4P’s Analysis: iPhone – Apple

In the mobile world iPhone launch has been the pivotal moment. The phones world is divided in 2 era’s – before iPhone and After iPhone. Just imagine the first gen phones they looked like a silver brick with buttons on it and then came the iPhone. What we did with those bricks was to do voice calls, a few games, and a calendar. What we do now is host of activities. It has changed the way we access the world and the whole overload of information on it. There are more than 3 billion iPhones sold since its launch.

It’s not that no one had tried earlier, there was IBM with their Simon Device – Touch screen, email, To-Do, Fax, etc. but again the design was more like a brick and weight as well.

Just check out the following video to understand the few following things:

Steve Jobs introducing the iPhone at MacWorld 2007:

Product: He introduces iPhone as 3 in 1 – a iPod + Phone + Internet Communicator.

Positioning: Smart and user-friendly design & Comparison between prevalent phones.

Promotion: Look at the way he sets the tone and then announces and ten launches the Product.

To get a bit more in specific details:

Product:

Innovation is one word that defines the Product strategy for iPhone. Apple invests a lot in R&D. This keeps them always ahead of the game in comparison with the competitors. iphone has always been the leader in its segment whether you talk about the touch screen or single slide button to silent a phone or a very high security on data. It has always been a strategy for the designers to bring out a very attractive feature that consumers have never dreamed about. This novelty value helps apple to attract and retain their customers. The loyalty of customers is so strong that you would see a mile long lines outside the mall to buy the new iphone on the launch of it.

Normally the Business schools teach you to find a problem that is pestering the customers, then find a solution to resolve this and Viola you are in business. But iPhone has always launched products which customers were not even expecting. No customer thought of a Touch Screen phone / iPod (instead of Walkman) / iMac.

These were absolute revolutionary products.

Promotion:

The promotion strategy as well is quite different, you would not see a common advertisement like its competitors. Apple focuses on a certain feature in a phone and keeps promoting the same. If you see the recent billboards – it pushes the idea that the images captured from iPhone are professional level. In-fact you do not see an iPhone on the hoarding. Earlier they had promoted the voice command “SIRI” or the email function a few years back. They have always refrained from bombarding ads / celebrity endorsements / high budget ad spends, etc.

In short Apple has always based their promotion strategy on “Focus on Value” rather than the product itself. They always advertised a feature (value). Another aspect they use for their promotion is voice of the customer. Their customers are their strongest Brand Ambassadors. Apple has one of the highest brand loyalties from existing customers, if you love Apple products there is a very small chance that you will leave the brand for other. This is enhanced now by many companies, remember the launch of FB Metaverse. Apple is also working on something similar – to keep the customers engaged in the ecosystem that these big brands create. This opens a plethora of possibilities and revenue streams for such organizations.

Positioning:

iPhone launched when Blackberry (BB) was the darling with all the corporates. BB provided the corporate employees with the email on the go. The sync with the handheld was the most amazing feature for which BB was a sole strong option. The BB positioning was for age group of 30-55 years. This went on for several years and then BB ventured to target the younger generation for their product. On the wake of this iPhone launched and they exactly nailed this shortcoming from BB. As a device the appeal of BB was not as unique and strong as was with iPhone.

According to Rubicon Consulting – around 2012, 3 Million iPhones activated by AT&T in US and around half of those customers were below 30 years of age. When they had strongly captured this blue ocean for BB, they went for the BB strong turf & launched the iPhone that can sync with MS Outlook on a PC. This move targeted to penetrate the core customer base of BB and today BB is seen nowhere while Apple holds around 15~20% market share of the global smart phone market

Pricing:

Apple has always used premium pricing strategy. Skimming Strategy – Pricing the product high, sacrificing mass sales for profitability. This helps keep high profits but also risks pirated products. To ensure the piracy problem Apple added a novelty value / pride of ownership angle. This has widely helped them to keep prices consistently high.

There had been legal battles that Apple purposely slows down older UI to push people to buy new variants of the iPhone but today we will park this strategy aside and focus on current scenario.

Apple has also successfully used the Decoy Pricing strategy. While launching the models keep the mid-level model at such a price that it makes the top end look value buy. Thus, the anticipation is to trick the customer mind into buying the expensive version and yet feeling he has got the value.

For more details on Pricing strategy read the following article:

To conclude, I would say that Apple has a revolutionary product, and they use aggressive pricing, smart positioning, and conservative promotion strategy.