can play music; movies, e-books and its media library can be sorted by songs, albums, artists and purchased methods. The texting on iPhone5 can be done by voice assistant, which converts the voice commands into text. Moreover, iPhone 5’s iOS 6 has several new features such as Passbook and Apple Maps. If we compare it with its competitors such as Galaxy S3 and Xperia Z, we find that these smartphones have similar and even better features as compared to iPhone5. Although Galaxy S3 and Xperia Z do not have features such as Passbook and Apple maps, they have thousands of other applications that are similar to the ones that are offered by Apple. Moreover, the touch screens of both Galaxy S3 and Xperia Z are smooth to operate and have a solid built. However, the external build quality of Galaxy S3 and Xperia Z is not as attractive and robust as iPhone 5.
Price: Apple is known for its arrogance towards its pricing strategies. It believes in delivering high quality products for a premium price. It believes that its customers buy an iPhone, not for of its price, but for the value that it delivers. According to some analysts, iPhone 5 could retail for $650 in the US and European markets and at a higher price in other far eastern countries. This is more than the market price of its competitors Galaxy S3 and Xperia Z respectively. Both these smartphones are well under $500 in all the markets. This is one of the biggest advantages that Samsung and Sony have over Apple.
Place: iPhone 5 would be primarily sold through Apple’s authorised distributors through their outlets. However, apart from the outlets, it can be pre-ordered and purchased from its stores too. Iphone5 can also be purchased online from several reputed e-commerce websites such as E-bay and Amazon. Even Galaxy S3 and Xperia Z would follow the same marketing strategy with reference to this marketing mix.
Promotion: As done before, iPhone 5 can be promoted by press conferences, media releases, rumours and social media. Sony and Samsung have been extensively promoting their smartphones through social media vehicles such as Facebook and Twitter rather than focusing on press conferences and rumours.
- IPhone has a tremendous brand image and a loyal customer base, on which it can bank on. These loyal customers would always buy an Apple product, even if it means that they need to spend extra for the product.
- The price of iPhone is higher than its competitors, smartphones such as Samsung Galaxy S3 and Sony Xperia Z have equally good features, and they are cheaper than iPhone.
- Apple needs to create an IMC plan for iPhone 5, that emphasizes on the overall value-addition to its prospects, and not just any single attribute like specific design feature or screen size.
In short, the company needs to identify a sustainable competitive advantage that is unique and difficult to replicate by its competitors.
In case of Apple, it would be its overall brand image and the innovation that it brings while creating its smartphones. It needs to focus on the overall value addition to its potential customers and target the necessary market segment with a well crafted message.
Target Markets for iPhone 5
In order to create a unique IMC plan for the brand, it is very essential to identify the target markets as it assists the marketers to focus their communication channels for a particular market and a consumer group. In case of iPhone5, once the target markets are selected, it would be easy for the marketers to create specific marketing messages that are based on the wants of their customers.
Market segmentation can be defined as the process of dividing different groups of consumers with common needs or characteristics and then selecting one or more segments to target it with a unique marketing mix (Schiffman and Kanuk, 2011). These groups of consumers become the target audience and become the focus of the IMC efforts. The essential variables that are used to describe and segment the target market would be demographic, psychographic, technographic, geographic and buyer behavioural response characteristics.
The segments that have been selected for iPhone5 are:
Psychographic Segmentation: Segmentation that is based on the lifestyles, attitudes and the opinion of the customers. It is a technique that studies and then divides the markets into different groups of people based on their characteristics (Duncan and Ouwersloot, 2008). We can refer the VALS types (US Framework) for this. Based on it, Apple can target the following consumer groups (Strategic Business Insight, 2014):
- Innovators: these people are sophisticated, have high self esteem and are highly motivated.
- Achievers: This group of people are motivated by a deep desire to achieve something; they have many wants and needs along with the desire of material possessions.
- Strivers: These people are trendy and fun loving. For them, success means money.
- Experiencers: They are avid consumers and spend a large proportion of their income on entertainment, fashion and socializing.
Geodemographic Segmentation: It is combination of geographic and demographic segmentation methods, which identifies and classifies the consumers into geographic clusters having similar demographic and lifestyle characteristics (Duncan and Ouwersloot, 2008). Apple needs to target customers of both the genders between the age of 15-35 with an income category of middle level and above. It needs to concentrate more towards the Asian countries like China and India, as the smartphone market is still in a developing stage in these markets and there is a large section of prospects that can be effectively targeted by a well planned IMC strategy.
With reference to the selected target segments, if we analyse the most prominent consumer characteristics and its linkage with iPhone 5 we find:
- Psychographic Segment: Some of the related prominent consumer characteristics are sophistication, trendiness, fun, entertainment and achievement.
- Geodemographic Segment: Key characteristics include inquisitive, ambitious, vitality and innovative.
A SWOT analysis helps the marketers in identifying the brand’s strengths and weaknesses, examine the opportunities and threats from the external environment, and then develop the specific IMC plan for the brand.
A big part of Apple’s turnaround could be attributed to Steve Jobs, who had a clear vision of how to improve the company performance and turn its fortunes. He continuously promoted new innovative ideas an also enforced several management changes along with the removal of the company’s unprofitable segments and divisions (Marino & Gamble, 2010). If we analyse the strengths of the iPhone brand, we can find traces of Job’s innovative thinking and vision.
