Although facing fierce competition from other companies, Apple is still indisputably at the
top of the tablet market (54.7% market share in the 4th quarter of 2011). The company has
sold nearly 33 millions iPad 2 in the year of 2011. On March 7th 2012, the company
launched its new iPad (3rd generation) for this year. This report aims at the marketing
analysis for the Apples new iPad.
As committed, new iPad is the upgrade of previous iPad 2, designed to bring the best user
experience to its customers through its innovative hardware, software, peripherals, and
services. Apple continues to use the same pricing strategy for the new iPad while reducing
the price for iPad 2 (from $499 to $399) to put it into direct competition with those
middle-range tablets of Amazon or Samsung. It has also been decided that Apple should
focus the demographic segment in general but more specifically be targeting their product
primarily to the 25-44 years old age group along with the secondary targets of 13-24 years
old and 45-54 years old or older.
The company uses a variety of direct and indirect distribution channels for iPads, such as
its retail stores, online stores, and direct sales force, and third-party cellular network
carriers, wholesalers, retailers (BestBuy, AT&T, Verizon, etc.), and value-added resellers
with the purpose of expanding its distribution network to effectively reach more customers
and provide them with a high-quality sales and post-sales support experience.
While the company is widely recognized as a leading innovator in the markets where it
competes, the tablet market is highly competitive and subject to aggressive pricing. To
remain competitive, the company believes that continual investment in research and
development is critical to the development and sale of iPads. In addition, by cooperating
with other prestigious companies such as Facebook or Starbucks and implementing
promotion strategies via multi-channels, the company aims to sell 65.5 million iPads
($42.6 billion revenue estimated) by the end of February 2013 while maintaining dominant
share (60%) of the growing tablet market.
Situation Analysis
<spanstyle=text-decoration: underline;”>Cooperative environment. As of January 2012,
Apple has opened 361 stores worldwide. The Apple Stores have been responsible for
turning the boring computer sales floor into a sleek playroom filled with gadgets. The iPad
is assembled by Foxconn Technology Group, which also manufactures Apples iPod,
iPhone and Mac Mini, in its largest plant in Shenzhen, China. Currently Apples biggest
manufacturer Foxconn is experiencing some serious problems. Their work labors get low
salary, work in poor working conditions and always work overtime. The Fair Labor
Association group tasked with auditing Foxconn has found a ton of issues that need fixing,
according to a report from Bloomberg. These problems may affect Apples reputation.
Competitive environment. Although Apple is still indisputably at the top of the tablet
market (with 54.7% market share in the 4th quarter of 2011), but the new iPad will face a
host of competitors that are clamoring after their own little niches. The competition can be
divided into two categories: direct and indirect competitors. The major direct competitors
of the new iPad are: Amazon Kindle Fire (16.8% market share), Samsung Galaxy Tab 10.1
(5.8% market share), Barnes & Noble Nook Tablet (3.5% market share). The other
tablet-competitors, which in one way or another, distinguish themselves from Apples
gadget are: Acer Iconia A500 (more memory than the iPad and more ports), Motorola
Xyboard (better camera than the iPad), BlackBerry PlayBook, Sony Tablet S, ASUS
Transformer, etc. (See Appendix)
The main indirect competitors for Apple new iPad are desktop computers, MP3 players
and smartphones. The iPads advantage over these products is that it offers several different
features in one product. Its making life easier for their consumers by being able to conduct
many applications in the one product. As a fact, according to Tim Cook, Apples CEO,
Apple sold 15.4 million iPads in Q4 2011, whereas HP sold 15.1 million PCs in the same
timeframe. Lenovo sold 13.1 million units in Q4. Basically Apple sold more iPads in Q4 of
last year, than any PC manufacturer sold of their products worldwide.
Economic environment. Uncertainty about global economic conditions poses a risk as
consumers and businesses postpone spending in response to tighter credit, unemployment,
negative financial news and/or declines in income or asset values, which could have a
material negative effect on demand for the companys products and services. Other factors
that could influence demand include increases in fuel and other energy costs, conditions in
