Apple iPhone PPT

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Apple Inc’s iPhone: Group# 5: Sushan Rungta (08EM-048) Deepanker Agarwal (08EM-014) Sumit Agarwal (08EM-045)

Transcript of Apple iPhone PPT

Page 1: Apple iPhone PPT

Apple Inc’s iPhone:

Group# 5:Sushan Rungta (08EM-048)

Deepanker Agarwal (08EM-014)Sumit Agarwal (08EM-045)

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Issues:

• Rational To Enter in the competitive Mobile Market

• Challenges while entering the Crowded Market• Issues and challenges in pricing a product or

service (pricing decisions, premium pricing, market skimming, etc).

• Consumer Reaction to reduction in prices• Reaction from Consumers in Europe and Asia.

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Introduction

• Apple’s entry in the Mobile Phone Market– Announcement: January 2007– Launch: 29-June 2007

• Hype about the product• Consumer Behavior used to mould Marketing

strategy• Enormous Sales Initially• Large Prices cuts to sustain sales later

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Issues:

• Rational To Enter in the competitive Mobile Market

• Challenges while entering the Crowded Market• Issues and challenges in pricing a product or

service (pricing decisions, premium pricing, market skimming, etc).

• Consumer Reaction to reduction in prices• Reaction from Consumers in Europe and Asia.

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Rational

• “Transform from Computer Manufacturer to full fledged manufacturer of consumer electronic goods”

• “APPLE COMPUTERS” TO “APPLE INC”

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Issues:

• Rational To Enter in the competitive Mobile Market

• Challenges while entering the Crowded Market• Issues and challenges in pricing a product or

service (pricing decisions, premium pricing, market skimming, etc).

• Consumer Reaction to reduction in prices• Reaction from Consumers in Europe and Asia.

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Challenges while entering the Crowded Market

• BREAKING THE SEGMENTS AND CATEGORY BARRIER- RAISING CONSUMERS EXPECTATIONS AND NEEDS

• Tech Savvy and Rich User, a growing and emerging segment

• iPhone was a segment creator

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Differentiation

• 3.5 Inch Screen an industry First.• Software development for iPhone, Open-

source.• Very fresh and responsive touch screen

response.• Tie-up with AT&T to provide plans for

unlimited data-transfer.

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Launching iPhone

• Generation of a lot of excitement among consumers

• Slowly released the details of the product• Word of Mouth Marketing• Tons of Free Publicity• Videos of Demos on YouTube and other social

sites• Teaser of iPhone

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Market Entry- Jobs Perfection

• Steve Jobs Focuses on Consumer need of the hour

• “What Jobs does is he focuses like a laser on what makes the thing cool, they keep the fervor up. They are very good at managing demand and keeping people excited”

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The Marketing & Product Concept

• Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features

• Product delivers the desired satisfactions better than the competition

• Marketing objectives:–Profits through customer satisfaction

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The Marketing & Product Concept.. Applied

• “One of the intelligent things they have done with their advertising is they understood they didn’t need to let the advertisement get in the way of the product… The product itself in innovative enough that demo-ing it on the ads is enough to generate excitement”

• Launch Advertisement

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Result

• Apple “Fans- not customers” queued outside stores to buy the product as soon as it was launched on iDay, the Launch day of iPhone

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Issues:

• Rational To Enter in the competitive Mobile Market

• Challenges while entering the Crowded Market• Issues and challenges in pricing a product or

service (pricing decisions, premium pricing, market skimming, etc).

• Consumer Reaction to reduction in prices• Reaction from Consumers in Europe and Asia.

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Premium Pricing

• Production constraint led to High Price and sent a message that this phone is for the cool, high heeled who have to have the best.

• Apple moped up almost 150 M $ excess due to premium pricing at $599 instead of actual $ 399

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Why not Cheap Price earlier

• Rationale– Production Capacity of 150,000 a month– Production was constrained and Demand would

exceed supply– Cheap price could have increased demand many

times and consumers would have been disappointed and left to never come back.

– Apple would have got bad name for misjudging the demand (PR Fiasco)

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Price Reduction after 2 Months..

• By holiday season the manufacturers were ready with to meet Apple’s Demand.

• With Production increased 3 times production capacity Apple decided to cut the cost of iPhone to $399 ie by 33%.

• Also iPod Touch was to be launched with similar features so company did not want to face any ambiguity about the pricing of the product. And give consumers full freedom to choose iPhone or iPod Touch.

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Issues:

• Rational To Enter in the competitive Mobile Market

• Challenges while entering the Crowded Market• Issues and challenges in pricing a product or

service (pricing decisions, premium pricing, market skimming, etc).

• Consumer Reaction to reduction in prices• Reaction from Consumers in Europe and Asia.

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Consumer Behavior or Reaction

• What kind of response will customers give to the Price Cuts?

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Really Bad Reaction

• “Apple screwed you: So now what?” Unofficial Apply Weblog

• “Some early iPhone buyers irked; others have no regrets” USA Today

• “Apple cuts price on top iPhone, angering some early buyers” The Boston Globe

• “iPhone owners crying foul over price cuts” New York Times

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Apple’s Remedy

• Steve Jobs wrote a letter explaining the price cuts.

• Those who purchased the product in last 14 days could refund the balance under Apple’s exchange policy.

• Credit of 100$ to purchase any other Apple product

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Remedy-A partial Healer

• Robbie D, one of the first customers say "I called AT&T said I was not happy after standing in line with my wife on the 29th so we could get 2 of them only to have it cost $ 400.00 less 66 days later. They said sorry and gave me a $100.00 per line credit!"

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Credit Voucher? No Refund?

• A president of a Technology Consulting firm said

“ A 100 $ credit could be perceived as adding insult to injury. It’s a way to make you go and buy something else, and gives company a chance to make more money”

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Successful Relationships

Customer Value

Customer Satisfaction

Customer Retention

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Scenarios for Apple’s iPhone

Should Apple have drastically cut down the price of the iPhone?

MIXED RESPONCES-NO CONCUSIVE POINT

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Issues:

• Rational To Enter in the competitive Mobile Market

• Challenges while entering the Crowded Market• Issues and challenges in pricing a product or

service (pricing decisions, premium pricing, market skimming, etc).

• Consumer Reaction to reduction in prices• Reaction from Consumers in Europe and Asia.

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Consumers in Europe

• Initially iPhone seemed like a success in Europe, Sold 330,000 units in 2 Month in 2007

• However, European legislation does not allow tying up with a single carrier for a handset.

• Users compelled to contract with one service provider for 2 years

• Also European customers were accustomed to any phone any network choice

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• The post sales revenue of iPhone was not impressive.

• The sales started dropping due to: – Premium Price– Carrier Exclusivity– Lack of 3G Capability

• Apple again reduced the prices and planned a 3G Version

Consumers in Europe

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Consumers in Asia

• Bharti Airtel got 200,000 queries• Vodafone got 100,000 queries• However, the success is limited due to the

binding contract with the service provider and the premium pricing

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Phone Unlocking

• Apple lost close to 300-400 M $ with every 1 Million phones being unlocked.

• Unlocking was due to the customer being forced to be with one service provider.

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Consumers Behaviour They REACT not ACT

Companies Actions Consumer Behavior or Reaction

Announcement of Launch AnxietySocial Media Marketing CuriosityTeaser Advertisement Awaiting for the productProduct Concept Innovation is always welcomeProduct Demo Advertisements Inquiring about the productLaunch Day Lines outside Apple StorePremium Pricing Cool, Tech Savvy Customer buys

Price Drops Consumers feel cheatedBinding on Service provider (Europe) Unlocked Phones in Market

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Thank you