Executive Summary

The assignment is about iPhone innovation in the light of integrated marketing communication

COSTAC framework plan for one year duration. First of all we will introduce the Apple Inc.,

then iphone innovation and diffusion. In the COSTAC framework we will state the current

strategy of Apple about iphone, i-e the context analysis, objectives and SMART (SMART will

be discussed within the objectives of the Apple, marcoms strategies and tactics (so marcoms mix,

media, message are the elements of tactics, but we will be discussed them in the light of full,

push and profile strageties). After that we will come to the say about the current innovation of

iphone i-e iphone4 and define that, how the Apple can promote the iphone4 in the market? What

should be required? Who will buy this product? On the base of secondary data we will try that

what are the successful and unsuccessful factors of Apple strategy. In action we will say about

the current budget of Apple for applying of marcoms stragety and tactics. In last we will write

about the control and monitoring of current Apple staff.

INTRODUCTION TO ORGANIZATION:

Apple is a U.S company, that produces consumer electronics and computer software products.

The company best known hardware products include the Macintosh computers, the iPod and the

iPhone. Apple software includes the Mac OS X operating system, iTunes media browser, the

iLife suite of multimedia software and the creativity.The company operates more than 250

branches in nine countries and an online store where hardware and software products are sold.

SHORT INTRODUCTION:

Founded Cupertino, California, United States of America (April 1, 1976) such as

Apple Computer, Inc.

Founder(s) Steve Jobs, Steve Wozniak, Ronald Wayne

Headquarters: Infinite Loop, Cupertino, California, USA

Public type NASDAQ: AAPL, LSE: 0HDZ, FWB: APC

No: of Locations: 251 (Q1 FY 2009)

Area are: Worldwide, United States, Britain, Canada, Japan, Australia, India, Italy,

Germany and China.

Industry: Computer Hardware,

                               Computer software

                               Consumer Electronics,

                               Digital Distribution.

Products:

Mac (Pro, iMac Mini • • MacBook, Air, Pro • Xserve)  iPhone, iPod

(Shuffle, Nan, Classic, Touch) Apple TV, Cinema Display, AirPort,

 Time Capsule Mac OS X (Server • iPhone OS), iLife, iWork

Profit : ▲ £ 2.22 billion in 2010

Website: Apple.com

(www.wikipedia.com)

INTRODUCTION TO IPHONE INNVATIONS AND DIFFUSION

A distinction is typically made between invention, an idea made manifest, and innovation, ideas

applied successfully (Mckeowm 2008). Apple launched iphone in January 2007. The original

2.5G iPhone combined with a quad-band GSM and EDGE mobile phone with features hand-held

Device found, runs a stripped down version of Apple's Mac OS X (iPhone OS), and with

different Mac OS X applications like Safari and Mail. It also contains web-based and dashboard

applications like Google Maps and Weather. The iPhone has a 3.5-inch (89 mm) touch-screen

display, Bluetooth and Wi-Fi. On 5th February 2008, Apple updated the original iPhone from 4

GB to 8 GB models and 16 GB of memory. On 9 June 2008, at WWDC 2008 announced that

Steve Jobs the iPhone 3G would be Available on 11 in July, 2008. This version adds support for

3G networks, Assisted-GPS navigation. The price cut to £ 130.55 for 8GB version and £ 196.15

for 16GB version, which was in black and white . On 24 April 2009 exceeded the one billion

App Store downloads. At 8 Jun 2010 Apple launched iPhone 4. Apple has detailed the new

version of the iPhone 4, announced at 24th June 2010.

www.bit-tech.net/news/hardware/2010/...iphone-4-release-date/1

Diffusion of innovations

The iphone diffusion-curve derives from an assumption that new product e.g. iphone4 is likely to

have "product life", i.e. a start-up phase, a rapid increase in revenue and eventual decline. In fact

the great majority of innovations never gets off the bottom of the curve, and never produces

normal returns. The Apple will typically be working on new innovations that will ultimately

replace older ones. Successive diffusion -curves will come along to replace older ones and

continue to drive growth upwards. In the figure above the first curve shows a current technology.

