Assignment Sample: 2013 to 2015 Strategic Plan for Apple iPhone in Malaysia

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Executive summary

 

This project paper focuses on the research of strategic plan for the iPhone serious product line under Apple Inc. The paper could be divided into three key components: Analyze Malaysia smart phone macro business environment and industrial environment; Research into the customer buying behaviors in Malaysian market; Provide detailed tactics and implementation instructions of the marketing plan. Please take note that some objectives setting such as the sale revenue growth target are based on personal judgment for the research purpose without company official data.

 

 

Acknowledgement

 

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Index of figures

Figure 1 Feature overview of the iPhone 4…………………………………………………… 5

Figure 2 Porter (1980)’s Five Forces model………………………………………………… 15

Index of tables

Table 1 Technology penetration at a glance………………………………………………… 13

Table 2 Social Networking in Asian Countries……………………………………………. 13

Table 3 The ranking of business environment (2007) in Asia pacific area……….. 15

Table 4 Ansoff’s product-market growth matrix…………………………………………. 30

Table 5 Porter’s generic strategies……………………………………………………………… 31

Table 6 Budgeting plan for 2013 financial year…………………………………………… 35

Table 7 Budgeting plan for 2014 financial year…………………………………………… 36

Table 8 Budgeting plan for 2015 financial year…………………………………………… 37

Table 9 Monitoring the achievement of targets……………………………………………. 39

Index of charts

Chart 1 Total Apple Revenues by Product Line……………………………………………. 5

Chart 2 The Malaysia GDP growth rate from 2000 to 2012………………………….. 11

Chart 3 Malaysian mobile phone user growth……………………………………………… 13

Chart 4 Summary of the age group information………………………………………….. 22

Chart 5 Summary of the education background………………………………………….. 23

Chart 6 Summary of the monthly income information…………………………………. 24

Chart 7 Number of cell phones in use………………………………………………………… 24

Chart 8 Percentage of smart phone owner………………………………………………….. 25

Chart 9 Average time of daily usage………………………………………………………….. 26

Chart 10 Usages of mobile phone……………………………………………………………… 27

Chart 11 Perception of advertising of mobile phone by male and female customers28

Chart 12 Main functions desired in the next mobile phone purchasing…………… 29

Table of contents

Executive summary………………………………………………………………………………………….. 1

Acknowledgement…………………………………………………………………………………………… 2

Index of figures………………………………………………………………………………………………. 3

Index of tables………………………………………………………………………………………………… 3

Index of charts………………………………………………………………………………………………… 3

Table of contents……………………………………………………………………………………………… 4

2013 to 2015 Strategic Plan for Apple iPhone in Malaysia……………………………………. 6

  1. Introduction……………………………………………………………………………………………… 6

1.1      Company background………………………………………………………………………. 6

1.2      Corporate financial highlights……………………………………………………………. 6

1.3      Product overview…………………………………………………………………………….. 7

1.4      Research background and research significance…………………………………… 8

  1. Objectives of this report……………………………………………………………………………… 9

2.1      To analyze Malaysia smart phone industrial environment (competition, trends)     9

2.2      To provide general course of action and recommendations for the coming 3 years’ marketing effort for iPhone series smart phones in the Malaysian market……………………………………… 9

2.3      To provide detailed tactics and implementation instructions of the marketing plan       9

2.4      Offer a specific marketing plan in the coming three years……………………… 9

2.5      To offer recommendations on the marketing of iPhone in the coming three years  9

  1. Research methodology……………………………………………………………………………….. 9

3.1      Research design……………………………………………………………………………….. 9

3.2      Data collection…………………………………………………………………………………. 9

3.3      Sampling……………………………………………………………………………………….. 10

3.4      Survey question design……………………………………………………………………. 10

3.5      Implementation………………………………………………………………………………. 10

  1. Strategic situational analysis……………………………………………………………………… 11

4.1      Macro environmental analysis…………………………………………………………… 11

4.1.1     PESTLE analysis…………………………………………………………………… 11

4.1.2     Summary of the PESTLE analysis…………………………………………… 16

4.1.3     Market Size………………………………………………………………………….. 16

4.2      Micro environment analysis……………………………………………………………… 17

4.2.1     Competitive environment analysis by applying the Porter’s Five Force17

4.2.2     Customer analysis…………………………………………………………………. 23

  1. Strategic marketing plan…………………………………………………………………………… 30

5.1      Organizational Strategies…………………………………………………………………. 30

5.1.1     Growth Strategies…………………………………………………………………. 30

5.2      Generic strategies…………………………………………………………………………… 32

5.3      Marketing strategies……………………………………………………………………….. 33

5.3.1     Product………………………………………………………………………………… 33

5.3.2     Price……………………………………………………………………………………. 33

5.3.3     Place……………………………………………………………………………………. 34

5.3.4     Promotion…………………………………………………………………………….. 35

  1. Strategic implementation………………………………………………………………………….. 36

6.1      Budgeting……………………………………………………………………………………… 36

6.2      Control mechanism…………………………………………………………………………. 38

  1. Conclusions…………………………………………………………………………………………….. 40

Reference……………………………………………………………………………………………………… 41

Appendix 1 The sample of survey on mobile phone users……………………………………. 46

2013 to 2015 Strategic Plan for Apple iPhone in Malaysia

 

1.        Introduction

 

1.1    Company background

 

Apple Computer Inc. was the brainchild of Steve Jobs and Steve Wozniak. In 1972 the two men met while working for the Internet technology company Hewlett-Packard. They discovered they both shared an interest in PCs. In 1975 they turned their interest into a project and began work on their first PC, the Apple I. Joint by Ron Wayne in 1976, the company, namely Apple Computer Inc. was finally founded (Gogerly 2011, p. 21). Through decades’ development under the leadership of Steve Jobs, in 2011 Apple has surpassed oil group Exxon to become the world’s most valuable company by market capitalization (guardian.co.uk 2011). Today, as the one of the most admired companies Apple designs and creates iPod and iTunes, Mac laptop and desktop computers, the OS X operating system, and the revolutionary iPhone and iPad.

