Marketing > How can Apple keep the iPod’s number one position in the highly competitive portable music player market?

Apple Computers

Problem Statement: How can Apple keep the iPod’s number one position in the highly competitive portable music player market?

BACKGROUND:

Product:

Steve Jobs, Steve Wosniak, and Mike Markkula founded Apple Computer, Inc. in 1977. It is a company that is known for innovation and high quality. Apple Computer, Inc. designs, manufactures and markets personal computers and related software, peripherals and personal computing and communicating solutions. Its products include the Macintosh line of desktop and notebook computers, the Mac OS X operating system, the iPod digital music player and a portfolio of software and peripheral products for education, creative, consumer and business customers. The Company sells its products through its online stores, direct sales force, third-party wholesalers and resellers in addition to its own retail stores. For the nine months ended June 2004, revenues rose 32% to $5.93 billion. Revenues reflect an increase in sales of iPod and Macintosh units.

Although Apple is continuing to release new and improved versions of its highly successful iPod, the company will face fierce competition that can try to take over its leadership position on the MP3 player market. Our team will focus on how iPod can maintain its position in the portable media market by introducing additional product features and services.

Consumers:

Apple products are sold to education, creative, and business customers. Three appropriate categories can be concluded to identify the mainstream of iPod consumers;

1. Music enthusiasts who are buying iPods simply for the love of music.

2. People passionate for new innovative technology and expensive gadgets.

3. The younger generation who are apprehensive of what is “in”, and will commonly purchase iPods intended for popularity purposes.

Competitors:

A new generation of smaller, sleeker and cheaper MP3 players from the likes of Sony, Rio, Creative and Rave MP are hitting the market this fall, and they all have Apple Computer's white-hot digital music player in their sights. The iPod has a strong hold on the market. But consumer electronics rivals are banking on a jump in sales of their alternatives this season, thanks to the explosion of other companies trying to sell and market digital music. Digital music services from MSN, Sony Connect, Wal-Mart, Napster and MusicMatch are not compatible with the iPod; all but Sony's use Microsoft's Windows Media format. Device-makers are racing to the market with a range of products they hope will solve the portability issues for iTunes alternatives, and eat into the iPods market share in the process.

MARKETING PROBLEM:

Apple has always been an essential part of the computer and technology market. Although it does not dominate the computer market, their introduction of the iPod, a portable digital music player, has revolutionized the MP3 player market.

Apple’s latest product, the iPod, has grown very popular in the portable music player market and is actually the best-selling MP3 player, capturing 65.8% of the market. Also, Apple has pioneered the legal music download market with its online music store, iTunes, with a stunning 70% share of legal downloads. With the help of iPod’s popularity, iTunes has become the #1 online music store. Even though Apple has gained success in the digital music-related market, current and future competition threatens to take iPod’s leadership position.

Consequently, the goal of our project is to find out how Apple can keep the iPod as the highest selling digital music player in a saturated market, and the strategies it can use to compete with its ever-increasing competition.

MARKETING DECISION:

Our focus will be on the following:

Create an ad campaign that displays how iPod can adapt to different products; i.e. BMW cars, Bose Speakers, etc.

Create an ad campaign based on product differentiation between iPod and other MP3 players. Introduce product to a younger market by creating a children’s model

• • Less memory?

  • Bigger buttons?

  • Affordable price?

• Develop the current iPod model in order for it to be able to play more compressed song formats.

  • .ogg

  • Vorbis

  • .wma (Windows Media Audio)

• Expand iPod’s accessory line.

  • Cameras

  • Microphones

  • Noise reducing headphones.

• Have iPod’s products available in mass market retailers.
  
  
  RESEARCH PROBLEM:

As Apple’s research team on the iPod, we aim to maintain the current position of the market share of Apple’s iPod. Through capitalizing on key strengths such as services, features and product notoriety, we aspire to secure current consumer purchasing power there by stabilizing iPod’s position within the industry and expanding our consumer demographics.

A survey will be conducted and through research we would be able to somewhat determine: which ad campaign will be more efficient to market iPod, if consumers are interested in the possibility of iPod playing more formats and which ones; will the consumer purchase more accessories if they were easily accessible, and finally, if a children’s iPod is introduced in the market, will it be as successful as the current model targeted towards adults?

If future purchases from another brand name is preferred, there would also be questions asking why and what could be done do gain to their purchasing power.

Information Needs

To determine which features and enhancements would be more effective, the following information will be needed:

General demographics:

Age, Sex, Income, Marital Status and No. of children in household.


Buying patterns and experiences:

1. How did they find out about the iPod?

2. What features or services are they looking for in a MP3 player?

3. Is the iPod lacking a particular feature?

4. What accessories would they like to carry with an iPod?

(Camera, microphone, noise-reducing headphones, games)

Purchase intentions:

1. Would they buy the iPod as a gift if it was more affordable?

2. Would an effective ad campaign influence their decision to buy an iPod?

3. Would the ability of iPod to expand its compatibility be a reason to buy it?

4. Would they, as parents, buy an iPod for their kids if there was a model specially designed for children?
   
   
   To develop an effective advertising campaign, we need to find out the following information: 1. Searching for information: Will they look for information about complementary products that can be used for the iPod?
   
   2. Will they look for the features that make iPod a better product in comparison with the rest of the MP3 player market?

Purchasing decisions:
What features will they look for when choosing an MP3 model? (Memory capacity, compatibility with other formats, size, battery life, ease of button usage)

Promotion Mix:

1. What type of ads will attract them the most?

(iPod and its accessories or iPod vs. other MP3 players)

2. How much information would they like in an ad?

(List of all features or features that are only available for the iPod)

3. Where would they prefer to see the ads?

(Out-of-Home, TV, Radio, Internet)

Bibliography:
Equity Research, Company data: CREDIT SUISSE FIRST BOSTON (CSFB); Apple Computer Inc. (AAPL) “Initiating Coverage with a Neutral Rating”

www.macnn.com

www.macminute.com

www.finance.yahoo.com

Printer Friendly Version or get for quick editing, exporting, sharing