#2: iLove iPod!

13 05 2009

How many of you own an iPod? I’m sure many of us are proud owners of iPods, the portable media device that has become absolutely indispensable in our daily lives (well, at least for me!)

ipodnano_hero20080909

The Latest iPod Nanos (www.apple.com)

Since the release of the first generation iPods in 2001, iPods have become a global phenomenon, changing the music industry and constantly wowing consumers with their sleek designs and functions.

Despite the premium prices that Apple sets for iPods, consumers are still lapping up the stylish portable music player. Apple is one of the leading producers of mp3 players today and has managed to capture a substantial market share of the mp3 player industry. Why are consumers willing to forego cheaper alternatives for Apple iPods?

Here is an article that explains some reasons behind iPod’s success.(http://www.besttechie.net/2008/03/01/the-ipod-success-thank-the-marketing-department/) The writer argues that iPods are largely successful because of a marketing strategy that associated iPods as “cool” and a must have fashion accessory. Such measures have influenced consumer preferences and largely generated favourable demand for iPods. One of the marketing strategies included iPod advertisements that showed “a bunch of people dancing on a colored background.” And in case you have not seen such an ad…

There are many strategies Apple employ to make iPods a phenomenal success. Out of all these strategies, which do you think is the most important?  (You may refer to the article or your own knowledge!)

Apple has also enjoyed much success in many other sectors.  Not only has Apple managed to revive interest in its Mac computers, Apple’s forays into other areas such as the music and movie industry (iTunes) and smart phone industry (iPhones) are phenomenally successful. Do you think Apple has employed similar strategies in these areas?

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34 responses

20 05 2009
Nguyen Thanh Phong / NJC / The Opposing Team

Both the writer of the above article and Jeff Weisbein attributed the “premium price” of the iPod to its distinctive style and excellent function. However, I would like to state an important point that it is thanks to the “premium price” policy that Steve Jobs can command the market of MP3 players with such dominating power.

I totally disagree that the quality of the iPod is superior to that of other brands. Empirical experience shows that even the music players in cell phones nowadays give excellent sound quality. Local brand Creative bundles its package with high-end earphone, which largely determines the sound quality too. Technology has evolved so much that improvement in sound quality is virtually indistinguishable. It is why the new models are loaded with extra functions and style, which is what the iPod is really good at.
What is truly genius behind the iPod phenomenon is its pricing policy. New iPod models have consistently been priced at a level which gives them an “exclusive brand” status. People who yearn for the high social class and are financially capable will not mind paying extra bucks for the posh iPod. The idea about exclusivity has been constantly practiced in the fashion industry (think of Louis Vuitton and Prada). In the beverage industry, Starbucks could have avoided closing 600 stores in the US if it had preserved its premium status. According to Harvard Business School professor John Quelch, Starbucks’ mass production, which helps to lower the price, has caused many “Starbucks veterans” to switch to Peets and Caribou – the more exclusive brands. For that reason, I hope that Starbucks will scrape off its plan to produce Starbucks instant coffee packages!

However, there is an inherent setback associated with exclusivity: it makes the demand price inelastic. An increase in the price leads to a proportionately smaller change in quantity demanded, which results in lower total revenue. Trade-off is one of the most important principles of Economics. However, Apple has performed an exceedingly intelligent balancing act. Its latest model has regularly commanded an exorbitant price. When that model becomes outdated, its price will drop so that average consumers can afford it (e.g. the iPod Nano). By this time, a newer and cooler model (e.g. the iPod Touch at the moment) has come out to satisfy the classy buyers; exclusivity is preserved. This is somewhat similar to a price discrimination where higher revenue can be collected from different groups of consumers. Similar behaviour can be observed in cinemas when entrance fees are higher for sneak previews.

In addition, to ensure maximum profits, Apple coaxes its buyers into paying more by its increasingly attractive price to storage ratio. At 2005 price, price per GB of an iPod Shuffle 512 MB was $200/GB, while that of an iPod Photo 60GB was $7.50/GB. It gives customers a perception of saving, while they may not use up the amount of memory they buy. A detailed graph can be seen at reference 2.

I acknowledge that the iPod has somewhat justified its price with its fancy design and interesting applications, but what I truly admire Apple for is its brilliant and careful pricing.

Reference:
1. John Quelch, Starbucks’ Lessons for Premium Brand, Harvard Business School, 09/07/2008. (http://hbswk.hbs.edu/item/5973.html)
2. Pete Freitag, The Genius of iPod pricing, 31/03/2005. (http://www.petefreitag.com/item/301.cfm)

PS: I’ve tried my best to be as concise as possible. But I feel it is inadequate to discuss an issue any shorter.

20 05 2009
Nguyen Thanh Phong / NJC / The Opposing Team

Sorry, I made a terrible mistake when saying that the exclusivity makes “demand price inelastic. An increase in the price leads to a proportionately smaller change in quantity demanded, which results in lower total revenue.”

I would like to correct it that exclusivity will make the demand price elastic. An increase in the price leads to an proportionately larger decrease in quantity demanded, which results in lower total revenue.

Thank you.

21 05 2009
Leonard / DHS / Invisible Hand

Hmm.. just to question the NJC team,

May I ask why exclusivity would lead to a price elastic demand for the good?
Being exclusive could actually mean that there is a lack of substitutes to the good, and this would in fact lead to a more price inelastic demand for the good.

Perhaps it should be explained this way (just my 2 cents worth):
Having a price inelastic demand for the good, an increase in price would lead to a less than proportionate decrease in quantity demanded. This actually allows Apple to continuously increase its price without worrying that its revenue will fall substantially.