 

1.2    Corporate financial highlights

Chart 1 Total Apple Revenues by Product Line

Source: macworld.com 2011

During its 2011 fiscal year, Apple sold 32 million iPads and 72 million iPhones. That latter figure is particularly impressive in light of the fact that—save for a version of the iPhone 4 that could operate on Verizon’s CDMA network in the U.S.—Apple didn’t release a new smart phone during its fiscal year. (The iPhone 4S came out in October, but it falls in the first quarter of 2012 so far as Apple’s accountants are concerned.) (Macworld.com 2011). Still, in general the company has achieved remarkable financial performance in the past financial years which surprised the world.

 

1.3    Product overview

Figure 1 Feature overview of the iPhone 4

Source: Sadun & Sande 2010, p. 7

 

The product line that we will focus in this study is the Apple iPhone series products. In the 2000s, Apple switched its focus from PC (personal computer) to mobile electronic devices. In year 2001, the company released the classical iPod, a palm sized digital music player and the year 2007 was another turning point for Apple as the company not only changed its name to the current Apple Inc but also because the company released the innovative iPhone and iPod Touch. IPhone is known popularly in the world as a smart phone. The main features of an iPhone, other than enabling messaging and Internet connectivity are its hardware, applications and media. Regarding the hardware of iPhone, it is based on a touch screen technology. It does not include a physical keypad. Take the iPhone 4 model as an example it is a mobile phone model similar to the iPhone 3Gs in term of the external features. The top of the iPhone houses a jack into which users can plug the earbuds, a Subscriber Identity Module (SIM) tray and a sleep/wake button that is used to power on or off the certain features. The bottom of the iPhone has a built in speaker and microphone and an indented slot for connecting to the dock. The front of the iPhone is a big touch screen and a single home button (Sadun & Sande 2010, p. 8). From the perspective of the customers, the iPhone products have overthrown the traditional smart phone design that must come with a physical keyboard, and together with other supplementary features and software system, the creative design and innovative features have become the standards that users use to define an ideal mobile phone.

 

1.4    Research background and research significance

 

According to the most recent news, Apple Inc, which ignited the personal computing revolution with the iconic Mac, the iPod, the iPhone and the iPad, has became the world’s most valuable company, toppling oil giant Exxon Mobil, and a higher market value than rivals Google and Microsoft combined (domain-b.com 2012). It would be interesting to look into the strategic positioning as well as marketing strategies of Apple Inc, in particular its iPhone series smart phone products. The research significance would be to provide a smart phone market trend analysis based on the Malaysia market as well as proposing a practical strategic marketing plan to Apple Inc in the coming three financial years.

 

 

2.        Objectives of this report

 

2.1    To analyze Malaysia smart phone industrial environment (competition, trends)

 

2.2    To research into the customer behaviors of the mobile phones users in the Malaysian market

 

2.3    To provide detailed tactics and implementation instructions of the marketing plan

 

2.4    Offer a specific marketing plan in the coming three years

 

2.5    To offer recommendations on the marketing of iPhone in the coming three years

 

3.        Research methodology

 

3.1    Research design

 

We are going to turn a simple research question into our systematic study and testing projects: can iPhone series products still dominate the smart phone market and enjoy customer preference as they do today. Both qualitative and quantitative research methods would be applied in this study. And only when we identify the market trend of iPhone, we can determine the strategies and marketing techniques to be applied.

 

3.2    Data collection

 

Primary resource: a market analysis using closed end questionnaire focusing on the customer buying behaviors and psychology activities

 

Secondary source: text books, Internet resource, library materials, news papers

 

3.3    Sampling

 

Random sampling will be done and the sample volume is set 150. 75 out of 150 are male and the rest 75 are female. Though a simple random sample (‘SRS’) which refers to all the subsets of the frame are given an equal probability (Vasarhelyi 1995) would be difficult since by doing an online research those who do not frequently visit the internet would probably be excluded from participating the survey, we still strive to achieve a random sampling by giving the majority of the Malaysian smart mobile phone uses equal chance to be part of our questionnaire.

 

3.4    Survey question design

 

Since this is a closed end questionnaire focusing on the customer buying behaviors as just mentioned, in term of the survey question design we will try to offer comprehensive options for the respondents to select. Hence, in many of our questions we offer the options such as “other, please specify”, “others”, “not applicable” and “Not sure” and other similar choices to eliminate the possibility that some respondents could not find a suitable answers to the specific questions based on the individual conditions.

 

3.5    Implementation

 

The survey had been done through Internet and questions will be design in a free market research website. The period of implementation would be between 5th May 2012 to 10th May 2012, and it had been carried out on the internet.

 

 

 

 

4.        Strategic situational analysis

4.1    Macro environmental analysis

 

4.1.1            PESTLE analysis

 

In order to illustrate the external environment and factors the Apple Inc faces, a PESTEL analysis had been conducted. The so called PESTEL analysis refers to the analysis of Political factors, Economic factors, Social and cultural factors, Technological factors, Legal factors and Environmental factors, it is an useful tool to help the organization detect and monitor those weak signals as well as business opportunities with the hope of recognizing the discontinuities, fractures and changes (good or bad) shaping the business environment (Henry 2008, p. 51). The key factors as outlined below are mainly obtained from the secondary research relying on the public accessible information and they need to be monitored continuously.

