Marketing Porfolio

7/30/2019 Marketing Porfolio

1/46

DCU Business School

Assignment Submission

Student Name(s): Shane Barry

Student Number(s): 58535191

Programme: MINT4 - BSc Marketing, Innovation & Technology

Project Title: Marketing Management Portfolio

Module code: MG328 Marketing Management & Planning

Lecturer: Joanne Lynch

Project Due Date: 18th Jan 2012

Declaration

I the undersigned declare that the project material, which I now submit, is my own

work. Any assistance received by way of borrowing from the work of others has

been cited and acknowledged within the work. I make this declaration in the

knowledge that a breach of the rules pertaining to project submission may carry

serious consequences.

I am aware that the project will not be accepted unless this form has been handed

in along with the project.

Signed:_________________________


2/46

Blackberry: Relationship Marketing

Link to article:http://www.independent.ie/business/technology/one-in-five-may-dump-their-

blackberry-phones-2906739.html
http://www.independent.ie/business/technology/one-in-five-may-dump-their-blackberry-phones-2906739.htmlhttp://www.independent.ie/business/technology/one-in-five-may-dump-their-blackberry-phones-2906739.htmlhttp://www.independent.ie/business/technology/one-in-five-may-dump-their-blackberry-phones-2906739.htmlhttp://www.independent.ie/business/technology/one-in-five-may-dump-their-blackberry-phones-2906739.htmlhttp://www.independent.ie/business/technology/one-in-five-may-dump-their-blackberry-phones-2906739.htmlhttp://www.independent.ie/business/technology/one-in-five-may-dump-their-blackberry-phones-2906739.html


3/46

One in five may dump their Blackberry phonesOne in five BlackBerry phone users is considering switching to another supplier becauseof the service problems which hit millions of people this week, according to a studytoday.

A survey of more than 1,000 BlackBerry customers by shopping comparison websiteKelkoo found that 19% are thinking about moving to another manufacturer, 42% willconsider changing later and 8% said they have bought a new mobile phone already.

Kelkoo said that with today's launch of the iPhone 4S already boasting pre-orders of overone million, this week's service issues could not have come at a worse time forBlackBerry, giving users a "tempting ship to jump to".

Research among another 3,000 people found that seven out of 10 who were planning to

get a BlackBerry in the future admitted they would need some reassurance from the

manufacturer as they would be put off by the recent problems.

Four out of five consumers said they were put off choosing a handset from amanufacturer that has experienced major service problems.

Chris Simpson, chief marketing officer at Kelkoo, said: "This week has been incrediblydifficult for BlackBerry users worldwide. However, BlackBerry offers a market-leadingproduct with a unique service, which nearly a third of consumers admit they will not findwith any other manufacturer.

"As such, it has a loyal following and this will stand it in good stead to retain customers.

Whilst our research highlights that some consumers intend to jump the BlackBerry ship,it could be a very different picture in the coming months when this week's issues

become a distant memory."- Alan Jones, Irish Times, 14th of October 2011.


4/46

Topic: Relationship Marketing.

Blackberry is the most popular mobile phone and has a market share of 22.8%. There are 70

million users worldwide. It is produced by the company Research In Motion (RIM).

Blackberry devices main functions are calling, texting, internet usage, e-mail and Blackberry

Messenger which lets Blackberry users send text messages to each other for free. Blackberry

has its own proprietary network called BlackBerry Enterprise Server which it uses instead

of other 3rd party services. On the 10th of October 2011 part of the network crashed leaving

10 million customers in Europe, Middle East and Africa without email, messaging services or

internet on their Blackberry smartphones. The problems then spread to North and South

America and continued for four days affecting most of their 70 million customers. The

problem came from a data centre in London, they had the problem fixed within five days and

everyones service was back to normal. It didnt go un- noticed with many users taking to

Twitter and Facebook to vent their anger. Many businesses use blackberries to communicate

with other employees and clients, while some were relieved to see peoples faces not stuck in

their phone most were angry that this crash had a major interruption with their work. Social

users were also annoyed not to have their services which they are using every day to

communicate with friends. In a very competitive market a crash such as this can have a

catastrophe effect on the business as we see in the above article one in five may switch to a

competitor. Blackberry has to put a strategy in place to regain customer satisfaction and show

that they value each customer.


