Solving Marketing Problems: Case study on iPhone in the Chinese Market

Solving Marketing Problems: Case study on iPhone in the Chinese Market

Transmittal Form

[Fill in your personal address]Street Address

City, State ZIP

Month Date, Year

Marketing Manager,

Marketing Department,

Apple Company.

Address

Dear Mr. /Mrs.:

RE: FORMAL JUSTIFICATION REPORT

This report intends to make recommendations to the marketing department after which the company can make further consideration concerning possible structural and strategic changes that could help broaden the supply chain. By so doing, Apple Company will be able to reach out to more customers in its new venture in the Chinese markets and other oversees countries. This is because this report identifies possible problems accruing from marketing inefficiencies that are affecting your company.

The information used for the report is cited from reliable secondary sources of data among them being your company’s website and primary data which is essential in collecting raw data relating consumer preference to rivalry in the smartphone industry. Using the research findings, an objective analysis is made which then justifies the recommendations. The scope of the research is achieved by administering 150 online questionnaires. The limitation was inaccessibility of some respondents. Among the recommendations therefore include the need for proper implementation of marketing strategies, pricing, language barrier and inventory management.

Yours Sincerely,

[Kindly fill in your name]

[Your signature]

 

 

Table of Contents

Transmittal Form.. 2

Executive summary. 4

Introduction. 5

Problem statement 6

Methodology. 6

Findings. 7

Consumer preference. 7

Competition. 8

Analysis. 9

Recommendations. 10

Conclusion. 11

References. 12

Appendices. 13

Appendix I. 13

Introduction Letter and Questionnaire. 13

Appendix II. 14

Questionnaire. 14

 


 

Executive summary

This research report is motivated by the need to write a critical and comprehensive report which will enable inferring of recommendations to help attain maximum efficiency in the marketing department at the Apple Company. Being that marketing is a service that is virtually demanding in nature, there is a general requirement by any business to direct its resources towards not only curbing competition, but also identifying consumer preferences. As a result, the data that is collected and analyzed involves identification of two essential variables to direct conducting an empirical research whose findings and recommendations will be helpful to the marketing department of the iPhones produced by the Apple Company. In this report the assumptions, findings and conclusions are pegged on supportive evidence derived from the critical analysis of actual findings collected using online questionnaires. The methodologies appended include the use of 150 questionnaires sent to random respondents over the internet. To improve visibility and enhance interpretation of the data collected, graphs and other statistical tools are used. Finally it is recommended that Apple Company embarks on the use of market niching in the Chinese markets whereby the marketing department should target Chinese districts with many potential customers.

 

 

Solving Marketing Problems: Case study on iPhone in the Chinese Market

Introduction

Apple Company has been a leader in producing quality electronic gadgets in the American market. Unlike in America, the Chinese market is different. Apart from government policies that undermine entry and operations of foreign companies, there are social-cultural, geographic and economic factors that affect the marketing department in the international markets. In spite of these realities and shortcomings, Apple Company identified potential markets in China which motivated the company into launching the iPhone brand into the Chinese market. Lately Apple Company introduced iPhone 5s (Shinal, 2013). Unfortunately the demand was more than the projected supply which led to stock outs. Even though this implies that the Chinese market is lucrative, it is a weakness on the side of the marketing department. Also, the acceptance of Apple Company’s expensive smartphone proves that company’s value chain and total quality management systems have been ultimately redesigned to offer not only value but also superior quality.

Despite the high cost of iPhone as compared to other smartphone companies such as Samsung, Nokia, Blackberry, and HTC, the company has managed to make favorable sales in the Chinese market. The company has invested extensively into its research and development department through which it has managed to develop superior products compared to their rivals. Owing to the high sales in the last fiscal year which were majorly attributed to the increased sales in Chinese markets, Apple Company has managed to experience tremendous growth not only in its sales volume but also in its profitability index (Shinal, 2013). Unlike other smartphone manufacturers such as Samsung who have invested in cost cutting strategies to lower the prices of their products, Apple has continuously produced quality products at a high cost which is astonishing. Moreover, the company has invested heavily into its marketing department. This is because the department receives a fair share of the company’s resources aimed at boosting market research whereby various strategies such as personal selling, promotions, celebrity or personality selling, advertisements and publicity programs have been adopted.