 

4.1.1.1      Political factors

 

Malaysia is a federal parliamentary monarchy, the Prime Minister of Malaysia is the head of government, and there is multi-party system. The Malaysian political system refers to all those regulations and practices and the structure of laws that show how the government is run. Malaysian political system has a unique foundation on which the country’s machinery functions (Challengelhs.co.uk 2010). Though the military forces are said to have played an important role in the rise of authoritarianism, in Malaysia, by playing a minimal role, they have contributed to the political stability (Verma 2002, p. 162). Therefore, the publicly known high economic performance and political stability has increased the business attractiveness and opportunities of the economy.

 

4.1.1.2      Economic factors

 

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. The ambitious target is carried out through the well known Economic Transformation Program. Launched on 21st September, 2010, it is a comprehensive economic transformation plan to propel Malaysia’s economy into high income economy. The program will lift Malaysia’s Gross National Income (GNI) to US$523 billion by 2020, and raise per capita income from US$6700 to at least US$15,000, meeting the World Banks’ threshold for high income nation. It is projected that Malaysia will be able to achieve the targets set if GNI grows by 6% per annum (nawam.com.my 2011). The NAJIB administration also is continuing efforts to boost domestic demand and reduce the economy’s dependence on exports. The central bank maintains healthy foreign exchange reserves, and a well-developed regulatory regime has limited Malaysia’s exposure to riskier financial instruments and the global financial crisis (cia.gov 2011). Though the government has its ambitious plan for the coming decade, the challenge is also obvious.

Chart 2 The Malaysia GDP growth rate from 2000 to 2012

Source: tradingeconomics.com 2012

As illustrated in the chart above, according to the data released by the Department of Statistics Malaysia the Gross Domestic Product (GDP) in Malaysia contracted 3.20 percent in the first quarter of 2012 over the previous quarter. Historically, from 2000 until 2012, Malaysia GDP Growth Rate averaged 1.1800 Percent reaching an all time high of 5.9000 Percent in September of 2009 and a record low of -7.6000 Percent in March of 2009 (tradingeconomics.com 2012). Therefore, the GDP growth rate is still far away from the desired target of annual growth of 6 per cent. Hence, whether the government of Malaysia could put the country’s economy back to high speed growth track will shape the future business environment for all the industries in the coming years.

 

4.1.1.3      Social and cultural factors

 

Since the beginning of its history, Malaysia has been a meeting place for a diverse range of external cultures and religions. As a result of these external influences, a new unified but distinguished Malay culture has emerged. Contemporary Malaysia represents a unique fusion of Malay, Chinese, and Indian traditions, creating a pluralistic and multicultural nation that has its character strongly rooted in social harmony, religion and pride in its ancestral background. With such a rich cultural heritage, acquiring the relevant skills and cultural knowledge in order to conduct business in Malaysia is crucial to any business success (wordpress.com 2009). As a result, diversity in cultural compositions in the Malaysian society will request for variations in the business and marketing strategies since the target customers are largely inhomogeneous.

 

 

 

 

 

4.1.1.4      Technological factors

 

Table 1 Technology penetration at a glance

Source: wetpaint.com 2009

 

Table 2 Social Networking in Asian Countries

Source: wetpaint.com 2009

 

Chart 3 Malaysian mobile phone user growth

Source: wetpaint.com 2009

 

As the charts above illustrate, the penetration rates of Malaysia’s major technological products are in a medium to high level. By 2009, there were 100.8 mobile phones per 100 Malaysians. This tells us that each Malaysian may own more than one mobile phone. Compared to 2000, when the penetration rate was a mere 21.8%, the number of mobile phone users in Malaysia has since grown significantly (wetpaint.com 2009).

 

4.1.1.5      Legal factors

 

The general corporate income tax rate in Malaysia is 26% for the 2008 tax year and 25% for year of assessment 2009 onwards. There is a concession rate of 20% on the first RM500,000 ($145000) of taxable income for resident companies with a paid-up capital of up to RM 2.5m ($725,000). Malaysia offers an extensive array of tax incentives covering a variety of industries and activities ranging from manufacturing and related services to new areas such as information and communication technology, biotechnology, regional services and Islamic financial products and services. And to enhance the attractiveness of the country as a destination of international investment, incentives can be applied to the company under different incentive schemes (Oxford Business Group Malaysia 2010).

 

4.1.1.6      Environmental factors

 

Malaysia faces many natural hazards, particularly flooding, landslides, and forest fires. Human cased transformation of the environment is often regarded as more problematic than natural disasters but less so than in other Asian countries. Automobile emissions are Malaysia’s major source of air pollution, but air quality indicators for Malaysian cities tend to indicate cleaner air than in most other Asian cities (IBP 2008, p. 9). According to Sardar and Ziauddin (1985), the major cause of this ecological crisis is regarding the value and belief in shaping human’s relation with the surrounding and the lifestyle itself. In Malaysia, currently there has been low level of public awareness in the environmental issues such as waste management and green house emission to strengthen the environmental sustainability, but there are various social programs and governmental efforts to increase the public awareness in the environmental issues.

 

4.1.2            Summary of the PESTLE analysis

 

To summarize the above analysis, with the offerings of high level of political stability, high mobile phone penetration rate as well as strong government support to boost the economy in the coming years, we have evidences to support the conclusion that Malaysia provides a healthy business environment to the business companies operating in the country. This conclusion is also in accordance with an early ranking in Asia Wireless Annual Report as shown below in the table in which Malaysia was ranked in the fourth place compared to other major Asian pacific countries.

Table 3 The ranking of business environment (2007) in Asia pacific area

Source: wetpaint.com 2007

 

4.1.3            Market Size

 

4.1.3.1      Global smart mobile phone market

 

IDC say 157.8 million smart phones sold worldwide in Q4 2011, bringing the total for the year to 491.4 million units. Gartner estimate worldwide Q4 2011 sales of smart phones at some 149 million. Their total across the year was 472 million or 31% of mobile communication device sales. This compares with figures for 2010 from the same company of 297 million smart phones or 19% of the 1.6 billion mobile phones sold that year. So year-on-year smart phone sales rose 58%. The Financial Times cites a JPMorgan prediction that 657 million smart phones will leave stores in 2012 (email-marketing-reports.com 2012). Based on the last year’s sale digit and sales prediction in 2012, this will means that there is an anticipated annual sale growth of 39.19 per cent this year.

