MARKETING STRATEGY MKT306

Obviously, the external situation is continually changing in a dynamicenvironment therefore PESTLE analysis is a suitable tool for Apple to have an idea on UK mobile phone market... This

MARKETING STRATEGY

MKT306

Student: Nguyen Hoang Kim

No 129045528 Module Leader: Stephen Storey

Tutor: John Davison

Table of Contents

Executive Summary

The purpose of the report is to discuss about the marketing strategy of Apple Company

in UK market The first part will be the current situation of Apple and it will be shown through SWOT and PESTLE analysis Furthermore, competitive advantage is also implemented to highlight the unique point of Apple company In the second part, the recommendation of segmentation, targeting, positioning and 4P will be discussed to launch new product to UK market

Apple is an American company which sells electronic goods such as computers, laptop, mp3 player and mobile phone Apple is really successful in doing the business Apple is the most admired company in the United State in 2010 (CNNMoney, 2010) In 2012, Apple has 394 stores in fourteen countries and in UK Market, Apple’s Iphone has the second biggest market share 28.5% (Guardian, 2012)

PART A: CURRENT SITUATION

PESTLE ANALYSIS

PESTLE analysis is a tool dealing with external environment which has a great effect onthe business and “it is an acronym for the Political, Economic, Social-cultural,Technological, Legislative and Ecological aspects of the wider environment” (Allen,2001) Obviously, the external situation is continually changing in a dynamicenvironment therefore PESTLE analysis is a suitable tool for Apple to have an idea on

UK mobile phone market

place for job, business, and investment (The Guardian, 2012) For that reason, Applehas many opportunities when doing business in UK.

Economic:

“Gross domestic product (GDP) is a key government statistic and provides a measure ofthe UK's total economic activity” (The Guardian, 2009) Therefore, GDP is the first factorthat will be identified to figure out the current UK economic

Based on the chart, the GDP of UK is slowly recovering after the economic crisis in 2008 Since 2009, the GDP has slightly changed from the highest 0.9% to the lowest -0.4% In thethird quarter of 2012, the GDP is boosted to 0.9% thanks to the effect of London 2012Olympic Game and then it shrinks again to -0.3% in the last quarter Based on the analysis,the UK economic is in difficult situation and according to BBC news (2013), ChancellorGeorge Osborne said the figures were a reminder that the UK faces "a very difficulteconomic situation"

According to a research named Factor Affecting Consumer Choice Of Mobile Phones, itclaims that the price of mobile phone plays an important role in the choice especially amonglower income consumers (Karjaluoto, et al 2005) therefore, the second factor is theunemployment rate of UK in 2012 “The unemployment rate was 7.8 per cent of theeconomically active population, down 0.2 on May to July 2012 and down 0.5 on a yearearlier” (Office For National Statistic, 2012) This is a good sign of the unemploymentrate of UK and it is also good for the business of the company because more and morepeople are now having job and they can consider buying the product of Apple.

Social and Cultural

The first factors of social and cultural are population and age distribution of UK in 2012.According to the population chart which is attached in appendix 2 shows that thepopulation of UK increases year by year and it increases from 59.57 million people in

2004 to 62.64 million people in 2012 and also from the age pyramid chart attached inappendix, people who have age from 18-35 make up a high percent of UK population.This creates a great chance for apple to sell smart phone in UK for the reason that thepeople aging from 18-34 purchases a large percent of smart phone (appendix 3)

Secondly, due to the development of transferring information, many households in UK haveaccess to internet According to office for national statistics (2012), 21 million households

in UK (80 per cent) had Internet access, compared with 19 million (77 per cent) in 2011.Furthermore, UK obtains the number nine in top 20 countries that have highest number

of internet users in quarter 2 in 2012 (appendix 3) Internet is becoming more importantfor UK people Especially, young British tend to have more activities through the internet

for instance social network, emailing and online shopping Based on the Guardian(2012), “British 18–to 24-year-olds are proving to be the world's top mobile socialnetworkers, with 62% accessing their profiles from smart phones and tablets, a higherproportion than any of the countries” Also, UK is also gain the number one in onlineshopping and UK consumers spend on average £1083 per year and more than 250compared with Australia gaining the second position (Guardian, 2012) Hence, UK is afertilize market for Apple to sell more smart phones.

