PROJECT REPORT ON 4Ps OF IPhone AND ITS MARKET TREND

Executive Summary

The objective of the report is to know about the iPhone, its history, market trend of iPhone and the marketing mix of iPhone. The report also shows the future of the iPhone and its projected sales unit and revenue. In addition, the report illustrates the global smartphone market and its market shares.

The report finds out the declining market shares of iPhone in recent years. The rise of other smartphone manufacturers, ineffective marketing strategies and costly price of iPhone have led to the decline in iPhone’s sales. Despite being highly criticized for expensive product, iPhone managed to build a brand by providing innovative, high class and quality products. Every model of iPhones is highly favoured throughout the time of their release. iPhone has a high market share especially in the USA and China. However, in other parts of Asia and Europe, Samsung comes second to none. In addition, iPhone has made the best use of 4ps, Product, price, promotion and place. The perfect use of marketing mix has established iPhone as one of the best smartphone brands in the smartphone market.

However, in recent days, it is acknowledged that the marketing approaches of iPhone are being ineffective. This might be due to the change in customers preference and needs. Thus, to reign the smartphone’s market again, iPhone needs to come up with better marketing strategies; better management and implementation of 4ps. That is not enough, the company should focus on addressing the needs and preferences of the customers too. The company should also spend more on Research and Development (R&D), to come up with innovative and better products focusing the quality. At last but not the least, the company should be flexible with the price of the product to proliferate the sales and revenue.

Introduction

iPhone is a line of smartphones designed and marketed by Apple Inc. All generations of the iPhone use Apple’s iOS mobile operating system software. The first-generation iPhone was released on June 29, 2007, and multiple new hardware iterations with new iOS releases have been released since. Apple has released twelve generations of iPhone models, each accompanied by one of the twelve major releases of the iOS operating system. The first-generation iPhone was a GSM phone and established design precedents, such as a button placement that has persisted throughout all releases and a screen size maintained for the next four iterations. 

Mobile users today want their handsets to be converged devices handling multiple functions, entertainment being the most important among them. They want their mobile to be fully loaded with top-end features, but they want all that at affordable costs. iPhone contains all that features which people demand and iPhone meets the people’s expectations.

The Apple iPhone is easily the most publicized new mobile device in recent memory. This brand is strong among teens, as many say that they hope to buy it. If that does happen, it will be a kind of “first” in the cell phone market, because Apple isn’t likely to discount phones, leaving this to be one expensive status symbol.

We all know that iPhone is a big name in the modern mobile world, its applications and design are the key factors which tempt people towards it. The first-generation iPhone was described as “revolutionary” and a “game-changer” for the mobile phone industry. Subsequent iterations of the iPhone have also garnered praise. The iPhone is one of the most widely used smartphones in the world, and its success has been credited with helping Apple become one of the world’s most valuable publicly traded companies.

As of November 1, 2018, a total of more than 2.2 billion iPhones had been sold.

1.1 History

Steve Jobs, CEO of Apple, announced the iPhone on January 9, 2007, on stage at the Macworld conference. He spent nearly an hour explaining the device, extolling the virtues of everything from a touch interface.

 The phone didn’t come out until six months after that initial reveal, during which time Apple frantically scrambled to turn Jobs’ demo into a mass-market gadget. When it finally hit stores in June, people lined up outside stores to buy one. Apple sold 270,000 iPhones the first weekend it was available, hit 1 million by Labour Day, and instantly captured the imagination of phone owners everywhere.

The iPhone 3G, which came out a year later, may have been an even bigger deal. Apple’s 2008 iPhone included support for 3G networks, which offered much faster access to email and web pages, and it came at a much lower price. Most important, it added the App Store, which gave developers a way to build and sell software to millions of smartphone owners. The App Store will almost certainly stand as Apple’s most important contribution to both the tech industry and society in general, even more than the phone itself. Developers immediately began building apps and games that changed the way we communicate, work, eat, and play. The App Store made way for Instagram, Uber, and Tinder, and it turned the iPhone into the pocket computer it was always meant to be.

From there, the iPhone’s story is one of evolution, not revolution. Each year, Apple made the phone bigger and faster, refining the product without changing the basic form factor or its most beloved features. It became more popular every time. From the beginning, Apple seemed to know the camera could be a smartphone’s best feature: The iPhone 4, with its selfie camera and HD video recording, was the biggest thing in cameras since Kodak. Ever since, Apple’s cameras have been among the best in their class.