Just a suggestion btw! =)

23 06 2009
Goh Yi Le / NJC / The Oppposing Team

In response to Leonard from DHS, I like to point out that exclusivity makes the product a luxury good and hence this means that the price elasticity of demand for the good is high

You claimed that “This actually allows Apple to continuously increase its price without worrying that its revenue will fall substantially” Is this necessarily always true? Does that mean that Apple can continue to raise its price to $1000 for an ipod without suffering huge losses? Obviously not. An increase in price can only increase total revenue if it is still within the inelastic portion of the demand curve. If the price is too high, it reaches the elastic portion of the demand curve, and thus total revenue falls.

21 05 2009
Sheena Soh / VJC / VJC012

Yes I admit. I am one of the victims of Apple’s successful marketing strategies. Despite the steep prices of their electronic goods, I would scrimp and save just to buy their product. I owned my first Apple iPod when I was 14, and now at 18, I own a MacBook and iPhone as well. Was all the forgone outing and meals worth it? Definitely.

Many of the factors that have led me, and an increasing number of consumers to choose Apple products (namely the iPod) have been mentioned in the article. One of which was the way Apple advertised the iPod. It was cool, it was stylish, and it was the fashion. Most importantly, the message the advertisement brought across to the public – it did not matter who you are, you can still enjoy the music wherever you are with the iPod. That appealed to many teenagers who always wanted to be cool and keep up with the latest trend. However, just capturing the teenage market would not have made the iPod such a huge success. It was also the quality, the service and sense of sincerity the company showed to the world. They set out to create a product that would be the best in the market, it was not necessarily the most affordable thing in the market but it was definitely one that was worth the money. Their effort showed with the continuous improvement that has been made on the iPod over the years. More importantly, they made it easy for anyone to purchase an iPod. One could buy it online, stores located island wide and even through a vending machine in Silicon Valley! The quality of each iPod purchase is also ensured with the top-notch parts that they use. Not only that, the quality of their customer service is also remarkable. One gets a brand new iPod when a manufacturing fault occurs. Such quality service and efforts spreads from user to user making it such a success.

Moreover, Apple also uses the iPod to participate in charitable activities. An example would be the (PRODUCT) RED Special Edition iPod whereby part of the purchase price goes to the Global Fund to fight Aids in Africa. Such activities portray to the public that Apple is not all about profits. They do give back to the society as well. Also, they have special limited edition iPod. For example, they had a partnership with the band U2. Together, they came up with a limited edition U2 iPod with the aim of fusing arts and technology. This unique approach to their product plays a huge role in making the iPod such a success.

As for Apple’s successes in the other sectors, I feel they have taken a different approach on the strategies used. They promote other goods using what was already selling well, the iPod. They came up with promotional bundles that packages the iPod with a Mac and also produced the iPod such that it was more compatible with a Mac. Such tactics saw an increase in the number of Mac users over the years. Using the iPod again, they tapped into the music and movie industry through iTunes. More recently, they launched the newest version of the iPhone, venturing into the smart phone market with incumbent firms like Blackberry. Instead of promoting it as simply a smart phone suitable for working adults, they included functions that would appeal to the teenagers too. They made it such that one could ‘customise’ the phone to suit ones need through the download of application on iTunes. Such functions would mean that a working adult could download applications like BBC news updates while a teenager could download games or social networking application like Facebook and MySpace. Using such strategies, they not only manage to capture some of the users in the smart phone market, but also capture the rest of the mobile phone users. In addition to that, they tap further into the music and movie industry with iPhone users being able to download songs and movie on the go with iTunes just a tap away.

21 05 2009
Benjamin / VJC / VJC012

Well, I’m an Ipod user myself and, correct me if I’m wrong, but doesn’t Ipod rely less on its products like their notebooks and mp3 players, and more on their accessories? I mean, products are only a one-time payment thing, but if they keep coming up with trendy accessories, people will want to make continued purchases, which is more profitable in the long run.

An interesting comment I read in a magazine somewhere ( if I had remembered correctly it should be something along the lines of this ) ‘…to succeed in a business, you should never start with yourself..always think of benefiting the greater masses..a good cause will bring good results…’ Well, as they say, you reap what you sow. (:

Cheers.

21 05 2009
Leonard / DHS / Invisible Hand

Hi benjamin (again),

Hmm you’re quite right to say that they rely on their accessories for revenue. Accessories could also mean songs from the iTunes library, etc… It basically is just anything to equip your iPod with.

However, Apple indulges in large amounts of RnD and places much emphasis on innovation. Besides coming up with trendy accessories, they are constantly inventing new versions of notebooks and mp3 players to captivate their consumers. Thus, a one-time payment thing may become a two-time payment when consumers decide to switch to the newer and cooler version of mp3, etc.

Furthermore, users of apple products might further promote and advertise their products. Their one-time payment can actually translate to a chain effect of many one-time payments as the product gains increased taste and preferences for it and thus increased demand.

To conclude, Apple places equal emphasis on both. =)

22 05 2009
Chan Ze Ming / RIJC / TTWW

The power of marketing today is not to be underestimated. The phenomenal success of the iPod today can be above all attributed to the marketing strategies of Apple. Of course, other factors may have played a part as well, such as product differentiation, pricing strategies and effective sales strategies but marketing is the key which allows Apple to tap on these advantages and turn the iPod into the mp3 player we all desire.

The iPod is not the first mp3 player in the market. As we all know, Creative first introduced a digital audio player capable of storing, organizing and playing audio files in the form of its Creative Zen. Creative was the first to come up with the digital audio player technology and had already launched their products before Apple even began selling iPods. Yet within a span of a few years, Apple has totally eclipsed Creative’s achievement in this market and wrested the majority of the market share out of Creative’s hands, along the way transforming the mp3 player into the ubiquitous accessory in the world today. Apple’s extensive and powerful marketing strategies was the key factor in their success and by the time Creative realized this and launched a $100 million marketing campaign to recover the lost ground, it was already too late.

