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The Seven P’s of the Apple Watch’s Marketing-Mix

Research Paper (undergraduate) 2016 15 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media

Excerpt

LIST OF CONTENTS

1. INTRODUCTION

2. MARKETING MIX
2.1. The original four categories
2.1.1. Product
2.1.2. Price
2.1.3. Place
2.1.4. Promotion
2.2. Three Additional P’S
2.2.1. People
2.2.2. Process
2.2.3. Physical evidence

3. CONCLUSION

4. REFERENCES

5. INTERNET REFERENCES

LIST OF FIGURES

1. IMAGE 1: Marketing-Mix. From 4 P’s to 7 P’s

2. IMAGE 2: Apple Watch Sport, Apple Watch & Apple Watch Edition

3. IMAGE 3: Apple Store in Upper West Side, New York

3. IMAGE 4: Apple logo with “Think Different” slogan

1. INTRODUCTION

After setting marketing objectives and marketing strategies, the Marketing-Mix represents the third and last level of planning in the marketing conception[1]. Therefore once the market for the Apple Watch has already been defined and correspondingly analyzed, the next step will be to review what the different elements of the Apple Watch Marketing-Mix are and how they interact with each other.

The interaction among them shows clearly how changes and decisions made, which affect to one specific area of a product’s Marketing-Mix, produce different changes –and up to what extent- in the rest of the elements[2], demonstrating that they cannot be seen, considered or analyzed separately but as a whole.

It is clear then that only by approaching the Apple Watch Marketing-Mix as a whole, in which each part is irreplaceable and subordinated to Apple’s marketing strategy, can be obtained a complete view of the level of efficiency they achieve when exploiting the two Unique Selling Propositions already stated in the conclusions of the first assignment.

2. MARKETING MIX

Abbildung in dieser Leseprobe nicht enthalten

Image 1: Marketing-Mix. From 4 P’s to 7 P’s[3]

Marketing-Mix is a set of tactical and monitoring tools which can be combined and applied in a company in order to arise some wanted reactions within the targeted market[4]. All the areas which belong to the marketing-mix are there to be controlled and run in such a way that they achieve a competitive advantage for our company –normally increased revenues through sales growth-. They are all interconnected and must work together coordinately with the targeted customer or market in spotlight.

Although McCarthy (1964) originally established 4 –Product, Price, Place & Promotion- the concept has been revisited many times by other authors who have enhanced these areas by adding additional ones. We will focus here on the 3 additional P’s from Booms & Bitner (1981) which have been very often used to complement the original 4: People, Process and Physical Evidence.

2.1. The original four categories

2.1.1. Product

The Apple Watch intends to satisfy the demand for a highly customizable good-looking smartwatch able to enhance the smartphone (in this case the iPhone) capabilities. It is also a product which presents a superior value proposition to the customer based on a total integration of the product with the Apple hardware (iPhone, iPad, Mac computers) and software environment (iOS, iTunes, App Store, etc.), a robust construction made with fine materials, an innovative design that clearly stands out and also adds countless customization possibilities through wristbands matching all styles and tastes. And all these advantages are wrapped in Apple’s customer service. It exploits then personalization, integration, design, ease of use and service as a way to maximize the added value offered to the customer as return for his/her investment.

The company has a unified product range in which software and hardware works seamlessly and in which only the screen and back materials are different depending on the version. Apple benefits then from a high margin product without incurring in additional costs derived from the complex handling from big product diversity with many different detachable features and add-ons.

An important selling point for Apple is the product presentation and packaging. Since the company –as stated in the first assignment- targets a customer willing –and able- to pay more for the Apple’s exclusive design and brand, packaging has to be presented according to this segmentation. This is no exception in the Apple Watch. A white minimalist box –with the brand value clearly assuming an important commercial role- inside of which every detail has been carefully thought gives the customer the impression that what he/she just bought is something unique which will distinguish its owner from the crowd.

And as part of Apple’s strategy, the Apple Watch only includes the basic accessories (watch, power adapter and charging cable, the wristband and instructions manual). It allows those users who only need the basics to start using it and forces those others who want more to buy any required accessory. This distinguishes once more the Apple Watch from most of the other smartwatch manufacturers which try to counteract Apple by offering value for money including many accessories as transport cases, additional wristbands, etc. Even something basic as the second year warranty is offered by Apple as an extra. Because premium branding does not revolve about getting as much as possible out of the customer’s investment, but about uniqueness and exclusivity. Everything else has to be bought separately.

Abbildung in dieser Leseprobe nicht enthalten

Image 2: Apple Watch Sport, Apple Watch & Apple Watch Edition[5]

According to the Boston Consulting Group Matrix (to perform product portfolio analysis based on their market share and growth rate) the Apple watch would currently be a star as its rapidly growing market share remains unbeatable and, as some statistics show, has become in 2015 after only some months in the market, the absolute market leader. Its cash generation capacity is well above average although not comparable to the iPhone which remains Apple’s bestselling product.

2.1.2. Price

While price-setting is always difficult due to the pressure in the demand, cost interrelationships and in the different degrees of competition[6], Apple follows a clear marketing strategy based on differentiation which stresses the product value, capabilities and advantages and allows the company to sell the product with margins notably higher than those of its competitors.