The strategy that has helped Apple Company and specifically the iPhone brand to realize drastic sales has in China has been its customer care services which are now being offered in most districts around China. This bid comes after the company introduced more points of sale courtesy of the large demand for the latest iPhone 5’s. Among other strategies that have helped Apple Company penetrate the Chinese market has been the implementation of market segmentation strategy where the marketing department did research which divided the major Chinese districts into segments after which their purchasing power was weighted using statistical analysis tools. Because of the segments the company can now target specific customers who are deemed to have the potential to afford the iPhone brands. The use of segmentation which was implicit during the marketing of iOS operating system used to power the iPhones was vibrant in steadying competition against Google’s Android and Nokia Symbian operating systems (Brenda, 2000). As a way of differentiating their products in such a way that they are affordable to the target segments, the prices of the iPhone are varied depending on the size of internal memory desirable by the customers: the lower the internal hardware memory the cheaper the phone.

Owing to the success demonstrated by the iPhone brand, competition has been triggered among smartphone manufacturer rivals among them being Samsung which is the largest competitor for iPhone, Nokia, Google Android and Blackberry. According to Techlnner, (2012) Samsung has become the world’s largest smartphone company but Apple Company have still managed to restructure the iPhone models through constant research, development and innovation which has made iPhone rank high in the smart phone industry.

Problem statement

Any company operating an international supply chain is bound to have issues relating to manufacturing, procurement, inventory management and more so marketing. This is because of the environmental factors that are varied from one geographical location to the other, economic factors, socio-cultural and political factors which determine the cost of factors of production (Brenda, 2000). In this case study, the marketing manager of Apple Company who are the manufacturers of iPhone brands of smartphones are faced by pricing problems despite using segmentation and niching strategies to target potential customers, high costs of advertising, logistic and inventory management problems experienced during the first weeks of launching  which consequently lead to under-stocking. Lastly because of the different geographical locations, the marketing department is faced with problems of language barrier in the customer care sections.

Methodology

This research work has been designed to collect empirical data concerning the two variables stated in the research questions aimed at identifying why Chinese consumers might prefer to choose iPhone over other competitor phones and secondly, identify the possible difference between iPhone and other mobile phones. The rubric of the questions is geared towards primary information in terms of punitions aimed at helping solve marketing problems. This has been achieved through a well-structured online questionnaire. The questionnaire will be send randomly to 150 online respondents residing in China. A high number of questionnaires is used because with online questionnaires there is a high rate of defaulting among respondents who fail to send back the mails. Secondly the method is cost effective and confidential thus it is likely to be preferred by many respondents. The third factor promoting the use of online questionnaires is the assumption that most internet users are addicted to the internet and are likely to have relevant information on the progress of iPhone or any other competing mobile phone brand.

Using the questionnaire, information will be extracted and analyzed and this will provide a clarified understanding of the pertinent factors towards the success of marketing activities aimed at promoting iPhone in China. In addition, the online questionnaires will act as a market research tool essential in understanding customers’ perception of the iPhone market. Specifically, the questions on the online questionnaire will provide descriptive research on the factors that create the iPhone success in China market and to find out the difference between iPhone and other companies mobile phone. Since this project is to formally justify the operations of the marketing department and the quality of services necessary to achieve customer satisfaction in the China market. The format of questionnaire is based on multiple choices ranging from 1 (strongly agree), 2 (agree), 3 (disagree), 4 (strongly disagree) and 5(not sure).

Findings

This section will present results of the findings and analysis of the success factors of the marketing department in relation to the promotion and sale of iPhone in the Chinese markets. The data collected from the study will be captured and analyzed for the purpose of statistically elucidating the empirical research findings after which data will be presented in the form of tables. From the dummy findings made regarding this report aimed at helping Apple Company boost their marketing activities in the Chinese market, certain findings are made in relation to issues listed in the problem statement. The first one being:

Consumer preference

When asked why most Chinese consumers preferred the iPhone over its competitors and other mobile brands, most answers given were reliable to the questions of concern. From the findings, most online respondents agreed that operability ranked higher than the sleek design and fashion but price was an undermining factor. In the second subsection, the launch of iPhone in China was so rapid with the creation of Apple Stores in major districts thus most respondents agreed that Apple Company segmented the Chinese market into market niches. In the third subsection, the adequacy of the period is desirable because most correspondents showed a liking for the less than two week launching period.