So what exactly is so special and magical of Apple’s marketing strategies to achieve such a phenomenal success? The Porter generic strategies and product life cycle hypothesis provide an insight into this. Apple’s iPod was geared towards a broad market scope based on its uniqueness competency and as a result, Apple adopted a differentiation strategy for its product. The aim of marketing in this case would be to portray the iPod as a superior and unique product in the mp3 market, distinguishing from other products to make it much more attractive to consumers.
Apple’s product design has been exceptional, portraying a classy and exclusive look which immediately stands out as a privilege good. Aimed at a medium/high class market, the product had a feel which allowed it to stand out as a must-have fashion accessory. This allowed for brand positioning, placing iPods with other prestige items offered on sale, providing a strong and clear image about the quality of the product. Apple also ensured that only the best was provided for iPods, with enhanced audio quality, maximum storage, minimum size and increased durability. This allowed iPods to distinguish itself in the market as the best digital audio player around.

Apple also launched an advertising campaign which greatly boosted the demand for its products. They promoted the iPod through both the mainstream media and on cyberspace. The advertisements focused less on the iPod’s capabilities but rather on the lifestyle of being plugged in while on the move. Apple portrayed the iPod as part of the daily life of youths, always listening to music and watching videos, thus sparking off a revolution for digital audio players. Its individual products were then geared towards this, providing different functions and capabilities such as the Shuffle’s portability and the iPod Touch’s multiple functions (Internet surfing and video playback). These contributed to Apple’s differentiation of its product in the market.

Another key part of Apple’s success lies in the product life cycle hypothesis, a particular strategy which companies adopt so as to stay ahead of fellow competitors. This operates on the assumption that a product is a tool conceptualized to meet the needs of customers. As customers have changing needs, products have a limited lifespan in the market, and undergo various stages during which they pose different challenges to the sellers and yield different profit margins. Apple has managed to develop an edge ahead of its competitors by always focusing on the initial market introduction stage of the product life cycle, where sales volume increases significantly, costs are reduced due to economies of scale, and little or no competition exists. This enables Apple to construct niche markets quickly and reap profits. By developing new products in the initial stage when market saturation of the original product occurs, Apple is able to enjoy high sales.

Apple also carries out market restriction and product bundling through integrated systems as part of its strategy. For example, iTunes software is the only version of software which can convey files to an iPod, and this is only commonly available on all Apple Macs. This has led to certain software systems which are requisite for the iPod to function, and the utility of these systems can only be achieved by using the iPod in certain circumstances. The close complementarities of both goods thus leads to a bundling effect, in which customers who consume one will invariably have to consume the other for maximal utility of the functions. This has enabled Apple to leverage on its strong market share in the Macintosh and iTunes market, where it holds a significant edge over smaller rivals apart from Microsoft, to boost demand for the iPod.

Thanks to all this, the iPod is the leading digital audio player in the world today.

23 05 2009
Goh Zuo Qi/TJC/Scimonoce

Apple iPods have become the must-have fashion accessory of all music-loving fans out there. In fact, the iPod was only launched on October 23, 2001, and as of September 2008, more than 173,000,000 iPods had been sold worldwide, making it the best-selling digital audio player series in history.

In my opinion, the branding and pricing policy is the most effective strategy. The advertisements are extremely appealing to the young. It is interesting to note that the Apple iPod has not engaged a prominent celebrity to endorse its product; the advertisements use shadow dancing figures as a representation of the masses instead. Therefore, this smart move appeals to the wide masses as these anonymous figures could just be you and me. Demand for iPods have become so inelastic that Apple can charge very high prices and yet a less than proportionate quntity demanded falls. The pricing policy makes it a very exclusive product and I agree with what has already been said, it makes it desirable and by possessing it, you are showing you can afford it, much like how designer handbags charge exorbitant prices.

As for other products, they are more or less counting on the ‘cool’ factor of Apple the brand. Mac computers purposefully distance themselves from the boring and stuffy image of Microsoft computers and market it as something different, as something rebellious, something not quite the norm. After all, everyone can have a Microsoft computer but are you daring enough to own a Mac one?

23 05 2009
Benjamin / VJC / VJC012

Well, all in all, I guess the key ingredient in Apple’s success formula boils down to their marketing strategies.

In my opinion, it’s a simple tactic that is being undertaken by Apple, and it’s called ‘Being ahead of the pack’. Being ahead in branding, being ahead in designs, being ahead in functions, being ahead in advertising etc all these will contribute to Apple’s success.

Similar to the fashion industry, one who can be a trend setter and not a trend follower will stand to gain the most. It’s as Ze Ming said in his post that ‘Apple’s extensive and powerful marketing strategies was the key factor in their success and by the time Creative realized this and launched a $100 million marketing campaign to recover the lost ground, it was already too late.’ Here we can clearly see that Apple is being the leader and Creative is being the follower.

Talk about insight and leadership. (:

23 05 2009
John Wee / NJC / Team Koinonia

The most important strategy that Apple has employed which has made the iPod such a success would have been its most basic approach to date – keeping its designs simple since the iPod’s emergence. This fundamental point that has created unwavering customer loyalty seems to have been neglected by many. Throughout the years, the iPod’s exterior design has been kept almost the same, such to the point that it is instantly recognisable to the masses. This has helped in loyal customers giving their unfathomable support. Brands like Creative have released so many different models over the years that customer have found it difficult to relate to a Creative MP3 player. Creative has to compensate this by associating itself with reasonably low pricing unlike Apple whose prices may not be as competitive. Also,many iPod users would have already gotten used to the iPod’s designs and would have been very comfortable it, hence whenever a newer iPod was introduced, they would not mind upgrading to another iPod instead of switching to another brand’s MP3 player which may have been cheaper. As such the demand for iPod has become price inelastic as customers would be reluctant to switch to other brands, allowing Apple to raise its prices without a drastic fall in revenue.

