Marketing Mix Analysis of iPad Essay

Executive Summary Managing and developing marketing mix appropriately is extremely important to firm’s marketing and success. In order to marketing product successfully, the right product must be exhibited to right people at the right place, right price and right time. If a firm can manage the marketing mix successfully, as a result, it can be a source of competitive advantage for firms. Each element of the marketing mix should be analyzed and if necessary, adapted to ensure that the right balance is achieved to give the product or service the very best chance of success in the market place. Apple is a successful company and its previous product iPod has a high market share in the global market due to its brand perception and image as s high quality innovative brand. In 2010, Apple launched an innovative product – â€Å"iPad† in US, which is a tablet computer with touch screen. Even in the first launching date iPad had been sold 0.3 million units. The product no doubt is getting support of Apple’s brand image and it has changed the way to consumer lifestyle. That is why iPad is thought as a revolutionary who will arouse a wave to electronic industry. Apple’s iPad delivered the value to the customer via marketing mix tools called the 4Ps: * Product looks good and works well. * Right price. * Right place at the right time. * Successful promotion helps to a larger output. Apple followed this by innovation and introducing new products in the market to satisfy consumer’s needs and wants. The current author here will use the theories, concepts of marketing mix to analysis the iPad. The remainder of this essay is structured into five parts. It begins by defining marketing mix and its evolution. Second, it analyse the company, iPad, its competitor and consumer. Third, it illuminates the marketing mix by analysing iPad. Finally it ends with the overall assessment and conclusion. Contents 1.Introduction and Definition3 1.1Definition of Marketing3 1.2Definition of Customer Value and Value Proposition3 1.3Definition of Marketing Mix4 2.Description of Apple & iPad4 2.1Brief Introduction of Apple4 2.2Introduction of iPad5 2.3Brief Consumer Profile6 2.4Brief Competitor Profile7 3.Marketing Mix Analysis of iPad7 3.1Product7 3.2Price10 3.3Place12 3.4Promotion14 4.Assessment of Overall Value Delivered16 5.Conclusion16 6.References18 1. Introduction and Definition 2.1 Definition of Marketing â€Å"Marketing is the process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others and forging relationships with customers.† (Philip Kotler, Gary Armstrong, 2009). This definition recognizes the importance of creating a long term relationship with customers and identifies the importance of satisfying customer wants. 2.2 Definition of Customer Value and Value Proposition Customer value is the difference between the values that the customer gains from owning and using a product and the costs of obtaining the product. Put it simply, customer value is created when the perceptions of benefits received from a transaction exceed the costs of ownership. The same idea can be expressed as a ratio (Chiristopher, 1996): Customer value = Perceptions of benefits The definition of customer value proposition is a well defined and persuasive marketing statement related to a specific product or service that details the reasons why a consumer would benefit from purchasing it. A value proposition is the definition of a firm’s promise to create and deliver customer value (Chapelet and Tovstiga, 1998). Fig 1.2.1 A model of value creation and the marketing process source: Adapted from Kotler Brown Burton Deans Armstrong, (2010), â€Å"Marketing† 8th Edition Figure 1.2.1 shows a typical model of value creation and the marketing process. Put it simple, marketing is a process cycle which consists of 5 simple steps as below: i. Customer buys or potential customer is contacted to understand the marketplace. ii. Finding out how the customer liked the product or what is needed. iii. Analysing these data and creating a plan that includes goals, strategy and its marketing mix. iv. Implement the plan that delivers value to customer which results in the customer’s buying the product and creating customer delight. v. Repeating the cycle starting with step (i) to step (iv) to make a better product sold with a better plan and continuously keeping this cycle going. Hence, create profits and customer equity. 2.3 Definition of Marketing Mix The concept of the Marketing Mix was first created by Neil H. Borden in his article called â€Å"The concept of the Marketing Mix† in 1964. In his article he explained the importance of a market to try to â€Å"mix ingredients† in their process in the market in order to be successful. E. Jerome McCarthy later grouped these ingredients into the four categories that are known as the 4P’s of marketing (Product, Price, Place and Promotion). Product — What does the customer want from the product/service? Price — What is the value of the product or service to the buyer? Place — Where do buyers look for the product or service? Promotion — Where and when can get across the marketing messages to target market? 