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1 | P a g e Strategic Marketing 310Class: Tuesday, 10:00a.m.

Hew Zhen Chow 14596674Sook Foon Yong 14658422Jacqueline Wong 14046962

Thi Thuc Oanh Lisa 14333279
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Executive Summary

The purpose of this Strategic Marketing Plan is to assist the Strategic Business Unit in developing a long term

strategy plan for the iPad 2 which is a tablet computer that has just been released in the Australian market onthe 25 th March 2011. The marketing plan will be covering a timeframe of 3 years along with strategies and

recommendations which will be suggested to the SBU to achieve its objectives.

Three objectives have been set for the SBU based on the key findings. The first objective for the SBU is to

maintain the market leader status of the iPad 2 in the tablet computer market. The second objective is to

reduce the risk of iPad 2 being fallen out from its product lifecycle by 30%. The third and last objective is to

encourage purchase of iPad 2 among other users of Apple product by 50%.

Two different segments of customer have been identified as potential target market for the iPad 2. The first

target market that has been identified is the Innovators and Early Adopters while the second target marketchosen is the Early Majority. Innovators and Early Adopters are Australian aged 20-35, average social class

and has indifferent to positive attitude towards the iPad 2. Early Majorities are Australian aged 35-50, high

income and has also has indifferent to positive attitudes towards the iPad 2. Both target market are being

segmented based on their psychographic, behavioural, demographic and geographic segmentation.

The iPad 2 is the first tablet to be released in the Australian market but the growth in the tablet computer

market has attracted competitors entering the market. The 3 competitors which could potentially threaten iPad

2s market share are the S amsung Galaxy Tab, Motorola Xoom and Blackberry Playbook. A competitor table

has been produced to compare the pros and cons of each product.

Strategies have been analysed and recommended based on the market, product, pricing, distribution and

communication of the SBU. For the market strategy, the SBU is suggested to implement multi-market strategy

for market scoop, national market strategy for market geographic, strong market commitment strategy and

harvesting for dilution strategy. Analysis has been made on the SBU market-entry strategy.

For the product strategy, strategies were suggested based on positioning, repositioning and product design for

the iPad 2. Besides, innovation and improvement strategies are also recommended to the SBU.

For pricing strategy, price skimming strategy is recommended for new product pricing and price cutting

strategy to be use for established product. In addition, price-flexibility, product line pricing and price

leadership strategies was also recommended to the SBU.

For the distribution strategy, the SBU is encouraged to adopt the indirect channel structure, postponements

approach and the competing channel of distribution as they are crucial for the SBU to achieve the desirable

objectives.

Lastly, in the communication strategy, the SBU will want to consider employing the advertising strategy in

the form of persuasive, informative and reminder. Besides, the sales promotion and public relations strategy

are also playing a vital role for the SBU to develop better outcomes in the near future.

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At the end of the marketing plan, an imple mentation table h as been produced for the SBU as a guideline to

measure the results as well as a timeframe t o complete the stra tegies.
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Table of Contents

Executive Summary ........................................................................................................................................ 1

3.0 Industry Background ............................................................................................................................... 84.0 Corporation & SBU Background .................................................................................................................. 8

4.1 Corporation ............................................................................................................................................... 8

4.1.1 Apple Sale Performance 2009-2010 ...................................................................................................... 8

4.1.2 Apple Stakeholder .................................................................................................................................. 9

4.1.3 Apple Social Responsibility ................................................................................................................... 9

4.2 SBU iPad 2 .............................................................................................................................................. 9

4.2.1 Geographical Scope of SBU ............................................................................................................ 10

4.2.2 SBU Current Situational Analysis ................................................................................................... 10

4.2.3. Financial performance .................................................................................................................... 11

4.2.3.1 SBU International Sale Performance ................................................................................................ 11

4.2.3.2 SBU Sale performance compare with Apples products ................................................................... 11

4.2.3.4 SBU Sale Performance (Australia based) ......................................................................................... 11

5. SBU Situation Analysis ................................................................................................................................. 12

5.1.1 SBU Culture ......................................................................................................................................... 12

5.1.1.1 Management Culture ......................................................................................................................... 12

5.1.1.4 Key Beliefs and Values ..................................................................................................................... 12

5.1.2 SBU Stakeholders ................................................................................................................................ 15

5.2 SBU Consumers .......................................................................................................................................... 17

5.2.1 Target Market ....................................................................................................................................... 19

5.3 SBU Competition ........................................................................................................................................ 22

5.4 Key Finding ................................................................................................................................................. 26

5.4.1 Maintaining the Status as Market Leader ............................................................................................. 26

5.4.2 Internal and External Competition ....................................................................................................... 26

5.4.3 Effects on Product Life Cycle .............................................................................................................. 26

6.0 SBU Objectives and Goals .......................................................................................................................... 27

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7.1 Market Strategies ......................................................................................................................................... 29

7.1.1 Market Scope Strategy ..................................................................................................................... 29

7.1.2 Market Geography Strategy ............................................................................................................. 29

7.1.3 Market-Entry Strategy ..................................................................................................................... 30

7.1.4 Market-Commitment Strategy ......................................................................................................... 30

7.1.5 Market-Dilution Strategy ................................................................................................................. 30

7.2 Product strategies......................................................................................................................................... 30

7.2.1. Product Attributes ............................................................................................................................... 30

7.2.2 Positioning Strategy ............................................................................................................................. 33

7.2.2.1 Positing by attribute ...................................................................................................................... 337.2.2.2 Positing by Value/Benefit ................................................................................................................. 33

7.2.2.3 Positing by user and application........................................................................................................ 33

7.2.2.4 Positing by the competitor ................................................................................................................ 34

Comparison of iPad 2 and competitor (Brian, 2010) ......................................................................................... 34

7.2.3 Product reposition strategy ....................................................................................................................... 34

7.2.3.1 Reposition among existing customers ............................................................................................... 34

7.2.3.2 Reposition among new user and achieve new use ............................................................................ 34

New concept: Apply iPad 2 as part of car interior ............................................................................................ 36

7.2.4 Product Design Strategy ........................................................................................................................... 36

7.2.4.1 Standard product ............................................................................................................................... 36

7.2.4.2 Standardized customization product ................................................................................................. 36

7.2.5 Product Elimination Strategy ................................................................................................................... 37

7.2.5.1 Harvesting ......................................................................................................................................... 37

7.2.6 New Product Strategy ............................................................................................................................... 37

7.2.6.1 Product improvement ........................................................................................................................ 37

7.2.6.2 Product innovation ............................................................................................................................ 38

7.3 Pricing Strategy ..................................................................................................................................... 39

7.3.1 Factors influencing pricing ................................................................................................................ 39

7.3.1.1 Objectives .................................................................................................................................... 39

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7.3.1.2 Costs ............................................................................................................................................. 39

7.3.1.3 Competition ................................................................................................................................. 39

7.3.1.4 Demand ........................................................................................................................................ 39

7.4 New Product Pricing Strategy .............................................................................................................. 40

7.5 Pricing Strategies for Established Products ....................................................................................... 41

7.6 Price Flexibility Strategy ...................................................................................................................... 42

7.7 Product Line-Pricing Strategy ............................................................................................................. 42

7.8 Leasing Strategy .................................................................................................................................... 42

