Apple announced its new iPhone 4S on Oct. 4 and many industry watchers expressed disappointment that it was not the much–anticipated iPhone 5. These people are missing a critical marketing point: Great marketing does not require every product to consist solely of “knock-it-out-of-the-park” innovation. Great marketing also uses more modest product changes to build a company’s advantage, especially when it provides opportunities to tap into a new market segment. In the iPhone 4S, Apple now has a broader product offering, with pricing and partnering variations that allow them to access a new market segment.
Think about it. Smart phones are a still a fast-growing, critical market, but not every consumer has $300+ to spend on a phone. Many consumers do not have the cash, and may want to buy a lower-cost phone. Apple now has a product for that segment. With a two-year contract for services, customers can get the iPhone 3GS for free! Or, they can buy the iPhone 4 for only $99! Suddenly, the iPhone is an alternative to price-conscious consumers, and it gives Apple access to a new segment.
And, as all good marketers know, once you gain a customer’s loyalty, they are more than likely to stay with the company over time, eventually moving to that newer, higher-priced model.
Group Activities and Discussion Questions:
- Show any video which details the new iPhone 4S. (There are videos available on several Web sites, including Apple.com, brandchannel.com, and wallstreetjournal.com.)
- Market segmentation exercise – Divide students into groups:
- Have students identify a different market segment that would be good candidates for the iPhone 3G, iPhone 4G, iPhone 4S.
- Have students identify competing smart phones for each of those segments.
- What marketing strategy and tactics can be used for each segment?
- Buying behavior exercise – Divide students into groups:
- Have students build the consumer buying model for purchasing an iPhone: problem recognition, information search, alternative evaluation, post-purchase behavior. Discuss.
- Similar to consumer purchasing, have the groups next construct the model for organizational buying: they are the buying team for Medtronic and need to purchase a new phone for 1,000 sales professionals. Discuss.
- What marketing strategy and tactics can be used?
(Sources: Wall Street Journal, Advertising Age, Brandchannel.com, Business Week, New York Times)
