Apples Entry into the Mobile Phone Market - Essay Example

Apple's Entry into the Mobile Phone Market Introduction: Much before Apple announced the emergence of iPhone on January 9, 2007 there was much anticipation and speculation in the global mobile phone industry. The mobile users all over the world were looking forward to this web-enabled multimedia smart phone designed and marketed by Apple Inc. The iPhone was first introduced in the US on June 29, 2007 and after almost a year on 11th July, 2008, the iPhone 3G was released which was a far advanced version of their earlier counterpart with 3G data speeds and Assisted GPS. There was a varying response in the European, American and Asian market after the launch of the iPhone. Faulty marketing strategy is what many consider as the core reason for its failure to draw the amount of customer it had targeted in the beginning. In such a situation the prowess of Apple's marketing strategy and the success of iPhone in getting a quantum hold over the market come into question. In marketing point of view, it can be conjectured that perhaps, Apple's strategy for iPhone in Europe and Asia has not been able to accomplish what it was supposed to. In my following statement I will discuss the merits and demerits of Apple's marketing strategy, where did they go wrong Their approach towards targeting Asian and European market is also a matter of concern now. The reason behind a global excitement centering the launch of iPhone: The entire wireless industry awaited the advent of iPhone in the market. There was an unrestrained buzz concerning its grand arrival. Since Apple's iPhone is among the few other internet-connected multimedia phones it generated umpteen interests among the mobile users all over the world. One of the major reasons for such a craze about iPhone is its trendy, sleek and modish look. Adding to the outer appeal of the iPhone these smart phones are endowed with advanced features like 3rd generation wireless networking. Apple's iPhone has also been able get the attention of the gizmo geeks who are tempted by its ultra-modern features which include portable media player and visual voicemail. Those who love to flaunt advanced mobiles are easily attracted towards its multi-touch screen and a minimum hardware interface. Besides having an in-built memory of 8 GB the iPhones also have a large screen of 3.5 inches and a striking display. The mobile users and the lovers of modern gadgets were more inclined towards iPhones owing to their endless features that were not available in other mobile phones. There is no denial of the fact that Apple's iPhones were richly added with most advanced features and most of the mobile users were eagerly waiting for its advent. To many, iPhone is a wonderful innovation which offers internet services like, web browsing, and local Wi-Fi connectivity. People started to think of it's a wonder machine which is a major achievement by Apple Inc in revolutionizing wireless industry. Delicate look of the iPhones and their intelligent features combine to make them irresistible among the mobile phone users. Their craze is perhaps much because of the prospect of owning something stylish rather than the interest of using a complicated gadget. Merits and demerits of the strategies adopted by Apple in launching iPhone: The craze for Apple's iPhones is attributable to the excellent marketing strategies adopted by the company. It can also be inferred that since Apple Inc emphasizes on the significance of innovation people all over the world expected to see something unseen and use something which was not known before. The USP of the product was undoubtedly its unique features and endless number of convenient services within that smart phone. It is also to be accepted that the marketing team of Apple strove hard to market their product in a most plausible way. Apple Inc was prudent enough to adopt Price Skimming method in the initial stages of its marketing. This is a marketing strategy in which Apple deliberately overpriced its products without bringing it down. Its tactics has helped iPhones to break through in to the market earning quick revenue, especially from those who went on purchasing the product early to maintain their status symbol. The policy of Price Skimming helped Apple's iPhones to expand its market and get a good hold on the mobile industry. Apple followed a well-nurtured policy to target those groups of mobile users who believe in using something innovative and different. The marketing team had done the groundwork by focusing on the fact that iPhones are gifted with features of email along with other web applications. Since it as quite new concept for the mobile users in most part of the world Apple tried to cash in this idea of bringing uniqueness in mobile phone industry. The strategists of Apple knew it very well that their emergence will be welcomed by the people since at that point of time mobile market was mature. The marketing process adopted by Apple saw much success due to the fact that it has been able to shift the paradigm in the mobile phone market. Another sensible marketing strategy used by Apple to sell its iPhones is announcing its entry into the smart-phone market almost six months prior to its actual launching. Preannouncement has a great impact on market anticipation. Apple, through this rare strategy created a commitment in the mind of its target customers. It was a part of its marketing strategy to announce the emergence of iPhones in January by which it tempted people to wait for the same. In this way it led to the freezing of the market. This also helped Apple in building anticipation and gaining brand equity. It was also a way of communicating with the consumers and asking them to wait for the iPhone. It is also considered that the company has utilized rumors to publicize the product that have ultimately increased its publicity. The marketing strategies have party contributed to the initial success of the iPhones in the global domain. But there is always a flip side of these merits. (Forbes, 2008) Despite the fact that Apple's marketing strategies have been quite a success, still there is no reason for the marketing team of the company to feel complacent. There had been many a loopholes in the marketing strategy adopted by this reputed American company. The market analysts believe that stubborn and one-track strategies of Apple are much to be blamed for its increasing discrepancy in the sales percentage of iPhones in Europe, America and Asia. The major strategic flaw of Apple is the iPhone pricing at market launch. It was almost an irreparable mistake on the part of Apple to reduce the retail price of iPhone from $599 to $399 in 2007. This discount of almost 33% and that too only after 3 months from the initial product launch was not at all accepted by its loyal consumers. The sense of being betrayed worked in the minds of those who were among the early buyers of such 3rd generation phones. The marketing strategists did not think about their faithful customers