7.9 Price Leadership Strategy .................................................................................................................... 43

7.4 Distribution Strategies ................................................................................................................................. 437.4.1 Channel Structure Strategies .................................................................................................................... 43

7.4.1.1 Indirect Channel Strategy .................................................................................................................. 43

7.4.2 Philosophy in Choosing Distribution Strategies ....................................................................................... 43

7.4.2.2 Postponement Approach ................................................................................................................... 43

7.4.2.3 Speculation Approach ....................................................................................................................... 44

7.4.3 Distribution Scope Strategies ................................................................................................................... 44

7.4.3.1 Intensive Distribution ........................................................................................................................ 44

7.4.3.2 Selective Distribution ........................................................................................................................ 44

7.4.4 Multiple Distribution Channels ................................................................................................................ 44

7.4.4.1 Complementary Channel of Distribution .......................................................................................... 44

7.4.4.2 Competing Channel of Distribution .................................................................................................. 45

7.4.5 Channel Control Strategy ......................................................................................................................... 45

7.4.5.1 Vertical Marketing Channels ............................................................................................................ 45

7.4.5.1.1 Corporate Channel System ............................................................................................................. 45

7.4.5.1.2 Contractual Channel System .......................................................................................................... 45

7.5 Communication Strategies (Promotion Strategies) ..................................................................................... 46

7.5.1 Allocation on Budget for SBU ................................................................................................................. 46

7.5.1.1 Objective-and- Task Method ............................................................................................................. 46

7.5.1.2 Affordable Method ............................................................................................................................ 47

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7.5.2 Advertising Strategy ................................................................................................................................. 47

7.5.2.1 Informative and Persuasive Advertising Strategy ............................................................................. 47

7.5.2.2 Persuasive and Reminder Advertising Strategy ................................................................................ 47

7.5.3 Sales Promotion ........................................................................................................................................ 48

7.5.4 Public Relations ...................................................................................................................................... 49

7.5.5 Direct Marketing ...................................................................................................................................... 49

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3.0 Industry Background

Tablet is a huge market and it shows a new path for new growth (Acers Growth Plans Hinge on Tablet PCs,

Chin, 2010).

The table market has been developed since earlier 2001 from Microsoft. It would be the first flat screen

technology in 21st century. The tablet market would aid in developing displays that could produce the same

quality as desktop computers (A brief History of the tablet PC, 2011). Although tablet PCs become a

moderate success, they were largely restricted to the business markets. After the revolution from Microsoft,

Hardware Company such as Samsung, HP are started to develop and introduce similar flat screen computer.

New data from strategy analytics out today clearly shows Apples dominant position has captured 95% of the

global market share of tablet (Perez, 2010). The research assumed global tablet sales grow from 3.5 million

to 4.19 million (Perze, 2010).The fast growing tablet market is going to be the main technology device in the next 5 years (Perez, 2010).

According to Tablepc(n.d.), tablet computer are the next generation computing combining the features of a

notebook . The tablet computer is slowing take over the PC market. Research from Oran (2011) indicated that

for every 10 pads sold during 2011, five netbook sale will be lost in both consumer and enterprise market.

From resource, there are more than 53 million tablet are estimated to be shipped in 2011(Oran, 2011). With

the innovative idea and designed , Apples iPad is dominate 95% of market share in the tablet computer

market, other manufactory share the remaining 5%.

4.0 Corporation & SBU Background

4.1 Corporation

Apple Inc. (NASDAQ: AAPL), formerly Apple Computer Inc., is an American multinational corporation with

a focus on designing and manufacturing consumer electronics and closely related software products. The

company was established in Cupertino, California on April 1, 1976. Apple develops sells, and supports a

series of personal computers, portable media players, mobile phones, computer software, and computer

hardware and hardware accessories. Examples of Apple products are like Apple iPod touch, Apple Mac Book,Apple iPhone 3 and iPhone 4, Apple iPad 1 and iPad2.

4.1.1 Apple Sale Performance 2009-2010

According to Apples annual report, which filed on October 2010, its net sales during 2010 increased $22.3

billion or 52% compared to year 2009. Besides that, Apple today announced financial results for its fiscal

2011 first quarter ended December 25, 2010. The Company posted record revenue of $26.74 billion and

record net quarterly profit of $6 billion, or $6.43 per diluted share. These results compare to revenue of $15.68

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billion and net quarterly profit of $3.38 bi llion, or $3.67 p er diluted share, in the year-ago quarter. Gross

margin was 38.5 percent compared to 40.9 percent in the ye ar-ago quarter. International sales accounted for

62 percent of the qua rters revenue. Thus, the figures above shows that Apple has been doing well and

growing rapidly in their technology sector.

4.1.2 Apple Stakeholder

Apple continues its innovative product development in the technology market. Indeed, employees are also

playing an important role in all area. Apple offers several divisions in their corporate so that they can have

different types of human resources. For instance, Apple has Marketing division, Finance division, Operations

division, Information, Technology and Services division, Software Engineering division, Retail Corporate

division and etc.

4.1.3 Apple Social Responsibility

At the same time, Apple provides Youth Programs that specially target for families, teachers and kids. The

Youth Workshops offer families with kids (ages 6 to 13) a chance to work together to hone their Mac skills

and use iLife and iWork applications to complete exciting projects.

We offer the free workshops at Apple Retail Stores worldwide. On their Field Trip, students can create

someth ing amazing right on the spot. Or they can bring in a project theyve already created and turn our store

into a theater, sharing their achievements with parents, teachers, and friends. For kids ages 8 -12, they will

have a chance to participate into the Apple Camp and they will learn the ins and outs of iMovie and how makea film in about the time it takes to watch one.

The free workshop, held at the Apple Retail Store, spans three days and leads up to an Apple Camp Film

Festival where campers debut their masterpieces.

4.2 SBU iPad 2

The Strategic Business Unit that is being focus to develop the strategic marketing plan is th e Apples iPad 2

SBU. The iPad is a multi-purpose mobile device for browsing the web, reading and sending email, viewing

photos, watching videos, listening to music, playing games, reading e-books and more.

The iPad 2 which released on the 25 th of March 2011 is the second generation of the SBU, which also a line of

tablet computers developed by Apple. The first generation of the iPad released on the 3 rd of April 2010 and its

production has been halted during the 2 nd of March 2011 to make way for the iPad 2. There are two variants

for the iPad 2, one is with Wi-Fi and another one comes with Wi-Fi and 3G. Both of the variants are available

in 16 GB, 32 GB and 64 GB. It is available in either black or white in colors.

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The details of products covered by the iPad 2 are listed below:

Models IPad Wi-FiIPad Wi- Fi +

3G IPad 2 Wi-Fi IPad 2 Wi-Fi + 3G

Storage 16GB, 32GB, 64GB

Price

- - 16GB-AUD$ 579.00 16GB-AUD$ 729.00

32GB- AUD$689.00 32GB- AUD$839.00

64GB- AUD$799.00 64GB- AUD$949.00

Thus, IPad2 operated very well in the market because the product is activated to the market as it came out and

Apple used strong marketing advertising as well as publicity to introduce IPad2 to the market.

