Marketing Management 15th Edition by Philip Kotler, Kevin Keller

Exercise 1

Apple

Over the past decade, Apple has become a world leader in innovative new product launches. The company has truly transformed the way people listen to music, play video games, talk on the phone, and even read books. Apple's evolutionary product innovations include the iPod, iMac, iPhone, and iPad and are the reason the company topped Fortune magazine's World's Most Admired Companies list three years in a row, from 2008 to 2010.
One of Apple's most important innovations over the past decade was the iPod MP3 player. Not only has the iPod become a cultural phenomenon; it introduced many consumers to Apple and initiated a series of monumental product innovations. The iPod exemplified Apple's innovative design skills and looked, felt, and operated like no other device. With the launch of the iTunes Music Store, a dynamic duo of legally downloadable music and cuttingedge portable music player caused iPod sales to skyrocket. To the delight of Apple (and the chagrin of competitor Sony), the iPod has become "the Walkman of the 21st century."
Beyond spurring sales, the iPod has been central in changing the way people listen to and use music. According to musician John Mayer, "People feel they're walking through musicology" when they use their iPods, leading them to listen to more music, and with more passion. The iPod has gone through a series of generations, and along the way Apple has added features like photo, video, and radio capabilities.
Apple reached its impressive market domination through a combination of shrewd product innovation and clever marketing. It defined a broad access point for its target market-music lovers who wanted their music, whenever and wherever. The marketing effort was designed to appeal to Mac fans as well as people who had not used Apple products in the past. This broader access required a shift in Apple's channel strategies. As a result, Apple added "mass electronic" retailers such as Best Buy and (now defunct) Circuit City to its existing channels, quadrupling its number of outlets.
Besides this enhanced "push" effort, Apple also developed memorable, creative "pull" advertising that helped drive the popularity of the iPod. The Silhouettes campaign, featuring people in silhouette listening to iPods and dancing, appeared all over the world with a message simple enough to work across cultures, portraying the iPod as cool but not beyond the reach of anyone who enjoyed music.
As the iPod's popularity grew, a halo effect helped increase Apple's market share in its other products. In fact, in 2007 Apple officially changed its name from Apple Computer Inc. to Apple Inc. to help communicate the company's focus in noncomputer products. By 2009, iPod sales had topped $8 billion, and by 2010 more than 250 million had been sold worldwide.
Apple's next-largest product launch after the iPod was the iPhone, its 2007 entry to the cell phone industry. With its touch-screen pad, virtual keyboard, and Internet and e-mail capabilities, the iPhone launched to huge consumer excitement; people lined up for hours to be among the first to buy one. But investment analysts feared Apple's two-year contract with AT T and high initial price would hinder the iPhone's success. Seventy-four days after the product's debut, however, Apple had sold its one millionth iPhone. It had taken the iPod two years to reach the cumulative sales ($1.1 million) the iPhone had reached after its first quarter. In fact, half the iPods' buyers switched to AT T from a different wireless carrier, incurring fees to break their contracts, just to have a chance to own an iPhone.
Over the next three years, Apple dropped the price of the iPhone significantly and added impressive picture and video capabilities, video game features, a faster processor, and hundreds of thousands of additional applications. By then, the iPhone had become a game-changing technological invention. Apple took in $13 billion in iPhone sales worldwide in 2009, and when the iPhone 4 launched in 2010, showcasing Face Time video calling, Steve Jobs declared it "the most successful product launch in Apple's history."
Also in 2010, a media frenzy helped Apple launch the iPad, a multitouch device that combines the look and feel of the iPhone with the power of a MacBook. The slick handheld device gives consumers access to music, books, movies, pictures, and work documents at the touch of a finger without mouse or keyboard. Apple's marketing campaign emphasized its appeal: "What is iPad? iPad is thin. iPad is beautiful. iPad goes anywhere and lasts all day. There is no right way or wrong way. It's crazy powerful. It's magical. You already know how to use it. It's 200,000 apps and counting... It's already a revolution and it's only just begun."
With $42 billion in annual revenue, Apple continues to increase its annual R D budget each year, spending $1.3 billion in 2009 alone. The company takes creating, producing, and launching new products very seriously. With creative marketing support behind them, these products are the reason consumers and analysts alike stay on their toes awaiting Apple's latest product news..
Apple's product launches over the past decade have been monumental. What makes the company so good at innovation? Is anyone comparable to Apple in this respect?