5/46

Strategic Marketing Recommendations:

1) Service Failure and Recovery:

Service failure is one pushing determinate that drives customer switching behaviour (Roos

1999) successful recovery can mean the difference between customer retention and

defection. (Bitner 1993) also argues that its impossible to guarantee a 100% error free

services. Blackberry need to have a service recovery plan in place to deal with such service

failures. I decided that (Gonzalez, Hoffman, and Ingram 2005) concept for effective sales

failure and recovery model (see Fig 1) could be used by Blackberry to deal with services

failures.

Recovery Culture: Blackberry top management needs to make the resources available so in

case of a service failure they can respond fast and effectively to recover the service back to

normal working but also compensate customer accordingly for going through the failure to


6/46

re-gain and even exceed customer satisfaction witch may have been lost during the failure.

(Hart, Heskett, and Sasser 1990) state, A good recovery can turn angry, frustrated

customers into loyal ones.

Failure Analysis: (Homburg and Frst 2005) said the steps for failure analysis recognising

the failure, identifying its source, evaluating its stability, and assessing its controllability.

Blackberry must first identify the failure and be aware of when customers expectations are

not been met. 96% of customers dont complain they just leave. 54%-70% who complain will

stay ifits resolved and 95% if resolved quickly. Blackberry must stay close to its customers

and asked them if there are any problems or improvements needed to be made on a regular

basic. They must find the failures and recovery quickly. They can identify the source and fix

the problem so it is stable and control it so it wont happen again.

Recovery Strategy: There are five main recovery strategies Blackberry could put into place

to re-gain customer satisfaction 1) apologetic: frontline or managerial 2) compensatory:

gratis, discounts, coupons, upgrades, or ancillaries, 3) reimbursement: cash refund or store

credit, 4) restoration: corrections, replacements, or substitutions), and 5) unresponsiveness:

firm does not respond to customers complaint (Gonzalez, Hoffman, and Ingram 2005;

Hoffman and Kelley 1996). Blackberry must pick which recovery best suits each customer

segment for example personal and business customers will have different recovery

strategies. A good recovery strategy is essential in retaining dis-satisfied customers that

would be lost otherwise. A reduction in lost customers by 5% can increase profits by

between 25%-85% depending on the industry.

Monitoring Evaluating and Feedback: Blackberry must track the failures, evaluate the

recovery strategy and give feedback to employees on how the strategy went. Its importantfor Blackberry to do this so they know how effective each recovery strategy was and know


7/46

what customers responded positively to what strategy. Customer satisfaction has been

linked to customer retention, increased purchase frequency, and positive referrals, which in

turn has been linked to positive organizational outcomes such as increased revenue growth

and profitability (Heskett et al. 1994; Maxham 2001). It is important they pick the rightrecovery strategy and can learn from experience. After a failure and customers have been

dis-satisfied it is important to re install customer confidence and satisfaction.

Customer and Financial Performance: An effective recovery strategy should lead to less

service failures and better recovery strategies. (Maxham and Netemeyer 2003) note a

positive relationship between recovery satisfaction and overall satisfaction and purchase

intent. This should lead to sales growth and more profitability as acquiring a new customer

can cost six or seven times more than retaining an existing customer(Frederick Reichheld of

Bain & Company 2006). Service failure should be seen as an opportunity by business not

only just to regain customer satisfaction but exceed expectations in their recovery. This

would lead to a higher customer retention and loyalty rate and may also attract new

customers.

2) Customer Retention

Form the above steps on (Fig 1) and the connected theory I have made some strategic market

recommendations to help Blackberry deal with service failures.