Of course, this customer loyalty has to be built on the fact that the iPod is a quality music player. Just like what Sheena from VJC012 had mentioned, Apple “set out to create a product that would be the best in the market” and “Their effort showed with the continuous improvement that has been made on the iPod over the years. The iPod has been made with distinguishing quality and the brand Apple itself carries a prestigious mark of consistent excellence on its products. Hence the many customers who would buy their first iPod would find themselves continuing to buy newer iPods in the future as they would have discovered its quality and have come to believe that the newer iPod they would be getting would be just as classy and even better in its features than the one they already owned. Thus, the iPod, with many accessories and software created to enhance the iPod experience, has come to be such a success.

For the other sectors, I believe that Apple has used the iPod as a launch pad for their different successes. iTunes are mostly used by iPod users while the iPod can be easily updated with songs with a Mac. Besides, iPod users would find that the Apple brand itself is an emblem of superiority as I mentioned earlier, hence they would not mind getting a Mac or recommending Apple products to their friends as they do know what they are getting when they purchase a product carefully crafted by Apple. To many, the brand itself gives them the reassurance that they are buying something good, hence customers do not mind at all coming back for more.

24 05 2009
Jolene seah/NYJC/Nyjc0823

Ipod sucesses is in its packaging and advertising. Apple focuses alot on design , making it product- ipod look cool( it mean look at it! it slims, simple and a nice cover colour makes it look nice and simple ) designers and stars (people who care about images and design) so do public love it. Famous people start to carry them around and with some advertising a trand is formed, having an ipod is cool, why? Because1) it look nice 2)these famous people had prove that it cool by carrying one.Even if it is expensiver than other mp3 players it does not affect it sales negatively, on the other hand being more expensive make it a “branded” mp3 player, apple is now view as “branded” and it only make it more desirable (just like why people go gaga over brands like LV and prada). Apple had hence sucessfully differentiated it product from other competiting mp3 players ( hence it is price inelasitic increases in price cause overall revenue will go up…blah blah) it cannot be substituted, people want it and any other similar products are viewed as ‘copied'(fake) hence less desirable.

After its successes in ipod. Apple had established itself as “branded”. And because its success lies greatly on designs, it had continue to place great emphasised on its designs, as its latter products had show eg. like its laptop (i love it keypad it sooo pretty) it also provides nice asscessories to go with its products( not onli i-pod but i-phone too) which only fuel its luxiousry image. Being branded already, it does not need to place too much advertising on it later products as it had loyal fans-Apple fans and people view it as desirable product(cannot be sub) . Apple now only need to conitnue to be Branded for its style,–people do not mind paying for designs.

24 05 2009
Fong Whye Kit / NJC /nationaljc

When you hear the ‘Personal Jukebox’ by HanGo Electronics, what do you think of? Many of us would probably draw a blank. How about ‘iPod’ by Apple? The mind is immediately inundated with images of not only ‘a bunch of people dancing on a colored background’ but popularity, coolness, being hip and ‘in’ … the list just goes on … Yes, the word ‘iPod’ has come to be associated with a culture of music, fun and coolness – a culture belonging to youth or the ‘next-gen’. And it is this mixing of culture into a product that I feel has made the iPod a success.

Philippe Legrain, in his article Open World: the Truth about Globalization, mentions that ‘[brands] aim to associate a product or company with an image, a set of emotions, a way of life.’ This is exactly what iPod has done. It has taken the humble MP3-player, branded it ‘iPod’ and associated it with a culture and then giving this culture to the youth.

In doing so, it has made the Price Elasticity of Demand (PED) for iPods extremely inelastic. This sort of product-image association has made the iPod less substitutable with other MP3-players in the market, thereby rendering the PED for iPods extremely inelastic. After all, who or what can substitute one’s culture? Also, in infusing culture into the iPod, the Income Elasticity of Demand (YED) for this little music box has become inelastic too as iPods now become a necessity of sorts – just as how having a culture is a necessity to everyone. As a result, even in a recession, people will still flock to buy a piece of their culture since it has now become a basic item in the consumption of these individuals.

Indeed, Apple has been successful mainly because of its ability to so deeply entrench a culture in the idea of an iPod that allows it to take center stage in the MP3 arena, relegating many other players like, as aforementioned, the ‘Personal Jukebox’ to the wings … and there it will remain for many ‘next-gens’ to come.

P.S. for the many of us who have experienced the power of Apple’s marketing, the Personal Jukebox manufactured by HanGo Electronics is in fact the first mass-produced MP3-player which created by Compaq

25 05 2009
Yan Ting/NYJC/Nyjc0823

Hi to all, maybe I am the one of the very few that does not have Ipod because i am rather turned down by its price. =)

A good question will be why even more stylish models from e.g. CREATIVE tech with more varieties of colours is still hard unable to compete the simple Apple Ipod design which is only available in white? I do agree with Jolene as she raised a good point as that Apple Ipod has become a established ‘brand’ itself like LV or Prada bag as just in one glance you will instantly know what brand is it from as it is so easily to recognize as its exterior never changes through the years – make it strong and unbeatable , emerging strong against the other competitors.

I think a rather interesting point that capture my attention is Apple’s far-sightedness in view of the mentality of the users in the long run as “Most average computer users would not get rid of or replace their iPod just to upgrade to a new operating system right away. The average user would wait for all the bugs and fixes to be taken care of before upgrading.”