4.2.1 Geographical Scope of SBU

iPad and iPad 2 is available for sell internationally, it covered mostly central countries such as America,

Germany, France, China, and Japan.etc. The SBU is also available to purchase online to cover more wildly

among the SBU target customer. Due to the measurement difficulties and limitation of the resource, this study

is going to concentrate in Australian market.

Apple has ten Apple Stores in Australia, where five of them located in New South Wales, two each in

Victoria and Queensland and there is only one in Western Australia.

4.2.2 SBU Current Situational Analysis

Apple is try to give customers experiences in using it product through its innovative, hardware, software,

internet offering(s) (Apple Inc, 2010). Additionally, Apple saw that they can reach more customers and

provided customers more high-qualities sales and post-sales experience if they keep going with their current

strategies (Apple Inc., 2010).

The SBU position the unique, piece of art- iPad 2 which contained faster processing speeds, better picture

quality, more function with remain price as iPad. Thinner.Ligher. Faster.FaceTime.SmartCovers.10 -hour

battery is their marketing slogan to illustrate the difference compared to iPad. Catching the wave from iPad,

there are still remaining high awareness and expectation of iPad 2. Besides, this is a trend to shifting from

computer and notebook shifting to tablet computer. The technology backup with the SBU gives iPad 2 a

strong technological support. Therefore, the market leader position, technology backup and shifting trend will

be an opportunity for the development of SBU.

Although, the strong position with SBU could help on the development in the tablet market, it is still risky and

uncertainties are threatening the SBU s strong position in the tablet market. The fast growing tablet market

attracted new competitors enter the market for instance, the Android software system adopts the concept of

apps store, produce to enter into the market.
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Although, iPad 2 enhanced most of the featu res, the performa nce is still less likely to meet the markets

expectation in terms of their sale volume an d market share co mpare to iPad. The iPad 2 may faces some

difficulties to maintain its sale, shipment and market share due to unforeseeable circumstances.

4.2.3. Financial performance

In the financial performance, iPad is one of the products which mark down the lowest net sales and unit sales

compare to iPhone and IPod. In 2010, the iPad first came out to the market for that year iPad net sales were

approximately $ AUD 4.68 billion and unit sales of iPad were $AUD 6.9 million (Apple Inc., 2010).

4.2.3.1 SBU International Sale Performance

As September 25th, 2010 Apple distributed the iPad in 26 countries through direct channels, third-party

resellers and cellular network carriers distribution channels ( Apple inc.,2010). The net sales of iPad during

2010 worth 8% of total net sales of the whole company (Apple inc.,2010).

4.2.3.2 SBU Sale performance compare with Apples products

The demand for iPad at that time is not strong enough and the market for the new product is narrow and in a

difficult situation (Apple Inc., 2010).

On the other hand, the net sales of iphone in 2010 reached$AUD23.6. billion and unit sales were $AUD 37.5

billion in the same year (Apple Inc., 2010). The IPod seemed represented better and people would like to buy

an iphone which they felt more similar with it compare to the iPad which has just come to the market not so

long (Apple Inc., 2010). The net sales of IPod in 2010 also reached $171 billion in 2010 but the unit sales of

IPod declined to 7% compare to 2009 (Apple Inc., 2010).

4.2.3.3 SBU Sale Performance (Australia based)

The international sales reached 62% for the quarter of the year. In the quarter, Ipad2 sold $AUD 6.33 million

and they expect to increase the sales of Ipad2 for the rest of year. The average sales for Ipad2 were $AUD 3.8

million per quarter when the product has just launched to Australia (Apple Inc., 2010).

Apple did expect that iPad would do better in the next coming year as well as later on in the market so they

are trying their best to make it come true. The new IPad2 just released in March 2011 is expected to performbetter the previous iPad and help the company increase their profits as well as revenues.

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5. SBU Situation Analysis

Review the internal (micro-) and external (marco-) environments of the SBU, including

5.1.1 SBU Culture

5.1.1.1 Management Culture

Apple uses a slogan, A magical and revolutionary device at an un believable price to introduce i Pad. From

the slogan, it reflects that Apple is paying so much attention to helps their employees explore their talents and

creative thinking. Apple is concentrate to achieve a technology trend leader which tends to create unique, first

product present to the world, like they create the first iTunes (Apple Pt Ltd: Annual Report 2011, 2011).

Apple values its employee work in every SBU. The company slowly implanted a sense of being a part of

creating some of the best -loved technology on the planet (Apple Pt Ltd: Jobs at Apple, 2011) amongst their employees by making them like they are a part of big family by doing something different (Apple Pt Ltd: Jobs

at Apple, 2011). They constantly encourage employees to be innovative, adventure, create something that

make an impact (Apple Pt Ltd: Jobs at Apple, 2011)

To meet the flowing trend in the market, Apple considered extending their product line to tablet market. Being

an adventurer in the industry, Apple continuous in research and development to build and host a platform to

discovery an innovative product and software- Apps store, iTunes, iTouch series, iPhone series and iPad series

(Apple Pt Ltd: Annual Report 2011, 2011).

5.1.1.2 Key Beliefs and Values

- Empathy for Customers/Users

- Aggressiveness/Achievement

- Positive Social Contribution

- Innovation/Vision

- Individual Performance

- Team Spirit

- Quality/Excellence

- Individual Reward

- Good Management

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5.1.1.3 Corporate resources

Corporate resources include the human, f inancial, physical , and technological assets or experience of the

company (Jain 2009, 23). It helps SBU to decide which field should the corporate enter and which market to

launch their products. For Apple, the SBU has marketed several products (iPad and iPad 2) and achieves large

amount of profit in the industry by utilising its resources wisely. Thus, Apple has a very strong financial

position, also the SBU have a high market shares for tablet market. It stands out from its rivals in the industry

with its creativity on developing new products.

5.1.1.4 Human Resources

Human Resources play a vital role in every business organization and it does enhance the businesss

operations all the time. Apple would be nothing without its wonderfully dedicated, diverse, and talented staff.

In Apple, it develops the human resources into several major divisions and they are Applications, Marketing,Mac Hardware Engineering, Operations, Legal, Software Engineering, Sales, Finance, Information

Technology System and etc. With the systematic and well organized divisions, Apple indirectly creates a

harmony working atmospheres and stronger bond between the corporation and the employees.

5.1.1.5 Financial Risk

Apple experienced one of the most challenging years in 2008 during the global economic crisis. The U.S.

financial uncertainty poses a risk as consumer and business may continue to postpone spending in response to

tighter credit, unemployment, declines in income or asset values which could have a material negative effecton demand for Apples product (Apple Pt Ltd: Annual Report 2011, 2011). Apple recorded a shape fall in

2008 because of the global economic crisis.

Constantly regulation, immediate action and continuous refinement of organizational values enabled Apple to

quick solve the problems. The company registered overall sales from1,285 million in 2008 to 2,531 million in

2009 (Apple Pt Ltd: Revised Quarterly Income Statement Information, 2011).

5.1.1.6 Technology

The new iPad2 has adapted some existing technology from iPhone and iPod such as safari, GPS, video calls

through Skype (Apple Inc., 2010). Apple has become a leader in technology and computer industry, they have

continue to create new products or technology that could help people (Apple Inc., 2010). Furthermore, Apple

wants to win over competitors by their innovation, new ideas that make them different from others (Apple

Inc., 2010).

