Contents

1.0 INTRODUCTION.. 2

2.0 ENVIRONMENTAL SCAN.. 2

2.01 The economic impact 2

2.02 Competition. 2

2.03 Technology. 3

2.04 Political legal 3

2.05 Social culture. 4

3.0 THE SWOT ANALYSIS. 4

3.01 Strengths. 4

3.02 Weaknesses. 5

3.03 Opportunities. 5

3.04 Threats. 6

4.0 MISSION STATEMENT. 6

4.01 Current mission statement of Apple. 6

4.02 Why the mission statement meets the criteria. 7

5.0 COMPETITION.. 7

5.01 Indirect competitors. 8

6.0 TARGET MARKETING.. 8

7.0 PRODUCT AND POSITIONINNG.. 9

8.0 THE PRICING STRATEGY.. 10

9.0 DISTRIBUTION.. 11

10.0 PROMOTION.. 12

11.0 RECOMMENDATIONS. 13

12.0 CONCLUSION.. 15

WORKS CITED.. 17

1.0 INTRODUCTION

In this study, the iPhone; which is manufactured by Apple has been analyzed in relation to the environmental scan, SWOT analysis, the mission of the company, competition, target market, positioning, distribution, pricing and promotion. The recommendations that are made at the end of this study are aimed at highlighting on the opportunities that are available and through which the company will be able to pursue its operation in the next 5 to 10 years.

2.0 ENVIRONMENTAL SCAN

2.01 The economic impact

Due to the effects of the current recession, many companies operations have deteriorated to an extent of closing up of businesses. The consumer spending has been decreasing as they make effort to increase their savings whereas most the products and services prices have simultaneously been reducing. This tread has strongly affected the shopping products although contentment has still been expressed in some special products. This situation has not left iPhone manufacturing company; Apple behind because as Steve Jobs; the current CEO notes, the company is going through the hardest environment in the economy which started from the great depression times. There is however a determination in the company which is aimed at ensuring that the innovativeness of the company is maintained at the global level as the shareholder wealth is continually increased (STEVE JOBS AND APPLE, INC. – Findarticles)

2.02 Competition

Apple and iPhone stresses on the importance of competitive environment. The choices made by the consumers vary and a lot of choices are basically made in the decision to buy a Smartphone. Elimination of options will be necessary if a consumer has to buy a touch screen Smartphone that is very sensitive. The Motorola Milestone, Google Nexus One and BlackBerry are the major competitors of iPhone although the brand still dominates the market. Competition stiffens when the competitors produce smart phones with features that are very similar to iPhone. The most unique feature that has enhanced iPhone survival in this case is its design which is very unique (usatoday)

2.03 Technology

The industry that Apple operates in specializes on software and computer. Various new treads have been established by the company and the iPhone model incorporates the latest inventions in the technology. iOS; which is new software has been created by the company for iPhone. These newly emerging features are an attraction to the customers. Other features of iPhone that are unique to the company are the FaceTime, multitasking and HDR camera.

2.04 Political legal

The business operation is always affected by the legalities that are possessed by various companies. Being a global company, Apple has had in many instances court proceedings for the breach of some legal requirements. In 2010, Apple had major court proceedings. This was following a move by Apple to make steps which were aimed at fighting with the competitors over what the CEO referred to as stealing of the company’s patented innovations. HTC Company was sued by Apple as a result in relation to the multitouch technology issue of iPhone. Other lawsuits in this year involved Kodak and Nokia in relation to technology theft (FINANCE YAHOO).

2.05 Social culture

In the social cultural environment, the consumers are affected by every product either directly of indirectly. The creation of the first generation IPhone by Apple has left the other companies in shock due to their perception that Apple as incapable of succeeding in the Smartphone business. Apple is currently planning on the fifth generation iPhone. IPhone software has been created by other companies such as Dominic, Amazon and eBay. The iPhone has transformed the online shopping with a good example being the iPhone user; 30-40% of who have downloaded the application for bar- code scanning.

3.0 THE SWOT ANALYSIS

3.01 Strengths

Leading brand name globally: The brand name of Apple iPhone has remained uniquely defined.
A very unique look: Although various manufacturing competitors of Apple have tried to imitate the iPhone, its uniqueness still remains especially in the design (Mottorola, Google Nexus and Blackberry).
Famous company image: The company image of Apple is based on its established reputation in the manufacture of products that have left most consumers indifferent.
The iPhone has been tested and proved to have a high resistance to computer viruses.
Over the last few years, the growth of iPhone has been very substantial. This growth is projected to continue over the next years of its operation.

