Apple-iPhone in Korea

8/14/2019 Apple-iPhone in Korea

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Group Members

Risma1

Tri Tunggal2

Yogi3


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Companys (Apple ) Introduction

Founded In April 1st,1976 by Steve Jobs,

Steve Woznaik , & Ronald wayne.

Headquarters :- Cupertino California ( USA )

Industry - Computer software, computerhardware, consumer electronics.

Laptop, Xbox, Ipods, Monitors are the major

products of Apple Inc.


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Apples Products

Apple TV

Monitor

Ipod

Laptops

Tablet Pcs

Handy Cam
http://images.google.com.pk/imgres?imgurl=http://watchitguide.net/guide/wp-content/uploads/2009/09/apple-tv-2.jpg&imgrefurl=http://watchitguide.net/guide/2009/06/12/apple-tv/&usg=__vUHgXml08jMJxQ3TZiLk_DVqvow=&h=406&w=400&sz=28&hl=en&start=40&tbnid=GR3oh7WTElJXWM:&tbnh=124&tbnw=122&prev=/images%3Fq%3DApple%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D20http://images.google.com.pk/imgres?imgurl=http://www.innosight.com/blog/apple_tablet.jpg&imgrefurl=http://www.innosight.com/blog/archives/2009-07.html&usg=__-AkuKWmOzMMoAoyNPIgQ6L1H8F4=&h=306&w=450&sz=31&hl=en&start=1&um=1&tbnid=g3aSWlpof9I1lM:&tbnh=86&tbnw=127&prev=/images%3Fq%3Dapple%2Btablet%26hl%3Den%26sa%3DX%26um%3D1http://store.apple.com/us/product/TW396LL/A?fnode=MTY1NDA5NQ&mco=MTMwODI2MzMhttp://images.google.com.pk/imgres?imgurl=http://img.alibaba.com/photo/11640229/Apple_Laptops.jpg&imgrefurl=http://onestopcomputerz.blogspot.com/2007/08/apples-laptop-market-share-climbs.html&usg=__0ICwgw9YFDf-M8qAea4doaGHi9k=&h=283&w=400&sz=14&hl=en&start=1&um=1&tbnid=IKEbvsP-xUc8pM:&tbnh=88&tbnw=124&prev=/images%3Fq%3Dapple%2527s%2Blaptop%26hl%3Den%26um%3D1http://images.google.com.pk/imgres?imgurl=http://www.gizmodo.com/assets/resources/2006/10/ipod_red_3shot.jpg&imgrefurl=http://www.executiveedgenews.com/2006/08/&usg=__lJs1RAnt1iZoaD4O_CoumKqqcLY=&h=364&w=520&sz=36&hl=en&start=5&um=1&tbnid=1ghiVE7FWHmj4M:&tbnh=92&tbnw=131&prev=/images%3Fq%3Dapple%2527s%2Bproduct%26hl%3Den%26um%3D1http://images.google.com.pk/imgres?imgurl=http://blogs.pcworld.co.nz/pcworld/products/product-20in.jpg&imgrefurl=http://blogs.pcworld.co.nz/pcworld/products/2007/08/apple_releases_new_imacs.html&usg=__b0M-VFyk3DQXcAcqR9KubKhWF-k=&h=226&w=237&sz=16&hl=en&start=128&um=1&tbnid=N-Qf9uB-Mev4hM:&tbnh=104&tbnw=109&prev=/images%3Fq%3Dapple%2527s%2Bproducts%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D120%26um%3D1


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Product In Focus

Apple iphone


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Situational Analysis

Competition Situation There are 19260 cell phone producer in the world, but there are

more than 15 big companies competing at the world level Market.


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Products Information

small & Lightweight device

Beautiful Designing & colors

Multifunctional Device

wide touch screen, Camera, Bluetooth,Wap Browsing ,MMS, Email, GPS &Messengers

officially went to sale on June 29, 2007

Selling Record 146,000 units within thefirst weekend of launch.


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Target Market

Primary customer targets is the middle-upper income professionals to coordinatetheir busy schedules.

secondary consumer targets are highschool, college and graduate students

who need one portable multifunctiondevice.