1.2 Research objective

  • To identify and analyse the marketing mix of iPhone
  • To know the consumption pattern of users
  • To identify the customers who use iPhone
  • To identify the behaviour of customers who uses iPhones
  • To study the perception of users towards iPhones

2. Literature Review

A literature review may be presented as a paper on its own, or it can be contained as an integral part of an article, research proposal, research report or dissertation. It describes, compares, contrasts and evaluates the major theories, arguments, themes, methodologies, approaches and controversies in the scholarly literature on a subject.  Literature review of the report on customer’s perception towards iPhone was done from different reliable resources like journals, periodicals, portals and articles.

Information about the iPhone and its history have been extracted from the journal ‘’product portfolio of iPhone’’ published in 20019. The journal shows the complete history of iPhone and its models. Moreover, it also predicts the future innovative designs of iPhone.

Similarly, according to the information presented in Ninth International Conference on Mobile Business and Ninth Global Mobility Roundtable (ICMB-GMR) in 2010 deals with the factor contributing the success of iPhone. It found out that the perfect mix of the 4ps of marketing aspects, innovative product with high class quality led to the success of iPhone.

Moreover, an article ‘’Global market share of apple iPhone’’ published on statisca.com in 2019 presents the declining market share of iPhone in recent years. It also discusses the reason for the downfall of iPhone. Rise of other smartphones, expensive product and ineffective recent strategies of iPhone are some reasons that led to the decline in sales of iPhone.

3. Research Methodology

The process used to collect information and data for the purpose of making business decisions. The methodology may include publication research, interviews, surveys and other research techniques, and could include both present and historical information. A research methodology or involves specific techniques that are adopted in research process to collect, assemble and evaluate data. It defines those tools that are used to gather relevant information in a specific research study. Surveys, questionnaires and interviews are the common tools of research.

Research methodology is applied on two important types of research process which involves basic research and applied research. Basic research includes the work or research that has not been done before. On the other hand, applied research involves the work that has already been done.

3.1 Types of Research Methodologies

Five types of research methodologies are explained below:

3.1.1Experiment

People who take part in research might be asked to complete various tests to measure their cognitive abilities (e.g. word recall, attention, concentration, reasoning ability, etc).  The results of different groups are then compared. The aim of these tests is not to judge people or measure so called intelligence, but to look for links between performance and other factors.

3.1.2Surveys

Survey is defined as the act of examining a process or questioning a selected sample of individuals to obtain data about a service, product, or process. Data collection surveys collect information from a targeted group of people about their opinions, behaviour, or knowledge. Surveys include collecting information, usually from large group of people, by means of questionnaires and other techniques such as interviews, online or telephone may also be used.

3.1.3Case Studies

In the social and life sciences, a case study is a research method involving an up-close, in-depth, and detailed examination of a case. For example, a case study in medicine may examine a specific patient a doctor treated, and a case study in business might study a business’s strategy. Generally, a case can be nearly any unit of analysis, including individuals, organizations, events, or actions.

3.1.4Participant and Non-Participant Observations

Participant observation means the presence of the researcher in the field interacting with people and local events (this interaction can have multiple zoom levels. Non-participant observation means non-participant observation is used to level out researcher biases in other methods and to reveal differences between what people say and what they do.

3.1.5Questionnaires

A questionnaire is a research instrument consisting of a series of questions for the purpose of gathering information from respondents. Questionnaires can be thought of as a kind of written interview. They can be carried out face to face, by telephone, computer or post.

Questionnaires provide a relatively cheap, quick and efficient way of obtaining large amounts of information from a large sample of people. Data can be collected relatively quickly because the researcher would not need to be present when the questionnaires were completed. This is useful for large populations when interviews would be impractical.

3.2 Data Collection

Data collection is the process of gathering and measuring information on variables of interest, in an established systematic fashion that enables one to answer stated research questions, test hypotheses, and evaluate outcomes. The data collection component of research is common to all fields of study including physical and social sciences, humanities, business, etc. While methods vary by discipline, the emphasis on ensuring accurate and honest collection remains the same.

3.2.1Primary Data

Primary data is collected by a researcher from first-hand sources, using methods like surveys, interviews, or experiments. It is collected with the research project in mind, directly from primary sources. It is the original source of information. The primary data are more reliable and have more confidence level of decision-making with the trusted analysis having direct intact with occurrence of the events. Primary data collection is quite expensive and time consuming compared to secondary data collection. In addition, primary data collection may be the only suitable method for some types of research.

3.2.2Secondary Data

Secondary data is public information that has been collected by others. It is typically free or inexpensive to obtain and can act as a strong foundation to any research project — provided you know where to find it and how to judge its worth and relevance. It is data collected by someone else for some other purpose but being utilized by the investigator for another purpose. Secondary data is used to increase the sampling size of research studies and is also chosen for the efficiency and speed that comes with using an already existing resource. Examples of secondary data are newspaper, book, article, journals, websites, etc. Most of the information in this report are extracted from trusted internet sites, journals, books and brochures and so on.