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5.1.1.7 Environmental Issues

Apple has changed their policies. They try to reduce dange rous chemicals from their products (A greener

Apple, 2010). All Apple products comply with new regulations from European, which restricted or banned

most of chemicals covered by RoSH (A greener Apple, 2010).Apple guaranteed that they focus on how to minimise the impact on environment by improve on their

products (Apple and the environment, 2011) as well as their tablet computer product.

The SBU designed iPad and iPad 2 to use less material, ship with smaller packaging, be free of many toxic

substances and be as energy efficient and recyclable as possible (Apple and the environment, 2011). Over the

past decades, Apple has tried to produce smaller, thinner and lighter products and decreased the carbon

emission to the lowest level as much as possible (Apple and the Environment, 2011). The iPad is one of the

examples to demonstrate their green mind.

They also recycle the materials they had used such as arenstic-free glass, high-grade aluminium and strongpolycarbonate and use in the new products (Apple and the environment, 2011). By doing all those things

Apple expected that they would lower the impacts on environment and protect all resources.

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5.1.2 SBU Stakeholders

Stakeholders Areas of interests

Owners, Shareholders, Investors Positive financial performance by the company.

Growth in stock price and shares price of thecompany.

Value creation from business operation.

Long-term goal of the company.

Customers Quality of the product being offered.

Innovation and improvement of the product.

After sales service and warranty that is being

provided.

Privacy and security of their personalinformation.

Affordability of the product price.

Accessibility to the product.

Employees of all ranks Working environment of the company.

Monetary reward.

Recognition of capability through promotion.

Ability to attract and retain employee.

Develop an effective and efficient workforce.

Suppliers To have a consistency in the price of products

supplied.

To supply products with consistent quality and

standards.

To deliver supplies in an environmentally and

socially responsible manners.

Having continuity in relationship with the

company.

Distributors Logistics and supply.

Channels of distribution.

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Connecti on with the retailers.

Federal Government Importation, regulation, control tariffs,

quarantine, customs, taxes.

Local Government Control of network coverage.

Ensure rules and regulations are complying with

local specific by-laws for operations in the

community.

Immediate Community Jobs opportunity.

Jobs training.

Education.

Environmental Groups Corporation Social Responsibility.

Waste Management, Emission from factory.

Environmental conscious in manufacturing,

transportation and product usage.

Usage of recyclable material.

Non-Profit Organization Encourage reputable public image through the

development of community investment strategy.Media Tool for marketing and promotion.

Create awareness.

Competitor Competitors in the tablet industry such as

Samsung, Motorola, Asus and other companies

will compete for market shares.

Compete in attracting new users of the tablet

computer.

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5.2 SBU Consumers

iPad 2 has been only out for nearly three months, contemporary iPad 2 is a relative new product and there are

obviously few major manufacturers in the market. It has made a lot of noise in the market, bad and good

comment is flowing into the market every day. It is too early to position iPad 2 in terms of their fluctuating

growth rate, sale and market share. Therefore, it is hard to determine the current market performance of iPad

2, IPad sale, growth and market share data will use as an example to elaborate their target market.

(Billy Fire LLC, 2005)

Unlike iPad or their predecessors, iPad 2 is in the introduction stage of the Product Lifecycle. For sure, it is

continuing to experience unprecedented growth. The tablet PC market as a whole is also experience a rapid

growth with the development . In the next five years, total shipments of Tablet computers are expected toincrease at a compound annual growth rate of 56%, with shipment rising from 17.4 million units in 2010 to

242.3 million units in 2015 (Infinite Research, 2011). The table will surpass gaming machines to become the

fourth largest consumer electronics category behind notebook computer, smartphones (Asher, 2010). It not

only include Apples iPad also contain with their latest competitor such as Samsungs Galaxy, Blackberrys

Playbook and Motorolas Xoom.

iPad 2 current position

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Sale volume compare with competitor (Nelly, 2010)

Numerous of research shows that worldwide record shows 34% sales. There are 13% enhance compare to last

year. In Australia, more than a quarter of a million Australians are using Apples iPad and there are 300,000

tablet computers have been sold in Australia by the end of October, 2010 (Colley, 2010). Also, IPad drives

45% growth in tablet market.

Research from Technology News and Insights (2010) stated, survey finds iPads Awareness as high as

Kindles (Amazons e -book reader), over 52% of respondents said they intend to switch to iPad for reading

and other multiple function (Survey Finds iPad Awareness as high as Kindles, 2010). However, when it

comes to iPad 2, the sale and growth rate is slightly declining due to the raise of competitor. Also, due to the

short Product lifecycle of Apples product, customer seeks to put their purcha se on hold and keenly aware of

A pples product plans (Martellaro, 2011). In terms of the strong iPad sale reported, there is no doubt Apple isthe leading manufacture in the market, but the company is facing stiff competition from its other major

competitors after iPad launched. Due to the raise of competitors and customer s awareness towards each

others brands service device, iPad 2 will need times to maintain their market share and sale performance.

5.2.1 Target Market

At present, there is a wider variety of tablet computer on the market as compared to iPad first launched, and

there are many consumer in the market that are still not convinced that iPad 2 are still viable, reliable and

innovative options. Hence, iPad 2 are primarily sought after innovators and early adopter who never purchase

any Apples product before but excited for tablet computer iPad 2 launch. The early majority come right

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behind the innovators and early adopter. B ased on the positi ve reviews of the Innovators, early adopters and

early majority sector will then begin to purc hase iPad 2.

In term of innovators, early adopter and early majority segment, iPad 2 user will come from three main

category in these segments which are entertainment user, communication user and infocentric user.

Entertainment Users are individuals with low resources group of those who are motivated by ideals. They are

relatively enthusiastic on gaming apps on their iPad 2. For example Angry Bird, the popular game in Apps

Store, gain over 11 milion for limited version and 7 million for full version in one month.

Communication Users are individuals with medium resources group of those who are motivated by ideas.

They are relatively sought on communication apps on their iPad 2 such as Whatspp messenger, Facebook,

Twitter, Skype, MSN messenger etc.

Information users are individuals with high resource group of those who are motivated by ideas. They are

relatively sensitive on information include business, technology, education, design and innovation sector.

They have high demand on information flowing in such as business people, technology savvy will be some on

the example.

Segmentation Characteristics Target Market(s)

Innovators and Early Adopter Early MajorityGeographic

Nationalitity Australia nation Australia nation

Demographic

Age 20-34 35-50

Gender Female and Male Female and Male

Family life cycle Young single; Young

married and married with

child under the age of six

Single; Married, youngest

child six or over

Family Size 1-4 family member(s) 1-6 family member(s)

Monthly Income Between AUS$2000 to AUS

$5000 per month

Between AUS$6000 to

$8000 per month

Education High School graduate, TAFE

graduate, Bachelors

TAFE graduate, Bachelors or

above

Occupation Professional and technical,

Student, Manager, Clerical,

Sales, Craftspeople

Professional and technical,

Student, Manager, Clerical,

Sales, Craftspeople

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Psyc hographic

Social Class Average High Income

Lifestyle Risk taker, tries new

technologies when they firstenter the market; Look at me,

Visible Achievement

Socially aware; Conventional

family; Do not take as muchrisk as the innovators.