Mainly this market will be replacing theiriPod and cell phone with the iPhone

primary business target is to partnerwith large cell phone service providers,

AT&T, Verizon, Sprint and Cellular One


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Intended Positioning

Customers get the total benefit as they

spend the money on the purchasing ofproduct

iPhone has captured the first position inthe minds of consumers

The iPhone will however be the #1touch screen phone because of theircreativity. Innovation n cool features.

A company that has the ability to letcustomers know about new products will

always own the mind of the consumer.


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What are some of the competitive force that have made the business

enviroment for Apple more complex in recent years

The threat of new entrants seems to be the biggest threat for iPhone because as South

Koreans are most likely to use mobile phones with the latest technology and features,they are more likely to switch phones. Thus, the customer switching costs and their

brand loyalty are very low, which makes it easier for new entrants to compete.

Moreover, the Korean Communications Commission has now opened this industry

(Ramstad et al, 2009), which makes it easier for foreign companies to enter the market.

Consequently, this will allow increasing competition. Another threat for the iPhone is the

fact that South Koreans are very quick in embracing new technology. Having done so,local companies will be able to compete with iPhone.

The threat of substitutes is linked with the threat of new entrants because their ability to

take up the latest technology might lead to cheaper substitutes, and the costs of

switching to substitutes seem to be low in South Korea.


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Considering the population of South Korea of 48 million people compared to phone

suppliers, the bargaining power of buyers seems to be low. However, this is

compensated by low costs to switch suppliers. Moreover, Apple might consider

selling iPhone through a local phone carrier, which is discussed later on. As the

South Korean phone network is driven by an oligopoly of three telecom

organizations, the concentration of iPhonesdirect buyers is quite high. Thus, the

bargaining power of buyers is also a threat Apple has to analyse.As the iPhones production settings are mainly based in China, the bargaining

power of suppliers is a less important threat for the company when launching the

iPhone in South Korea.

The intensity of rivalry is also a great threat for iPhone. Protection of local mobile

phone manufacturers helped home grown companies like Samsung and LG to sell

together about 90% of mobile phones in the country (Ramstad et al, 2009). With the

opening up of the industry, competition will increase and prices become morecompetitive. However, the low switching costs of consumers as well as a

differentiated product might be an advantage for iPhone when entering the market.


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5-Forces of Competition1. Consumers market

2. Corporate market

1. CarriersAT&T

2. OS

providers

Linux, WM

3. Hardware

makers

Intel

1. Establish

mobile

manufacture:

LG, Samsung

2. Software

giants: Google,MSFT

1. VoIPSkype

2. PDA phone

Palm

3. Features

phone

Nokia, LG

1. More

companies

enters

2. Strong

brands and

finance

Industry

RapidlyEmerging

Buyers

Weak

Suppliers

Strong

Rivals

Strong

NewEntrants

Threat

SubstituteProducts

Emerged


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Implications for the success of the

iPhone in South Korea

1. PoliticKorea entered many international organisations such as WTO, OECD, UN etc. (CIA, 2008). These arepositivepolitical factorsfor the launch of iPhone. However, the political situation of its neighbouringcountry North Korea is of high concern, particularly regarding its nuclear tests which are a threat to thecountry, and therefore might have negative implications

2. Economic

South Korea belongs to the twenty largest world economies.The economical growth was encouraged byclose ties between government and business sectors through direct credit and import restrictions (CIA,2008). The South Korean economy is highly concentrated on electronic and technological development.The mobile phone market is almost saturated. The phone network is driven by a clear oligopoly of threetelecom organisations (SK Telecom, KTF, LG Telecom) which provides clear restrictions for marketentries.

The country ranks 13thin its GDP purchasing power parity.

Although the rapid growth rate mitigated after the Asian Crisis (1997-1998), South Korea still embodiesan emerging market with high potential for growth (Kotabe et al, 2008).

The South Korean mobile phone market is highly influenced and characterized by its oligopoly of threemajor mobile phone network providers and the strong competition of mobile phone producers. Theimplications of this highly competitivemarket are a threat to Apple but can be conquered with the rightmarketing strategy.


