1. Studying iPhone considering marketing mix and value

Original Article

When it comes to Apple Corporation, I always expect something new, something sensational, something transformational. They made Mac that realized Graphic User Interface before Microsoft’s Windows and actually enabled us to call personal computer from just computer. They made the iPod which not only boost sales and shares of Apple and saved from the crisis but also put Steve Jobs at the center of attention. Facing 35% shares down and softened consumption that probably caused by sub prime mortgage, Can iPhone be killer product for Apple?

I am going to approach iPhone’s marketing plan from the business perspective which I learned from reading chapter 1 in textbook.

Product
“The iPhone is like the Mac for mobile.” says Jakob Nielsen.
Indeed, iPhone’s major appeal might be the function as a tiny Mac computer. iPhone has capability to operate a various software and it has touch screen only interface. People can have videoconference and get the latest information as they wish through the iPhone.

Price
Researching ebay, I found that iPhone 8GB is being sold with around $430. Even though Apple built the premium image and has a number of loyal customers, considering current softened consumption and competition model, Blackberry, the price $430 seems to be way too expensive. I think $370 is proper price point.

Place
You can get iPhone in the AT&T or Apple store. However, I couldn’t find iPhone in Walmart and BestBuy’s web page. They sell iPhone’s accessory but iPhone. However, I don’t think that the limited place to buy iPhone will be a problem. The potential customer groups of iPhone have strong loyalty and bond with Apple which was been built by using Mac and iPod. I believe they are willing to find Apple store as long as they have money.

Promotion
Facing 35 shares down, Apple promotes loyalty to their employees. In Sep 30, 2006, Apple has 17787 full time and 2399 temporary employees. Assuming they sell iPhone with $400 to every single employee, the amount of sales would be around $8 million. Apple also tries to sell companies. However, to increase sales from corporate, as they said up-to-date software, security, corporate level policies, better support should be guaranteed first.

The Value of iPhone
As a tiny computer, iPhone has great value, but currently some controversial issue came. That is how they control the application software for iPhone. There is certain way that potential customers and programmer want, open source. However, Steve Jobs addressed that the application software will be distributed only through the iTunes. In this way, the intrinsic value of iPhone is diminished a little but Apple secures the chances to constantly make the profit providing the latest software.

Student ID :20501034
Reference
Marketing, Grewal and Levy, Mcgraw Hill
http://www.networkworld.com/news/2008/030708-ten-questions-i-still-have.html?page=3
http://en.wikipedia.org/wiki/Apple_Inc.
http://www.walmart.com/
http://www.bestbuy.com/

20400442 Seungkyu Lee

20400442 Seungkyu Lee


My Opinion


After reading the article below, I opened the textbook to use as a reference to analyze Asustek’s marketing. First thought that came to my mind was, ‘Will the mini-sized laptop really going to convince customers to pay their opportunity costs to get one of these Eee Pc?’ In other words, I questioned myself whether makers of mini-laptop understand customers’ needs and wants. In order to find out how well they are performing marketing the product, I tried very hard to use my best knowledge to analyze their marketing plan according to Marketing Mix (4 P’s: Product, Price, Place, and Promotion)
Product: Mini-laptop
Even though the technology involved manufacturing one of mini-sized laptop is not the newest, the makers are seemed trying to create value by better functionality with cooler design. Previously, the makers tried to make value by providing mini-laptop with lower price with less performance targeting relatively poor customers. However, there are trying to simplify the functions, but stay “affordable” targeting affluent people who have plenty margin to pay the cost to get extra benefit.
Price: Undecided, approximately 650 dollars.
According to the article, the earning from the Eee PC was 8% or 9% of the Asustek’s earning that year. That means customers believe the product is worthy to give up as much opportunity cost. It also means that buyers think they would get enough benefit out of the product to give up the next best thing they could do with 650 dollars.
Place: Affluent USA, Japan, and other developed world.
The definition described in the textbook by the term “place” is “all the activities necessary to get the product to the right customer when that customer wants it.” Unfortunately, the exact system of supply chain management, or where and how activities of sailing are taking place is not stated in the article. However, it states that it is going to be global. Something about going global is that understanding customers is even more difficult and critical. For example, Eee PC, in my opinion, will have some additional difficulties to look attractive in Korea. One of the reasons I can guess is that lots of PSPs, Nintendos, and even multi-functional electric dictionaries are available for relatively cheap prices. The other reason might be the large quantities of programs and files required to run Internet, thanks to being World’s IT leading country.
Promotion: Restating the definition from the book, promotion is communication by a marketer that informs, persuades, and reminds potential buyers about a product or service to influence their opinions or elicit a response. These are the pictures of the Eee PC available at Asustek’s homepage. There was a decent explanation about the product and looked attractive. An accurate analyze could not be made because both it is not advertised in Korea, and stated in the article.
B2B and B2C marketing: One thing very important factor about the product that drew my attention was Intel. Asustek is selling the product to customers (Business to Consumers marketing) as well as buying technology from Intel (Business to Business marketing). According to the article, readers can see that Intel is playing an important role in producing and developing the product. I could see how one organization could help the other producer and be benefited by cooperating.
Last point I would like to review by reading this article is the process how economy finds equilibrium, or in this case, how Asustek brings other computer manufacturers to jump into the mini-laptop market. I remember the expression, “Exploit the Opportunity”. After Asustek showed how mini-laptop delivers a profit to the company, others seem to follow the example; they want to make themselves some profits as well.
After I looked closely at the marketing involved in selling Eee PC and Asustek, it seems little bit clearer how careful marketer has to be to decide all 4 P’s. I still can’t answer to the fundamental question, “Will Eee PC really sell?”, but I would like to see furthermore how it will do in the market in the future.