Behavioral

Purchase occasion Special occasion; Regular

occasion

Special occasion; Regular

occasion

Benefits sough Technology, Entertainment;

Communication; Info-

centric

Technology, Entertainment;

Communication; Info-

centric

User status Potential user; First time

user; ex- Apples product user

Potential user; First time

user; ex- Apples product user

Usage rate Medium- Heavy usage Medium-Heavy usage

Loyalty Status None- Medium Medium- Strong

Readiness stage Aware, informed, interested,

desirous and intending to buy

Interested, desirous and

intending to buy

Attitude towards product Positive, indifferent Positive, Indifferent

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5.3 SBU Competition

New data from strategy Analytics announce d (Perez, 2010), A pples dominant position as the leader among tablet PCs, during 20 10, iPad has captured 95%

of the global market share for table, the remaining 5% is share for Windows, Xoomz, Android, etc, DisplaySearch (Bookwalter, 2010).

(Bookwalter, Feb 2010)

Two tables below are to illustrate the competitor in tablet market.

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Table 1 below illustrates the competitor in t ablet market analy sis in Product similarities, product difference, product positioning, product pricing, and product

promotion sectors.

Product Similarities Product Differences Product Positioning Product Pricing Product Promotion

SBU (Apple iPad 2) Tablet PC Equipped with a Dual

Core A5 chip, do twicethe work at once

1. Slogan "Thinner.

Lighter. Faster.Facetime. Smart

Covers. 10 hour

battery." 2. Focus on

product's performance

AUD$ 500-1000 TV Advertisements, Online

Advertisements, In-storedisplays, Brochures and Catalogs

Competitor 1 (Samsung Galaxy Tab) Tablet PC Customized user's

experience-"Samsung

Touchwix UX" (live

panel and mini apps

tray)

1. Slogan "What's your

Tab Life" 2. Focus on

product features

AUD$ 729 TV Advertisements, Online

Advertisements, In-store

displays, Brochures and Catalogs

Competitor 2 (Motorola XOOM) Tablet PC Come with Android 3.0

(Honeycomb) as itsoperating system

1. Slogan "Everything

A Tablet Should Be"2. Focus on product's

features

Product is not

available yet inAustralia.

Online Advertisements

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Competitor 3 (Blackberry Playbook) Table t PC Professional grade

tablet built to offer high

performance

experiences and with

1GHz dual-core

processor, 1GB

RAM,6-axis motion

sensoring, GPS and

Micro USB port.

1. Slogan" The

World's First

Professional- Grade

Tablet"2. Focus on its

applications

Product is not

available yet in

Australia.

Online Advertisements

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Table 2 below illustrates the competitor in t able market analys is in market share, competitive advantage, sustainable competitive advantage and performance

sectors.

Market Share Competitive

Advantage

Sustainable Competitive

Advantage

Performance

SBU (Apple iPad 2) 30% High Tech

Applications

Market leader $ 4.5 million per quarter sales

in Australia

Competitor 1 (Samsung Galaxy Tab) N/A Innovative and creative

designs

Large distribution N/A

Competitor 2 (Motorola XOOM) N/A Unique designed tablet

operating system for

attractive features

Localization service N/A

Competitor 3 (Blackberry Playbook) N/A Rich and rapid

applications

developments

Large and strong consumer's

platform

N/A

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5.4 Key Findings

5.4.1 Maintaining the Status as Market L eader

The iPad 2 is the current market leader of the tablet computer industry with 74% market shares. However, it isa decline compared to the 90% market shares that the first iPad obtained in the 4th quarter of 2010 due to the

emerge of new competitors entering the market such as the Motorola Xoom, Samsung Galaxy Tab and

Blackberry Playbook.

5.4.2 Internal and External Competition

The iPad 2 is currently facing competition internally and externally. For internal competition, iPad 2 is

competing against other product also produced by Apple such as the iPhone and iPod Touch which offers

similar function as the iPad 2 which a more compact size. Externally, iPad 2 faces competition from rivals

product such as the Motorola Xoom, Samsung Galaxy Tab and Blackberry Playbook.

5.4.3 Effects on Product Life Cycle

There is only 11 months difference between the release of the first iPad and ipad 2. Customers are aware that

the product life cycle for iPad 2 will only sustain for a year. Thus, they will tend to hold back their purchase

decision for iPad 2 and assuming a newer version of ipad entering the market within a short period of time.

Thus, the product life cycle for ipad 2 is likely to experience only three stages which are the introductory

stage, growth stage and the declining stage. This is because when customer holds back their purchase

decision, the rate of purchase, demand and sales volume for ipad 2 are hardly to increase. Thus, the iPad 2 is

likely to proceed to declining stage right after growth stage without going through a maturity period.

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6.0 SBU Objectives and Goals

Objective 1

Maintain the market

leader status of the iPad 2

in the tablet computer

market.

Objective 2

Reduce the risk of

iPad 2 being fallen

out from its Product

Lifecycle by 30%

Objective 3

Encourage purchase of

iPad2 among other

users of Apple product

by 50%

Product

Product Repositioning-

new user

Product Repositioning -

new use

Product Design Strategy-

Standardized

Customization

New Product Strategy-

Improvement

New Product Strategy-

innovationPricing

New Product Pricing

Strategy- Skimming Price

Strategy

Price cutting Strategy Price Flexibility Strategy Product line-pricing

strategy

Price Leadership Strategy

Distribution

Indirect Channel Strategy Distribution strategies-

Postponement Approach

Scope strategies- Intensive

X XX

XX

X X X

X X X

X X X

X

X

X X

X

X

X

X

XX

X

X
http://tech2.in.com/media/images/2007/May/img_6022_apple-logo.jpghttp://tech2.in.com/media/images/2007/May/img_6022_apple-logo.jpghttp://tech2.in.com/media/images/2007/May/img_6022_apple-logo.jpghttp://tech2.in.com/media/images/2007/May/img_6022_apple-logo.jpg

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Scope strategies- Selective Competing Channel

distribution

Vertical MarketingChannel- Corporate

channel

Promotion

Objective and Task

Method

Affordable Method Informative and

Persuasive Advertising

Strategy

Persuasive and reminder

Advertising Strategy

Sales Promotion

Public Relation

Direct Marketing

X X

X X

X

X X X

X X X

X XX

X XX

X

X

X

XX

X

X X

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7.1 Market Strategies

7.1.1 Market Scope Strategy

For the strategic marketing plan, the SBU will be recommended to focus on the multimarket strategy for theiPad 2. The total-market strategy where a single product serves an entire spectrum of a market is not

applicable for the iPad 2 because it is focusing on the mass market. This is not applicable because different

segments of customers will tend to perceive different value from the iPad 2.

Multimarket strategy involves using a single product and distributes it to a number of different segments. The

SBU is recommended to implement this strategy and market the iPad 2 to different segment of consumers who

perceive different value from a tablet computer. The iPad will be targeting and distributing to four main

segments of customers, namely the entertainment user, information user and communication users.

The first segment of users that is being targeted is the Entertainment Users. The iPad 2 has been enhanced

with faster processors and better graphics than its predecessor which will provide customers a better gaming

experience. Besides that, the iPad 2 is emerged with the function of an iPod to allow users to use it as a music

player as well as a portable video player which provides a larger screen.