Technology

Technology can have a substantial impact on people’s live and companies fortunes(Jobber, 2010) In mobile phone industry, 3G and 4G broadband is crucial for smartphone users if they need to use the internet whenever they are not at the place wherethe wireless is available In UK, 3G broadband is widespread but 4G broadband is thenew technology and in late 2012 only EE launched this kind of technology BBC news(2011) claims that the 3g does not totally cover all the area of UK which meanscustomers cannot have the same speed of the smart phone in different places.Furthermore, the speed of 3G is not as fast as the max speed of 7.2 Mb and in fact, thehighest speed of is just 4.44 Mb and the average speed is under 2Mb(BroadbandGenie, 2013) Consequently, the broadband infrastructure of UK still hassome problems that may affect the purchasing decision of customers

SWOT ANALYSIS

According to Hollensen (2003), SWOT analysis is a technique, which has fourcategories, strength, weakness, opportunity and threat, helping the company to identifysuitable marketing strategies for the company Also, SWOT analysis is applied to

“accomplish an organization’s mission by exploiting an organization’s opportunities andstrengths while neutralizing its threats and avoiding (or correcting) its weakness”(Griffin, 2010) The table below is the SWOT analysis of Apple Company

Strengths Weaknesses

• Strong brand name

• Easy to use and intuitive gadgets

• Decreasing tax

• Young trend generation

• High accessing to internet

• Bad situation of UK economic

• Poor broadband infrastructure

Competitive advantage / USP:

For business, keeping in touch with customers is really important because the firm canaware of what customers’ needs and wants and enhance the relationship with customer.Kandampully and Duddy (1999) states that what establishes a firm’s competitiveadvantage is their ability to serve customers’ present and future needs Therefore, byestablishing competitive advantage, the company can serve customer in a bettermanner and in the long run it will have more customer as well as earn more profit.Bharadwaj, Varadarajan and Fahy (1993) also supports it by saying some firms aremore profitable than others, regardless of whether the average profitability of theindustry is high or low The superior performers conceivably possess something specialand hard to imitate that allows them to outperform their rivals and they call it competitiveadvantage Besanko, Dranove, and Shanley (2000) also based on economic profit todefine competitive advantage “When a firm earns a higher rate of economic profit thanthe average rate of economic profit of other firms competing within the same market, thefirm has a competitive advantage in that market.” For that reason, by creatingcompetitive advantage, the company can build up relationship with customer; get higherprofit in the same market and make distinction with potential rivals

Nowadays, Apple commits to give customers an integration product and it has created

an extreme consistency of its products Because Apple makes the hardware, theoperating system, and many applications, Apple products are truly integrated system(Apple, 2013) So this creates a distinctive difference to other mobile phone companyfor instance, the Google products are built by largely self-directed teams, so there Islittle consistency between them (The Guardian, 2012) and it also makes Apple becomethe one of the leading company in mobile phone industry

PART B: Recommendation

Segmentation, targeting and positioning

Nowadays, because of the rapid market development, customers always want manychoices of products having good attributes According to Datta (1996) customers do notjust want more choices, but they demand exactly what they want, when they want andhow they want it.Jobber (2010) also claims the complicated of customers by stating thatvery few products or services can satisfy all customer in a market Not all customerswant or are prepared to pay for the same things

Segmentation and targeting:

To be successful in doing the business, different product must be made to servedifferent customer groups Market segmentation is an appropriate technique Marketsegmentation refers to recognition of the existence of multiple demand functions anddevelopment of a marketing plan to match one or more of these demand functions(Frank, Massy, and Wind, 1972) In segmentation, marketing research must beinvolved to implement the technique Customer market can be segmented in different

way according to three variables given by Jobber (2010), Behavioral, psychographicand profile

