Table of contents
ANSWER TO QUESTION 1
HOW WOULD YOU DEFINE THE MARKET FOR THE APPLE IPOD? WHICH ARE THE RELEVANT EXISTING AND FUTURE COMPETITORS?
ANSWER TO QUESTION 2
HOW WOULD YOU DEFINE APPLE’S COMPETITIVE ADVANTAGE?
ANSWER TO QUESTION 3
HOW IMPORTANT IS CUSTOMER LOYALTY FOR APPLE?
WOULD YOU RECOMMEND A STRICT EXIT STRATEGY FOR ITUNES, IF THE PROFIT PER TRACK OF 10 CENTS WILL GO DOWN TO ZERO EVEN NEGATIVE? JUSTIFY.
ANSWER TO QUESTION 4
DEVELOPMENT OF A PERCEPTUAL MAP
WOULD YOU LIKE ADDITIONAL DATA?
Table of Tables
Table 1 Marketing questionaire of portable Mp3 players ranked for importance
3 Table 2 Score table for iPod according to ‚Importance’
Table of Figures
Figure 1 Perceptual map 1 : Price vs. Portability
Figure 2 Perceptual map 2: Price vs. battery endurance
Figure 3 Perceptual map 3: Price vs. Special file formats
8 Figure 4 Price determination according to Van Westendorp
Answer to Question 1
How would you define the market for the Apple iPod? Which are the relevant existing and future competitors? The market for MP3 players was relatively young in 2004. The first iPod was launched by Apple in 2001, but there were several competitors in the market. Apple holds a market share in selling MP3 players by August 2004 of 66%, totaling 10 million MP3 players. Therefore Apple holds the lion’s share of the market for MP3 players. With the highest quarterly revenue in a decade as well as large profits Apple is on the roll. The relevant existing competitors in 2004 are:
- Virgin Electronics and
Because of growing market expectations, many additional imitators will enter the market within the next time with over 100 iPod substitutes. In addition Microsoft is also aggressive promoting an alternative song format to Apple’s AAC. At first sight:
The first impression of this case study shows that the iPod story seems to be a great success for the Apple Company.
Answer to Question 2
How would you define Apple’s competitive advantage?
Apples’ competitive advantage could be summarized into an extraordinary marketing expertise, that make possible to offer an unique experience to a community of enthusiastic customers. We can divide the sources of Apple’s competitive advantage in two groups: Company-related
Highly known brand associated with a trendy and inventive image •
High customer loyalty
Innovation and very high quality of products
Good distribution channels (Internet, own retail stores in different countries, distribution partner) iPod-related
Product features (outstanding quality and ease of use, low weight, cutting-edge design, compatibility with Windows format) •
Accepted Pricing (Premium) by loyal customers
iTunes on-line music exchange website
Answer to Question 3
How important is customer loyalty for Apple?
Customer loyalty is indispensable for any company, but it is a particularly sensitive issue for Apple. Apple’s early evangelistic marketing path created much more than a product, it formed a lifestyle approach to innovation and technology. This product lifestyle approach delivers not only user friendly and physically attractive products, but targets persons who identify themselves as individual thinkers or revolutionaries. This image created an exceptionally strong Apple brand and community, leading many journalists to dub Apple product users as “fanatics” . The fanatical involvement of even non-traditional Apple users in the context of customer loyalty can be well illustrated in the battle with Real Networks online store for an open market. Real Networks, a competitor to Apple’s online iTunes store, cracked the fair play code that prevents iPod users from downloading at competing online music stores. The reaction from iPod users...
References: Wikipedia, “Apple Inc.,” http://en.wikipedia.org/wiki/Apple_Inc
CNET, “Real gets flamed over iPod campaign,” CNET Networks Inc., http://news.com.com/Real+gets+flamed+over+iPod+campaign/2100-1041_3-5314753.html
American Customer Satisfaction Index 2006: Personal Computers, Natonal Quality Research Center at Ross School of Business, University of Michigan, http://www.theacsi.org/index.php?option=com_content&task=view&id=147&Itemid=155&i=Personal+Computers
Rex Crum, “Apple profit rises 78%; iPod sales reach 21 million,” MarketWatch, Inc., http://www.marketwatch.com/news/story/apple-profit-rises-78-ipod/story.aspx?guid=%7BCCF6CF6B%2DD2C6%2D435B%2DA5B2%2DE6D92872F777%7D
Sean Silverthorne, “Where does Apple go from Here?,” Harvard Business School Working Knowledge, http://hbswk.hbs.edu/item/3877.html
Tim Bajarin, “Apple TV: Why it Matters,” PC Magazine, Ziff Davis Publishing Holdings Inc., http://www.pcmag.com/article2/0,1895,2097871,00.asp
Diller, H.: Marketing News der wissenschaftlichen Gesellschaft für Innovatives Marketing e.V., Univ. Erlangen-Nürnberg, Ausgabe 1/2005, März 2005, Nr. 44
Wübker, Georg: Power Pricing: Methoden der Preisfindung, Universität Frankfurt, 31.5.2006
Sattler, H./Nitschke, T.: Ein empirischer Vergleich von Instrumenten zur Erhebung von Zahlungs-bereitschaften, in: Zeitschrift für betriebswirtschaftliche Forschung (ZfbF), 55. Jg., Juni 2003, S. 364-381
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