4.Main Body

4.1 Market Trend of iPhone

Imagine that the first cell phone has just been released. People are excited and confused by the idea of carrying a phone outside of their home. Few people have cell phones, and some are uncertain that they will become popular. Fast forward 20 years and the streets are dominated by cell phones. A couple years later, the smartphone takes over.

Look around you today, there are smartphones, tablets, and even watches that allow you to make phone calls. This change in the communication market is an excellent example of a market trend. A market trend is anything that alters the market your company operates in.

In order to keep your company ahead of the competition, it is important to utilize market trend analysis, or the process of evaluating changes to your market. Market trend analysis looks at how your industry started in the market, how it has grown, and where it is expected to go. For example, how cell phones first come about, how their popularity changed, and how manufacturers and retailers expect the market to change.

Despite being the top brand in smartphones’ market, iPhone’s market share remained as the 3rd largest in the global smartphone market in Q2 2019. Samsung maintained its top position, accounting for 23% of the global smartphone market share, followed by Huawei in second place, with 18% share of the market and iPhone with 11% share of the market in the same period.

Figure 3: Sales of iPhone 2009-2019

The global smartphone market is expected to witness more fierce competition as the dynamics of the smartphone industry is set to witness some significant changes in the coming years providing plenty of opportunity for current market participants to capture a larger share of the market.

Apple recently announced its Q3 earnings, showing the company’s iPhone revenue dropped. Despite this dip in revenue, Apple’s iPhone still holds the world’s 3rd largest market share among smartphones. Apple shipped 35.3 million iPhones in the second quarter of 2019, down by 14.6% from 41.3 million units one year ago. According to Apple’s announcement, the company generated a total of USD 53.8 billion revenue in Q3 2019, an increase of 1% from the year-ago quarter. Its quarterly profit reached USD 10.04 billion in the same period which was more than any other competitors.

Figure 4:iPhone’s Revenue 2015-2019

                                       Commenting on the Apple’s Q3 2019 earnings, CEO Tim Cook said: “This was our biggest June quarter ever — driven by record revenue from services, accelerating growth from wearables, strong performance from iPad and Mac, and significant improvement in iPhone trends. These results are promising across all our geographic segments, and we’re confident about what’s ahead. The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products.” For Q4 2019, Apple forecasts revenue will reach between USD 61 billion and USD 64 billion.

4.2 Marketing Mix of iPhone

Marketing mix is the set of tactics a business use to promote and sell its products in the market. These tactics range from developing the product, deciding its price and places where it will be sold, to deciding its communication and promotional strategies.

The tactics are further divided into 4Ps – Product, Price, Place, and Promotion. However, nowadays, the marketing mix constitutes several other Ps like Process, People and physical evidence as vital mix elements.

Apple Inc.’s marketing mix (4P) indicates how the company matches its business activities to the conditions of the global market for information technology, consumer electronics, and online services. A company’s marketing mix involves the strategies and tactics pertaining to the implementation of a marketing plan. The focus of the marketing mix is on the 4P variables, namely, Product, Place, Promotion, and Price.

In this business case, the marketing mix is specific to the technological nature of Apple’s business. For example, the company’s 4Ps encompass multinational operations in the consumer electronics market, the information technology market, the Internet services market, and the digital content distribution market. Such diversity in operations brings Apple Inc. in competition with a variety of firms, such as Google, Amazon.com, Samsung, Dell, Lenovo, Sony, and PayPal, as well as Microsoft, IBM and Intel. These competitors are known for their aggressiveness in innovation and marketing. As a result, Apple has a marketing mix that involves various strategies and tactics that correspond to the approaches of these other firms.

In developing its marketing mix, Apple Inc. uses an approach that focuses on premium branding. This approach involves capitalizing on the premium brand and ensuring that all the 4P elements support the maintenance of a strong brand image. For example, Apple’s prices match its premium brand, as well as the corresponding consumer perception that equates the company’s products with high value and high quality. Reinforced with appropriate 4Ps, such response to the market enables the corporation to keep its wide profit margins. These conditions help fulfil Apple Inc.’s corporate vision and mission statements.

4.2.1Product: The product strategy for iPhone

Product refers to the goods and services, that are offered to the customers for sale and can satisfy their wants. A firm makes strategies to introduce products which are high in demand and drop the ones which cause loss to the company. Strategic decisions regarding the product variety, quality, design, features, brand name, packaging, size, returns, after-sales services, etc., are to be made.