3.02 Weaknesses

The iPhone is widely known to be very expensive to the customers. Apple has not been able produce a cheap phone in the market
The previous hardware failures is a weakness that is still affecting Apple company
The Apple distribution choice has only been restricted to AT &T. this has effected the distribution of iPhone
The assistance of Apple company by AT& T has not been that great
In addition, the use of the FaceTime can only be capable on the Wi-Fi

3.03Opportunities

iPhone has the ability to expand its competition to other companies through which the customer base can be expanded
The Apple company has the opportunity to upgrade its technology and hardware in the future, therefore widening the market
The development of the FaceTime has the ability to allow its talk anywhere unlike the current limitation to Wi-Fi
The customers have began to buy other Apple products, which expand its definition of doing business beyond its major products such as the iPhone

3.04 Threats

The smart phone market is very developed, and poses as a threat considering that iPhone has just been a beginner in that area
The iPhone market is characterized by stiff competition since very many smart phone are found in this market from various manufactures
The competitors in this market are very strong. Consider; Motorola, Black berry and Google Nexus One.
The technology change has been very rapid thereby the newly developed brands are likely to be overweighed by newly introduced products by the competitors
The current market makes the iPhone not to be affordable due to cheaper phones with similar features

4.0 MISSION STATEMENT

4.01 Current mission statement of Apple

In the modern world, Apple continues with its industrial lead in innovation with its iLife, professional applications and OSX operating systems as its wining computers. In addition, Apple continues to lead in revolution of the digital media with its video players, iPod portable music together with iTunes online stores, entering the market of mobile phone with iPhone revolution.

4.02 Why the mission statement meets the criteria

The excellence of the mission statement is based on its ability to contain everything that is required in a mission statement. Basically, what should be specified in the mission statement includes the objective of the organization in addition to providing a future management actions general outline. In the mission statement, Apple clearly states its effort in revolutionizing every electronic type and putting on everything an Apple stamp. Ranging from portable music machines to computers together with the recent iPhone intervention, it is a clear illustration of the big focus of being the ahead of the competitors. iPhone is indeed the first name that will come in the mind of an individual when thinking in terms technology in a device.

5.0 COMPETITION

Almost three years after its launch, the competition of iPhone continues to emerge. However, despite the competition iPhone continues to enjoy the status of having established the prime entry into the market of smart phone. The competition is mainly being triggered by the fact that the design of smart phone has always remained the same thereby making the consumers to get bored and opting to look for new designs. The most strange thing is that three years after its launch, there has been no other manufacturer that has been successful to not only surpass the product but compete with it. The major competitors are HTC HD2, Blackberry Storm, Google Nexus One and Motorola Milestone (Droid).

HTC HD2 is a very advanced phone. When it was launched, many people thought that it was going to completely eliminate iPhone from the market. Nexus One was designed by Google. The major weakness that has made this phone to be able to beat iPhone is due to the OS, in which similar use on the same phone has a high probability of turning the customers off. Motorola tried to race in the iPhone competition through designing the Motorola Milestone. However, just like Nexus story, Motorola was not able to race off the iPhone out of the market.

5.01 Indirect competitors

They include Verizon droid x; which comes with a design of the dual antenna and Nokia. The Nokia has an advantage in the color. Its wide range in the color makes the various customers to have a wide range of choice depending on their taste which will certainly vary. In addition, Nokia has provided a solution to the FaceTime limitation iPhone for Wi-Fi connection. Therefore, Nokia N8 does not limit connection in addition to the device being able to connect to any device for video calls.

6.0 TARGET MARKETING

The first ever iPhone was released by Apple in the year 2008. The target audience and marketing strategy were by then almost similar. During the initial release, the main goal of iPhone was to achieve the target market which mainly consisted of the young men (ezinearrticles.com). This drive was based on the fact that an iPod was bought by more than 48 percent of these men. Therefore, Apple thought that it would go ahead to ensuring that these young men had on the same device a phone, music together with many other applications. More than 72 percent of the young men were wiling to purchase this phone when it was initially launched as opposed to the females who accounted to only 28 percent. According to a quote from the ezinarticles.com, there was clear evidence that those who promoted the iPhone market were the young men at the ages between the ages of 20 and 35 years as well as the employees that were mobile (did not continuously work in the office).

Having said that, it is important to note that there is certain demographic segmentation which includes age segmentation, gender segmentation as well as the key element that consists of the cohort effect. Although this was in 2008 the mainstream product market that was most popular, it was just the beginning of the cohort effect, with the major tread becoming that of buying iPhone.