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3. Social culture The South Korean cultureis characterised by its high homogeneity. Koreans strive for being up-to-date,

particularly regarding latest fashion and technology, and moreover inherit big brand awareness as statussymbols. Also South Koreas demographical factors are positive for the launch of iPhone, as the product

suits a majority of the population, but in return it also portrays a threat, as the product must tick all boxesof the high expectations towards mobile phones.

Native Koreans account for most of the inhabitants.

81% of the overall population of 48.6 million people are living in urban areas and 72% are aged between15 and 64 years (CIA, 2008).

4. Tecnology

The technologicalenvironment in South Korea is of high standard and is substantial for the mobile phone

industry, which accounts for one of the highest mobile phone penetration rates in the world. Moreover,the CIA (2008) points out the outstanding telecommunication networks and technologies, achieving thehigh standard required and appreciated by the South According to the CIA (2008), there are 45.6 millionmobile phones registered in the country, which portrays the high penetration rate. Korean population andits focus on innovation. Therefore, it is essential to offer a product which can keep up with the highstandard of the market in order to be successful.




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South Korea, a market dominated by two major players, Samsung and LG, carries a demand uncertaintythat should likewise be considered before launching the product. Regarding the market size and growth,the perspectives seem encouraging with a GDP per capita of $28,100, GDPreal growth rate 2.3% andan unemployment rate of only 3% for South Korea in 2008. (CIA, 2009). The Korean government raisedtrade barriers on smart phones to protect domestic manufacturers and this probably represents iPhones

major constraint for entering the market. The strategy used by the government made Samsung and LGthe second and third largest makers of cellphones by units in the world and it helped the country to

develop one of the broadest markets for cellphones. So, iPhone should consider facing a hard strife, andtailor the necessary strategies in order to win an important market share in the market.

Another issue that iPhone has to take into consideration is the legal environment that may seriouslydelay their entry to the South Korean market. There are a set of regulatory hurdles regarding thelocation-based services that iPhone provides for its customers (e.g. maps, direction finders) and that are

subject to government permission.As a last aspect that iPhone might consider before entering the South Korean market is the iPhoneclones that, in case these are not stopped from popping in the market, will considerably depress itsexpected sales, as it happened in China.




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Aspects to be considered before

entering the market

1. socio-cultural distance between home and host country :2. country risk/demand uncertainty,

3. market size and growth,

4. direct and indirect trade barriers

5. intensity of competition

Even if South Korea is home to leading hardware manufacturers, athriving computer-game industry and savvy technology consumers,Koreans are still happy to carry a mobile phone and an MP3 player asseparate devices instead of using a one-product-does-all device, and oneway for iPhone to outrun this gap regarding culture might be to stronglyrely on Koreans avidity for the latest and greatest trends in mobile

phone technology and their generally stable and large incomes. The Self-Reference Criterion can be a powerful negative force in global business(Keegan et al, 2008), and iPhone should not neglect it, otherwise theirmarket entry could be a failure.


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South Korea, a market dominated by two major players, Samsung and LG,carries a demand uncertainty that should likewise be considered beforelaunching the product. Regarding the market size and growth, theperspectives seem encouraging with a GDP per capita of $28,100, GDP real growth rate 2.3% and an unemployment rate of only 3% for SouthKorea in 2008. (CIA, 2009). The Korean government raised trade barrierson smart phones to protect domestic manufacturers and this probably

represents iPhones major constraint for entering the market. The strategyused by the government made Samsung and LG the second and thirdlargest makers of cellphones by units in the world and it helped thecountry to develop one of the broadest markets for cellphones. So, iPhoneshould consider facing a hard strife, and tailor the necessary strategies inorder to win an important market share in the market.


entering the market


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Another issue that iPhone has to take into consideration is thelegal environment that may seriously delay their entry to theSouth Korean market. There are a set of regulatory hurdlesregarding the location-based services that iPhone provides for itscustomers (e.g. maps, direction finders) and that are subject togovernment permission.