Therefore, it creates a reliance of Apple Ipod users to use Apple related products like such as apple computers that is able to run both in Mac and Microsoft. Hence, this undeniably creates an incentive to but Apple products after it had gained its reputations.

And of course, this strategy can only work if its advertisements have effectively promoted Apple ipod as a necessity.

27 05 2009
Kristy/NJC/NJC2

I refer to all the comments above and I believe that much of Apple’s success can indeed be attributed to its aesthetic appeal and its marketing. However, as much as I believe that these are key factors to Apple’s success, I believe that many have overlooked one factor.

Apple’s ability to constantly renew its products is what gives it the edge over other companies. In a short span of 5 years, Apple has launched over 10 different versions of its iPod, from the iPod Classic to the iPod Nano to the iTouch. This is one key aspect of Apple’s strategy in retaining its customers. Old customers never leave as there are always upgrades to purchase whilst new customers enter the shop because there are newly improved models which better suit their tastes, or because of new functions offered that have never been seen before. Such is an ability which we do not see in many other companies and it is exactly this factor which allows Apple to constantly differentiate its products from others.

Also, whilst creating new versions of their products, they have also made a point to ensure that its products are marked with its signature colour – white. By ensuring that their line of products are bleached white with the typical ‘square’ look, they have created an indirect connection with all their products, enticing consumers to buy not just one but, if possible, all since it ‘appears’ to be in a set!

Furthermore, Apple has tapped on its strong R&D to design products where functionality comes along with aesthetics. With the current iPhone on sale, Apple has also explored more avenues to gain profits and attract customers. For example, iPhone users can download many different applications into their phones. These applications are not only constantly upgraded but, they are also creative and fun! Such is a reason why we see more youths using the iPhone as it aptly enters an era where nearly everyone is tech savvy.

1 06 2009
vignesh/NJC/NATIONALJC

ipods! hmm… let’s look at the questions.

first, what is the most important strategy. the most important strategy is obviously their advertising strategy. ipod is a luxury good, i can say that safely because we have lived without ipods before ipod was created. so how did ipod became a ‘necessity’? when we had lived without even knowing what it was before that. if we think, the answer is, they made it a necessity! how? by advertising! they advertised saying it lets us listen to music and told us it’s function…but more importantly, they told us it is ‘cool’ and they showed how good it feels to listen to the music in their advertisements and that feeling of goodness when listening to music and being ‘free’ was associated by many with ipod. to them, ipod, not the music, but ipod became the goodness. ipod became music. and that was how they captured their customers and the market. they made it a necessity first of all and thus obviously, advertising is the main strategy.

next, and yes, they once again brought up the similar strategy of advertising to their other products. products like mac computers for example, this time they advertised it as being different. they even coloured their computers… and then they advertised. they told the people out there, ‘hey! look at this new thing we have her. it’s different from everything else. it’s new. come and get it! be different!’ and that’s what got them people. if they did not advertise, then obviously noone would have taken the risk of buying another computer when microsoft was ruling the industry. advertising was what opened up the people to apple’s products, it told them what they were, that’s number 1 but more importantly, it told them why they needed it. because it’s cool? because it’s different? and this caused people to associate these qualities with the product and the product became a hit. advertising was their key strategy evidently.

3 06 2009
Jing Yan

Hi organizers. 🙂 I was here not long ago after you guys post this second blog post and I recall seeing another question being asked: ” Can Apple ensure the continual success of iPods in the future?” But now i don’t see it anymore…. 😦 Did you guys happen to change the post some time after 13.5.09?

3 06 2009
nefmq

Hi Jing Yan,

Yes, the blog post was changed shortly after it was posted. We did not want to overwhelm you with too many questions.

But nonetheless, do feel free to address that question! So far, the discussion has been focused on how Apple has attained success, but can Apple ensure the continual success of iPods in future? What are the potential challenges the iPod face and how can Apple deal with these challenges?

5 06 2009
Jing Yan

Haha I see. 🙂 Thanks! 🙂

7 06 2009
Jocelyn Tan/ SAJC/ 19-ers

Hi organisers! Thanks for opening up this question again 🙂

I believe that Apple can ensure iPods success in the future.

Firstly, Apple is a dominating firm in the mp3 industry and there are formidable barriers to entry in this industry which limits the number of tough competitors that Apple may face. It is rather difficult for other potential mp3 manufacturers to enter this industry and it is also difficult for existing competitors to “defeat” Apple’s strong standing/ iPods popularity. As such, Apple can continue to be a giant in this mp3 industry and iPods can continue to be “hot” selling items in the near future.

Secondly, Apple markets its iPods as cool and trendy must-haves. As long as Apple continues to manufacture trendy iPods, people, especially youngsters like us, will continue to purchase them, because of our liking (taste and preference) for “cool stuff”.

Lastly, iPods are made in developing countries like China, where labour is relatively cheaper as compared to developed countries. This helps to keep their cost of production low and Apple can sell its iPods at greater profits (if iPods prices do not fall). High levels of profits help to maintain Apple’s status as a giant firm and the profits earned can be used for innovation purposes- to design “cooler and trendier” iPods with newer functions. This will then ensure their continued popularity (which links back to my second point).

All in all, iPods have the potential to remain popular in the near future.

8 06 2009
Beatrice / RI(JC) / The Keynesians

I believe that Apple’s premium pricing strategy has helped it brand the iPod successfully. According to Wikipedia, Premium pricing (also called prestige pricing) is the strategy of consistently pricing at, or near, the high end of the possible price range to help attract status-conscious consumers…. People will buy a premium priced product because:
-They believe the high price is an indication of good quality;
-They believe it to be a sign of self worth – “They are worth it” – It authenticates their success and status – It is a signal to others that they are a member of an exclusive group;
-They require flawless performance in this application – The cost of product malfunction is too high to buy anything but the best – example : heart pacemaker.