The second segment of users which is being targeted is the Information Users. The group of users will be

attracted by iPad 2 web browsing function and informative applications which will enable them to receive

information conveniently. Entrepreneurs, students, teachers and business persons are the group of market that

will be intended to purchase an iPad 2 to work as a tool to update them with the latest news or as an education

tool which provides them knowledge.

The third group of users is communication users who will use the iPad 2 for checking their emails and also

connecting with peoples. The 3G compatible iPad 2 will allow users to check their email inbox anytime and

anywhere while the newly addition Facetime feature of the iPad enables video call which will be a useful

business tool for communication.

The last segment is being target in medical user. Viewing a growing special need for the group of disability,

iPad 2 provide a way from them to communicate, explore and experience in society. The largest application

data base, sensitive touch screen giving them different customized application apply in their dairy use. The

iPad 2 will become a bright hope to disability.

7.1.2 Market Geography Strategy

As the Strategic Marketing Plan will be only focusing the Australian market, the national-market strategy will

be suggested to be implemented by the SBU.

For the iPad 2 to be successful nationally, proper control needs to be institute by the SBU to ensure things are

satisfactory in different regions. Hence, the SBU has to make sure that commission to distributors, pricing for

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the iPad 2 and the availability of models ar e fairly distribute d among different states across Australia. Apple

has covered up the a majority of geographic area in Australia by setting up the Apple Store in different states

in Australia and also allocating the iPad 2 to different distributors within the state.

7.1.3 Market-Entry Strategy

For market-entry strategy, the SBU is already the first firm to enter the industry with the introduction of the

first iPad. The SBU has created a lead for itself that other new entrants will find difficult to match. The

experience curve has allowed the SBU to come out with the iPad 2 even before the competitors come out with

a product which matches the first iPad. Being the first to enter the tablet computer market has boosted the

brand recognition of the iPad 2 as the symbol for the industry.

7.1.4 Market-Commitment Strategy

The market-commitment strategy which will be recommended to the SBU is the strong-commitment strategy.

The SBU should focus foresee its own obsolescence by developing new product before the competitor does,

improving product quality based on the faulty of the previous iPad, increasing expenditures for sales force,

advertising, and sales promotion relative to the tablet market growth rate.

7.1.5 Market-Dilution Strategy

The SBU will be recommended to start implementing the market-dilution strategy 18 months after the launch

of the iPad 2. This helps the SBU to make way for the release of the iPad 3. By 18 months, the harvesting

strategy will be used for the iPad 2 to increase short-term earnings in order to aid in the introduction of the

iPad 3. The price of the iPad 2 will be lowered and all its promotion and advertising expense will be

completely cut off.

7.2 Product strategies

The SBU product dominated the tablet market after iPad then iPad 2. Competitor arises and enters the tablet

market; one interested fact is some of them are from Apples joint supplier. They adopt the concept of iPad,

develop and design their tablet computer. Focusing the trend, the SBU is going to dominate the market until

2014. New product introduction, product repositioning among existing user and new user is suggested to

consider extending the market leadership also dominate to the market.

7.2.1. Product Attributes

Currently, in terms of the product attributes (quality, feature, design) , iPad 2 is currently less popular than

iPad and unlikely to reach the market expectation due to the raise on competition as tablet market share drop

to 70% according to research (Billy,2010). In general, iPad 2 has a good preview comment in the market

compare to iPad . Besides, the feature and design, iPad 2 provided high processing speed, faster graphics,

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lighter, thinner design, over 60,000 apps d esigned for the iP ad and smart covers protect the screen without

spoiling the design.

The graph below demonstrates the improvement of iPad2.

iPad vs iPad 2: Specification (Brian, 2010)

The attributes of iPad 2 would benefit our three segment user, entertainment user, communicate user and info-

centric user. Recap from the SBU target customer, entertainment user is the group of segment that looking for

gaming or entertaining apps; communication user is the group of segment that looking for speed

communicating devices and info-centric user is the group of segment that have a high demand of latest

technology or latest information flow in.

These three types of segment is sharing a similar character, thus, by the time being, these three segments will

move inwards and overlapping share and looking for similar product attribute from iPad 2. Graph belowshowing the movement of these three segments when time pass.

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Before the movement

After the movement

Infromation User

EntertainmentUser

Communication User

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7.2.2 Positioning Strategy

In order to establish a better positing in the market, iPad 2 ha ve covered most of the positioning strategy. The

term of positioning is to place a product in a particular stat ue in the market where it may receive a valued

reception than competitor. The several positioning approaches are listed below:

7.2.2.1 Positioning by attribute

Again, iPad 2 s high quality graphic, face -time communicating function, Apps support and the smart cover

etc.

Feature of iPad 2 (Apple.Inc, 2011)

iPad 2 provided lighter, thinner design, over 60,000 apps designed for the SBU and smart covers protect the

screen without spoiling the design. At present, iPad 2 is doing well in their positing in terms of iPad 2 attribute

that influence their sale rise up to 30,000 when it first launched in Australia. However, current user is

experiencing difficulties to access on internet with it Wi-Fi device, also the unclear front camera as well. It

given an improvement area for the SBU in future

7.2.2.2 Positioning by Value/Benefit

iPad 2s high processing speed giving customer confidence rely on their product in every sector such as

business, teaching, learning and entertaining. The improved graphic illustration provide smooth and high

quality experience for face-time userThe product benefit customer in term of the processing speed and better graphic illustration, hence, there are

wildly used in every sector.

7.2.2.3 Positioning by user and application

The SBU stated iPad 2 can be used in different sector. iPad 2 is a nearly perfect tablet computer to satisfy

the three segments (Entertainment, Communication and Information). The SBU position the iPad 2 products

as a tablet computer for business, teaching, communicating, and photograph. In order to have better coverage

in mass market, SBU are going to suggest looking into medication and army force and automobile industry.

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7.2.2.4 Positioning by the competitor

At present, iPad 2 did not positioning by th e competitor. Due to the unexpected fast start with iPad, the SBU

already have nearly 90% of the market. It is not necessary to have an official test shows against the

competitor. Source found that there are still some tests to compare the feature, attribute, price among blog andwebsite; graph below is a capture of the compare table among competitor. Foresee arises of competitor, it

suggested the SBU has to be aware of this issue.

Comparison of iPad 2 and competitor (Brian, 2010)

7.2.3 Product reposition strategyHave a better understanding with the current position, and reposition to attract new type of customer.

7.2.3.1 Reposition among existing customers

At present, the SBU is doing well position with existing customer; it suggested SBU retain the existing

customer in promotion to distribute a long lasting relationship.

7.2.3.2 Reposition among new user and achieve new use

iPad 2 repositioning among new user could help iPad2 enlarge the overall market, to achieve our maintain

market share objective. Thus, The SBU could slowly reduce the risk of iPad 2 falling out in the routine of the

product lifecycle.

It recommended that the SUB should maintain the existed market segment (Entertainment, communication,

infocentric) also develop into other market segment such as medication, army force, and automobile.

Assuming a growth in the tablet market in these few years, the extension of iPad 2 and discovering the use in

these three segments is in needed. It sees a need for the disability segment that provided a platform to speak

and present their thinking. The specific medication application will be adopt to use in physiology training.