2. Description of Apple & iPad 3.4 Brief Introduction of Apple Apple Inc., founded in 1976, is an American multinational corporation which is best-known for its hardware and software products. The hardware products are: Macintosh, iPod, iPhone and iPad. One example of the famous software of Apple is iTunes, a proprietary media player application that works with iTunes store and allows customers to download music and offers other features of consumer electronics. Fortune magazine named Apple as the most admired company in the US in 2008, and in the world from 2008 to 2012. 3.5 Introduction of iPad On January 27, 2010, Apple introduced the much-anticipated media tablet, the iPad (As shown in Fig2.2.1). Fig 2.2.1 Introduction of iPad (source: www.apple.com) The iPad measure 9.7 inch wide screen display with multi touch screen with 1024 x 768 resolutions which is lighter and thinner than any other notebooks or laptops. Its internal 25 watt-hour battery can run up to 10 hours of video, 140 hours of audio playback and one month on standby as Apple claims. Steve Jobs stated that, with the introduction of the iPad, Apple had opened a market for a new class of mobile devices. (As shown in Fig 2.2.2) Fig2.2.2 Apple iPad First Hands-on (source: http://www.ipadforums.net) 3.6 Brief Consumer Profile Consumer market can be defined as â€Å"all the individuals and households who buy or acquire goods and services for personal consumption† and consumer buying behavior can be defined as â€Å"the buying behavior of final consumers, individuals and households who buy goods and services for personal consumption† (Kotler, 2009). Table 2.3.1 shows the analysis of market segmentation for iPad. SEGMENTATION BASE| SELECTEDSEGMENTATION VARIABLES| Geographic Segmentation| Region| West Malaysia, east Malaysia| City size| Major metropolitan areas, cities| Density of area| Urban| Climate| Hot, humid, rainy| Demographic Segmentation| Age| 18-34, 35-49, 50-64| Sex| Male, female| Married status| Single, married, divorced, living together| Income| RM40,000 and over| Education| College, college graduate, postgraduate| Occupation| Professional, white-collar| Psychological| Needs| Sense of self-worth, fashionable| Personality| Extroverts, novelty-seeker, aggressives| Perception| Low-risk| Learning-involvement| High-involvement| Attitudes| Possitive attitude| Psychographic| Lifestyle| Couch-potatoes, outdoor enthusiasts, status-seekers| Cultures| Malay, Chinese, Indian, and other foreigners| Religion| Muslim, buddhism, hinduism, christian, catholic, and others| Social| Middle, upper| Family| Bachelors, young married, full nesters, empty nesters| Use-Rated Segmentation| Usage rate| Heavy users, medium users| Awareness status| Aware, interested, enthusiastic| Brand loyalty| Strong| Use-Situation Segmentation| Time| Leisure, work, morning, night| Objective| Personal, fun, achievement| Location| Home, work, mega mall, restaurant| Person| Self, family members, friends, peers| Benefit Segmentation| Convenience, social acceptance, easy e-book reading, value-for-the-money, service| Table 2.3.1 Market segmentation for iPad From analysis above can see that most of Apple’s users are high-end clients who have the strong purchasing power, easily accept new technology and they are very loyal to Apple. 3.7 Brief Competitor Profile Apple iPad bring threats and impact to PC industry in some way. On one hand, the hot-sell of iPad attracts many PC manufacturers set foot in this field. So the other tablet computers will be the biggest competitor, such as Blackberry’s playbook, this is a tablet computer which located in business person, and it will also attract public’s eyes because of its vast multimedia function. On the other hand, the price advantage of netbook is also a challenge to iPad. After all compared with traditional computer, iPad may not a necessity. To some business and professional people, they will choose the traditional notebook rather than iPad. 3. Marketing Mix Analysis of iPad According to the information that searches from magazines and internet, the author knows many information of iPad. The author here will use the theories, concepts of marketing mix to analysis the iPad. 4.8 Product â€Å"Product means the goods-and-services combination the company offers to the target market. â€Å" (Philip Kotler, Gary Armstrong, 2009). The iPad bridges the gap between smart phone and laptop, it offers equivalent range of features and functions that a computer does. It has internet capabilities running on both Wi-Fi and 3G. Some of the features are discussed previously. Fig 3.1.1 shows its tech specs. Access to Apple Apps Store which has over 300,000 applications and to iTunes are attractive features of iPad. Fig 3.1.1 Tech Specs for Apple iPad (source: http://www.apple.com) Value delivered to customer: 1) Convenient to Carry and Easy to Use Compared to functionalities and performance, it is surprised that iPad weighs only 1.5 pounds. It is very thin and sleek