Strength: Although Apple has been consistently doing well in technology industry, the sustained growth of iPhone sales was important for the company’s terrific financial performance over the past few years. IPhone has a very powerful brand personality, which has already created a loyal customer base. These loyal customers prefer only Apple products in all the product categories in which it is available. Because of this loyalty, the cost and efforts involved in attracting newer prospects is much more as compared to retaining the existing ones. It is also seen that due to the popularity of Apple’s iPod, iPad and the Mac Book, the number of customers who are switching from other smartphone brands are also increasing. The biggest strength of iPhone is that it is perceived as an innovative and technologically advanced product.
Weakness: The biggest weakness of the iPhone brand is its high price, which alienates a huge potential market of low-end mobile phone buyers. Another major problem is the technical issue that is related to the smartphone, iPhone is known to have some major problems in the past related to its antenna, faulty screens, battery, in-built applications and physical defects. Although the company has successfully replaced all the faulty iPhones, it still creates a bad reputation for the company. Another problem is the constant patent war that is going on between Apple and Samsung, which has resulted in several court trails and negative publicity. Also, there have been reports of fall outs between the company’s overseas contractors with their local workers, which have resulted in several production delays and backlogs.
Opportunities: The biggest opportunity for iPhone5 would be to penetrate the large untapped markets of China and India. The huge middle class of both the countries present a great opportunity for the tech giant. Apple can introduce financing scheme and seasonal discounts in such markets, where the customers prefer some additional incentives from the company. Such strategies would strengthen the product’s band image as the consumers will feel that Apple is supporting them in fulfilling their aspirations. Another opportunity for iPhone would be to market some of the Unique Selling Propositions (USPs) of iPhone 5 such as retinal display, iOS 6, best in class camera, music quality and millions of application available for download via iTunes. It can make use of the tremendous potential of social media, by aggressively marketing iPhone 5 through its official iTunes and App store pages on Facebook and Twitter respectively.
Threats: Apple’s iPhone 5 is operating under monopolistic competition market structure. A market structure, where there are several companies in the market selling differentiated products to the customers. However, these competitors do not differ a lot in terms of price and product features. In fact, competitors such as Samsung and Sony, through their Galaxy S3 and Xperia Z, are offering products that are at par with iPhone 5 and even cheaper than it.
The biggest threat for iPhone 5 is losing its market share to Samsung and Sony.
IMC Objectives based on the above analysis
In order to create a specific IMC plan, it is very important to set the objectives that can act as guide for the development of the IMC Plan (Duncan and Ouwersloot, 2008). Objectives refer to what the marketers want to achieve for the brand and where they want it to be at some point in the future. Based on this, the following three objectives can be set for iPhone 5:
IMC Objective 1- Creating a powerful brand image: This is a communication objective, which needs to be reinforced in the minds of its target customers by developing a powerful brand message. Marketers at Apple can use Hierarchy of Effects model –AIDA (Awareness, Information, Desire and Action) and Think/Feel/Do model to analyse the consumer’s response levels (Duncan and Ouwersloot, 2008). The hierarchy of effects model assumes that a customer has to pass through stages of steps for the brand message to achieve the desired purpose and response. On the other hand, Think/Do/Feel model assumes that consumers can choose different paths to decide their buying behaviours. This objective evolved from the fact that Apple is considered as an iconic brand today, and the company must use this to its advantage while marketing the iPhone5.
IMC Objective 2- Thrive on the brand loyalty and create a competitive advantage: This is a behavioural objective and it has been selected because Apple consumers are brand loyal to a large extent and they tend to relate themselves to the brand. For some, having an iPhone is like a status symbol. The company needs to take advantage of this situation and develop a marketing campaign accordingly. It needs to target the loyalists, and with this, the company needs to carve a unique competitive advantage for its brand. A sustainable competitive advantage is an advantage that iPhone 5 would have relative to its rivals, Galaxy S3 and Xperia Z (Duncan and Ouwersloot, 2008).
IMC Objective 3- Penetrate new markets and selected customer segments: This is both a communications and a behavioural objective. This has been selected owing to the fact that Apple needs to develop its brand message as per the attitudes and behaviours of its target customer. For iPhone5, Apple has selected two markets segments (as mentioned above), and these segments have been further divided into different sub-groups. These sub groups need to be targeted by an appropriate and precise brand message, a message that resonates with their needs and wants.
Apple is a brand that is superior to its competitors. It has a loyal customer base. Apple’s marketing campaign, over the past several years, has been lauded by both critics and public. Based on the previous IMC campaign of the company, we can say that it is important to have one voice and a message that is clear for its customers to interpret and understand. Based on the above study, we can infer that Apple needs to aggressively market its iPhone 5 with a well planned IMC strategy. It must organise a well planned rollout schedule for the smartphone by using media vehicles such as press conferences, rumours, social media and print advertisements. There is an annual press conference organised by Apple, where the new products are unveiled and introduced for the first time. Apple can use this press conference as a base to launch its iPhone5. Finally, it must also create a unique brand message that resonates in tune with its target audience.
The brand message can be “Own an iPhone 5, own the whole world” or “I am iPhone 5, I am all that you need”.
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