 

4.1.3.2      Malaysian smart mobile phone market

Similar rapid growth could also be found in the national digital market of Malaysia. Data collected by market research firm Nielsen Malaysia predicted growth for tablet and smart phone market in the country to reach 75% and 89% respectively by middle of 2012 (bintulu.org 2012).

 

4.2    Micro environment analysis

 

4.2.1            Competitive environment analysis by applying the Porter’s Five Force

Figure 2 Porter (1980)’s Five Forces model

Source: Adapted from Porter 1980 (The Free Press/Macmillan)

One of the most used tools to perform an industrial analysis with reference to the competitive conditions in an industry is Porter’s Five Forces model which focuses on the interaction of five forces in deciding the industrial competitive level as well the attractiveness of the industry. These forces are: (a) the risk of entry by potential competitors, (b) bargaining power of the suppliers, (c) the threat of substitutes, (d) the bargaining power of the buyers and (e) the rivalry among the established competitors (Hill & Jones 2010, p. 43). As below we would perform a competitive environment analysis by applying the Porter’s Five Force in the mobile phone industry.

 

4.2.1.1      The threat of entry

 

The seriousness of the threat of entry depends on the barriers present and on the reaction from existing competitors that entrants can expect. If barriers to entry are high and newcomers can expect sharp retaliation from the entrenched competitors, obviously the newcomers will not pose a serious threat of entering. Michael E. Porter (1998, p.24) in his famous book, On competition, listed out six major sources of barriers to entry which include: economies of scale, product differentiation, capital requirement, cost disadvantages independent of size, access to distribution channel, government policy.

 

The threat of entry is medium for the following reasons. On one hand, as said above there has been a rapid growth in the global and national mobile phone market, in particular the smart phone market sector. As a result, the growing market will tend to attract new players into the mobile phone market to split the cake. But on the other hand, there are also factors restricting the entering of the new players. One critical factor of this kind is the economy of scale. They are the internal and external economies.Internal economies of scale are economies made within a company as a result of mass production, in the case of mobile phone industry, internal economies of scale could be the large investments needed in the initial investment as well as R&D (research and development) capabilities. And in term of external economies of scale, as we know, many mobile phone companies would have their own licensed franchises that operate to sell the products and services to end consumers. Such proprietary sale network would create strong challenges for the new players if they would like to get involved in this market. One more factor that creates barriers to the new entry is the intellectual property. For example, in the area of prevalent 2G mobile communication technology, Global System for Mobile Communications (GSM, around 80–85 % market share), intellectual property is concentrated among a few industry participants, creating barriers to entry for new entrants and limiting competition among phone manufacturers (archive.org 2007).

 

4.2.1.2      The bargaining power of suppliers

 

The bargaining power of suppliers comprises another one out of the five forces that determine the intensity of competition in an industry. The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices for unique resources. Or the suppliers can exert power by threatening to raise prices or reduce the quality of purchased good (Kneer 2005).

 

The bargaining power of suppliers is low in the mobile phone industry because in general mobile phone companies and operators provide such high volume orders that suppliers have been cautious not to temper with the relationship and ended up being in a low bargaining position (Chan, Chen, Cormane, Her & Tomas 2006). But in the supply of some components of the mobile phone, there could be only few number of suppliers and the overall supply volume may not be able to meet the rapidly growing demand because of the dramatic growth of the mobile phone market in the recent years. For example, manufacturers simply can’t build enough of the gadgets because chip-makers that rolled back production in 2009 are now scrambling to play catch-up. According to research firm Gartner Inc, although sales sprang back later in the year, manufacturers were spooked and reined in investment in chip factories. Capital spending plunged 41 percent to $25.9 billion in 2009, after dropping 31 percent the year before (digitaltrends.com 2010). Total chip production capacity shrank, and as a result it takes time for the suppliers to catch up with the changing market. In such case, when the demand exceeds the supply, it will also strengthen the bargaining power of the suppliers.

 

4.2.1.3      The threat of substitutes

 

The presence of substitute products can lower industry attractiveness and profitability because they limit price levels. The threat of substitute products depends on several factors:

n  Buyers’ willingness to substitute

n  The relative price and performance of substitutes

n  The costs of switching to substitutes (Tutor2u.net 2008)

 

In the case of mobile phone industry, the threat of substitutes is generally considered as in a low level. Substitute products for the mobile phone industry could be considered fixed-line phone products if convergence is not considered to exist. The substitute product’s price is not lower, and its quality and performance capabilities are negligible compared to mobile phone products. Switching costs are low but the advantage goes to the mobile phone industry because there is a greater chance of switching to mobile phones from fixed line phones than the other way around. Hence, the threat of substitutes is therefore considered as in a low level.

 

 

4.2.1.4      The competitive rivalry

 

Rivalry could be defined as the competition behaviors among firms in an industry to obtain market share from each other. The competitive struggle can be achieved using price, product design, advertising and promotional efforts, direct selling efforts, as well as after-sale service and assistance. In general, more intense rivalry means lower prices or more spending on non-price-competitive weapons, or both (Hill & Jones 2010, p. 47).