The second shows an emerging technology that current yields lower growth but will eventually

overtake current technology and lead to even greater levels of growth. The length of life depends

on many factors which we discussed later.

Apple’s popular buzz marketing expertise for revolutionary products such as iPod, iPod

Nano and iPod Touch should be directed towards communicating the dynamic smartphone.

(CAE Weblog: Apple iPhone Promotion, n.d.)

COSTAC Model:

This model provides a useful framework for illustrating Marketing communication plans.

Apple launching of iphone in UK faced a lot of problems in the competitive market. COSTAC is

the combination of:

C = Context analysis, O = Objective Setting, S = Strategy development, T = Tactical,

A = Action and C = Control

CONTEXT ANALYSIS

This analysis helps to Apple for better understanding of its environment and provides a sound

basis for establishing communication objectives. In the light of following elements of context

analysis we can introduce the current position of Apple and iphone.

1.Business context

Apple concentrated over the trading condition. Considering the vast explosion of iPhones in such

a short period, it is natural that all of those who want an iPhone would expand its use to business

as well own. And there is no joy to carry around a Blackberry and iPhone, either in the pocket.

All this does is extra pressure on the belt. It's no wonder that the iPhone's usability in a business

context is a raging debate now. This is still a secondary question, because the fact remains that

present and future users demands for iPhone, for business use.

2. Customer context

Apple is judging the consumer behavior and consumer decision making for iphone in the market.

o Buyer or consumer behavior.

The consumer behavior display in searching for, purchasing, using, evaluating, and disposing of

products and services that they expect to satisfy their needs. iPhone "phenomenon" than perhaps

any other single piece of technology. It might seem like another blog would be just another one

on the mound. But the iPhone is a perfect example of technology that its mark on consumer

behavior. A recent article in the LA Times discusses the overwhelming accessibility of

information for iPhone users. The article examines in particular possibility that this access could

become a social responsibility - the phone can "change in seconds, a light-hearted entertainment

in the pursuit of truth."

o Consumer decision-making processes

The ability to see what the consumer trusts about something to think before he is paying money.

That is the most powerful aspect of iPhone. A student aims from the Atlanta area, and says the

phone is a "great opportunity for people has opened to check on a particular product, be it a pair

of jeans, a computer or car, with her colleagues(Jared Kelley-Hudgins). Jared thinks he's the new

iPhone, especially for the anticipated 3G feature, which would, if introduced to the Internet

access outside of Wi-Fi networks up to 10 times faster than speed EDGE networks. So

considering the technological quality, speed, appearance (iphone is a consistent band and simple

instruction to use), safety (because iphone has updated equipments for any official,

entertainment, printing etc use), value and loyalty( it is a professional device, low price than

value, and best service ability, i-e 97% people are happy to use the iphone).

3. Internal context

Apple’s commitment to internal quality improvement programs would build high customer

equity in terms of value, brand and relationship. Management understands the customer’s value

creation process to provide and deliver customer value. So for this purpose Apple use Online

Store team, Online Service Assistant,Online help forums, Phone Support( Customer service

phone numbers main headquarters– stored in iPhone’s phonebook), Email & Chat Support, Face

-to-Face Contact, Customer Involvement, Customer Appreciation.

(Apple – Support – Contact Apple Support, 2009)

(iPhone marketing plan - Apple iPhone forums, 2009)

Marketing functions / departments and their activities coordinated for vertical integration and

holistic marketing management. The iPhone work product development and internal / external

relations management. The iphone team concerned with Marketing Manager, Operations

Manager, designers, hardware engineers, software engineers, product managers and business

development manager. So they are communicating messages to influence the way in which they

deal and respond to external audiences.

4. External context

The factors affect over the Apple marketing communication activities are:

Political situation. • Taxation is something that government of UK over Apple from expected profit, and pricing strategy. The important laws in the world is GATT in favor of trade.

Economic factors

The real world economic growth is in need of a major recession also affected UK economy, that

affected Apple market already. So the Apple cares in the process of editing in market is declining,

but it is higher than any other in the telecom sector. The exchange rate fluctuation is also

harmful for Apple.

Social factors.