Apple is not the cost leader. The company has never used penetration pricing to gain market share rapidly, as Apple has managed to quickly become the leader in many product segments short after its entrance despite its comparatively higher pricing. What Apple really does would be a sort of “market-skimming”[7], or in other words enter the market with a new product priced higher than the competition to maximize initial earnings with early adopters. But an important difference has to be pointed out here. Most companies using a price skimming strategy tend to lower their prices over time as customers start to lose interest or new products appear. Apple has only done it in very few occasions and with minimum discounts, as the company manages to sell their products at high prices over most of the product life cycle.

With the Apple Watch Edition priced at 11.000€[8], the company brings differentiation to a whole new level by trying to enter a new segment dominated until recently by companies with no –or very few- technological background. Apple is then the first technological company offering a smartwatch aimed at the watch luxury market and is, at the same time, the first company with a product in the watch luxury segment with a strong technological background. In both cases these differences will continue to allow Apple to price its products without having to necessarily tie them to competitors’ prices.

It is clear then that the company uses differentiation also as a price strategy. If its brand stands out among many others, Apple’s customers must consequently be ready to pay more than the average for a product that will place them in the reduced group of those selected to be noticed and be looked at.

2.1.3. Place

Apple currently pursues a strategy to position its products in as many places, and as close to its target customer, as possible. The Apple Watch has a reserved space in each of the company sales points.

As a company with a clear focus on differentiation, the Apple Stores are the company’s direct sales channel and are conceived to communicate Apple’s commitment to design and distinction. Apple locates its stores in strategic places of most major cities or malls and pays a lot of attention to the architectural design with translucent glass stairs or big glass façades (like the one of the Apple Store on Yew York’s 5th Avenue). With the arrival of the Apple Watch in April 2015 these stores have become even more exclusive. Any customer considering the purchase of the gold Apple Watch Edition is invited to enter a room separated from the rest of the store and rest comfortably. There an Apple employee offers him individual advice and the kind of service and attention someone would expect a top luxury brand would dispense to a potential customer.

Abbildung in dieser Leseprobe nicht enthalten

Image 3: Apple Store in Upper West Side, New York[9].

Among Apple’s own points of sales are also the Apple Shops which are reserved areas within the store of a partner company. They allow the company to cover a much bigger territory with a fraction of the investment needed for an Apple Store. These Apple Shop spaces are decorated according to the Apple Stores’ corporate image and offer the customer -at a smaller scale- the same product experience one would find at a regular Apple Store. In Germany they can be found inside Saturn or Mediamarkt.

The Apple on-line store, in which the company offers its whole product portfolio, is one of the fastest growing sales channels[10] and through a big logistic network enables customers to buy on line and receive the product in a short period of time without paying any additional transport costs if they reach a minimum order quantity.

Another sales channel, perhaps less known and publicized, is the Refurbished Apple Store through which the company sells at discounted prices returned products which cannot be sold as new anymore or products from customer claims which have already been repaired.

Apart from the before mentioned direct sales channels, the company has a vast network of independent retailers who sell Apple products to the end customer. Apple exerts a lot of pressure on these retailers imposing its corporate guidelines so that the overall customer experience resembles as much as possible that of regular Apple Stores.

2.1.4. Promotion

Apple is a company that invests large sums of money to promote its products through many and different platforms. On TV, in specialized magazines, billboards, by signing agreements with others companies (Apple Inc. + Nike Inc. to promote the Nike fitness tracker), mobile advertisements in underground systems, trams and buses, etc. Apple is always on the search for the right spot where any promotional activities could have the biggest impact. One of the fields in which the company has been traditionally very active is in product placement[11]. Today there many popular American shows in which actors are seen using a Mac, an iPhone or more recently wearing an Apple Watch.

Some very famous advertisements like the iconic Apple Macintosh Commercial, considered by many as the best Super Bowl commercial of all time, or the video series in which Apple ironically mocks Windows disadvantages demonstrate Apple’s creativity in his quest against the status quo and his predilection for ads and commercials with a deep impact on consumers’ opinions and behaviors.

[...]


[1] Scharf, A. et al. (2015), p. 517.

[2] Homburg, C. (2012), p. 909.

[3] Professional Academy (n. d.).

[4] Kotler P. et al. (2011), p. 191.

[5] Apple Inc. (2016).

[6] Kotler, P. et al. (2006), p. 387.

[7] Hutt, M. D. et al. (2013), p. 312.

[8] Apple, Inc. (2016).

[9] Time Out New York (2015).

[10] Banjo, S. (2014).

[11] Product Placement is a type of advertisement in which brands and products are shown in movies, shows and other programs for commercial purposes“ (Verband für Product Placement, 2016).

Details

Pages
15
Year
2016
ISBN (eBook)
9783668779150
ISBN (Book)
9783668779167
Language
English
Catalog Number
v437674
Institution / College
University of Applied Sciences Essen
Grade
1,3
Tags
apple watch appe 7 P's marketing marketing mix USP unique selling proposition

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Title: The Seven P’s of the Apple Watch’s Marketing-Mix