Apple designs and brands its products to be cool and a ‘must-have’ product. By spending millions on advertising and marketing, it is able to successfully brand the iPod to consumers. Premium pricing is also not commonly practised in the Mp3 industry, thus Apple is one of the trend-setters in this area, making it have a unique premium product. What Apple does is to emphasise its products’ uniqueness and use marketing to repeat this point over and over again. Similarly for other Apple products, such as the Mac and iPhone, Apple has applied the premium pricing model combined with advertisements. To watch some of their ads, click here: http://www.apple.com/getamac/ads/ & http://www.apple.com/iphone/gallery/ads/.This strategy has been highly successful and no doubt Apple will continue to use it for some time.

8 06 2009
Seng En Quan/ TJC/ Team Patrick

Aside the other strategies being adopted by apple (e.g. premium price systems, reliability, compatibility), I do believe that branding (i.e stylish and sleek designs that the iPods are cased into and brand name) is the most important reason for their success.

Through careful design and structuring, Apple is able to create a generation of iPods which not only function as a music player but beautifies the user as a futuristic hand held accessory. Though different models come in different shapes, sizes and functions, they are easily identified due to the sleek desgin, polished surface and trademark keypad that each model entails.

As compared to its competitors (e.g. creative, sony) iPods have an underlying uniformity in terms of design. Hence, the ease in identification helps consumers to aid in the advertising campaign when they showcase their handheld iPods to the public while listening to music.

The iPods have also fulfilled the saying: “Less is more”. Although the iPod designs are rather simplistic, they appear to be more striking and easily set apart as compared to other brands of mp3 players. The term ‘iPod’ is also a catchy name and can be easily related to.

All in all, I believe that the iPod desgin and name has attributed to apple’s success in the mp3 industry through easy identification, bringing marketing of the product to a whole new level. Apple has also employed similar strategies successsfully in other areas: iPhone and Macs

9 06 2009
Tan Jun Ren/VJC/VJC011

Well,Every company must have numerous strategies(branding,advertising,functionality etc.) to lure consumers into buying their products. For Apple,the reason, I believe, why the Ipod has become a global phenomenon is because of its unique design coupled with an extensive marketing campaign to promote the Ipod.

In 2001, when the first generation of Ipod first came out, it immediametly made an impact in the music player market the Ipod was radically different form most other conventional music players. Instead of having numerous buttons to press, it only had 4 and the wheel in the centre.Its design was sleek and minimalistic, which is exactly what people then and now still craved. Apart from that, there was the marketing campaign that Apple launched. The advertisment that showed men and women dancing in the coloured background, represented that anyone in this world can be have fun while grooving to music, was highly appealing. That made the Ipod hip and attracted many people, especially teenagers, to desire it, making the Ipod very popular.Furthermore, it used catchy music in its advertisements, like “Jerk It Out” by the caesars, enhancing its hip status even further.
Also, Apple has numerous collaborations with other companies and people to further establish its branding as the hippest mp3 player in the market. For example it teamed up with nike to produce an ipod capable of being your own personal trainer, to appeal to the sporty.This has enabled it to have niche markets which few music players have yet to venture into.By having the foresight to tap into an unestablished has also helped the Ipod in its rise.

But all in all,I firmly believe that because of these 2 main factors, the Ipod has been able to capture people’s hearts and Apple being able to establish itself as one of the big fish in the music player market.

13 06 2009
Muhammad B Rahmat/vjc/vjc006

Do you think Apple has employed similar strategies in these areas( itunes and iphone)?
I think the 3 areas are actually linked and hence their strategies would be complementary. The ipod isnt what it is today without itunes. The iphone is the future reincarnation of the ipods.
Firstly, itunes came at an important time for the entertainment industry, especially the music industry, which was losing revenue due to illegal downloads online. Apple was able to take advantage of this by producing itunes that provided legal downloads online and allow the entertainment industry a new medium to sell content .
Secondly, It is quite natural for apple to expand into the phone industry. This is because current phones are becoming closer substitutes to the ipods considering that most have a built in music player. hence if apple didnt enter the mobile industry, the current ipods can be rendered obselete to the multifunctional phone that can do more than just play video and music.
Lastly, besides advertising, i think that ipods have also been quite successful as they have various models that cater to different tastes. Ipod shuffle is relatively more affordable. the nano is small and sleek. the classic has a large storage capacity. the ipod touch is more interactive. hence i believe they have products at different price points and functionality to cater to the consumer tastes and preferences

18 06 2009
Syamil / VJC / VJC008

We all agree that Apple has employed numerous marketing strategies both before and after the development of iPod to market it, including sleek , stylish and unique design, ‘luxurious’ branding, one-of-a-kind packaging and deals, better quality hardware, amass of new applications and software, and furious advertising for the young and trendy everywhere.

The most important out of all these: the instantly recognizable branding and design.The iPod is portrayed as something ‘very cool’ and ‘fashionable’ to have, that it attracts people of all ages to buy it and tend to overlook software/hardware limitations (previously you couldn’t transfer songs from one ipod to another)This is also proven true, as while companies such as Samsung released similar mp3 players earlier with the same or even more sophisticated functions when compared to iPod but less stylish in terms of design, they don’t sell as much as iPod.

The applications provided are also vital components towards Apple’s success. By limiting iTunes Store purchases to Apple products, this ensures that Apple products remains part of the consumer lifestyle even after buying the product.This is different from other manufacturers such as Samsung and Creative where their involvement with the consumer basically ends after the consumer purchases the product. This helps to shape the strong consumer preference towards the Apple brand. The deals (free iPod Nano for every Macbook purchased) also help to create complimentary goods which may boost the demand for both Apple products. But still, the looks trump everything else in the marketing of iPod.