7.0 PRODUCT AND POSITIONINNG

IPhone is in the growth stage of the product life cycle. This is evidenced by the fact that iPhone is a new advance in the technology which has already received results that are favorable in the market. The iPhone positioning is based on the understanding that the customers believe about the value, benefits and features. The customers are always comparing the product of one company with those offered by the competitors. Based on this understanding, the Apple designed an iPhone that was unique and which was way above the level of the competitors. Developing the iPhone defined value and features that were very unique to the specific needs of the customers. In comparison to the competitor’s smart phones, iPhone stands out on its own style. In iPhone, Apple has been able to satisfy the customer’s value. In addition, the features that are found in the iPhone define the product (Black Book 61). Generally, iPhone is expensive therefore targeting a certain class of customers. Due to this, it is only those customers that are willing to part with a high amount of cash that are able to be associated with iPhone, especially when it was initially launched.

Basically, the connection of the customers to the iPhone has been based on their trust on the product although the promotion has played a very big role. The management of iPhone by the marketers has been based on focusing their marketing activities on a positioning strategy. The distribution channel, promotion, pricing and advertisement have all been aimed at maximization of the strategy that Apple chose for the iPhone. Through applications, the iPhone users have been able to design and easily use the graphics. The iPhone positioning has been based on the use of the iPhone. Through quality or pricing, Apple has built trust that it poses the highest quality in the smart phone, which has indeed been true. This has been portrayed by the high price that iPhone has been able to charge on the device. To the customers who have become possessed with iPhone, they believe that iPhone is just an iPhone; more than just a phone and it is this perception that makes them to pay for the iPhone high price. The needs satisfied in the iPhone are not the basic needs of having a phone (making calls). iPhone is a phone of class which satisfies the luxurious needs of a certain category of customers (Zandbergen & Paul 21).

8.0 THE PRICING STRATEGY

Skimming strategy was used by iPhone to determine the setting of its market. The skimming strategy aims at selling a product at a price that is initially very high ensuring that profits are maintained even when the sales are at a low level. The starting price of the iPhone for the 8 gig model was $499, while for the 16 gig model it was at $599. The lucky thing was the high anticipation of the iPhone for a decade which made the consumers to be willing to pay for the product despite the high initial price. Through the use of the skimming marketing strategy, iPhone was able to attract the consumers at the upper class who had a feeling of being better with a higher prestige. This strategy did not last for long because two months later of dominating the market at a high price, there was a reduction in the premium version down to $399 from the initial $599. This resulted to the next strategy of pricing which was referred to as versioning.

Through versioning, the various version of a similar product are offered. Apple in this case has various generations in the iPhone. The highest and the most current is the 4G (fourth generation) which the current listing for the version of the 16 GB is at $199.99. The offering of this product is targeted to the customers that are less sensitive to the price and who as long as they have the product, they do not care about the cost. Apple next phone tier is the 3G version, which can be bought by the customers with as low as $49.99. From the original price which was initially at $599, this has been perceived to be a drop that is very huge, but with a combination of versioning and skimming, it has been possible for Apple to yield profit from all the levels of customers regardless of whether they belong to the high class, middle class or the low class.

9.0 DISTRIBUTION

Apple markets its iPhone through AT &T. By offering iPhone through agent operated store distribution that is direct, and major retailers, AT &T has sales trade offs, channel relationship and margin. The pricing is controlled by AT&T through offering iPhone only to the stores that are owned by company and through prevention of the use of the activation commission by the indirect stores. Through the use of stores that are directly their own, the costs of commission payment to the retailers and agents is saved by AT&T. There is also feeling by AT&T that it is unnecessary to have indirect distribution if demand is created by iPhone that goes to the stores that are owned by Apple. Based on the channel, store build- out funds has been provided by AT&T in return for service commitment and exclusivity.

In the wireless markets that are mature, more price points and handsets are complicating the distribution. Recently, Verizon wireless transformed to contracting with BrightPoint from in-house handset warehousing. This change has enhanced distribution to authorized retailers and agents indirect channels. The iPhone distribution could however change with the varying models and prices across the channels of distribution as the mobile handsets are focused by major retailers.

10.0 PROMOTION

When the iPhone is advertised by IT&T, the actual product is usually put on the display so that the customers can have a chance to view the full details of the phone. In their commercials, the only thing that is usually seen is a human hand and a phone. Through the displays, the customers usually get an opportunity to not only learn about the new brand but also a chance to view the details on the different application found in the phone.