The "Start social brand community networking and the provision of communications for the

scope of the professional routine and quality of life, i-e blogging, micro-blogging, photo-sharing,

web-journalism, network gaming, etc. which are the characteristics of iphone.

(Millennial Marketing: Jello & Betty Crocker get iPhone Apps: Who’s next?, n.d.)

Technological factors.

The real challenges for iphone are the state of the art in the real world, the level of awareness and Internet

usage for the individual and industrial aspect of the world are rising. Landlines performance and

development efforts, new technologies in mobile phones are increasing. But Apple planned everything in

iphone i-e the future plans for the technological link between cities, universities, hospitals and other

institutions are increasing and can be connected to mobile phones. The level of using e-technology (on-

line bidding, billing, complaints, blogging etc) is high and trendy. Significant developments in the

mobile market (3G Handsets reality and advanced features for the customer) is the multimedia

download market push into new areas and opens up great opportunities for Apple iphone’s.

Legal factors:

Questions of copyright and illegal downloading large influence on Apple

download industry and are a major problem for active service operators. A former lack of laws in

this area, the consumer away from commercial download services and in response to these new

technologies were introduced to prevent the protection of copyright owners and that customers

download and share files illegally promoted. Digital Rights Management (DRM) was created to

have the number of copies that can be made from a download, and are indeed the control of this

industry, there are many positive aspects to it so many negative DRM for the consumer.

Environmental factors.

As part of the green revolution, green applications designed, the customers with

creative solutions (green tips) for a green and healthy living. e.g. advises them to

"Compost PET-waste," or "no water the Sidewalk", etc. The second thing is global

concern of the Global Warming issue & other pollution causes concerning the packaging

material and radiation of the cell phones

(Annex 1.1 iPhone Application Green)

5. Stakeholder context.

It is very importat to understand the issues surrounding the range of stakeholders to be

communicated. But Apple does not concentrate over Investors, Financial institutions, Trade

associations, Government role regulations, pressure groups.

The article says “We all love Apple with its modern and innovative products – but some recent news

about the lack of stakeholder feedback and irresponsible business practices are making me wonder

whether Apple is not willing to listen and act anymore with regards to Sustainability and CSR?

These two recent articles raise big question marks about the way Apple is conducting its business and

whether to buy Apple products in the future.” (http://www.fabianpattberg.com/tag/stakeholders)

SMART OBJECTIVES OF IPHONE

The objectives of Apple in order to achieve its goals. The objectives can show the clear path

towards the target. Although this concept is not new, but people still confuse it with other

concepts such as objective, strategy etc. The term SMART stands for specific, measurable,

achievable, realistic and timely bound, to clearly define the long-term objectives.

The Apple marketing objectives were to make an aggressive buy achievable objective for the

first and second years of the market:

1st year Objectives - Apple presented a 2% shares of UK mobile phone market with the aim of

testing by individual sales volume.

2nd year objectives – To increase shares to10 percent.

• Addition to Apple's image of innovation, quality and value, so the iphone4 is a suitable

sulotion.

• Measure the awareness and response in order to make adjustments to marketing

campaigns as necessary for iphon4.

• Extension to the Apple brand and link to the established meaningful positioning.

Target Market:

• Differentiate the other PDA's iPhone4 on the market.

• The primary objective of the customer:

That the average incomes of the top professional of their busy schedules to coordinate

and communicate with Colleagues, friends and family.

• Secondary objectives are consumer high school, college and graduate students who

need a portable multifunction device.

• Primary objective is business partnership with:

• Large mobile phone provider O2, ORANGE, VODAFONE.

• Large enterprise software companies, where information is critical to the

ultimate consumer.

• Secondary business objective is medium to medium-sized businesses that help

managers and employees to stay in communication or access to the critical data customers want

to go. The current Market segment of all telecom companies annual sales are from £6,54 -

£32,000,000 .

Segmentation:

Demographic Variables for iPhone4: Intellectual users with purchasing.

o AGE

Young users (16yrs-25yrs), Middle aged users

o INCOME

High income

OCCUPATION

Professionals, Corporate users/entrepreneurs, Medical users and Students

(Launching iPhone: Apple’s entry into the Mobile Phone Market |Marketing Case Studies|, n.d.)