According to (Azevedo 2011) The costs of attracting new mobile phone customers are

increasing in the face of a mature market with high penetration rates. Therefore, mobilecommunications operators are trying to retain customers by implementing new marketing

strategies I think Blackberry should see this service failure as an opportunity and launch a

new marketing campaign, especially with one in five customers thinking of leaving for a

competitor. Blackberry need to work hard to keep customers to retain profitability. Especially

in a very competitive market with Samsung 16.3%, LG 5.7% and Apple 4.6% of market

share (Gartner August 2011)


8/46

Looking at the above model and theory and taken the points into account I recommend that

Blackberry offer something in compensation to its customers for this failure. They should

exceed customers expectations and make on offer that will retain customers and attract new

ones as they see Blackberry treats their customers well. Its a perfect opportunity for them to

take advantage of a mistake and turn it into an opportunity by spending big and launching a

new marketing campaign. As acquiring a new customer can cost six or seven times more than

retaining an existing customer(Frederick Reichheld of Bain & Company 2006). Blackberry

should focus in on steps 1 and 2 of (Gonzalez, Hoffman, and Ingram 2005; Hoffman and

Kelley 1996). Recovery strategy 1) apologetic: frontline or managerial) 2) compensatory:

gratis, discounts, coupons, upgrades, or ancillaries.

First step in the marketing campaign would be to communicate apologies and reassurecustomers that this type of failure will never happen again. They should put back up

infrastructure and a plan in place to deal with a similar crash and minimise down time

in the future. To show customers that they are serious they should say that if the

network is ever down for more than one day again every customer gets a free upgrade

of their phone. This will re-assure customers and also Blackberry will work harder not

to let the network fail. New customers will also be attracted by the guarantee made by

Blackberry.

Blackberry should compensate customers for this failure by rewarding them. Theyshould reward each customer with free service for the month of November for the five

days their network was down. They should also have this offer open to new

customers. As they have their own network this would be possible with help from

mobile providers. This would be an expensive cost but worth it if customers are

retained and can also be boosted by arrival of new ones.

They could also compensate customers by giving customers vouchers for apps andmusic downloads. This would be more suited to the social customer rather than

business ones. Blackberry has currently offered a $100.00 worth of free apps but only

certain apps and over a period of time. They should let customers choice what apps

they want and let them download as soon as possible and spend the $100.00 in one

day if they want to show they value customers and want to make up for the mistake.


9/46

Downloading apps and music wouldnt be attractive to the business customer. Manycompanies block the download of certain apps on business phones. The above offer of

free service for a month would appeal to business customers. Blackberry could offer

their tablet the Blackberry Playbook to business customers. The amount they give

to each business would depend on their amount of employees with Blackberry

phones. Not only would this compensate business users it also could result in repeat

orders of their tablet from these businesses.

3) Relationship Marketing

The European mobile communications industry has revenues of 174 billion and growing 10%

per year(GSMA 2008) According to Ferguson and Brohaugh 2008 Heavy investments are

made in marketing in order to gain new customers, whereas few efforts are made to retain

customers and build profitable long-term relationships I think blackberry should put more

focus on retaining customers and building relationships. Social media would be the ideal

medium for doing this.

Blackberry could go on online and use several social media websites to connect with their

customers. Many business now have created some medium of social media see (Fig 2),

(Carolyn Heller Baird and Cuatam Parasnis 2011) suggest that To successfully exploit the

potential of social media, companies need to design experiences that deliver tangible value

for customers time, attention, endorsement and data. Blackberry already has many social

media tools 55,940 YouTube followers, 8,551,008 Facebook followers, and 631,519 Twitter

followers. They also have Foursquare, Flickr and several forums and blogs. Blackberry needsto manage these accounts better and set up a Social CRM system to control all social media.

Looking at (Fig 3) we can see the reason consumers interact with companies via social media

and why business think consumers follow them via social media. By looking at the diagram

we can see that there are big differences between the two. Blackberry should look at what

consumers want from interaction on social media and deliver it.

Organizations need to carefully consider how they can create a social media experience thatis unique to their brand, offers customers value and exploits the power of the social


10/46

community(IBM Institute for Business Value 2011). If we look to (Fig 3) also from (IBM

Institute for Business Value CRM Study 2011) Blackberry should see the top reasons why

consumers interact with social media and implement them, this will help re-gain customer

satisfaction after the service failure. The top two reason customer interact with business on

social media are discounts and to purchase. Blackberry should focus on these two topics to

build greater relationships with customers.

1) Discount

In exchange for their time, endorsement and personal data consumers expect something

tangible Discount is at the top of consumers list but near the end of the businesses. On

Facebook and Twitter they have huge followings and their accounts are updated daily. A lot

of the content is Blackberry telling customers about new products and apps.