As a last aspect that iPhone might consider before entering theSouth Korean market is the iPhone clones that, in case these arenot stopped from popping in the market, will considerably depressits expected sales, as it happened in China


entering the market


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4Ps of Market

Apple iphone's Marketing

Mix


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Global product strategy

The first step Apple need to pay attention to is its global product strategy. Should the

company aim for a standardized or adapted product strategy? Adaptation of the iPhone means considering differences in customers needs in South

Korea. Consequently, appropriate changes are made to match local marketconditions (Kotabe et al, 2008, p.353). Apple also has to consider legal conditions inSouth Korea such as taxation. Adapting the iPhone to local needs will increasecustomer satisfaction but also leads to higher production costs.

The market is not only characterized by protection of local phone manufacturers

(Ramstad et al, 2009), but Apple must also carefully consider technological issuesnext to South Koreas unique environmental and marketplace conditions.Consequently, Apple should consider the product adaptation approach when enteringSouth Korea, taking into account local conditions and wants in order to boostcustomer satisfaction, and hence increase sales. They might modify the iPhone byaugmenting the core product and product attributes with localized support featuresthat cater local market conditions.

Samsungs and LGs smart phone sales have been limited due to high prices and the

lack of Korea-language software applications (Ramstad et al, 2009), although there isa high degree of English literacy in South Korea.

E.g. Apple might adapt the language or raise the ring volume so phones can be heardon crowded South Korean streets (Kotler et al, 2008), and offer shiny features tostick them on the phone etc.


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Having made the decision about its global product strategy, Applehas to decide on whether to enter South Korea with an advancedversion of the iPhone before launching it anywhere else. As aconsequence of stiff local competition, time might be a keysuccess factor for Apple when entering South Korea. The marketis almost saturated, and Apple will enter it late because it has

already embraced 3G technology. As South Korean consumers arequite tech-savvy and most likely to use mobile phones with latesttechnology and new features, they are very likely to switch mobilephones. Consequently, entering the market with an advancedversion of iPhone might create a competitive advantage for Appleand probably results in gaining market share more quickly.

Global product strategy


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Global pricing strategy

Kotler et al (2008) differ between two global pricing strategies/objectives:market skimming/financial objectives (Appendix B) and penetrationpricing/nonfinancial objectives. Penetration pricing may be used by Apple togain a market position in South Korea by setting a low price, and henceattracting a large number of buyers. Apple might consider penetrationpricing due to the intensive local competition from Samsung and LG in SouthKorea whose selling price for phones is almost twice as high as it is outsidethe country

iPhone is advised to respond to competitive and market conditions, andshould consider the geocentric approach in connection with penetrationpricing when entering South Korea, because this will enable Apple to quicklypenetrate the market and gain market share from its strong localcompetitors in the short term, and lends global competitive advantage whileApples global strategic objectives are supported rather than the objective ofmaximizing performance only in South Korea. Having gained a stable marketshare in the country, local costs plus ROI will characterize the iPhones pricein the long-term.


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Price

Reasonable Price as for as Features are concern

1. Apple iPhone 3GS 32GB 79,9902. Apple iphone 3G 16GB 56,000

3. Apple iphone 3G 8GB 49,0004. Apple iphone 8GB 35,000

5. Apple iphone 16GB 41,000

A good Resale Value

Their Prices justify the Products

Apple decided tolower the prices toensure theestablishment ofmarket dominancein as short of timeas possible


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Distribution strategy

Apple should rather consider selective distribution, which means using

more than one but fewer than all of the intermediaries who are willing tocarry (Kotler et al, 2008, p.325) the iPhone. This will allow Apple todevelop good working relationships with selected channel members andexpect a better-than-average selling effort (Kotler et al, 2008, p.325).Moreover, by using selective distribution, the market will be more coveredwith iPhone compared to exclusive distribution, and it will give the companymore control over prices and promotion than intensive distribution does.

Apple is advised to sign distribution contracts with approximately two tothree phone carriers in South Korea which enables to enter the marketprofitable and successful.