 

The competitive rivalry in the mobile phone industry in Malaysia is medium for a number of reasons. First of all, Malaysia as a free market has attracted various mobile phone brands from the rest of the worlds, such as Apple, Motorola, Samsung, Nokia, Google, Blackberry and a number of other international and regional mobile phone brands. Secondly, Apple’s iPhone serious though are popular among young users, it faces strong challenges from the major competitors such as Samsung. Take Samsung as an example, it is now the world’s largest mobile phone producer, this year it is eyeing another strong year in the Malaysian market after a stunning 1,000 per cent growth last year. As Lee Jui Siang, Samsung Electronics’ director of Regional Mobile Business for Southeast Asia, Oceania and Taiwan cited after the launching of Samsung Galaxy S3 “Our Company has captured about 60 per cent of the mobile phone share and more than 60 per cent of the smart phone market in Malaysia. We’re currently No. 1 in Malaysia, in fact, since the third quarter of 2011” (btimes.com.my 2012). Therefore because several large mobile phone companies control the major market share, the competitive rivalry would be restrained to some degree. Thirdly, though facing strong challenges from the competitors, one more factor that reduces the competitive rivalry for the existing players is the differentiation of the mobile phone products. Product differentiation deals with making changes in the marketing mix of a product so as to differentiate it from whatever the competition is offering or to offer a product which stands out in the market (marketing91.com 2008). As we know, mobile phone especially in the smart phone market sector, differentiation is an important strategy to compete in the market. The mobile phones are differentiated mainly by the number of customizations or the additional features that they offer. Keyboard, wifi support, 3G provision, internet access, operating system, camera, memory, CPU performance and all other features and functions and factors rather than price alone could all become the elements that define an unique mobile phone in the market. Therefore, the overall competitive rivalry in the mobile phone industry in Malaysia is medium rather than being in a higher level that many of us think of.

 

4.2.1.5      The bargaining power of buyers

 

Bargaining power is the ability to influence the setting of prices. According to Mike W. Peng (2009, p. 42), there are four conditions leading to the strong bargaining power of the buyers. First of all, a small number of buyers would lead to strong bargaining power. Second, buyer may enhance their bargaining power if products of an industry do not clearly produce cost saving or enhance the quality of life for buyers. Third, buyer may have strong bargaining power if they purchase standard, undifferentiated commodity products from suppliers. Finally, like suppliers, buyers may enhance their bargaining power by entering the focal industry through backward integration.

 

As in the case of mobile phone market, the bargaining power of buyers is small for the following rationalities. First of all, the number of buyers is huge and the majority of the buyers are individual customers since they do have any relationship with each other, each time buying is a standalone buying, therefore the large number of individual consumers would reduce their bargaining power as buyers; secondly, mobile phone products are highly differentiated. As mentioned, mobile phones are differentiated mainly by the number of customizations or the additional features that they offer, direct price war is usually not the only competition behaviors and hence buyer may not have strong bargaining power because of the high differentiation level in the mobile phone products in particular among the smart phone products; thirdly,  since buyers as just said are mainly individual end users, as a result in general they would not be able to enhance their bargaining power by entering the focal industry through backward integration. Hence, the buyers’ bargaining power is weak in the mobile phone market in Malaysia.

 

4.2.2            Customer analysis

 

4.2.2.1      General information of the surveyed customers

 

Since, random sampling will be done and the sample volume is set 150, 75 out of which are male and the rest 75 are female, therefore we have 50% of the respondents being male and another 50% female.

Chart 4 Summary of the age group information

 

As the chart illustrates, within the 150 respondents, they are mainly in the age groups ranged from 15 to 40. As a matter of fact, customers aged from 21 to 30 is the largest group of users in our respondents with 55 out of the total respondents from this group, this to some degree reflects that young people is the critical customer base of the mobile phone or the mobile phone products have the largest penetration rate among the young ages. And a large percentage of them tend to have good education background and enjoy average or above average income level as shown in the pie chart below.

 

Chart 5 Summary of the education background

 

 

Chart 6 Summary of the monthly income information

 

4.2.2.2      Mobile phone usage information

 

Chart 7 Number of cell phones in use

 

As the chart above tells, 86 out of the 150 respondents only have one cell phone but still a certain proportion of them actually own more 2 or more than 2 mobile phones. Considering the fact that usually one mobile phone will be enough of our daily use, we understand the reason for the holding of two or more mobile phones as that people are replacing their old mobile phone most recently (probably within the past half of year). And taking into the consideration of the raise of the smart phones, it could be one of the major determinants for this phenomenon of holding more than two mobile phones. By asking the question that “Do you have a smart mobile phone?”, 27 out 150 total responding users suggest that they currently hold a smart phone. This means that the penetration rate of smart phone in Malaysia is about 18 per cent. This is nearly the same as the data released in the end of last year. According to recent smart phone penetration statistics from several sources including Netsize Guide, Informa, Google, Ipsos, and Go-Gulf.com, it is concluded that by December 2011, Singapore is the champion in terms of smart phone penetration, and also is the world’s first country that have more smart phone than feature phone in used. And for Malaysia, with 36.6 million mobile phone subscriptions in which feature phone number is 31.4 million (85.79%) and smart phone number is 5.2 million (14.21%) (iphone-my.com 2012). The calculated smart phone penetration rate in our research which is 18 per cent has actually to some degree demonstrated that the penetration rate is increasing gradually if our survey could accurately reflect the average level of the country.

Chart 8 Percentage of smart phone owner

Chart 9 Average time of daily usage

 

Probably due to the low smart phone penetration rate, in term of the average time of daily usage, most people are using mobile phones for less than 6 hours. This in another word suggests that the heavy user of mobile phone percentage rate in Malaysia is still low compared to those found in the developed economies such as Singapore and the US. And regarding the activities that they will engage in using the mobile phone, feature phones’ traditional function such as voice calls, text message and phone tools are still used most frequently by the respondents. But we can see that more smart phone functions are also welcome by the customers though their penetration rate is still low.