POSITIONING

With the using of product differentiation, positioning, iPhone4 will be adaptable, practical,

value-added equipment for personal and professional use. It will focus on the expediency of

having a full device for communication, but also pictures, music, video, and Internet access.

The iPhone4 will be encouraged as a profession and stylish.

Positioning: Designing the competitive advantage The competitors of iphone4 in UK are Sony Ericcson, Nokia and Blackberry after having

been sorted through the prospective differentiation points

iPhone’s Prospective Differentiation Points

Product differentiation (Kotler & Armstrong, 2002, p. 270,271)

Unique Selling Proposition (USP) – Multi-touch screen

Promotional features: Larger, removable disk storage capacity – USB support, digital

camera memory cards, external hard drives, Light weight and thin body, Easily

replaceable long life battery (twice the usual time), High definition camera, 4G wirelesses

– even faster, more incredible speeds than ever offered on this sort of device. This will

leapfrog the competition.

(iPhone features, 2010)

Image differentiation

Apple brandname:

Iconic Apple image used to capitalize on iPhone brand

Apple logo emblazoned on the packaging and body of the phone and software and design

by Apple.

(Apple launches iPhone at Macworld-CRAVE at CNET UK, 2009)

Channel differentiation

Exclusive distribution:

O2 ,Orange, Vodafone.

Service differentiation

Apple’s “work hard play hard” iPhone team

Handling sales, troubleshooting, updates announcements, maintenance, etc.

(Apple Computer-Company Profile of Apple Computer – Getting a job at Apple, 2009)

From the past experience of iphone status:

The market share was 10% in the U.K. smartphone market over a course of two years.

So the objective of iphone4 for UK will be:

• A large consumer shares of several sub-markets could be conquered for the first Apple-timer in

the mobile phone market.

• It would be for the needs and desires of the targeted customers.

• Capturing multiple market segments through a single marketing strategy would save the cost of

customized marketing and preferential terms for individual segments.

To satisfy the needs and wants of smartphone customers and guarantee satisfaction through

value delivery.

It would provide a market breakdown to identify potential smartphone users.

To manage a successful, focused launch without budgetary wastages.

It would help sort out consumer groups of interest from broad segments of various age-income

combinations of the cellular phones market. Hence, limits wastage of resources.

(Kotler & Armstrong,2002, p.246).

The SMART criteria should not only to the general communication strategy, but also to the

setting of targets in the promotional mix. This means that enables the SMART principle, these

objectives are set for advertising, sales promotion, personal selling, public relations and direct

marketing.

Strategy Development and TACTICS of Apple:

The Apple will focus this part of the communication process, to examine the strategy and

communicate the right balance between the need of consumers, traders and other stakeholders.

There are three approaches that Apple can use as a basis for their communication strategies and

these are generally regarded as the 3Ps of marketing communication.

Pull communication strategies as a B2C strategy:

Apple will create advertising and sales promotion activities to the end users or buyers in an

attempt to provide iphone4 from the agents to consumers; in turn they will demand the product

directly from the Apple and thus pull the iphone4 by the channel demand. The advertising

objective is to create a rule and to maintain heightened awareness to build attitudes and provoke

motivation within the group of buyers. Pull strategies encourage the end-users to demand the

product from the distributors, thereby pulling the product through the distribution network.

(Kate Walsh Notes)

Iphone is advertising through Television Commercials (TVCs), Celebrity testimonials.

Billboards and banners:

Malls: visited by the youth, Office buildings for corporate users, Underground Metro stations for

corporate users and youth.

Online Podcasts:

YouTube is a platform for successful advertising. iphone also use marketing blogs, etc.

Sales promotion:

Apple Joint tariffs through O2, Vodafone and Orange to optimize costs for consumer.

Price cuts under market skimming strategy .

(iPhone marketing plan - Apple iPhone forums, 2010)

Push communication strategies as a B2B strategy:

The Apple uses these promotional activities or messages to the channel intermediaries

(commercial channels), as distributors, wholesalers, agents, distributors and retailers, which in

turn pass on such promotional activities are targeted for the end users e.g. you can buy iphone4

from carphone warehouse with the connection of O2, Vodafone and Orange.

