Iphone_Segmentation

Principles of Marketing Individual Essay by Pan An Simone Segmentation, targeting, differentiation and positioning Describe and evaluate critically the segmentation, targeting, differentiation and positioning strategies adopted by Apple for its new iPhone 3GS. Rome, 16 November 2009 EXECUTIVE SUMMARY/ABSTRACT In this individual essay the Segmentation, Targeting, Differentiation and Positioning marketing adopted by Apple Inc.’s product “iPhone 3GS” are going to be analyzed and evaluated. INTRODUCTION Apple Inc. is a well known IT company, specialized in the production of Operative Systems, Computers, MP4s, Computer gadgets and Mobile Phones with its headquarter at Cupertino, in the middle of Silicon Valley, California. The beginning of the company starts on the 1st of April, 1976, founded by the company’s CEO Steve Jobs and Steve Wozniak. Apple has been well known in the first 80’s by Macintosh computers, at present associated with famous “iPod”, multifunctional mp3 player and its online music store named “iTunes Store”. iPhone is one of the latest Apple’s creation which is a mobile phone equipped with an inside iPod, an Internet web browser, a camera, multi-touch screen, the possibility to access thousands of applications and many other features. Apple Inc. has reached three generations of iPhones so far since the start of the production of the good. The first named iPhone, second generation named iPhone 3G and the last, present in the current market, iPhone 3GS. A great deal of improvements between these three products were made concerning the speed of the device, the product efficiency and material quality, leading to the ultimate Apple creation, the iPhone 3GS ANALYSIS AND DISCUSSION iPhone surely has catched many customers’ attention for its features but in the marketing point of view, how was evaluating what group of customers to target taken place' Market Segmentation Markets consist of buyers, and buyers are all different from one another, according to their personal needs, wants, buying attitudes and many other factors. Companies use Market Segmentation to divide large markets into smaller segments, focusing on giving efficiently and effectively products and services that match customers’ needs. In this section, Apple’s major bases for segmenting the markets are going to be analyzed. Segmenting consumer markets is dividing and focusing specific consumers characteristics and environments to find the best way to view the target market. This consists of the major geographic, demographic, psychographic and behavioural variables Geographic segmentation is dividing the market into different geographical units such as nations, regions, states, countries, cities or neighbours. Apple retailers, also called “Apple Store” are present in the major cities of the world including New York, San Francisco, Los Angeles, London, Paris, Rome, Tokyo, Singapore, Hong Kong and many other metropolises in the World. These Apple stores are located in shopping malls and on famous, high population density streets. Taking one example in New York the Apple store is located in the Fifth Avenue, one of the major street in New York, opened 24 hours a day “where the city never sleeps”. The stores offer opportunities to consumers to try the iPhone 3GS placed in tidy stands. Here customers are identified as the opportunity of actually trying the product can make them perceive the value of the product. Demographic segmentation is dividing market variables based on age, income, occupation and generation. iPhone 3GS is an intuitive device which offers a high number of applications, including games, therefore young age 15 to 30 are surely targeted. More over, the device is a web browse, email explorer and GPS maps. All these features are targeted to a young to middle aged group of consumers who need web browsing, managing emails and finding the ways for example, to the work place. On the other hand, as the iPhone 3GS is a new generation product, with new technological methods, previous generation of people may find the product difficult to use. iPhone 3GS minimum price 16 Gigabytes in Italy is €599. It can be characterised as a luxury good as the price is relatively high to be a smartphone. Income segmentation divides buyers into groups based on the levels of income. iPhone 3GS is targeted to high income customers who are willing to purchase a relative high pice, which can give them a sense of satisfaction as the price makes the product “unique” and “exclusive” to the eyes of consumers. Psychographic segmentation divides buyers into different groups based on social class, lifestyle or personality characteristics. iPhone 3 GS appears to be aimed at high social class customers not only for the relative high price for a mobile phone but also for the elegant look of the phone. iPhone has been seen in hands by a large number of celebrities and this also gives customers a feeling of “exclusivity” to have a same phone as his/her favourite celebrity has. Behavioural segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. iPhone 3GS is a high technological product, potential customers are those who seek a fast device in which functions are intuitive. Targeting Marketing In this section, how many segments and which segments, in terms of quantity and size of the market are going to be analyzed. The segment size, growth, segment structural attractiveness and company objectives and resources are the three factors that Apple Inc. must look. iPhone is targeted and located in the smartphone, new generation touch screens mobile phones. BlackBerry and Palm are competitors who were present in this market before iPhone entrance in the market. The market of smartphones is rising; according to Mr. Carton, Director of Research at ChangeWave Research, a full 39% of consumers now own some kind of smartphone. Compared that with last summer, when the smartphone market was just cracking 25%. At the moment Blackberry is leading the market with a 40% market share over Apple’s