Regarding Apple’s success in other sectors, the dawn of iPod may contribute towards this phenomenon – people start looking towards iPod-related software in Macbook and hence they start buying Macbooks, etc. For Macbook, Apple does employ similar strategies, especially the most important one, Product Design. With groundbreaking design like the ultra-think Macbook Air, Apple has garnered market share and also reduced some of Microsoft’s. iPhone’s marketing strategies are similar to that of iPod and Macbook, with the focus on the tech-savvy generation with the penchant of looking stylish the high-tech accessories, which includes most of today’s young people, especially in US.

22 06 2009
Rahul/vjc/vjc004

The widesprad usage of ipods globally testifies to its international success. So what exactly has earned it such acclaim? The article identified several factors from its adverising strategies to the product’s characteristic look and the range of accompanying gadgets to account for its popularity. I personally see all of this harmoniously blending in

22 06 2009
Lu Si Hong/DHS/DHS 7

One of the strategies that Apple used was their different advertising strategies that they employ for releasing several different versions of the iPod, to differentiate these products and to earn a higher total revenue from them, although they basically do have the exact same function which is to play music. One very good example was that of the development of Apple iPod with its general reduction of price over the years with the release of iPod shuffle, a more basic version of iPod and this makes use of the concepts of price elasticity of demand. Initially, when the iPod was released, demand for it was very price inelastic, as there a little substitutes available at that time that can give teenagers the sleek and cool look from MP3 players. Thus, at the start, the iPod was charged at a higher price so that Apple could earn higher total revenue as one can observe from the graph of a price inelastic demand for a good.

After a few years from that, Apple released more basic versions of iPod such as iPod shuffle. This could be due to more and more firms in the MP3 industries following Apple’s lead and are designing much cooler MP3 players. As such demand for the iPod has become more and more price elastic, and as a counter to this, Apple could choose to reduce price of the iPods to gain a higher total revenue as one can see from the graph of a price elastic demand for a good. However, if Apple was to do that, it might seem to be implying that they might be implying that their goods are getting inferior and lead to other negative side effects, and as such, Apple chose to release more basic versions of the iPod, which costs lesser as well, and advertised them as necessities, and their basic functions, thus justifying their lower costs. This enabled Apple to stay in the market and earn higher total revenue as well.

Thus with this increased total revenue from demand for iPod being price inelastic to that of being price elastic, it allowed Apple to engage in substantial Research and Development. This enabled Apple to be ahead of other competitive firms in the MP3 industry and allowed Apple to be able to keep releasing iPods which have better functions such as iPods that have larger memory space etc. This allowed the same process to repeat itself once again with the demand for iPods being price inelastic yet again with little substitutes available in the market, and thus allowed Apple to earn high profits, and stay phenomenally successful in the market, even with increased competition in the MP3 market.

22 06 2009
Rahul/vjc/vjc004

Apologies over the abruptness of the previous post. the continuation follows.

…with the product’s unique brand image. The boldness that lies in the ipods’s simple outlook, its respect for and dedication towards creating individualised music experiences with a wide range of accompanying product accesssories and applications, and the seemingly human touch in the device’s functioning all resonate with notions of die-hard music enthusiasm and fearlessness in self-expression conveyed through the product’s commercial advertisements. Such lifestyle traits would have an immense appeal to the ‘hiddden wild sides’ of urban dwellers. It is this lure, i believe, that has drawn massive numbers of ipod users. This essentially is a holistic advertising strategy through the media and less expectedly even in the physical experience of walking into an apple concept store. In other words, while other brands may be able to compete in terms of their technologies and product specifications, they simply do not have as strong a psychological grip in the minds’ of consumers compared to the ipod. Thus i conclude that it is the soft power of the ipod, in its lifestyle branding and advertising, to which the major success achieved may be attributed to.

23 06 2009
Lu Yongquan / HCI / Team 10

I think the above commentors have sufficiently elucidated the reasons behind the ascent of the iPod into ubiquity — its premium pricing, solid design, innovation, and advertising strategy, among others.

I would just like to point out that those reasons could be more pertinent in the early years of the MP3 player industry (at the turn of the millenium, perhaps), but right now it seems that Apple’s dominance is due to how deeply entrenched its dominance is in the public consciousness. That is, it feeds off a self-re-enforcing cycle to preserve its position.

The iPod has become the de facto MP3 player to beat. Unlike other markets (e.g. the console gaming industry where the Wii, PS3 and Xbox 360 slug it out), the prevalence and ‘superiority’ of the iPod is taken for granted. I assert that this is a self re-enforcing cycle because such a belief extends beyond Apple’s direct publicity efforts. The media contributes to its dominance when they review any new product in the market (e.g. a new Zen or iRiver model) by benchmarking and comparing it to the iPod, for instance.

This is a phenomenon when the overwhelming dominance of the iPod has become a barrier of entry. This compounds itself in many ways – for instance, the iPod Touch / iPhone app store which features, to date, more than 50,000 apps.

Apple’s own infrastructure and appealing hardware may have contributed to the app store’s popularity initially, but beyond a point I think it ceases to be a dominant factor. Instead, developers are all attracted to the platform (over its competitors like the Zune Marketplace), consumers buy the iPod Touch because it has more apps, and the cycle goes on. Perhaps the term ‘runaway success’ is apt in this instance.

I’m not asserting that Apple’s financial success here is wholly divorced from its actions, just foregrounding how the former may be disproportionate to the latter due to this compounding effect. So long as they steer away from complacency and continue to engage in solid and innovative R&D, their entrenched dominance should take them far in the years to come.