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Place

Available in More than 79 Countries for examplePak, India, America, Europe, Australia, etc

Online Purchasing from Apple Online Stores.

Only available In Major markets.

Have a proper Delivery networked channel.

Aiming for massive position worldwide at alldecent major retailers online.

Eye catching displays will be found at all

physical stores


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Promotion Strategy

Apple might decide to use nonpersonal communication channels such as

print media (newspapers) and broadcast media (television) to reach asmany consumers as possible. Although advertising and public relationswithin the marketing communications mix are more expensive than othertools, especially PR creates awareness and interest in iPhone before itslaunch. An original but tasteful TV campaign, that pays particular attentionto iPhones performance and design features, will finally lead to desire andaction (buying the iPhone) when iPhone is launched. Especially opinion

leaders will be affected by this communication. They will carry messages topeople who are less exposed to media, so that finally personalcommunication will be stimulated through word-of-mouth (Kotler et al,2008).

Furthermore, it has to be discussed whether to standardize or adapt Applespromotional strategy. Because advertising is based largely on language andimages, it is mostly influenced by the sociocultural behaviour of consumersin South Korea. As iPhone has no market share in South Korea yet and istherefore an unknown product, the company is advised to react to themarket, and adapt its advertising in a way that emphasizes iPhonesperformance and design features. Also language has to be adapted.Consequently, the initial high spending on its promotion strategy will pay offin the long-term because Apples global strategic objectives are supported.

However, standardization allows the realization of economies of scale inthe production of advertising materials, reducing advertising costs and

increasing profitability (Hollensen, 2010, p.606).


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Promotion

Apple promotes iphone through Internet,Print & Electronic Media

Sales persons working to guide theproducts features to the general public.

Building Good Relations with VariousPublics by Obtaining Favorable UnpaidPublicity

After sales service warranty

integrate our message of revolutionarycommunications and audio/visualexperience together in all of our media

advertisements

www.apple.com

Companys Website
http://www.apple.com/http://www.apple.com/


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Monitoring

The success of Apples market entry depends on its concrete goals and objectives. These will influence

marketing performance measures and standards.

Regarding its product strategy, possible market performance measures will be numbers of sales of itsadvanced model compared to other markets in which the iPhone was launched and compared tocompetitors (so far information available), sales growth rate within a certain time, market share gainedafter a certain time, percentage of total profits, return on investment, and by the monitoring criteria listedby Sargeant and West (2001):

the actual sales achieved against the budget,

the actual costs incurred against those budgeted,

the overall strategic direction that the organisation is takingi.e. will the overall corporateobjectives be achieved in a manner commensurate with the organisation's mission?

In terms of iPhones promotion strategy in South Korea, possible performance measures will be the

advertising effectiveness like the awareness level achieved, cost per contact with target audience,

sales per territory relative to its potential

Measures to control the performance of iPhones pricing strategy will be the response time of

competitors to iPhones selling price, margin structure relative to marketing expenses, margins

relative to channel member performance.


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Regarding iPhones distribution strategy, possible market performancemeasures will be sales, expenses and contribution margin of Applesdistribution contracts, percentage of stores carrying the iPhone/marketcoverage, sales relative to market potential of each phone carrier,percentage of on-time delivery, expense-to-sales ration of each partner,order cycle performance of each carrier (Hollensen, 2010).

If nothing else, the success of iPhones market entry can also be measured

by behavioural control such as reactions about the iPhone launch innewspapers etc.

Monitoring


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conclusion

Taking into account all the aspects debated, IPhones launch in South Korea will be profitable and

successful when :

Apple adapts iPhone to local market condition and customer wants to a certain amount, andintroduces an advanced version of its product,

chooses a geocentric pricing approach while penetrating the market with lower prices compared tocompetitors in the short term,

promotes the iPhone through PR before launching, and through an adapted TV campaign at thetime of launch while emphasizing on the products performance and design,

distributing the iPhone through two to three selected local phone carriers.

To which extend the iPhones entry into the South Korean market has been successful can be

monitored by regular control of output, like profits, sales figures and expenditures as well as bybehavioural controls.


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Apple-iPhone in Korea

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