iPhone 30% market share. The good news for Apple is that BlackBerry smartphones appear to be loosening in the market share as on the graph in the Appendix 1 shows an increasing trend in the market share line for Apple, with its major competitor BlackBerry appearing to be steady on the 40% market share after 6 months. Apple’s iPhone 3GS is a product which has decided to target few market segments, Young and Adult middle aged consumers who have a high level of income and are targeted to large, increasing in size markets. This type of targeting a market is called Concentrated marketing (or niche marketing). Apple’s aim in using this target market is to gain as much revenue as they can offering the iPhone as it targets to specific group of customers, users of smartphones, which are having a positive increase in demand over the market as shown in the Appendix 2. Their objective are to achieve higher sales and a strong position within its market segment because of its greater knowledge of consumers needs, using specific promotion techniques and marketing research to target more efficiently to consumers that can serve best and most profitable. Differentiation and Positioning After deciding which segments of the market it will target , the company must decide on a value proposition- concerning the product about creating differentiated value for targeted segments and what positions it wants to occupy in the segments. A product’s position is what the customers perceive about the product in the consumers eyes, in other words is the place the product occupies in consumers’ minds relative to competing products Whether Apple’s iPhone is the first mobile phone in the most of consumers’ minds is still hard as it is a new product and many other mobile phones dominated the market before it. The graph above, APPENDIX 3, shows a perceptual positioning map showing consumers perceptions of the brand versus competing products on important buying dimensions. The y-axis represented the price of the mobile phones indicated in Euros (€) and the x-axis represent Luxury versus Performance. The position of each circle on the map indicates the brand’s perceived position and the size of the circles shows the brand’s relative market share. iPhone is more orientated towards performance even though it still is a luxury product. What Apple want to target is customers who seek a mobile phone device in which wherever place you can log on the internet, check your emails and use the GPS. iPhone targets to high income customers therefore the price is highest than its competitor. By contrast, Blackberry has a relatively higher market share, its more orientated towards luxury and the price is targeted to lower income customers. To build profitable relationships with target customers, marketers need to understand better customers than the competitors do, what the new iPhone 3GS offered to customers is many new features such as a built-in compass, vocal commands, battery which lasts longer and the expansion of memory. Even though this has explained why the price of the product has increased more from the previous generations of iPhones but benefits are made into it and make the product worth of purchasing. The exterior changes brought by Apple to make the iPhone better looking than the previous iPhone it differentiates from competitors, gaining competitive advantage. The full positioning of a brand is called the brand’s value proposition: the full mix of benefits upon which the brand is differentiated and positioned. It’s the answer to customers questions: “Why should I buy your product'” Apple’s iPhone has made a great deal of improvements in the past two generations and the production cost has clearly risen too as new technologies were built in as to cover the increase of the cost they also increased the cost of selling it. ‘More for more’ is the concept involving charging a higher price to cover the higher price of the good. They want to give customers the latest technologies possible to give satisfaction to them. But on the other hand, economic crisis may lead into a decrease in demand for the product as purchasing power is damaged, leading to a oversupply of the product. Positioning statement To young and middle aged smartphone consumers who seek the latest generations of mobile phones. Apple’s iPhone 3GS is the mobile phone which gives you the ultimate portable web browser, a powerful MP3, GPS, Video Recorder, and a Game console, all in the tip of your fingers. With iPhone 3GS all the fun and the entertainment are inside of your pockets. CONCLUSION AND RECOMMENDATIONS iPhone 3GS target market are customers among the age of young and adult 15 to 40 but what Apple, in my opinion, should really focus on is expanding the target market by lowering the price of the product. Many consumers would want to purchase the product but with the price so relatively expensive, and with the conjuction of the economic crisis, it makes it difficult for a large number of people to purchase the product. What I would finally recommend to Apple is to adopt a “More for less” positioning strategy to decrease the price while offering more technological improvements to “boost” customers interests towards the product and increase sales. iPhone 3GS is a product reflecting the newest technologies present in the hi-tech world. It’s still not is at the top of smartphones market share but the blackberry market-share loosening propounds to have positive effects in terms of profits and market-share. APPENDIX 1 APPENDIX 2 APPENDIX 3 REFERENCES/BIBLIOGRAPHY http://www.nyc.com/shop/apple_store_fifth_avenue.635813/editorial_review.aspx accessed on the 14th November, 2009 http://www.tuaw.com/2009/10/28/apple-iphone-closing-in-on-blackberry-market-share/ accessed on the 15th of Novembre, 2009 Prices extracted from http://www.expansys.it/ accessed on the 15th Novembre, 2009 ‘Principles of Marketing’ Fifth European edition; Philip Kotler, Gary Armstrong, Veronica Wong and John Saunders. Prentice Halls, Financial Times.