Chart 10 Usages of mobile phone

 

Finally, in the part of the survey when asked about “How much will you spend each month on mobile Internet?”, based on our calculation, the respondents spend an average of RM 51 on mobile Internet. This is in alignment with last year’s released by Yahoo in the “Yahoo! Net Index Survey” 2011 that Malaysians spend an average of US$15 (RM46) per month on mobile Internet, a segment which has expanded more than double since last year with growth spurred mainly by those in the 15-25 age group (nst.com.my 2011).

 

4.2.2.3      Advertising of mobile phone

 

Regarding the effective of the advertising of mobile phone, we design a number of questions in our investigation. And below we discuss some findings based on the summary of the answers to the questions.

Chart 11 Perception of advertising of mobile phone by male and female customers[1]

 

The above chart shows the summary of six questions designed to test the effective of the advertising of mobile phone; there are several key findings when we divide the sum up the answers by different gender groups. The first finding is that mobile phone advertising is effective for both gender groups as we can see that most answers to the five questions are quite positive; the second finding is that women users are more emotional and could be easier be persuaded into the purchasing behaviors by the ads. For instance, more female customers agreed with the point that “The promoted brands in the ads could be more trusted more compared to those that are never shown in any ads”. Similar findings could be found in Q15 and Q 16; male customers could also be highly motivated into the purchasing than women when they are in love with the in love with the model that is shown in the ads rather than the ad contents which suggests that male customers are more rational than female counterparts.

 

4.2.2.4      Future buying behaviors

 

Chart 12 Main functions desired in the next mobile phone purchasing

 

In the last part of the survey, we investigate the future buying considerations of the respondents. While the majority of the feature phone functions receive the similar desirability from the consumers, we can observe that smart phone features such as visiting social network websites witness significant growth in the customer base in the future buying. This also provides confirmation to the conclusion that the penetration rate of smart phone will increase largely in the coming few years.

 

 

 

5.        Strategic marketing plan

 

5.1    Organizational Strategies

5.1.1            Growth Strategies

Table 4 Ansoff’s product-market growth matrix

Source: Kumar 2010, p. 175

 

Ansoff (1957) created a marketing tool known as the “product-market growth matrix’ as shown in the table above based on the two different dimensions: product and market. The matrix allows marketers to consider ways to grow the business via existing and/or new products in existing and/or new markets, there are four possible product/market combinations, and the matrix helps businesses decide what course of action should be taken given the current performance (Kumar 2010, p. 175).

 

As for Apple’s business in Malaysia, two major strategies would be optional for Apple: market penetration and product development. On one hand, as we have concluded the smart phone market is expected to growth and penetration rate will also increased in the coming few years, hence the continual penetration would be a strategy for the current iPhone models such as iPhone 4 and iPhone 4s; on the other hand, product development which involves developing new products or modifying existing products so they appear new, and offering those products to current market would also be a necessary growth strategy as mobile phone products are highly differentiated, and Apple would need to innovate its products to get adapted to the changing customers needs.

5.2    Generic strategies

Table 5 Porter’s generic strategies

Source: sqaji.com 2006

 

The objective of a generic business-level strategy is to establish a competitive position that distinguishes the organization from competitors and creates value for customers. In general, firms pursue competitive advantage by offering (1) products or services that are different from those of competitors, where those differences are valued by customers (e.g., novel designs, higher quality, unique features); (2) products or services that are standard, but produced at lower cost and usually offered at a lower price; or (3) a combination of the first two options, a hybrid competitive strategy which is known as “best cost” (Harrison & John 2010, p. 89).

 

Currently, Apple targets the mass market with its iPhone and iPod products, but combines this broad scope with a differentiation strategy, hence such generic strategy could be categorized in the differentiation strategy. And in the coming few years, the company would still adopt the differentiation strategy for two major reasons: first of all, in term of target scope the company needs to target at the broad industry rather than narrow market segment because this would largely reduced the profit of the mobile phone products produced by the company; secondly, in term of advantages, since the iPhone are usually considered by the customers as premium products, there is no way the company would approach the low cost strategy, it would continue the current market position by focusing on the product uniqueness.

 

5.3    Marketing strategies

5.3.1            Product

 

In term of the product strategy for the coming years, by adopting the differentiation strategy, there are more detailed product strategies to be applied. First of all, an increased focus on environmental issues and strengthened public environment awareness have contributed to a rise in the demand for environmentally friendly products and services, therefore it will be necessary that Apple adopts an environmental product strategies by sourcing of materials and packaging that is more environmentally friendly. As for App Inc, the products could be designed in such a way that they are energy saving and also it can require the suppliers to follow the relevant environmental standards; secondly, as concluded above, new smart phone functions such as social network support and gaming are receiving more customer preference, new iPhone model needs to continue the differentiation strategy and equip the product with enhanced relevant functions and performance.

 

5.3.2            Price

 

According to Rajan Saxena (2009, p. 326), price strategy refers to the method companies use to price their products or services, the pricing strategy determination is usually depend on a number of factors such as (a) Corporate goals and objectives; (b) Customer characteristics; (c) Intensity of inter firm rivalry; (d) Phase of the product life cycle. Also there are several usual pricing strategies which include skimming strategy, penetration pricing strategy, premium pricing, differential pricing strategy, geographic pricing strategy, product line pricing strategies and so on.

 

As for Apple Inc, premium pricing will be the best choice that is workable and best for the interest of the company. Premium pricing (also called prestige pricing) is the strategy of pricing at, or near, the high end of the possible price range. The company could continue to adopt the premium pricing in Malaysia for the following reasons: first of all, the market is expanding and penetration of smart phone is far away from saturation, price war is not necessary; secondly, as we have found out, mobile phone in particular the smart phone products are highly differentiated, low price will not necessarily increase the attractiveness of the product because customer may believe that high price is an indication of good quality. This is also in accordance with our finding in the survey as that with the popularity of the smart mobile phone, compared to the traditional mobile phone many Malaysian users would be willing to pay additional price for buying a smart mobile phone. Therefore as the industrial leader and together with its high end positioning, the company could continue to apply the premium pricing in the coming few years.