who supported them when they were following Price Skimming method. Another major mistake that can be traced in the marketing strategy of Apple is their forcing of the costumers to signing with AT&T (American Telephone and Telegraph) as the business model of sharing revenue. This is nothing but a wrong marketing strategy adopted by the marketing team of Apple. This can also be addressed as a greedy attempt to win quick bucks which did not happen in reality. The statistics showed the glaring truth that the sales started to slow down. Apple was left with only 2 million contracts with AT&T against the selling of 3.3 million iPhones in the US until the end of 2007. It hampered the smooth selling process leading to a somewhat contraction in their market share. It does not require much of intelligence that Apple failed completely in its marketing strategy when they decide to target US in the beginning and completely ignoring their prospect in European market. In this regard, it is to be noted that the iPhone was launched in the US on June 29, 2007, while it was only late in November that the product was launched only in 3 European countries which include UK, Germany and France. It will be confusing to understand the motive behind such an approach since only Western Europe has a population of 350 million which is certainly more than the whole of the US. Adding to their late emergence in European market, Apple stuck to its marketing policies used in the US and tried to apply them indiscriminately in all the European countries. They overlooked the fact that each European country has a different carrier. While there is O2 in the UK, Germany has T-Mobile and France has Orange. Moreover, it was only on July 11, 2008, more than a year later, the iPhone was launched in other European countries like, Italy, Spain, Switzerland, Netherlands and the Scandinavian nations. (Moco News, 2008) Marketing strategy that Apple should have adopted for European and Asian markets: A proper market survey was the elementary step that the strategists should have taken to understand the various pros and cons of launching iPhones in different European and Asian countries. The marketing team should have been more focused on understanding that Mobile habits in European and Asian markets are entirely different and a single policy cannot be adopted to meet success in the global arena. The marketing professionals of Apple should have segmented their markets according to the varying profiles of the consumers in both Europe and Asia. While smartphones like iPhone were relatively new in the Asian market, especially the idea of availing e-mail and service on the phones the European markets were more accustomed to this system. They are a more mature market as compared to that of Asia. Apple's exclusive sales strategy was not able to make a major impact mainly because of the softening demand for costly mobile phones in Europe. Moreover, the national markets of Europe have their own distinct natures. Apple should have formulated different marketing strategies to target its customers. They must have done the homework of designing their strategies in compliance with the mobile laws prevalent in different European countries. While the mobile users in Germany and France pay highly discounted prices for new phones in exchange of 1 to 2 year service commitments, the Italians do not get the phone at subsidized rate. More than 90 percent of the Italians have to pay for their service as prepaid clients and thus Apple's decision to make the users sign contracts with AT&T was binding for them. Apple should have opened up and made more attractive selling propositions. They have to understand that European countries were not that keen on owning the iPhone like that of the US. In order to penetrate the competitive European market only a high-end device will not serve the purpose. There timing of launching iPhones in the European countries can be considered bad since at that time there was a softening demand in the market. The marketing strategy will be appreciated if Apple proposes more flexible options to the European customers. To increase the momentum in sales they should try to find newer prospects in the EU without dropping the product's price in the US. It is much easier for the marketing strategists to market their iPhones in the Asian markets like except Japan as this innovative high-end phone is much more advanced in technology than the level of phones which the mobile users in Asian markets are accustomed with. The best way to reach the Asian customers is to cut down on the cost of their iPhones. Since most of the developing nations conglomerate to form the mobile market of Asia the marketing professionals should promote unlocked iPhone which was available for a much lesser cost. This policy might attract more Asian customers which will tempt them to replace their phones with more affordable Apple iPhones. Conclusion: Despite its initial craze in the market and success of Price Skimming strategy, there were many strategic blunders on the Apple's part. While Apple did a great job in designing this stylish and high-end phone, they failed to understand the differences in their targeted markets and the necessity to come out of their clichd marketing strategy to streamline their selling procedures. The decision of cutting down price within 3 months of its launching is the main reason why Apple lost most of its loyal customers. The late introduction of iPhones in European market is another vital reason for its failure to capture the Western European market. The emergence of these smartphones in the wireless industry might have led to the increased hype in the global market but apart from the US, Apple's marketing strategy failed to win faith of the European customers. In such a circumstance, the marketing strategists of Apple should strive to formulate more nation-based strategies than to have a universal strategy for all the mobile customers of the world. This is a competitive market for the wireless industry and in order to expand their hold in the global sphere Apple should be more focused on coming up with more attractive selling propositions for this technology product. It will be apt for Apple to realize that a single strategy that works in one country does not necessarily means that it will be a success in other countries. Apple's iPhones can see more successful avenues if they do a more concrete market survey prior to their emergence in the global markets. References Is Apple's iPhone Rollout Smart Business. Forbes. 2008. Retrieved from: www.forbes.com/2007/06/14/apple-iphone-microsoft-ent-sales-cx_kw_0614whartonmarketing.html on December 9, 2008 Is Europe Forcing Apple To Rethink Its iPhone Strategy. Moco News. 2008. Retrieved from: www.moconews.net/entry/419-is-europe-forcing-apple-to-rethink-its-iphone-strategy on December 9, 2008 iPhone: $599 to $399 - Where Apple Goofed Up. Tech Crunchies. 2008. Retrieved from: techcrunchies.com/iphone-599-to-399-where-apple-goofed-up/ on December 9, 2008 Read More