Apple Tablet Strategy, Marketing Plan Example

Tablet devices existed even before Apple introduced iPad but Apple has been credited with revolutionizing the tablet market because it was the first company to convince customers through a revolutionary product that tablet devices are the future of personal computing. Apple introduced first generation iPad at a price of $499.99 for the baseline model and since then its pricing strategy has remained unchanged despite considerable progress by the competition and crowded market. 75 percent of the tablets shipped worldwide in the second quarter of 2011 were iPads, a decline of 21 percent from just a year ago during the same period (Siwicki). Consumer Reports noted last year in fall that even though iPad was still superior to competitors’ products, the competition was closing in and Samsung’s Galaxy Tab was particularly emerging as a worthy competitor (Consumer Reports). Apple has indeed introduced iPad mini recently to offer a lower-priced option to consumers but original iPad series will most likely continue to define Apple’s competitive position in the tablet market.

iPhone redefined the smart phone industry but latest figures show that Samsung Galaxy S III was the biggest selling phone during the third quarter of 2012, ahead of iPhone 4S and iPhone 5 (Evatt). Thus, it would not be a surprise if iPad also loses its crown sooner or later because competitors have significantly improved their products and coupled with lower prices, may seem a better value to a significant proportion of consumers. The competition will continue to grow and even Microsoft that has usually focused on software, recently entered the market with its Surface line of tablet devices. Surface has many features absent in iPad such as stereo speakers instead of mono, ports, and jacks. It even comes with a cover that also functions as full-fledged keyboard. Moreover, it offers double the iPad’s storage at similar price points (Pogue).Google has entered the market with Nexus tablet device that starts at $199 only (CNET) and Samsung Galaxy Tab 2 tablet starts at $349.99 (Samsung). One cannot deny the fact that Apple is perceived to be a more premium brand than its competitors and can afford to charge higher prices. This is why $400 should be the targeted price for baseline iPad models because it will help Apple expand its market reach yet still charge a little higher than the competition to preserve its brand prestige. There are signs that consumers are now warming up to offerings from the competitors because Apple had a market share of 59.7 percent during the second quarter of 2012 (Crothers).

The appeal of Apple’s hardware products such as iPhone and iPad is not only due to superior hardware products but also complementary products such as apps. The company’s iTunes store creates artificial competitive barriers for the competition and also provides the company with another attractive revenue stream. But the revenue potential of iTunes store also depends upon the sales of hardware products such as iPads. This is why Apple should lower price to $400 to maintain market share and possible recover some of the lost ground and focus more on earning attractive profit margins through iTunes store because unlike hardware, software advantage is more difficult to overcome. Apple’s iTunes store is also unique because no other competitor with the exception of Microsoft builds its own operating system or maintain as extensive proprietary apps market as Apple.

References

CNET. Best 5 tablets. 8 November 2012. 13 November 2012 <http://reviews.cnet.com/best-tablets/>.

Consumer Reports. “Tablets.” Consumer Reports Fall 2011: 61-63.

Crothers, Brooke. Android gains in tablets, Apple slows in third quarter, IDC says. 5 November 2012. 13 November 2012 <http://news.cnet.com/8301-1035_3-57544922-94/android-gains-in-tablets-apple-slows-in-third-quarter-idc-says/>.

Evatt, Robert. Robert Evatt: Samsung Galaxy S III sales outpace iPhone 4S. 13 November 2012. 13 November 2012 <http://www.tulsaworld.com/business/article.aspx?articleid=20121113_52_E3_Forthe7722>.

Pogue, David. Sleek Tablet, but Clumsy Software. 23 October 2012. 13 November 2012 <http://www.nytimes.com/2012/10/24/technology/personaltech/microsoft-unveils-the-surface-its-first-tablet-review.html?pagewanted=all>.

Samsung. Galaxy Tab. 13 November 2012 <http://www.samsung.com/us/mobile/galaxy-tab>.

Siwicki, Bill. Android captures 20% of the iPad’s market share, ABI Research says. 16 August 2011. 13 November 2012 <http://www.internetretailer.com/2011/08/16/android-captures-20-ipads-market-share-abi-research-says>.