The adequacy was majorly attributed to the marketing strategies of the company compared to consumer loyalty. In the fifth subsection, the main factor hindering further growth of iPhone in the market is price. Other factors came secondary among them being competition and insufficient supplies. The market segmentation strategy employed by iPhone is reliable since it entails a good choice of marketing techniques. Despite the success achieved, more could be realized if the company could ensure timely supply of iPhone devices so that demand matches the supply chain of these phones in China. It is commendable that the iPhone has Chinese language translator which adds to the hype created by the Chinese store attendants in the Apple Stores

Table 1.1: Customer preferences

Response Frequency Percentage   %
Yes 84 56
No 42 28
Non respondent 24 16
Total 150 100

Source: Field data

Chart 1.1: Represents percentage rate of respondent

Source: Table 1.1 Above

Competition

Competition is the ability to gain competitive advantage over rivals. Because of the heated competition in the technology and mobile phone industry, there is continued need for innovation so as to develop new products features that can effectively compete in the market. Firms have often achieved competitive advantage through acquisitions and mergers, enjoying economies of large scale production and taking of price leadership positions. From the questionnaires it was established that there is a difference between iPhone and other phone models. Samsung is the biggest rival for iPhone followed by Google’s Android then blackberry.

The features and phone properties such as the iOS operating system integrated in iPhone’s offer a very effective platform that improves customer experience as well as adaptability of the phone. The iOS operating system is refined and stable as compared to the Google’s Android Operating system which has shown prevalence for malfunctioning. Research and development has been the only way towards developing of effective smartphones. Nevertheless, iPhone can emulate special features that have been developed by Samsung in their Samsung galaxy series and work towards improving the iPhone further. The effectiveness of respondents on competition is summarized in the table below.

Table 1.2: Effectiveness of respondents on competition

Response Frequency Percentage (%)
Effective 72 48
Not effective 42 28
Ineffective 36 24
Total 150 100%

Source: Field data

Analysis

Making a comparison between the research findings which represents primary data and the secondary information gathered from secondary sources of information such as websites and books on marketing strategies, it becomes rife that iPhone has been successful in the Chinese market. For a bigger part of 2011 and the beginning of 2012, iPhone dominated the Chinese markets leading to increased customer base and profitability margins. The sales of iPhone have since then been on a downward trend but it is worth analyzing the market factors that promoted the attainment of previous high sales during the 2012 fiscal years but later started reducing in the 2013 financial year.

From the research project, it was established that iPhones have nice features which foster superior performance. Chinese consumers are supported by their cultural believe in quality and durable products thus they generally have a liking for quality. Besides, iPhone through its marketing manager has been strategizing about the market so they chose the segment with a niche of potential customers. Consequently, the research findings indicate that there are many differences between iPhone and other smartphones. These differences have been embedded into the iOS operating system of the iPhone which are much superior compared to other mobile phone brands. The iOS operating system used is much more superior to the android operating systems, windows and the Symbian OS. Apart from differences in the physical appearances, there is difference in operability and internal phone memories which makes iPhones a preferable choice among Chinese customers.

Recommendations

In accordance to the two research questions that helped in finding information to analyze the data that relates to the objective of this formal justification report, the findings are guiding towards making viable recommendations on the results extracted from the questionnaires. For instance the first question can categorically be answered basing on the positive attributes that customers have managed to identify in the iPhone that are not in other smartphone. In order for this question to be applicable, the marketing department needs to appreciate that they are dealing with the best quality of smartphones thus they need to involve in more aggressive advertisements on social media and across different social networking cites (Kotler, 2010). This is because potential customers have shifted their focus towards the use of internet search engines to find smartphones thus increasing traffic flow towards Apple Company’s products and more so the iPhones will be beneficial.

