The iPod, Apple Computer’s new breakthrough music player that can store and play up to 2,000 songs from a handheld computer no bigger than a cigarette pack (Technology), provides a striking illustration of what global marketing is all about.
When Steve Jobs, CEO of Apple Computer, first introduced the iPod in October 2001, it was received with scepticism. The digital music player was considered only marketable to a small, tech-savvy group of individuals, and the high price (starting at US$399) (Product development costs) made failure seem inevitable. The downloading of songs to the hard disk of a computer required a Mac computer, and the iPod was not usable on a standard PC.
But Steve Jobs proved critics wrong. Three years later, iPod’s success has been unmatched by any other digital music product in the world. Over 2 million have been sold internationally and it has shot Apple Computer back into the mainstream market, long dominated by Microsoft’s Windows.
The iPod has changed the market for digital music and the consumer demographics. The iPod gives consumers the freedom to control their environment and choose music that fits their mood. Digital music is cool with iPod’s stylish design. (Market needs and wants)
With its success in the United States, Apple did not lose time capitalising on overseas potential. Introducing the iPod in Europe through its existing Mac dealerships, the sales rapidly rose despite of high price tags. Japan was also penetrated through strong dealers already available. By March 2004, international sales of the iPod amounted to 43% of revenues, and the company posted a quarterly profit of US$46 million, tripling profit from the year before. (Regional Economic Agreements)
Meanwhile, Apple is not standing still. Pressured by technological development and competitive imitation, the iPod has been continuously upgraded with increased capacity of storing songs. Simultaneously prices for the original units are coming down (Leverage scale economies). Targeting the huge Windows market, and also to pre-empt competition, in 2003 Apple developed a model that work with PCs. However, Apple also faced a strong competitor, Sony who released its NW-HD1 Walkman in Japan, USA and Europe in July 2004.
Typical of the high tech industry, Apple has begun releasing new models, including the mini iPod, which is about as small as a credit card and holds about 1000 songs. To overcome the copyright infringement problems of downloading songs, the company launched the iTunes Music Store, which allows people to legally download one song at a time off the Internet for US$0.99. Apple has also launched promotional alliances offering free downloads – such as Sprite buyers getting a number code for one free song.
This story illustrates that a high tech product such as iPod naturally has what it is called a “global market”. This type of product is often developed in a leading market, and in order to stay competitive, aspects such as innovation and new product development are crucial and have to be continuous. Because of global competition, it becomes important to expand quickly into international markets.
It is crucial for any organization to understand the phenomenon of ‘Global Marketing and Integration’ in order to achieve global success. Global Marketing has two prerequisites. It involves an organization standardizing their marketing programs by allowing marketing efforts to seamlessly operate across country borders. Standardization ensures products, promotions, price and channel structure cooperate together to increase opportunity and effectively meet the needs of global customers. Secondly it involves coordination across markets by eliminating cost inefficiencies and reduce duplicate business efforts of their national/regional divisions. On the other hand Global Integration involves playing a role in many different world markets that are relevant to the business. Integrating firm operations means some...
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