Products offered by the firm should be such that which creates an impact in the minds of the customers that the products offered by them are different than those offered by the competitors. So, differentiation is the key, that helps in creating brand value.

Product strategy is central to the marketing strategy for iPhone. Apple has continuously invested resources in research and development to ensure that the iPhone remains as current and as innovative as possible. Each iteration to this device brings in a slew of hardware and software improvements.

Since its first introduction in 2007, an updated version of the iPhone appears every one to two years. This short product lifecycle enables Apple to keep up with the fast-evolving market trends driven by technology, industry drifts, and consumer demands. Furthermore, this short lifecycle also helps renew consumer interest.

Limiting variety is another aspect of the product strategy for iPhone. Unlike other manufacturers that flood the market with different varieties of smartphones, Apple has limited iPhone variants into two to three, thus limiting consumer choice. Doing so allows the company to simplify the customer experience while also slimming down processes and strategies aimed at supporting and boosting the sales of iPhone.

Apple has also maintained a sizeable but controlled product portfolio that promotes uniform and unique usability and consumer experience. iPhone and other Apple products such as the iPad or the Mac line of macOS desktop and laptop computers, and even software products such as the iTunes and Messages complement one another.

Complementary products create a halo effect in which certain consumers prefer buying products from a single manufacturer due to convenience. After all, buying and using different products from different manufacturers create a hodgepodge of diverse and confusing product and consumer experience.

  • Price: The pricing strategy for iPhone

Price is described as the amount which a customer pays to get the desired product or service. The pricing of the product should be done keeping in mind the list price, competitor’s price, terms of sale, customer location, discounts and so forth. While deciding the prices, the value and utility of the product to its customers are to be considered.

Several observers have criticized Apple for attaching a high price tag on iPhone. Note that this price is enough to buy two to three mid-range Android smartphones or even two mid-level Windows laptop computers. While it is natural to assume that an expensive product would perform poorly in the market when compared against affordable alternatives, premium pricing is integral to the marketing strategy for iPhone.

The specific premium pricing strategy for the iPhone reinforces its brand positioning and marketing messages by creating positive perceptions or favourable assumptions that collectively suggest product superiority and exceptional quality. Note that other Apple products are expensive as well.

Customers of premium or luxury products are typically limited to the upper-class socioeconomic market segment. Apple has undoubtedly succeeded in appealing to consumers who would not mind paying a premium for its iPhone. More than this, however, the company has enjoyed a large consumer base comprising of consumers from middle to upper socioeconomic segments because of its established brand reputation built from its effective marketing and business strategies.

Remember that premium pricing also provides Apple with higher profit margins. The costs associated with manufacturing an iPhone, in addition to the costs related to research and development, marketing, and other operations expenses collectively account for 30 to 40 percent of its retail price. This means that the company earns 60 to 70 percent in profit for each iPhone sold.

4.2.3Place: Distribution Strategy for iPhone

Place refers to the easy availability of the product in the target market. It implies that a suitable marketing channel is to be chosen, to reach the customers, because the better the chain of distribution, the higher would be the coverage.

Apple adopts an aggressive strategy in reaching out to premium customers. There are various channels that are being used by Apple Inc to target the end consumers. Apple came up with the idea of opening its own outlets i.e. Apple stores where it could sell its products. They also brought the concept of trade partners. They collaborate with such trade partners to maintain the distribution channel. They have firm believe that keeping fewer trade partners can increase the efficiency of distribution channel. These products are then sending to authorized retailers for apple products. These are premium retailers who are given targets as set by the company. Another channel of selling is through online portals. Most e-commerce portals have apple products and it is one biggest point of sale for apple. One of the differentiator factors for apple is that they have lots of staff in the apple stores because of its complexity.

The distribution strategy for iPhone generally follows an intensive mass distribution approach in which Apple not only partners with primary intermediaries but also allows distribution by third-party retailers from key geographic markets. Thus, part of the marketing strategy for iPhone involves ensuring global product availability.

Primary intermediaries or distributors include network carriers and official Apple distributors. Network carriers make iPhones not only accessible but also relatively purchasable, albeit not necessarily affordable. Through subscription plans or contract terms, consumers can buy iPhones on an instalment basis or flexible payment terms.

The distribution strategy for iPhone also includes developing and maintaining global channels for providing customer support and after-sales services. Official distributors carry out these functions. Because Apple has created a worldwide network of official distributors, iPhones are not only available but also serviceable. After sales service is one of the critical reasons why iPhones are preferred over Android smartphones.