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MedicationUser

InformationUser

EntertainmentUser

CommunicationUser

Graph below demonstrate the new segment will eventually joi n into the three existing segments.

iPad 2 can support army force as training tool to provide reality training simulation in image. Army force

would have better understanding through simulation. iPad 2 also secure the use information that would secure

army confidential document leak out.

Hence, iPad 2 can consider enter into car industry, to become a supplier of the interior part for car factory.

IPad 2 can be installed in car dashboard as a sound system support (iPad DJ in car), Speed/ tachometer

support in modified car, GPS.

`Having said, those are additional features that iPad2 can provide, moreover, consumers can still use the core

applications that iPad 2 has such as facetime, music and their installed apps; ultimately, this will influence

consumers decision in selecting Ip ad2 over other devices. It can be optional selection to add into the car.

Graphs as below is demonstrating iPad 2 apply as an interior part in a car

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New concept: Apply iPad 2 as part of car interior

7.2.4 Product Design Strategy

7.2.4.1 Standard product

Seeking an economic sale of iPad 2 (profit maximize), it is already a standard product that offered in different

grades and styles with varying price. Consumer has boarded choice and also distribution channel to get the

product.

7.2.4.2 Standardized customization product

New iPad cover sticker with design print and customized iPad back cover will be introduced. In order to

encourage existing user Apples user consider purchase iPad 2 and reducing risk of fallingout from the product lifecycle, SBU offer customer an option to specify a limited number of desired

modifications to a standard product. To meet the specific requirement of every individual customer, it

recommended SBU introduce specific requirement for consumer, such as iPad cover sticker with designed

print and customized iPad back cover (replaced the aluminum back cover in difference colour).

With these customized feature, it able to identify consumer themselves with their specific requirement.

iTune music

Facetime -communication

Normal application

GPS search

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7.2.5 Product Elimination Strategy

7.2.5.1 Harvesting

IPad 2 will slowly fall into the declining stage in it product lifecycle. The suggested estimate product life of iPad 2 in this study is 18 months, the sale volume will declining. Cutting the cost and improve the cash flow,

harvesting strategy is applied to iPad 2 when it position in declining stage.

7.2.6 New Product Strategy

7.2.6.1 Product improvement

iPad 3 will introduce after iPad 2 18 months product lifecycle. Seeing the declining demand of iPad 2,

because of the fast growing and demanding trend. Improvement of new product strategy is to achieve andmodify by adding new features or styles in iPad 2. The New product strategy could maintain the market share

of SBU and also giving the SBU another strong reason to persuade exiting Apples product customer make

purchase decision. Due to the changing environment, the market may force iPad2 to do some improvement to

keep it viable when iPad 2 reach the maturity stage within it 18 months product lifecycle. In terms of

maintains the market share of SBU in the tablet market.

Noticing the technological problems of iPad 2, it suggested SBU improve the Wi-Fi and front camera feature

in the latest tablet computer, here we called iPad 3. For the next generation, iPad 3 will introduce call

function to benefit driving customer. Inspiring by their competitor, SBU should adopt their specialized front

camera, flash feature. Besides, with the technological improvement and new feature such as flash feature,

external USB plug and call function, iPad 3 will once again dominate the tablet market.

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iPad 2

iPad mini

iPod

7.2.6.2 Product innovation

To maintain the market share in tablet mark et, iPad mini and 3D monitor are going to introduced to the market

when IPad 2 entering to it declining stage. iPad mini is a mini version of iPad 2 , it contained a 7inch monitor

and all feature in current iPad 2, graph shows as below to illustrate the size of iPad mini. iPad mini is aconvenient tool for business man and traveler, it will be a better selection for consumer looking for product

size tablet computer with feature combined iPad2 and iPod. Seeing the trend of 3D product, SBU applied 3D

display to the tablet market. The product- innovations new approach is to satisfy as latent need.

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7.3 Pricing Strategy

The iPad 2 is currently selling at different price range based on the storage volume and also the connection

capability. The cheapest iPad 2 which has only Wi-Fi connection and 16GB of storage is selling at AUD

579.00 while the most expensive model with came with Wi-Fi and 3G connection along with 64 GB of storage is priced at AUD 949.00. Apple priced the iPad 2 at the same price as its predecessor but offers better

specifications.

7.3.1 Factors influencing pricing

7.3.1.1 Objectives

One of the main objectives for iPad 2 in the Strategic Marketing Plan will be maintaining its market leader

status.

7.3.1.2 Costs

According to Business Insider (2011), the cost for Apple building an iPad 2 is around AUD 306.59. The cost

is only based on the material cost of manufacturing an iPad 2. The figure excludes other extra expenses such

as shipping, inventory, retail, marketing and also R&D.

7.3.1.3 Competition

There is currently only one competitor of the iPad which has already starting selling in the market which is the

Samsung Galaxy Tab. The Galaxy Tab only offers a single range product which is a standard 32GB model

which sells at AUD 729.00. The iPad 2 of a similar range is only selling at AUD 689.00.

7.3.1.4 Demand

There is a strong demand for the iPad 2 in the Australian market prior to its release. The iPad 2 was sold out

during the first day of its release in Australia and the demand for the device exceeds the supply.

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7.4 New Product Pricing Strategy

The SBU is currently adopting the skimmin g pricing strategy for the iPad 2. The iPad 2 is currently selling at

a high price in order to attract the customers on the upper end of the demand curve. This group of customers

belong to the segment of Apple Addict or Tablet Cravers. The demand for iPad 2 by this group of customers isinelastic and will be the same regardless of the price. The graph below explains the price inelasticity of the

customers toward iPad 2.

When the SBU increase the price of iPad 2 from P1 to P2, there will only be a minimal change in the demand

for iPad 2 as the demand will only decrease slightly from D1 to D2.

When the first iPad is being released to the market, it is not only the first tablet to enter the market but also

created the tablet computer industry. Customers are willing to pay the high price to be one of the first users of

a tablet computer. Building from the strong customer based of the first iPad, the SBU is able to set the same

pricing strategy for the iPad 2 because the same group of customers will still have the intention to the one of

the first to get hold of the new generation of iPad.

In order to achieve the objective of maintaining the market leader status of the iPad 2, it is recommended that

the iPad 2 will continue the use of price skimming for their pricing for the timeframe of the next 18 months.

Price AUD

Demand for iPad 2 Unit

P2

P1

D2 D1

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Below will be an example of the pricing for the cheapest and t he most expensive range of the iPad 2 in the

next 18 months.

Current 6 Months 12 Months 18 Months After 18

Months

iPad 2 16 GB

with Wi-Fi

AUD

579.00

AUD 559.00 AUD 529.00 AUD 479.00 Release of

iPad 3

iPad 2 64 GB

with Wi-Fi +

3G

AUD

949.00

AUD 929.00 AUD 899.00 AUD 849.00 Release of

iPad 3

As more competitors are expected to release their tablet computer to the Australian market soon, it would be

safer for the SBU to set the price of the iPad 2 rather high initially and slowly brings down the price when

other competitors starting to grow. The strategy will enable the iPad 2 to edge out other competitors in terms

of market share.

7.5 Pricing Strategies for Established Products

The iPad 2 is expected to reach its maturity and being an established product in the market after duration of

1.5 years. After this period, the SBU will switch their focus towards the release of the next generation of iPadwhich is also known as the iPad 3.