 

5.3.3            Place

 

Regarding the place strategy of the iPhone products, with the large demand of the Apple mobile phones, place strategy is always critical. According to our experience, for a long period in the past, the newest iPhone would not available in the Apple store and online, the company has contracts with the mobile network operators such as Maxis and Digi, this has limited the availability of the iPhones to those that are not willing to be bounded by a contract. Hence, Apple could think more on widening the distribution channel in the Malaysia market.

5.3.4            Promotion

 

Promotion is one of the key elements of the marketing mix, and deals with any one or two-way communication that takes place with the consumer. Marketing theory distinguishes between two main kinds of promotional strategy – “push” and “pull”. A “push” promotional strategy makes use of a company’s sales force and trade promotion activities to create consumer demand for a product. A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product (tutor2u.net 2009). As for Apple Inc, by adopting premium pricing and differentiation strategies, a mix of promotional activities such as advertising, public relations, direct marketing and digital marketing could be use to promote to brand. These efforts come together with expanded distribution channels will be able to promote the mobile phone in a “pull” selling strategy effectively.

 

 

6.        Strategic implementation

 

6.1    Budgeting

 

Million Ringgit

Activities\MonthOctNovDecJanFebMarAprMayJunJulAugSepBudget
Marketing survey13
Research and development events20
Promotional efforts90
Distribution channel expansion and maintenance4
Sales force motivation20
After-sale support8
Brand management40
Training5
Total200

Table 6 Budgeting plan for 2013 financial year[2]

Million Ringgit

Activities\MonthOctNovDecJanFebMarAprMayJunJulAugSepBudget
Marketing survey26
Research and development events40
Promotional efforts180
Distribution channel expansion and maintenance8
Sales force motivation40
After-sale support16
Brand management80
Training10
Total400

Table 7 Budgeting plan for 2014 financial year

 

 

 

Million Ringgit

Activities\MonthOctNovDecJanFebMarAprMayJunJulAugSepBudget
Marketing survey45.5
Research and development events70
Promotional efforts315
Distribution channel expansion and maintenance14
Sales force motivation70
After-sale support28
Brand management140
Training17.5
Total700

Table 8 Budgeting plan for 2015 financial year

 

6.2    Control mechanism

 

Planning and control will be derived by a top down management approach to focus on the strategic objectives using the capital and resource allocated above in the budget and action plan, the success of the business strategies and marketing strategies would be monitored using various ways. For example, the brand management efforts with the target of increasing the brand awareness by 50% within it would be measured through two major ways: industrial analysis and marketing research such as the brand awareness survey. And as for the goal of increasing the sale revenue by 200% in the coming three financial years, corporate annual and quarter finance reports would provide a very good monitoring mechanism for the company to keep an eye on the implementation of the budgeting and various marketing efforts. On the other hand, despite the watching mechanism, the company could also divide the three targets into annual target to make sure that they are reliable and implemented with the greatest efforts. For example, the three target of increasing the sale revenue by 200% in the coming three financial years could be separated into three smaller target of 65%, 136% and 200% for the coming three financial years.

Strategic business objectivesMeasurement techniqueFirst yearSecond yearThird year
Increase the sale revenue by 200% in the coming three financial yearsCorporate annual and quarter finance reports65%135%200%
Increase the net profit by 220% in the next three financial years (green product strategy)Corporate finance reports
Energy efficiency reportCarbon report
70%140%220%
Increase the brand awareness by 50%Industrial analysis

Marketing research (brand awareness investigation)

20%35%50%
Increase the market share by 30%Marketing research (market share investigation)10%20%30%

Table 9 Monitoring the achievement of targets

 

7.        Conclusions

 

To conclude the above analysis and strategic plan for Apple Inc’s iPhone series product line in the coming three financial years, based on our examination over the macro environment, micro business environment as well as customer behaviors in the market of Malaysia with our own original survey done on 150 mobile phone users, we manage to come to some conclusion that could be meaningful for the future development of Apple’s iPhone not only in Malaysia but also some conclusions are applicable worldwide. First of all, Malaysia as a raising smart phone market, the expected market share will increase rapidly in the coming few years with the government’s plan to turn the economy into high income economy in 2020; secondly, smart phone penetration will increase in a fast speed with customers’ preference over the smart phones; thirdly, differentiation should be continued as the strategy for the business and iPhone series smart phones.

 

 

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Appendix 1 The sample of survey on mobile phone users

 

Thank you for joining our survey under the research project “2013 to 2015 Strategic Plan for Apple iPhone in Malaysia”, this survey aims at collecting information about mobile phone users’ consumer preference and perception. Please answer the following questions based on your own judgments, please don’t hesitate to contact us if you need any assistance. We appreciate your participation and careful answering.

 

Part 1: General information of the respondents

 

Question No. 1 Please choose your sex group:

 

A) Male

B) Female

 

Question No. 2 Please select your age group:

 

A) Under 15

B) 15 – 20

C) 21 – 30

D) 31 – 40

E) 41 – 60

F) 60 and above

 

Question No. 3 Please select your education degree (the highest degree owned currently)

 

A) PHD

B) Master

C) Degree

D) Diploma

E) Certificate

F) High School or below

 

Question No. 4 Please select your occupation

 

A) Student

B) Profession

C) Military

D) Doctor

E) Management

F) Technicians and engineers

G) Customer service

H) Doctor

I) Marketing related or sale

J) Accountant or auditor

K) If others, please name it:

 

Question No. 5 What is the level of your monthly income?

 

A) RM 1000 or below

B) RM 1001 – RM 2000

C) RM 2001 – RM 3000

D) RM 3001 – RM 5000

E) RM 5001 – RM 10000

F) RM 10001 or above

G) Not sure

 

 

 

Part 2: Mobile phone usage information

 

Question No. 6 How many cell phones do you have in use right now?