IPhone target market is mostly the youths who yield maximum satisfaction from the phone. Basically, the youths are very fond of the social networks that are available on the internet. IPhone clearly understands this factor and has optimized from it as a channel through which it has been able to successfully promote its brand. As this category of customers; which consists of the majority of them visiting the internet, they usually have an opportunity to learn more about the product. According to www.Apple.com, basically the innovativeness of iPhone is also usually portrayed in the way that it usually promotes its product (http://www.apple.com/iphone/why-iphone/). The commercial that are usually used by iPhone basically leaves the potential customer wishing that actually they had a similar phone, so influential that most of these that have had an opportunity to view these promotions have ended up buying the iPhone. Some of the media used by iPhone to promote the phone have included the internet social media (targeting the youths), mobile phones, radio, television, newspapers

11.0 RECOMMENDATIONS

For the last years since the launching of the iPhone, Apple has been able to spread this product to the entire markets world wide. Its ability to stiffly compete with other products has been based on its ability to offer unique options to the customers. With the new deal of launching the iPhone 5G in place, Apple has the opportunity to develop its growth to surpass the competitors on an even winder margin. When we look at the initial launching of the iPhone by Apple; the product emerges to the shock of many competitors who have always maintained a lead in the Smartphone market. As long as the company has the ability to develop new product unexpectedly to the competitors in the modern market, the possibility of maintaining a lead in the market is still high.

When iPhone was initially launched, the skimming strategy was used to penetrate to the market. The strategy was successful because of the class of customers that iPhone maintained; who were of a certain class and who had established a certain tradition with the product that they had for so long anticipated in the market. These customers were ready to purchase the product at whichever price that was initially launched in the market. With a certain class of customers who are willing to purchase the product at a high price of offer, the company needs just a section of a few customers to make profit. Most of the major competitors have used the penetration strategy; where by their Smartphone are initially lowly priced. This strategy also has a target population. In order to realize a profit in such a strategy, the companies have to maximize in terms of selling to as many customers as possible. To these manufacturers, competition defines their business tradition since they have to possess as many customers as possible. From the success of skimming strategy, it is clear that despite the modern competition, iPhone has a certain group of customers that are loyal and who are willing to buy the product at the price offered in the market. These customers are precious because they a basically loyal to the purchase despite the price level as long as the product meets their requirements. IPhone has been able to meet their needs through having a unique design and various features that are not found in other Smartphone. As Apple prepares to launch the next generation iPhone, this class of customers needs to be highly considered. Their package needs to be produced and placed at the market with a clear consideration that despite the price, this class of customers will always purchase. However, targeting the middle and the low class of customers will also be very essential. This can be enhanced by designing different models of iPhone at different levels of prices. This will ensure that the highly expensive class is served while the low class is not forgotten. Charging a similar price will make the product to lose a distinction therefore it will be enhanced through charging different prices for different class of people depending on the features in the iPhone.

The current technological environment has been characterized with dynamism. Every other day the competitors are in the process of developing a unique and more advanced product to the market. This has been a threat to most companies which do not heavily invest on research and development of the new product. Most of the iPhone customers complain that company takes long before initially developing new models. This has made the product that has overstayed in the market to become monotonous hence loosing some of the customers. Of course the price of iPhone has dynamically been decreasing, but is that enough? What about the customers who are willing to buy the iPhone at a high price? Therefore, what Apple needs to do is to incorporate the rapidly dynamic technology.

Apple has maintained a good reputation in the market for having a leading brand name. This name has been associated with the high quality that it has indeed maintained. In addition, iPhone has maintained a substantial growth in the market since the introduction of the smart phone. Maintaining a reputable brand name is what will determine the future of iPhone. Strategies should be enacted to ensure that the company is able to continue developing its already existing brand name.

The distribution channel of iPhone by Apple has been restricted to the AT&T. This has not been necessary considering that Apple can seek for an alternative distribution choice. The channel of distribution to be used needs to ensure that iPhone diversifies its distribution. In the future, the issue of direct versus indirect distribution might be resolved by Apple by products that include the nono- sized iPhone that is rumored to be introduced to the market.

To what many customers hold, generally an expensive product is usually accompanied by unique high quality features. As the products are maintained in the market for an extensively long period of time, the value of being unique is usually lost. As Apple maintains the expensive iPhone it the market, it should maintain the uniqueness features in it. The newly introduced brands should after a short period of time be accompanied by introduction of new ones before the uniqueness is outweighed by introduction of new and similar products by the competitors

12.0 CONCLUSION

Since the introduction of the iPhone to the market, Apple has been able to emerge as a successful and highly reputed company. Being in a very competitive phone industry which is characterized by high rate of technological changes, iPhone has been challenged by the need to keep on developing new brands to replace the already existing. The future of iPhone in the industry will depend on its ability of Apple to consider its strengths, weaknesses, opportunities and threats in the decision that it will be making.

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