(http://www.carphonewarehouse.com/mobiles/pay-monthly/apple-iphone4)

The O2, Vodafone and Orange are distributors for iphone. They offer the following packages.

Orage give Free iPhone 16GB on a 24 month contract, you have to fork out £ 75 per month.

Vodafone iPhone is not officially her 4 tariffs, but the rumors of an iPhone on Vodafone 4 costs

from £ 35 per month with the 16GB phone costs 89 pounds released.

IPhone O 2 from 4 data packets and go up to 500MB 1GB, which should be more than enough for

most people. Look under 24 months of comparison iPhone £ 25 month you get 100 minutes at

500MB, the level increased to £ 60, if you think you need 1GB.

(http://www.simplyfreeiphone.co.uk/news.html)

(Kate Walsh notes)

A push often uses mainly promotional mix tools i-e:

• Personal selling, as in business to business marketing.

The personal selling may focus initially on developing a relationship with a prospective buyer,

but ultimately, always trying to "close the sale to end." It is an effective way to manage personal

customer relationships.

Ttrade advertising is using encourage wholesalers and retailers and motivate them to purchase

its products for resale to their ultimate customers. Trade advertising usually appears in

publications that serve the particular industry e.g. the Apple give grants to the distribution

channel in UK, to give free iphone with their package i-e given in the following image.

• Sales promotion techniques such as discount for bulk orders, dealer competitions for the best

sales figures and so on. Hence for the sales promotion iphone Joint tariffs with the folloing

connection available at UK to optimize costs for consumer.

(http://www.carphonewarehouse.com/mobiles/pay-monthly/apple-iphone3gs)

If Apple Inc. uses both the pull and push strategy in their communication with the business

men and direct to the customers for iphone4 and provide accessibility to customers with other

connection, upgrade facility etc, then the product will be promote very well. And iphone4 will be

like the king position in the market.

PROFILE COMMUNICATION STRATEGY

The Apple can be used this strategy to create a positive public image of iphone4 in the minds of

parties. The task or objective is to provide a suitable project corporate identity, to build and

maintain a solid reputation for iphone4.

Marketing communications tools used in profile strategies include mostly:

• Public relations:

Apple will generate public relation techniques such as press releases, press conferences, facility

visits etc, to provide the test units to O2, Vodafone And Orange and high end subscription.

(Entrepreneurs, IT professionals, etc). Creative method "Spread the Word" competition with

consumers. Apple signed contract for free Wi-Fi to public. And for customer attraction has done

customer Appreciation Day for every 6 months.

• Sponsorship:

It is a community based projects such as Tesco’s computers for schools initiative. Apple

exclusively is sponsoring is about 15,000 Subscribers up to 66% from last year opportunity to

weekly e-newsletter. But due the innovative product (iphone4) the responsibility of Apple is

more than before, because the phone is new and it want promotion in the market, for this purpose

Apple will Sponsoring for target consumers in specific exhibitions, function, etc for which

consumers take keen interest.

The Apple use tactics for customer attraction. The customer is elevating from different sources

to create differentiation by competitors and delivering the goods with value added service

message or an application. • PR • Blogs - Opinion & Specialized Pre-Launch Strategy • Sneak

Peaks sites on R & D Info • Buzz & Viral Marketing • Apple.com • Printed media launch

strategy • TV Outdoor Media Social Media • Advertising • Carrier Handeld Apple.com Post

launch strategy • Independent review sites • Online Ads • Digital Campaigning Paind Digital

Marketing Strategy Break Up Email Marketing Social Media Display Ads Advertising Blogs

Access to care • Hosting iPhone Apps iPhone apps iTunes Purchase section for free as you can

see, you can watch Apple has almost all digital channels in 2007 to 2010, and makes economic

sense used in order for the hosting to use their communicative message consumers and target

audience.

ACTION

Action means applying the organization’s marketing communication strategies and tactics so

that organizational communication objectives can be achieved. For this purpose the basic activity

i-e to set the marketing communications budget.