 

A) 1

B) 2

C) 3

D) 4 or more

 

Question No. 7 Do you have a smart mobile phone?

 

A) Yes

B) No

C) Not sure

 

Question No. 8 Are you using an iPhone currently?

 

A) Yes

B) No

C) Don’t know

 

Question No. 9 What many hours do you spend in using the mobile phones?

 

A) 8 hours or more

B) 6 hours to 8 hours

C) 4 hours to 6 hours

D) 2 hours to 4 hours

E) Less than 2 hours

F) Don’t know

 

Question No. 10 What are the major purposes you use your mobile phone for? (Could be more than one choice)

 

A) Make calls

B) Text message

C) Photo taking

D) Visiting social websites such as facebook, and twitter

E) Blog visiting and writing

F) Reading news

G) Phone tools such as calculator

H) Gaming

I) Video or movie watching

 

Question No. 11 How much will you spend each month on mobile Internet?

RM

 

Part 3: Advertising of mobile phone

 

The below questions are designed to focus on studying of your feeling regarding advertising and how the advertising of mobile phones could impact your decision making of buying.

 

Question No. 12 Advertising could help provide better products for the society

 

A) Extremely disagree

B) Somewhat Disagree

C) Neutral

D) Somewhat Agree

E) Can’t agree more

F) Don’t know

 

Question No. 13 Advertisements provide with me more options in deciding which brand to buy.

 

A) Extremely disagree

B) Somewhat Disagree

C) Neutral

D) Somewhat Agree

E) Can’t agree more

F) Don’t know

 

Question No. 14 The promoted brands in the ads could be more trusted more compared to those that are never shown in any ads

 

A) Extremely disagree

B) Somewhat Disagree

C) Neutral

D) Somewhat Agree

E) Can’t agree more

F) Don’t know

 

Question No. 15 What I learn from ads could help me in selecting which brand to buy.

 

A) Extremely disagree

B) Somewhat Disagree

C) Neutral

D) Somewhat Agree

E) Can’t agree more

F) Don’t know

 

Question No. 16 It is very likely that I will choose a certain band if only I love the advertisements

 

A) Extremely disagree

B) Somewhat Disagree

C) Neutral

D) Somewhat Agree

E) Can’t agree more

F) Don’t know

 

Question No. 17 It would be highly possible that I would choose a particular brand if I am in love with the model is shown in the ads

 

A) Extremely disagree

B) Somewhat Disagree

C) Neutral

D) Somewhat Agree

E) Can’t agree more

F) Don’t know

 

Part 4: Pricing of mobile phone

 

Question No. 18 What is the price of your most recently purchased mobile phone?

 

A) RM1 – RM500

B) RM 501 – RM 1,000

C) RM 1,001 – RM 2, 000

D) RM 2,001 – RM 3,000

E) RM 3,001 – RM 5,000

F) RM 5,001 and above

 

Question No. 19 What is the acceptable price for a smart phone in your opinion?

 

A) RM 1 – RM 300

B) RM 301 – RM 500

C) RM 501 – RM 1000

D) RM 1,001 – RM 2,000

E) RM 2,001 – RM 3,000

F) RM 3,001 or above

 

Question No. 20 With the popularity of the smart mobile phone, compared to the traditional mobile phone how much is the additional price that you think is acceptable for buying a smart mobile phone?

 

A) RM1 – RM 50

B) RM 51 – RM 100

C) RM 101 – RM 200

D) RM 201 – RM 500

E) RM 501 – RM 1000

F) RM 1001 or more

 

 

Question No. 21 Since the iPhone series are very popular in the market, compared to other smart mobile phone brands how much will you consider as acceptable to pay extra for buying an iphone 4s (the newest iPhone model in the market)?

 

A) RM1 – RM 50

B) RM 51 – RM 100

C) RM 101 – RM 200

D) RM 201 – RM 500

E) RM 501 – RM 1000

F) RM 1001 or more

 

Part 5: Future buying behaviors

 

Question No. 22 To what extent do you think price factors matter when making your next purchasing?

 

A) Extremely important

B) Important

C) Neutral

D) Not important

E) Extremely unimportant

 

Question No. 23 To what extent do you think branding is important when making your next purchasing?

 

A) Extremely important

B) Important

C) Neutral

D) Not important

E) Extremely unimportant

 

Question No. 24 To what extent do you think the features of the mobile phone are important when making your next purchasing?

 

A) Extremely important

B) Important

C) Neutral

D) Not important

E) Extremely unimportant

 

Question No. 25 Given the popularity of the iPhone series, compared to the other smart mobile phone brands how much is the additional price that you think is acceptable for buying an iphone 5 (the coming new version of iPhone)?

 

A) RM1 – RM100

B) RM 101 – RM 200

C) RM 201 – RM 500

D) RM 501 – RM 1,000

E) RM 1,001 – RM 2,000

F) RM 2,001 or above

 

Question No. 26 What are the major functions desired in your next smart phone? (Could be more than one choice)

 

A) Make calls

B) Text message

C) Photo taking

D) Visiting social websites such as facebook, and twitter

E) Blog visiting and writing

F) Reading news

G) Phone tools such as calculator

H) Gaming

I) Video or movie watching

J) Others, please name the features you desired:

 

[1] Q12 Advertising could help provide better products for the society

Q13 Advertisements provide with me more options in deciding which brand to buy.

Q14The promoted brands in the ads could be more trusted more compared to those that are never shown in any ads

Q15 What I learn from ads could helps me in selecting which brand to buy.

Q16 It is very likely that I will choose a certain band if on ly I love the advertisements.

Q17 It would be highly possible that I would choose a particular brand if I am in love with the model is shown in the ads

[2] The financial year of Applc Inc starts in October