They should try to communicate with their followers more. Have competitions each day to

win a phone or tablet. Questions where they can gain insight into customers. Best feature on a

product? What new feature would you like best? Why do you choose Blackberry? etc. They

would get honest answers as they are rewarding the customer back. Each day they could pick

the 25 most asked questions on their accounts and answer them. If your question gets asked

you get a free app of your choice. There are hundreds of posts each day on Facebook and

Twitter with are not replied too. They should spend more time answering these then pushing

new products to show they value the customer.

Blackberry could also have a more interactive marketing strategy which would link offline

and online to give discount to customers. 40% of smartphone and tablet users use their device

while watching TV therefore splitting their attention. They could have a treasure hunt where

users have to scan QR codes or the swipe technology like GoogleWallet. They could have

these on ads which are reachable with a phone e.g bus shelters, also on TV ads and different

forms of social media. If the user scans all five ads they get a reward of 10 free credit or

discount off a new phone. This would get Blackberry users looking to find their ads and

increase their attention towards them over others. It would also get users coming to all

different types of Blackberry social media and offline media. Online sites may pick upon the


11/46

campaign and find it different and fun and link it across the internet on Facebook, twitter,

Stubleupon, Reddit, Digg and many others.

2) Purchase:It may be surprising that consumers actually want to buy through social media as business

again have it rank near the end in (Fig 3). Blackberry should give the customer what they

want and let them buy through social media. 92% of consumers use social media for

connecting with network of friends and family while only 23% say they use it for

interacting with brands. 55% dont engage with brands at all on social media. But a

recommendation from a friends or family could make a difference if some likes or re-tweets something consumers are more likely to interact with that brand. (Carolyn Heller

Baird and Cuatam Parasnis 2011). Blackberry could offer products on special offer through

social media if they share with all their friends on Facebook what they bought and what they

think about the product and Blackberry. This would not only give the customer a cheaper

product but communicate to all his friends. With the average users having 130 friends it

would have a great reach. Blackberry could also ask the user to tell them the top 5 reason

they are buying a Blackberry and could offer the customer extras with the phone for doing so.They could give a voucher for free apps, music movies. Again the user would share the 5

reason they are buying a Blackberry with their friends and their friends could also see what

they received free. There is the issue of the users privacy so it would be optional but to get

the special offers they would have to share with their friends.

The above steps would help Blackberry get closer to their customers and understand what

they want from Blackberry and why they buy. They would also be increasing sales through

giving discounts and selling on social media. The customers would also be more satisfied as

they are getting better offers and getting their wish of discounts and purchases through social

media. Overall I think Blackberry customers would be pleased with Blackberries service

failure strategy and decide to stay with them. Blackberry would also have infrastructure in

place so this wouldnt happen again reassuring customers. Then getting closer to their

customers through social media and listing to their wants, Blackberry can build better

customer focused products. This strategy would not only help retain customers but new

customer would look at Blackberry in a different way and even switch phone provider tothem.


12/46

Bibliography:

Gray, T. (2006). Customer Acquisition vs. Customer Retention.Available:

http://www.gemsolv.com/wordpress/2006/11/customer-acquisition-vs-customer-retention/. [Last accessed 25th

Oct 2011].

Favell, A (2011). Global mobile statistics 2011. Available: http://mobithinking.com/mobile-marketing-

tools/latest-mobile-stats. [Last accessed 25th Oct 2011.]

Nielsen (2011). 40% of Tablet and Smartphone Owners Use Them While Watching TV. Available:

http://blog.nielsen.com/nielsenwire/online_mobile/40-of-tablet-and-smartphone-owners-use-them-while-

watching-tv/.[Last accessed 25th

Oct 2011]

Ewan. (2011). Quick Tap contactless payments from Orange & Barclaycard: Live today!. Available:

http://www.mobileindustryreview.com/2011/05/quick-tap-contactless-payments-from-orange-barclaycard-live-

today.html. [Last accessed 25th Oct 2011]

Gartner (2011). Gartner Says Sales of Mobile Devices in Second Quarter of 2011 Grew 16.5 Percent Year-on-

Year; Smartphone Sales Grew 74 Percent. Available: http://www.gartner.com/it/page.jsp?id=1764714.[ Last

accessed 25th Oct 2011].

