Apple's iPhone Launch: A Case Study in Effective Marketing
Kyle Mickalowski, Augustana CollegeMark Mickelson, Augustana CollegeJaciel Keltgen, Augustana CollegeABSTRACT When CEO Steve Jobs announced in January 2007 that Apple would be releasing a revolutionaryiPhone five months hence, consumers waited with bated breath for a phone that would deliver all the features of their iPods as well as a smart phone. Anticipation grew, just as Jobs knew it would, as Juneapproached. The launch would become one of the most heralded technological product splashes Apple,known for its masterful media build-up, had ever planned. How the iPhone was developed, priced, promoted, and distributed is lesson for marketers around the world. Apple investors were pretty happy withthe outcome as well. INTRODUCTION
One year after Apple Inc. CEO Steve Jobs announced the company’s industry-changing iPhone onJanuary 9, 2007, at the Macworld convention in San Francisco, the share price of Apple’s stock has morethan doubled to a January 9, 2008, value of $179.40 (See Chart 1). This stock price incorporates all of Apple’s business, but a large part of the rise in value can be attributed to the launch of the cutting-edgeiPhone, of which four million have already been sold through mid-January 2008 (Carew, 2008). Based onthis simple observation of the stock price, the iPhone can so far be declared a success, at least from ashareholder standpoint. This paper will explore both the pre- and post-launch activities surrounding theiPhone to explain why it was such a success for the stockholders and why Apple’s reputation forunparalleled marketing success is deserved. Chart 1: This chart depicts the astounding growth of Apple’s stock from January 9, 2007, to January9, 2008.
THE ANNOUNCEMENT BY CEO STEVE JOBS
Jobs' announcement was an example of the intelligent use of trade shows and Apple's experiencewith generating press coverage and buzz about new products through them. The conference capped off thetwo-year development period for the iPhone, a period during which Jobs embarked on a campaign to sign awireless company as the exclusive carrier for the iPhone. Eventually, he was able to convince AT&T toabandon almost all control over the development of the iPhone to the point where only three executives atAT&T had seen the iPhone before it was announced (Sharma, Wingfield, and Yuan, 2007). This situationgave Apple the liberty to develop its product on its own terms and to keep its features under tight wraps. Inan industry that changes as rapidly as the wireless communication industry, the ability to be as autonomousand secretive as possible is very important in the development of a product like the iPhone, and Steve Jobswas able to recognize and use it to Apple’s advantage. THE PRODUCT AND TARGET MARKET
The iPhone could be described as a combination of Apple’s popular iPod music player and a smartphone designed to surf the Web. Its highly-touted feature is a 3.5-inch, touch-sensitive screen thatconsumers use to make calls, navigate their music collection, and write messages on a virtual onscreenkeyboard (Wingfield and Yuan, 2007). At the time of the announcement this innovative feature set theiPhone apart from the competition in the wireless-phone market. Apple parlayed the strong reputation of the Apple brand and the iPod’s success to enter a lucrative cell-phone market, a step that may ward off apotential threat to Apple as other companies introduce devices that have strong music-storing and playback capabilities.All of these benefits and features of the iPhone come for a price though; the initial price of the4GB model was $499 and the 8GB model cost $599. Aimed at the high-end, tech-savvy consumer, who isoften a business user, the iPhone is marketed to a sizable, fast-growing market. Before the recent fears of apending recession, analysts predicted that the aim to sell 10 million iPhones through 2008 would be...