Again, with the reality that customers appreciate the quality of iPhones, then the marketing manager could think of introducing online platforms where the iPhones can be sold at the click of a button. This would help solve frustrations from customers who queue outside of the Apple Offices in major districts such as Guangzhou to physically purchase iPhones. These recommendations further answer the regarding why consumers prefer to choose iPhone over competitor’s phones. This trend has been evident during the launch of iPhone 4, 5 and 5s which were previously received with a lot of enthusiasm by tech savvies in China (Shinal, 2013). Since most people in China and across the world have embraced the use of iPhones, it is advisable for Apple Company to use its marketing department to better the supply chain specifically the procurement division because iPhones have become a fashion among Chinese youths most of whom strives to own the latest devices in the market.

On the side of manufacturing, combining cutting edge technology and the perfection of the phones casing into a sleek and stylish outlook has attracted many consumers. Despite the high prices, the demand for iPhones has proved to be more than supply on many occasions. This scenario has been evident with persistent stock outs not only in China but also in the United States. Even when stocks run out due to high demand and low supply by the Apple Company, customers still show their loyalty by waiting for new deliveries. Because of the devotion shown by the customers, the marketing department at the Apple Company needs to establish consistent customer care services in China. For instance there is need for employment of more Chinese into the iPhone stores to break the language barrier that could negatively hinder sales. By employing the locals in China, the company through its marketing department will not only be engaging themselves in corporate social responsibilities but also in creating customer loyalty in addition to boosting the per capita income of the Chinese people (Techlnner, 2012).

Another recommendation revolves around tearing the line between manufacturing economics and marketing economics which together help the company to reach break-even point by utilizing economies of scale. Additionally Brenda, (2000) emphasizes that the need for a high rate of stock turnover should be factored by the marketing manager after which measures should be taken by the manufacturing department and research departments to develop phones that are suited for the middle class earners in China. In the past the expensive pricing has keep more customers coming during the launch period. A short launch period of two weeks is healthy for both consumers and the companies marketing department but after the launch, the sales have been recorded to significantly drop. It is therefore recommended that the manufacturing department should consider manufacturing phones with lesser features in order to attract repeated purchases. Better still they can introduce discriminative pricing for the less privileged lower class earners in the Chinese economy. This is because it is believed that the more sales a company makes the more influence it has and the more after sale gains from purchase of support services such as software programs and upgrades. By so doing the marketing department will be adding value to the overall profitability while at the same time increasing its popularity in the Chinese markets.

Making recommendations using the second question directs the marketing department into identifying superior product features to use in making advertisement notices. Following the lawsuit filed by iPhone against Samsung for infringement of copyright. The marketing department needs to directly involve people and entice them into making repeat purchases using soft selling marketing strategies. Soft selling is where the marketing department uses an online marketer to facilitate interactions between customers and the marketing department thus creating a personal relationship which then entices customers into making re[eat sales or referring friends who are potential buyers of iPhones (Brenda, 2000).

Conclusion

In conclusion, there is much to be done by iPhone with relation to improving the services of their marketing department in the newly invaded market in China. There is need to consider dealing with the marketing problems which are pricing, language barrier, inefficiencies during launching and inventory management or under-stocking problems which are often overpower by overwhelming demand leading to delays. With the realization that the smartphone industry is faced paced with innovations accruing from research and development departments, the marketing department also needs to brace up for the challenge so as to avoid being a bottle neck and slow down the production process. This can be achieved by considering recommendations made emphasizing the need for price cutting strategies or price discrimination, demand projection in order to avoid running out of supply during the first two weeks after launching the iPhones, improving the supply chain by creating an online platform to facilitate overseas sales in China and employing Chinese people in the customer care and marketing departments because of their familiarity with the Chinese cultural practices and language.

.


 

References

Kotler, P. (2010). Marketing defined: Principles of marketing. Australia: Apple-cross.

Shinal, J. (2013). Tech and financial markets. San Francisco:  San Francisco Chronicles. http://www.usatoday.com/story/tech/columnist/2013/01/27/apple-china-iphone-ipad/1862721/

Techlnner, J. (2012). Apple iPhone 5: strengths, weaknesses, opportunities and threats. Retrieved 27 November 2012 from: http://www.weste.net/2012/9-15/85264.html

Brenda, K. (2000). Crystallizing knowledge of historical Company performance into interactive landscapes. New York: Wiles Press.