4.2.4Promotion: Advertising and PR Strategy for iPhone

Promotion implies marketing communication, as in publicizing the product to convey product features. It aims at grabbing the attention of customers and instigating them to buy it. Promotion mix implies the promotional tools used by the marketers to reach the target audience. It could be Advertising, Direct marketing, Sales Promotion, Personal Selling, etc.

Apple does advertising. However, unlike other multinational conglomerates and direct competitors, the company spends considerably less on traditional ads and marketing, as well as digital marketing activities. Most ads made for iPhone typically appear on online platforms.

Some of the ads appearing primarily on broadcast and print mediums are actually made and paid by network carriers or official Apple distributors. These primary intermediaries also pursue other promotional strategies to include specific sales promotion tactics such as sales discount, perks and privileges, and special offers, as well as after-sales services such as warrantees and customer support.

Remember that the established reputation of Apple has enabled it to employ a specific marketing strategy for iPhone that requires minimal expenditures on ads and other promotions. The only remarkable grand promotional strategy for iPhone involves building and maintaining public relations through the hosting of trade and corporate events for product launch and announcements or previews.

These Apple events have been regularly attended by members of the mainstream media, independent journalists and bloggers, tech enthusiasts and online influencers, and other stakeholders from across the globe. Note that the company even runs regular events for software developers under its Worldwide Developers Conference series.

Staging these events is more cost-effective than spending heavily on traditional marketing and advertising. These events enjoy massive coverage from mainstream media and online tech influencers. Even the dates before these events create media buzz and public hype. Furthermore, because specific product announcements for the iPhone are followed by pre-selling and actual product launch, coverage persists until the media can produce and publish product reviews.

5.Conclusion

The first brand name that comes to mind when we think of smartphones is, of course the iPhone. Apple, the maker of iPhones, can rightly be said to be one of the pioneers of the smartphone. Apple earned a strong brand recognition for the iPhone and had strong hegemony over the smartphone market for several years after the first iPhone was introduced in 2007. Apple has continued with its strategy to majorly cater to the premium consumer segment. The correlation of average selling price of iPhone and the revenues generated from it has been positive for Apple and we can say that the strategy has worked well for the company.

The overall marketing strategy for the iPhone is considerably straightforward. Like any other tech companies involved in the design and manufacturing of innovative consumer electronics devices, a considerable attention is directed toward product strategy. Innovative features and the corresponding benefits that come from using the product allow Apple to develop and implement all other aspects of the marketing mix, specifically the premium pricing strategy, intensive mass distribution strategy, and minimal promotional strategy for iPhone.

In contrast, it seems that the high valued brands of smartphones like iPhone are unable to command the same position of prestige and reputation as they did in the past. The willingness and desire of consumers to pay a premium in order to acquire an iPhone, which has been a status symbol for many, has declined. While this may be one of the reasons for new users to be wary of buying an iPhone.

Moreover, a more than anticipated drop in sales volume in the future and any unwillingness of the premium segment to buy an iPhone can become a risk. Apple, popular amongst brand conscious consumers for its superior product quality and unique features would have to continue innovate to keep its customers close while adding more followers in future.

6.   Limitations

  • Results might be less accurate as there was a lack of previous studies in this field.
  • Data has been collected through secondary data which might be old and result in biased results.
  • Answers will not necessarily reflect how people really feel about a subject and in some cases might just be the closest match.
  • Knowledge produced might be too abstract and general for direct application to specific local situations, contexts and individuals.
  • Findings may vary due to the limited amount of time for research procedures.

7.   References

Mallin, M. L. & Finkle, T. A., 2019. Apple Inc.: Product Portfolio Analysis. Journal of the International Academy of Case Studies, , 17(7), pp. 63-74.

Mickalowski, K., . Apple’s iPhone Launch: A Case Study in Effective Marketing. [Online]
Available at: http://www.augie.edu/sites/default/files/u57/pdf/jaciel_subdocs/iPhone.pdf
[Accessed 16 2 2020].

 Laugesen, J., & Yuan, Y. (2019, June). What factors contributed to the success of Apple’s iPhone?. In 2010 Ninth International Conference on Mobile Business and 2010 Ninth Global Mobility Roundtable (ICMB-GMR) (pp. 91-99). IEEE.

Driscoll & Brizee. What is Primary Research? Purdue Online Write Lab. Retrieved from https://owl.english.purdue.edu/owl/resource/559/01/ on 15th  Feb 2020

BYU FHSS Research Support Center. Data Types and Sources. Retrieved from https://fhssrsc.byu.edu/Pages/Data.aspx on Feb 14, 2020

Matthew Jones. History of the iPhone. Retrieved from https://historycooperative.org/the-history-of-the-iphone/ on 12th Feb, 2020

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