When iPad 2 is established in the market, price cutting of the product will starts to take place. After the period

of 1.5 year, the technology advances will enable the production of the iPad 2 to be less costly while the

experience curve of production for the iPad 2 will also increase. The SBU can aim for a higher market share

and to secure as much experience as possible in order to gain a profit advantage before leaving the iPad 2 to

harvesting.

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7.6 Price Flexibility Strategy

Currently, the iPad 2 is selling through a one-price policy. The same price for the iPad 2 is set for all the

customers who purchase it within Australia under essentially the same conditions and in the same quantities.

In order to gain more sales and achieve a stronger market share, the SBU should implement flexible pricingstrategy. To encourage the use of iPad 2 in business, the SBU can offer corporate price to corporations if they

purchase the iPad 2 in a bundle. Besides that, to encourage the usual of iPad 2 in studies and education, the

SBU will price the iPad 2 in a discounted price for students. The table below will show the implementation of

difference pricing of two difference range of iPad 2.

Market Price (per unit) Corporate Price (per

unit)

Student Price (per

unit)

iPad 2 16 GB with Wi-

Fi

AUD 579.00 AUD 559.00 AUD 554.00

iPad 2 64 GB with Wi-

Fi + 3G

AUD 949.00 AUD 929.00 AUD 924.00

7.7 Product Line-Pricing Strategy

The iPad 2 is currently the only product line of the SBU. Relate to the product strategy, the SBU has been

suggested to release a smaller version of the iPad 2 which will be name as the iPad Mini. The iPad Mini is a

smaller version of the iPad 2 and will be segment as the entry level for tablet computer.

The graph below will show the comparison of pricing between iPad 2 and iPad Mini. The price of the iPad 2

will be based on the price skimming after 6 months to match the release date of the iPad Mini.

Price (per unit)

iPad 2 16 GB with Wi-Fi AUD 559.00

iPad Mini 16 GB with Wi-Fi AUD 509.00

7.8 Leasing Strategy

The leasing strategy is not appropriate for the pricing of the iPad 2 because it is a product which requires a

low-involvement. Leasing strategy is more suitable to be used in high-involvement purchase such as houses

and cars.

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7.9 Price Leadership Strategy

The iPad 2 is the current market leader for t he tablet compute r industry based on its market share and it is also

the first product to enter the tablet computer market. Being the market leader enable the SBU to make pricing

decisions which to be follow suit by other competitors. The SBU is recommended to set the price high at theinitial stage of the product life cycle where there are only a few competitions in the market to give the SBU a

cost advantage. When other competitors started to establish themselves, the SBU start undergoes a price

reduction on the iPad 2 to force competitors into a pricing dilemma.

7.4 Distribution Strategies

Distribution strategies mainly are about how a firm utilizes the channels available in the market to deliver the

goods and services to the end user. Channels are organized structures of buyers and sellers that bridge the gap

of time and space between the manufacturer and the end user.

7.4.1 Channel Structure Strategies

7.4.1.1 Indirect Channel Strategy

At this point of time, ipad 2 is distributed and sold in Australia by employing the indirect channel strategy

whereby resellers like JB Hi Fi, Big W, Myer and David Jones are involve in the distribution tunnel before it

reaches the end user.

This can be seen when ipad 2 first launched in Australia last month. Apple stores in Sydney and Melbourne

drew crowds of hundreds, while resellers also drew large crowds. There have been reports of hundreds

waiting outside Next Byte, JB Hi-Fi and Myer stores. (Smart company, 2011)

Based on the above, it showed that ipad 2 managed to generate great sales volume in Australia when it

launched by using the indirect channel strategy. Therefore, it should continuously use the chosen structure

strategy in the near future to maintain its strength in the relevant market.

7.4.2 Philosophy in Choosing Distribution Strategies

7.4.2.2 Postponement Approach

In general, ipad 2 is encouraged to apply the postponement approach especially when it has special order from

the customer. For instance, when customers who intend to have extra requirements to be added into the ipad 2,

longer time is taken to manufacture the special version. Consequently, uncertainty is likely to occur when

producing a special version. Thus, postponement should be applied to avoid unnecessary incident to take

place.

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7.4.2.3 Speculation Approach

On the other hand, ipad 2 has been using th e speculation wa y since it first launched, whereby it will only be

produced based on the customers demand. The SBU should continue with this approach to maintain the

products quality and this can help the SBU to avoid producing extra quantities. Thus, by hiring thespeculation approach, it makes the ipad 2 looks more outstanding and unique.

7.4.3 Distribution Scope Strategies

7.4.3.1 Intensive Distribution

In order to maintain the consistency, ipad 2 is strongly recommended to uphold its intensive distribution

across all the states in Australia. For instance, telecommunications companies like Optus and Vodafone in

Australia are catering the identical data plans for ipad 2 in all the six states. By having the intensivedistribution, ipad 2 will be able to increase its economies of scales in the market and creates a larger

opportunity for impulsive purchase from the customers. Thus, within the fixed period, which is one and a half

year from now, ipad 2 shall stay on the current strategy and continue to achieve a better outcome.

7.4.3.2 Selective Distribution

Next, our SBU has been perfectly fit in the selective distribution since the products first stepping into

Australia. During the first day, the third-party resellers around the country such as JB Hi-Fi, Harvey Norman,

Myer, David Jones and NextByte have all sold out and are now taking orders. In addition, JB Hi-Fi and

Harvey Norman sold out within hours and were practically begging Apple for more stock, with JB Hi-Fi chief

executive Terry Smart telling The Australian Financial Review that even with triple the quantity of stock he

still couldn't meet the demand out there (Bordermail, 2011) The ipad 2 was effectively distributed across the

states by the selected retailers and hence, it helps in gaining high sales volume and less likely to neglect the

potential market for ipad 2.

7.4.4 Multiple Distribution Channels

In a multiple distribution channels, it involves more than two channels while handling out the products to

reach its end users and these channels are simultaneously being applied along the process.

7.4.4.1 Complementary Channel of Distribution

First of all, the complementary channel of distribution enlarges the size of the targeted market for the product

and based on our SBU, this approach is less likely to be taken into consideration as the targeted market for

ipad 2 is too large and sometimes it is hardly to maintain its concentration in the particular market.

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7.4.4.2 Competing Channel of Distributio n

On the other hand, the SBU should imple ment the competin g channels into the distribution process to gain

more sales with the retailers assistance. In order to motivate the retailers, a slight increase in their incentives

and some attainable rewards should be taken into account. Therefore, the SBU not only generating more salesbut also increasing the market shares for ipad 2; this eventually make ipad 2 stands out from its rivals.

7.4.5 Channel Control Strategy

7.4.5.1 Vertical Marketing Channels

7.4.5.1.1 Corporate Channel System

In the vertical marketing channels, the SBU is entirely carrying the corporate channel system as it is having

possession of the whole channel; with this strategy, the SBU is likely to achieve profit maximization and

creates a stronger ownership in a given period of time. Besides, the

SBU joined the forward integration whereby it has its own retailers which provide another platform for the

customers to adopt ipad 2. The retails stores are as follows, Apple Retail Stores, NextByte and My Mac which

located in all the six states in Australia.

7.4.5.1.2

Documents

SMP_ Done_2011