23 06 2009
Ng Yisi/TJC/Economatrix

Let me divide this post into two main sections: factors which contributed to the initial success of the iPod, and factors which contributed to the continued success of the iPod and Apple.

What exactly propelled the iPod to being “must-have” gadget and accessory amongst the public? I say that it is the “indie” factor. The “indie” factor is the need to be different, which is a trend amongst the youth. The more unique and different something is, the more attractive it is; something which someone else does not is a treasure. Hence, when the iPod was just launched, it was something new which hardly anyone had. As quoted from the link from the post, the iPod also has a unique and stylish design. Thus, the iPod was the new and different accessory which possessed that “indie” factor that attracted everyone to buy it. This was the main reason for iPod’s initial popularity.

Then again, when everyone has an iPod, what allowed it to enjoy such continued success and popularity? I have identified 3 factors. The prestige factor then comes into play. iPods are always priced as a luxury good, in fact, it can be said to be the electronic equivalent of Louis Vuitton. iPods have then become one of the material goods which can “prop-up our social and financial status”. Honestly, if I have an iPod, I would definitely show it off to my friends.

Secondly, there is the package factor. Apple has increasingly offered their products in packages. For example, if one purchases the iPod, he can use it with his iTunes programme, synchronize it with his MacBook or iPhone. This packages are very attractive because it offers a “one-time purchase to settle all your electronic gadgets needs”.

Trendiness is an overly stated but true last factor. With unique and well, “cool” advertisements and stylish designs, Apple has done exceptionally well in packaging the iPod to be a cool and trendy accessory. Of course, youths are inevitably associated to “cool and trendy”. Thus, they are attracted to own iPods.

Despite all the appraisals by well-established companies and the general public, these strategies adopted by iPod has undoubtedly contributed most successfully to its sales. This can be seen as to why some of its rivals pale into significance as compared iPod in their branding and sales.

24 06 2009
Bryan

Bryan / Millennia Institute / MI

A : “Hey check out my new iPhone/iPod/iTouch/iTunes/iMac !”..
B: “Wow!”
C: “Wow!”
D: “Wow!”

When someone mentions any of the iProducts, “wow” is often the first word that is being spoken. On the other hand, other brands of Mp3 players (e.g creative, samsung) doesn’t receive the same treatment as the iProducts do. Why is this so?

With the introduction of iPod to the market in 2001, they have managed to capture high market share with sleek designs and functions. This has reversed the law of demand. Instead of lower prices would lead to higher quantity demanded of goods, higher prices has led to higher quantity demanded. The iPod with its attractive design and user-friendly functions are accompanied by expensive prices. As Apple has successfully built up the image and created a brand for themselves, customers no longer view the high prices as high profit margin for the firm, they often associate high prices with quality and social status.

In the eye of the consumers, any further iProducts after the first generation iPod are equally hot-selling as well. For instance, iPhone. On its release date, they are sold like the hotcakes. Apple products have become literally like an edible apple. “An apple a day, keeps the doctor away”. Everyone wants to be owner of any iProducts.

I feel that the strategy that prove to be the most successful is Branding. If you are able to create a powerful branding like Apple, you are able to dominate the market. Even if it is sold at a sky-high price, people will still want it as it has become a part of their life, they will consider it as a necessity. However, sky-high prices must come with quality. Inevitably, i must agree that Apple product such as the iPhone and iMac are ingenious products. Apple offered products that are so intelligent that the market doesn’t has it.

BRANDING + INNOVATION + QUALITY = You’re the winner

18 07 2010
Zhang Gongbo/VJC/VJC Team1(P.G)

Among so many reasons in the passage, I think the way iPod is advertised is the key factor to its success in marketing. IPods, unlike other MP3s, do not put emphasis on prices and the size of its storage. In fact, most people do accept prices that are not extortionately high. In economics terms, the demand for a MP3 player is rather price inelastic as people who can afford a MP3 player are ones who are not tight with budget. Mere price differences will not scare many customers away. Customers do not usually care much about the size of storage, either, as they can always transfer songs from their PCs to MP3s.

Secondly, the TV commercial of iPod, featuring a group of cool folks dancing with music, gives us a sense of coolness. To us, such coolness is not unattainable. In fact, those people who are dancing are common folks, just like you and I. The message is thus very clear to us: Join us. Be cool.

Thirdly, which I consider the most importantly, the success of the way iPod advertise itself is through showing off its sleek features and high qualities. Other MP3s, such as the Zune, have very good quality and customer services as well. However, their advertisements either don’t tell us how good their products are, or tell us so much that the entire advertisement sounds aggressive and boring. Throughout the entire TV commercial of iPod, not much about iPod’s features and high qualities is said; instead, these attracting spots are shown and demonstrated to us, in an appropriate way, and at an appropriate time. Say, when you see young, cool folks dancing with iPod, do you want to join them? When a handsome-look successful manager sits on his BMW and switch on his iTouch to check daily news, do you feel that this is what only iTouch can offer whereas other products don’t? These feelings make iPod/iTouch unique to all of us, or in Economics term, make the demand for iPod very price inelastic because of branding effects.

Similar to iPod, peripheral products such as iPhone and iTunes are employing similar strategies in marketing. However, for iPhone, the strategy focuses more on the quality of the smart phone. There are many smart phones before iPhone, and the competitors of iPhones such as Samsung and Nokia have many users in the past. The distinct feature of iPhone from smart phones of Samsungs and Nokias is that iPhones 3G has only four buttons’ (home, volume up, volume down and power/sleep). That feature leaves us an impression that iPhones will give us less trouble with regard to buttons. I have once read from an online handbook of Nokia N97 saying that for repair services of a cellphone, more than half of them are because of button problems. All operations are done on the screen — to us, it just seems user-friendly and high-tech.

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