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MARKETING MANAGEMENT

Course Name : Masters of Business Administration


Module Name : Marketing Management
Class work : 1
Submission Date : 29 October 2010
Word count : 1200
Module Lecturer : Anthony
Submitted By : Syed Hassan Raza
Kaplan ID No. : C0103570
LJMU ID No. : 468229

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CONTENTS

INTRODUCTION------------------------------------------------------------------------------3

DIFFUSION OF INNOVATION
USED IN INTERNATIONAL LAUNCH---------------------------------------------------3

MARKETING MIX--------------------------------------------------------------------------- 4

STEVE JOB STATEMENT-------------------------------------------------------------------6

RULES FOR EARLY ADOPTERS WITH TECHNOLOGY-----------------------------6

REFERENCES-----------------------------------------------------------------------------------7

APPENDIX 1------------------------------------------------------------------------------------8

APPENDIX 2------------------------------------------------------------------------------------9

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Introduction:
IPhone has strong brand image internationally. Apple understands the changing
envirnoment and introduced the iPhone, which not only meet the customers need but
also exceed the cusotmers expectations.
Following is the brief review of iPhone international launch using diffusion of
innovation and marketing mix adopted by the iPhone marketers. The discussion also
covers the Steve Job statement and Rules apply to early adopters.

Diffusion of innovation:

‘The process by which innovation is communicated through certain channels over


time among the members of social channels’. (Rogers 2003)
Diffusion of iPhone was not difficult for the Apple. Apple has good market reputation
due to its innovative product and strong customer’s loyality. As Allen said. ‘Apple
has a reputation for streamling the customer experience’. (From handout).iPhone
marketers used the mass media and interpersonal marketing to attract the adopters for
diffusion. The adoption rate of new product is normally slow becuase adopters are
reluctant to try new product initially then it starts gaining acceptance. ‘The relative
speed with which an innovation is adopted by members of a social system.’
(Rogers 2003). But adoption rate of iPhone was high becuase information about
the iPhone was diffused across the boundries. Iphone was accepted irrespective of
geographical boundries, cultures and lifestyles. It became unique gadget and changed
the competitive envirnoment of the mobile phone industry.

Apple marketing strategy carried out extensive research to appeal adopters identified
by Rogers being; innovators; early adopters; early majority; late majority; and
laggards (Roger 1983). The theory that each group acts as a reference base for the
next group, from innovators through to laggards (Moore 2002)

Innovators are those who are interested in new innovative product or service and take
lead in getting information about the new product and adopt it even on premium price.

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Early Adopters are opinion leaders who carefully search for new technology that
might give them a competitive advantage. They are less price sensitive and willing to
support the product if given personalized solution and good service support.
Early majority adopts the product when benefits are proven and a lot of adoption has
been taken.
Late majority are those who are skeptical conservative and are risk averse, technology
shy and price sensitive.
Laggards are tradition-bound and resist the innovation until they find that status quo is
no longer defensible.

Marketing mix adopted for the iPhone:

Marketing mix:

The set of controllable variables which the company uses to


influence the target market. These are product, place, promotion,
and price and extended P’s. (ACCA, Business analysis – P3, BPP, p60)
Robert suggested that 4ps correspond to the customers 4Cs.
Product by providing customer solutions, customer cost by pricing,
convenience to customers by providing product and Promotion by
communicating with customers. (Robert, cited in Philip Kotler, p20)

Product:

According to the Kotler, customers must feel he gets a best deal


from buying an item than by any of the alternative. (ACCA, Business
analysis – P3, BPP, p61)
Innovator and Early adopter are technology geek and always look
for trying innovative product. IPhone was the first phone to make
listening music, checking voicemail and browsing web as easy as
swiping, its high tech software was key ingredient, user’s friendly
interface, beautifully crafted box and thousands of apps which can
be downloaded by itunes made technology geeks excited. In order
to make the iPhone attractive, developers continuously upgraded
the iPhone models so that early adopter’s loyalty could be
maintained. Due to its unique features and stylish design, late
majority and laggards also showed their interest in iPhone. As Allen
said, ‘his wife uses the computer for emails and the web definitely
isn’t geek. She has zero interest in electronics but as she saw the
iPhone on the news, she said she wanted one’. (From handout)

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Place:

Iphone distribution policy was customer pull. Adopters could


purchase the iPhone by making reservation from the Apple website
and also visiting the Apple store where they got more information
by meeting expert staff and testing iPhone.

Promotion:

To promote iPhone, marketers adopt the aggressive marketing


approach. Innovators and early adopter are majorly attracted by
mass media. Marketers used advertisements by selecting
international media to spread information about iPhone such as tv
channels, apple website, newspapers and magazines. Public relation
techniques were also deployed for the diffusion of the Iphone. Many
news releases and media conferences were carried to promote the
iPhone launch in which Steve Job was actively involved. IPhone
marketers also used interpersonal marketing (words of mouth) to
promote the iPhone. Marketers used the personal selling to arise
attention of the early majority, late majority and laggards. One thing
is common among these categories; they don’t take initiative and
wait for technology being proven. To attract these categories,
trained and skilled workforce deployed to make awareness about
the iPhone to the customers. Apple also enabled adopters to test
the iPhone at store. Innovators and early adopters played an
important role in promoting the iPhone to majority and laggards by
words of mouth. iPhone collaborated with reputed network providers
such as AT&T, O2, Orange and Vodafone for international diffusion.
These companies used their own communication mix to promote the
iPhone.