• The Apple break-even analysis assumes the wholesale sales of £ 328.34 per unit,

variable cost of £ 164.17 per unit and fixed costs est of £ 32,830,000. Based on these

assumptions, the break-even calculation is 32,830,000 pound divided by

(£ 328.34 - £ 164.17) equal 202,000 units sold.

• Break-even calculations show that Apple will exceed the sales volume for profitable

202k. After the first year, Apple is a profit of 1.25 billion billion minus 32.83

million fixed. costs.

• Recommended price is £ 229.84. The markup is 40 percent.

• It is predicted that sales will increase by at least 60 percent from this change, which will

reduce the impact of fixed costs and to improve opportunities for our production scale,

increase, further Improvement in profits in the long term. So the iphone4 is the innovative

product of apple, so in the early stage that is shown in the following diagram.

(Kate Walsh notes)

The "innovators" (those who adopt new products first) are usually relatively young, active,

intelligent, socially and geographically mobile. It follows from the above model, the apple is

launching iphone4, the customers who are buying first, the expected differ significantly from

those who buy the product, much later. This must be considered in the development of the

marketing mix. Innovators are the first to adopt and show a behavior that they want to remain

likely demonstrated and the first to own iphone4 are far from the average consumers. They are

often not taken seriously by their colleagues. So to bring awareness in the customer the Apple

will use marcoms approaches for high involvement. i-e

(Kate Walsh notes)

CONTROL

Once the marketing plan begins to be implemented, the manager is monitoring and control that

what is going on? Monitoring means, to check that everything in schedule. Control means

corrective measures as soon as possible if things do not work as planned.

(Kotler & Armstrong, 2002). The Apple team will used the following methods for control the

marketing communications.

• Sale control: the team will test that whether actual sales match the organization’s sales

objectives. It means place, so they will target the big cities and focus over youngsters crowd

areas e.g. Universities, Colleges and Pubes etc.

• Profitability control: the team will manage that the profit which the organization gains from

investment, is profitable or losable or equal. This involves determining whether actual profits

match the organization’s profit objectives.

• Brand awareness control: Apple is known for cool gadgets like the iPods along great

technological importance of innovation known as the iphone.

(Apple.com 2009, 2010)

Brand awareness will be an important tool in taking the Apple brand from "social cool" to

"business cool".

• Benchmarking:

Apple has received in the supply chain performance and is on the top of the benchmark list.

With the start of each new product until iPhone 3G versions, Apple has mastered in the

execution of product delivery, which seems to be a major obstacle for its competitors.

Source:

(www.amrresearch.com)

The contribution that evaluation research can the resilience of individuals, to make families

and communities as evaluation factors become conversant on expanded programs and program

contexts. The contribution that can make programs for their communities, the program is that

more professionals use insights and strengthened the "lessons learned" that come from evaluation

research. Customer evaluation and attitude towards Apple would flourish positively and they

would want to distinguish themselves with iPhone4.

(Corporate Social Responsibility, Customer Satisfaction, and Market Value – Insightory, 2010)

References

(www.wikipedia.com).

www.bit-tech.net/news/hardware/2010/...iphone-4-release-date/1

(CAE Weblog: Apple iPhone Promotion, n.d.).

(Jared Kelley-Hudgins).

(Apple – Support – Contact Apple Support, 2009)

(iPhone marketing plan - Apple iPhone forums, 2009)

(Millennial Marketing: Jello & Betty Crocker get iPhone Apps: Who’s next?, n.d.)

(Annex 1.1 iPhone Application Green)

(http://www.fabianpattberg.com/tag/stakeholders)

Kotler & Armstrong, 2002

(Apple launches iPhone at Macworld-CRAVE at CNET UK, 2009)

(Apple Computer-Company Profile of Apple Computer – Getting a job at Apple, 2009)

(Kate Walsh Notes)

http://www.simplyfreeiphone.co.uk/news.html

(http://www.carphonewarehouse.com/mobiles/pay-monthly/apple-iphone3gs)

(iPhone marketing plan - Apple iPhone forums, 2010)

(Apple.com 2009, 2010)

(www.amrresearch.com)

(Corporate Social Responsibility, Customer Satisfaction, and Market Value – Insightory, 2010)