measuring only 0.5 inches. This lightweight iPad is very useful for business trip, making it easy to transport as compared to a laptop. Not only it is easier to carry it around, but also be able to use it to check e-mails, show videos and photos to people instantly whenever required with its long battery life, which at 10 hours is 2-5 times longer than a notebook (As shown in Fig 3.1.2). Fig 3.1.2 E-mail and photo function for iPad (source: http://www.cnbeta.com) 2) Easy for E-Book Reading One benefit that can’t miss is the iBooks Application. Customer can download the favorite e-books to iPad and read while traveling (As shown in Fig 3.1.3). Fig 3.1.3 E-books on Apple iPad (source: http://www.telegraph.co.uk) Retrieving books to read on ibooks application on iPad is simply easy. Browse through the e-bookshelf on the iPad, choose one title wish to read and click, the book opens in front. Customer can view the book in portrait or landscape, and the way the pages flip is awesome – flip it with finger and looks just like a real book. 3) Excellent Service for Customer What’s more, the service of iPad is very nice. Apple has its own key service – iTunes. Customer can get this value to enjoy the all kinds of internet resources such as music, video and applications (As shown in Fig 3.1.4). Fig 3.1.4 iTunes on Apple iPad (source: http://www.ipadforums.net guardian.co.uk guardia guardia) The iTunes online store makes it incredibly easy to purchase songs and load them onto the devices. When customer wants to watch or listen, they neither need to search from the CDs nor television channels. What they need to do is just opening the iTunes, all they want is in iTunes, it let the media browse much faster, it is easier to sort. 4.9 Price â€Å"Price is the amount of money customers have to pay to obtain the product. â€Å" (Philip Kotler, Gary Armstrong, 2009). The iPad is priced starting from $499 for 16 GB storage to $829 for 64GB storage and 3G connectivity. In detail, tab 3.2.1 shows the price of iPad selling in Malaysia. iPad| 16G| 32G| 64G| Wi-Fi| RM 1, 549.00| RM 1, 849.00| RM 2, 149.00| Wi-Fi + 3G| RM 1, 999.00| RM 2, 299.00| RM 2, 599.00| Tab 3.2.1 Selling price of iPad (source: http://www.apple.com guardian.co.uk guardia guardia) Value delivered to customer: 1) Eco-friendly Device for Environment Protection The iPad is made of recyclable glass and Aluminum and the packaging material is recyclable & the packing is efficiently done. It is not using Arsenic, PVC, bromine fire, Mercury as the company has restricted the use of harmful chemicals. With such price, customers are not buying the fashionable device only, more importantly, they are making contribution to environment protection. Fig 3.2.1 shows how green is the iPad. Fig3.2.1 How green is the iPad (source: http://sortable.com) 2) Flexible Price as Actual Needs The iPad price varies according to its storage capacity and the internet access capacity, which leads to reducing the initial cost on the first ever tablets based on customer’s actually needs and application (As shown in Fig3.2.2). Fig3.2.2 Price and configuration of the iPad (source: http://www.apple.com) 3) Cost Saving with Maxis Bundled Package It is available on Maxis bundled packages with a 24-month contract based on different types of iPad internet plan (As shown in Fig 3.2.3). By doing so, the price of iPad has been dropped down from RM450 to RM950. The plan is much more attractive not only for those who can’t afford to pay for the high price, but also for some of the SME to extend their business. Fig 3.2.3 Maxis iPad Bundled Packages (source: http://www.maxis.com.my) 4.10 Place â€Å"Place includes company activities that make the product available to target consumers. â€Å" (Philip Kotler, Gary Armstrong, 2009). Apple started selling the iPad not only from its official websites, but also retail outlets and Apple Store. Value delivered to customer 1) Easy Walk-in Location for Purchase The iPad can be purchased from Apple Store, Apple Premium Reseller and Apple Authorized Reseller located in Malaysia. All shops are conveniently located and beautifully designed, identified by the large backlit Apple logo, such as in most famous shopping mall like Sunway Primary, One Utama, KLCC and Mid Valley in Selangor, even in Melaka, Penang, Sabah and Sarawak. The value is so easy for customer to come and have a journey on iPad (As shown in Fig 3.3.1). Fig 3.3.1 Apple shops in Malaysia In each shop, customer will be able to find dedicated Apple-trained and Apple-certified Mac experts who can come up with the right solution for you. 2) Time-Saving Online Order Apple iPad are also available on internet for the customers on Apple’s website. Online purchase is the easiest and time saving way for most of them (As shown in Fig 3.3.2). Fig3.3.2 Online Apple store for iPad (source: http://www.apple.com) On the website, the Apple explains the number of features and benefits of iPad. This adds the value to the consumers as convenience is a value that people appreciate and for which they will pay more than the actual price. 