Price:

Apple charged the premium price for this high tech gadget .Initially
iPhone pricing policy was marketing skimming. It charged the high
price to the innovators and early adopters to maximize revenue and
to justify its high quality product. These adopters are technology
geek and are not price conscious. When the iPhone was launched in
2007 for $ 600, technology geeks took an initiative to buy first. The
diffusion of iPhone was halted because of its high price tag in spite
of its demand high. Early majority and especially late majority are
price sensitive and they are those who set the mainstream of
market as well. In order to increase market share and volume of
sales, iPhone marketers changed its pricing policy to market
penetration so that mass market could be captured. iPhone price

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was trimmed to $400 in second month after the launch and further
reduced to $200 in 2008 to attract late majority and laggards. Steve
job also introduced the discounts for the early adopter to
compensate premium price so that their loyalty with the iPhone
prevails.

Steve Job Statement:


The Steve Job statement is justifiable on the ground that technology
changes rapidly. Everyday there is change in technology which
creates the uncertainty in competitive environment. So companies
like Apple which is recognized as first mover has to adopt those
changes in order to maintain its competitive advantage and also
meeting the expectations of the customers. When new technology
introduces then value of existing product value impairs and product
cost also changes due to the economies of scale.

Do the different rules apply to early adopter with


technology?

Early adaptors are the opinion leaders and are reference for the
next group. Early adopters are technology geeks and diffused the
innovation by interpersonal marketing to other categories. They
should be properly communicated and informed about changes in
the product and price so that their loyalty remains attached with the
company.
Steve Job showed the strong loyalty with early adopter in his
apology ‘Our early customer trusted us and we must live up to that
trust’ (From handout).

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Reference list

Rogers, E.M. 2003, Diffusion of Innovations, 5th edition, Free Press,


New York

Hsu, P.F, Kraemer, K.L., Dunkle, D. 2006, ‚Determinants of E-


Business Use inU.S. Firms’, International Journal of Electronic
Commerce, Vol. 10, No. 4, pp. 9–45.

Moore, G.A. 2002, Crossing the chasm, 3rd edition, Harper Collins,
New York

ACCA, Business Analysis-Paper P3, ACCA, Published by BPP

Extracted from iPhone case study

Lauterborn Robert, cited in Philip Kotler, Marketing Management Edition


12, Page 20

Rogers,E.M, 1983, cited in Philip Kotler, Marketing Management Edition


12, Page 659

http://www.roi.com.au/index.php/general_marketing/effective_intern
al_marketing_for_successful_external_marketing.html

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APPENDIX 1

Attributes of diffusion of innovation:

Rogers defined the five attributes which influence the rate of adoption innovation:
differiential advantage, competibility, complexitlity and communicability and
diversity. Hsu et al (2006) found that 49 to 87% of the variance in
the rate of adoption across innovations can be attributed to
these five attributes.

Compatibility:

iPhone is unique gadget which makes it different from others, highly


compatible with the personality, lifestyles, attitudes and tastes of all
class.

Communicability:

iPhone marketers established several means of communication for


the diffusion of iPhone and to provide information to the customers.
Customers can communicate with the Apple team through Apple
website where extensive information in available about the iPhone
which customers can used to resolve their problems. |Customers
can also share their ideas and obtain new information about the
iPhone by pop in to apple blog where thousands of users post their

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views and experience about the iPhone. Apple employed
knowledgeable staff at its store to satisfy the customers’ needs.

Complexibility:

User friendly interface and software were the main selling points for
the iPhone. iPhone got the popularity due to its attractive touch
screen interface and very friendly applications which any technology
shy can easily use.

Diversity:

When the new product launches in the market it takes time to get
acceptance because customers avoid to try new things due to the
uncertainty involved. iPhone marketers solve this issue by
encouraging customers to test the iPhone at the store so that they
satisfy with the functionality of the iPhone

APPENDIX 2

Extended 3Ps:

People:

Apple recruited the staff who align with the Apple strategy i.e.
customer focus. iPhone adopts the internal marketing approach to
hire, train, and motivate able employees so that they can provide
better services to the customers.
(www.roi.com.au/ internal marketing)

Process:

IPhone process is source of competitive advantage. Its flawless


manufacturing system, compatible software, unique design, efficient
response time to query, better customers services better processing
speed in deliveries and involvement of developers in innovations
make the iPhone unique and difficult to imitate.

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Physical evidence:

Customers always make comparison and evaluate the qualitites of product or services
with other to makie the buying decesion and satisfying themselves. iPhone made
difficult for the cusotmers to make comparison with other mobiles. iPhone users
friendly software, beautifully crafted box and stylish design really delighted and
conveniced the customers to show their loyality with iPhone.

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