Nowadays, Apple’s product is segmented by profile (income) and psychographic(lifestyle) variables In details, Apple is targeting customers who love the technology,want to be creative and have high income With the nonstop innovation, Apple givescustomers a great experience about the newest technology and with the huge number

of applications; consumer can be more creative through using its applications In order

to attract more customers, Apple should apply new segmentation to sell its product todifferent people having different wants and needs In fact, Apple only have footprint inthe high-end smart phone but the low-end smart phone Therefore, a new segmentation

of low-end smart phone will be implemented In this case, Apple can also segment itsproduct by behavioral (income) and psychographic (lifestyle) variables but it will target

to other group of customer who love technology and creativeness but have low ormedium income As the matter of fact, the cheap smart phone market is growing and it

is a fertilize market for Apple to invest in According to a analysis by Lan Fogg in BBCnews (2013), by 2016, 31% of the global overall handset market will be low-end smartphone and at recent, a basic smart phone in UK costs £29.99 meanwhile Iphone 5 ofApple is sold at £529 Hence, a new target of Apple Company will be cheap smartphone

Positioning:

After segmentation and targeting market for new product, the next step is to create aposition for that product in the market According to Jobber (2007), positioning is thechoice of: Target market-where we want to compete and differential advantage-how we

wish to compete” Apple is going to alter the target market as well as differentialadvantage For instance, the new product would target the lower income market ratherthan high income market (students or people who have medium or low income) and itwill bring to customer different user experience compared with the existing iphone.Because of the fact that the new product will have less power and less durable cover inorder to reduce the price, it will change the differential advantages by experiencing IOSwith surfing the internet and social network to position the product in the market

Because of the fact that Apple will launch the cheap smart phone for medium or lowincome people therefore it will adopt the product development strategy In developmentstrategy, the company can increase its sale by introducing new product to the marketthrough different versions for example different size, function, etc and the new product isalso sold through the same distribution channel.

Marketing objective:

Before the details of a marketing plan can be developed, objectives for the plan must bestated The marketing objectives are the measurement for the success of the marketingplan and it should be SMART objective

Three Levels of a Product gives a clear view of building new product for Apple

Company First of all, in simple term, core benefit is the reason for the product existenceand in Apple case, the core benefit of the new phone is to communicate with other people by calling or texting

• Design: The design of the new product must be different from the existing Iphone

of Apple to distinguish between product for high income and product for lower income customers Actually, Apple can use the same design with physical home and power button with the apple symbol behind the phone Furthermore, young customers usually want to have a dynamic life therefore, Apple should add more color for the new product instead of white and black color as the existing product

• Packaging: The packaging of the new phone can have the same design of

Iphone however it will be different in the shape because they belong to different product line and the packaging of the new phone has more colors based on the color of the phone

• Feature: The new product will work on the IOS as the existing product but as thematter of fact the power of the new product is not as strong Obviously, because

of the price of the product is lower, the speed of the new product cannot becompared to the Iphone so it cannot give customer the real effect when playinggames or using the application

Nevertheless, the new product will have an advanced camera with flash light which isthe main feature of this product and with the new camera, users can be creative with thehigh quality photos and they can easily share the photos on social network through 3G

or wifi

• Warranty: The products have a warranty period of 1 year

• After sale support: Can be acquired from any Apple store all over the world

• Delivery: The product can be purchased from any Apple store or order online

weapon and is very important to the organization because price multiplied by thenumber of units sold equals total revenue for the firm.

In fact, the positioning strategy has a great effect on pricing In positioning, the targetmarket of the company is placed and based on the value that people have on the newproduct (the differential advantage) the price can be set The new product of Apple willtarget student and people who have medium or low income and the differentialadvantage is not so impressive therefore, the price of the new product is low and it willadopt market penetration strategy

Furthermore, price is also go with other factors in marketing mix and the matrix below isshown the combination of price and promotion