3) Golden Service for Apple Loyalty When customer are on the go, the Apple Store app is the best way to research, personalize and buy products from Apple and get the most out of customer’s visits to the Apple Retail Store for Apple loyal fans. Fig 3.3.3 shows what can do with the Apple Store app on the iPhone or iPod touch from search to pay. Fig3.3.3 Apple store apps for iPhone and iPod Touch (source: http://www.apple.com) 4.11 Promotion â€Å"Promotion means activities that communicate the merits of the product and persuade target customers to buy it. â€Å" (Philip Kotler, Gary Armstrong, 2009) Apple Company had been promoting the iPad with the help of social media campaigns and multi-channel media strategy. Value delivered to customer: 1) Multiple Channel for Better Understanding of iPad The online promotion by Apple on Facebook, YouTube and other related websites approaches to the consumers added more value to the decision of consumers of buying iPad. Same like in stores all the information is available online for customers. Customers can download brochure from its website for their convenience. When Apple announced the idea of iPad, most fans write blogs and share through internet. Customer will see them and many videos about iPad, some of them are made by Apple and some are made by other people. These blogs and videos are shared by many other people through many ways (As shown in Fig 3.4.1). Fig3.4.1 Video sharing about iPad (source: http://www.9to5iPad.com/) 2) Custom Engraving of iPad Apple had offered free iPad engraving from its online store, allowing customers to add a personal touch to the tablet in time for the holiday seasons (As shown in Fig 3.4.2). Customers are given the option to engrave up to 2 lines of free text on the back of an iPad after selecting an iPad model and any desired accessories from the online store. Fig 3.4.2 Website about iPad engraving (Source: http://store.apple.com/) 3) Free Delivery for On-line Purchase When purchasing the iPad online from Apple’s official website, customer will get the value of free delivery. Just wait for 3-4 business days, the product will be arrived on hand safely. 4. Assessment of Overall Value Delivered Apple has always placed a major emphasis on the marketing and the brand awareness of its products. The iPad’s advantage is that they offer several different features in one product. Converging all the new technology into one product is the route apple is seeking. It’s making life easier for their consumers by being able to conduct many applications in the one product. Apple’s iPad followed all the 4P’s of marketing mix to deliver the high level of value to the customers. The company has manufactured an iPad using strong in-built applications. The gadget permits people to work and entertain anytime anywhere, as a value of experiencing its easy and convenient use. It provides value to customers through a huge number of features which helps in saving time and energy. Adding more to customer value the price of iPad is competitive and flexible in the market as discussed above. It advertised on T.V., newspapers, magazine, radios and also on internet, which makes people have clearer understanding in various channel. It provides value by available at all the apple stores and website. From the iPad’s 4P’s analysis, we can easily see the difference of it, and can answer the question â€Å"why people buy it which seems unnecessary product.† Apple iPad satisfy their needs and this delivers the value as a product and service in terms of features, style performance, durability, quality, reliability and design to the customer. 5. Conclusion Apple iPad is a new product which has made a dent in the history of tablet business domain and the first successful product. This has also ignited the demand for new and improved tablets from Apple and other competitors. Apple has used the 4P’s of marketing in a very efficient and proper manner, so that added the value to the customer’s decisions of purchasing iPad. When Apple introduced iPad, they intended to come across the consumer’s wants and demands which would satisfy to their lifestyles. Apple in future which demands more innovative products and the company still need to adapt to expected changes in iPad which they have already started in their new iPad 2. With their experience, they are able to continue strengthen its position in the industry. 6. References 1. Philip Kotler, Gary Armstrong. (2009). Principles of Marketing. (7th Edition). Australia. Pearson. 2. Kotler Brown Burton Deans Armstrong. (2010). Marketing (8th Edition). Australia. Pearson. 3. Borden, N. H. (1964). â€Å"The concept of the Marketing Mix†. Journal of Advertising Research. Vol II 4. APDGT YAMAMOTO. â€Å"Understanding Customer Value Concept: Key To Success†. pp. 547-552. 5. Chapelet, B. and Tovstiga, G. (1998), â€Å"Development of a research methodology for accessing a firm’s business process-related technologies†, International Journal of Technology Management, Vol. 15 Nos  ½, pp. 10-30. 6. Apple Annual Reports, 2010 7. www.apple.com 8. www.maxis.com.my