 

Appendices

Appendix I

Introduction Letter and Questionnaire

[Kindly fill in your name here] Name of researcher

[Kindly fill] University of affiliation

Dear Respondent,

RE: QUESTIONNAIRE

I’m currently pursuing a project research aimed at facilitating the making of a justification report that will guide recommendations made to the marketing department at the Apple Company. The report seeks to identify possible structural and strategic changes necessarily in dealing with competition in the smartphone industry. My research is designed to cover areas related to consumer presences and the consumer’s observation regarding competition among the major rivals in the smartphone industry after which the empirical research findings will be analyzed in order to provide justification to the marketing manager on the need for adopting the recommendations made.

The project proposal is purely academic and it is essential for the passing and subsequent fulfillment of my academic course. Therefore, I kindly request you to go through the attached questions and fill in the requested information appropriately. Any information given will be treated with strict confidentiality and will not be used for commercial purpose. It will be used strictly for academic purposes.

Yours Sincerely,

[Fill name]

[Sign Here]

 

 

Appendix II

Questionnaire

IPhone success in the Chinese market

  1. Consumer preference
  2. Why do Chinese consumers prefer to choose iPhone over substitute phones?
  3. Sleek design
  4. Operability
  5. Fashion
  6. Price
  7. How long did it take after the launch of iPhone 5, for it to be launched into the Chinese market?
    1. 2 weeks [     ]
    2. 1 month [     ]
    3. 6 months [     ]
    4. 1 More than one year [     ]
  • In your opinion, how adequate is that period?
    1. Adequate [     ]
    2. Fairly Adequate [     ]
    3. Inadequate [     ]

 

  1. If adequate, what are the factors leading to this adequacy?
  2. Brand loyalty
  3. Marketing strategy
  4. Others [specify]……………………………………………………………………..

………………………………………………………………………………………………………………………………………………………………………………

  1. Despite tremendous growth, what might be the factors hindering the iPhone market in China?
  2. Inadequate suppliers for the Apple Company [     ]
  3. Competition [     ]
  4. High cost of iPhone                                       [     ]
  5. Others [specify]……………………………………………………………………..

………………………………………………………………………………………………………………………………………………………………………………

  1. How do you find the marketing strategies employed by iPhone?
    1. Reliable [     ]
    2. Fairly Reliable [     ]
    3. Unreliable [     ]

 

  • If (a) above, what are the factors leading to its reliability?
  1. Good communication system [     ]
  2. Good choice of marketing techniques [     ]
  3. Anticipation among customers [     ]
  4. Others [specify]……………………………………………………………………..

………………………………………………………………………………………………………………………………………………………………………………

  • If unreliable, what could be the main reason leading to the unreliability in marketing strategies?
  1. Poor choice of marketing strategies [     ]
  2. Incompetence in marketing                            [     ]
  3. Language barrier [     ]
  4. Others [specify]……………………………………………………………………..

………………………………………………………………………………………

………………………………………………………………………………………

  1. Competition
    1. Is there a difference between iPhone and another mobile phone?
    2. Yes [     ]
    3. No [     ]
    4. In your opinion, what mobile brands are the main rivals for iPhone?
  2. Samsung [     ]
  3. Blackberry [     ]
  4. Google’s Android [     ]
  5. Others [specify]……………………………………………………………………

……………………………………………………………………………………………………………………………………………………………………………….

  • How effective are mobile phone features integrated in iPhone compared to its rivals?
  1. Effective [     ]
  2. Fairly Effective [     ]
  3. Ineffective [     ]
  4. If (a) above, what could be the main factors leading to the effectiveness?
  1. Research and development [     ]
  2. Introduction of new features [     ]
  3. Others [specify]……………………………………………………………………..

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

  1. If ineffective, what could be the reason this ineffectiveness?
  1. Disloyalty among iPhone employees [      ]
  2. Poor communication system [      ]
  3. Poor customer/after sale services [      ]
  4. Others [specify]……………………………………………………………………………………………

………………………………………………………………………………………..……………………………………………………………………………………..

  1. In what ways do you think the effectiveness can be enhanced?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….

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