Freeman, M. (2011).BlackBerry users hit by international network breakdown. Available:

http://businessetc.thejournal.ie/blackberry-users-hit-by-international-network-breakdown-250592-Oct2011/.[

Last accessed 25th Oct 2011].

Heller, C.B, Parasnis, G (2011) "From social media to social customer relationship management" ,Journal of

Strategy &Leadership, Vol. 39 Iss: 5, pp.3037, Available

from:http://xtra.emeraldinsight.com/journals.htm?issn=10878572&volume=39&issue=5&articleid=1949681&show=html, [Accessed: 29th

Nov 2011].

Jurisic, B, Azevedo (2011), Building customer-brand relationships in the mobile communications market: The

role of brand tribalism and brand reputation,A. Journal of Brand Management, Jan-Mar2011, Vol. 18 Issue 4/5,

p349-366, Available from: http://web.ebscohost.com/ehost/detail?vid=3&hid=112&sid=6a5bee85-13fa-4f1d-

a0fd5fc928d5264e%40sessionmgr114&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=57434577

,[Accessed 29th

Nov 2011].

Hui, M.K, Ho K.Y, Wan, L.C(2011), Prior relationships and consumer responses to service failures: a cross-

cultural study,Journal of International Marketing, Vol 19, No.1, pp 59-81, Available from: American

Marketing Association, [Accessed 29th Nov 2011].


13/46

Appendices:

(Fig 2)

(Fig 3)


14/46

Groupon: Brand Image

Article:http://www.telegraph.co.uk/technology/social-media/8413336/Groupons-image-

problems-spread-to-Europe.html
http://www.telegraph.co.uk/technology/social-media/8413336/Groupons-image-problems-spread-to-Europe.htmlhttp://www.telegraph.co.uk/technology/social-media/8413336/Groupons-image-problems-spread-to-Europe.htmlhttp://www.telegraph.co.uk/technology/social-media/8413336/Groupons-image-problems-spread-to-Europe.htmlhttp://www.telegraph.co.uk/technology/social-media/8413336/Groupons-image-problems-spread-to-Europe.htmlhttp://www.telegraph.co.uk/technology/social-media/8413336/Groupons-image-problems-spread-to-Europe.htmlhttp://www.telegraph.co.uk/technology/social-media/8413336/Groupons-image-problems-spread-to-Europe.html


15/46

Article: Milo Yiannopoulos, in San Francisco, 29th March 2011.

Groupon's image problems spread to Europe

Despite phenomenal growth and a planned floatation, the group-buying site is

stumbling into a number of avoidable public relations blunders, reports Milo

Yiannopoulos.

Over the past few weeks, group buying website Groupon has come under a lot of scrutiny in the US.

Stories in the press have not been kind: paidContent described Groupon as "a magnet for lawsuits", while

the Los Angeles Times went as far as to report legal papers accusing the company of "bait and switch"

advertising on Google after the company was sued for "false and misleading business and advertising

acts" by bus tour company San Francisco Comprehensive Tours.

This renewed scrutiny follows a series of extremely poorly received television adverts broadcast during

the Superbowl. What's more, the company is shortly to lose its President and it is also fending off

accusations that revenues plunged 30 per cent in February, a claim that has been circulating widely after

being published on influential technology blog TechCrunch.

And now customers in the UK are beginning to make complaints too, again citing allegedly dodgy

advertising practices. Will Wynne, managing director ofArena Flowers, recently filed a complaint with the

Advertising Standards Authority, claiming that at least two of the offers Groupon was promoting simply

didn't exist.

"Around Valentine's Day, I noticed an ad for flowers which actually directed me to a deal on depilation

treatment," Wynne claims. "In fact, there have never been any flower deals on Groupon in the UK."

If the ASA rules in Wynne's favour they may forbid Groupon from showing the ads in their current format

in future. The ASA Council may also advise Groupon "not to advertise sales promotions if they could not

demonstrate they were genuine".

Groupon did not respond to this newspaper's requests for comment about the complaints, though it did

tell the ASA that its banner ads "were created and controlled by the German branch of Groupon" and

that the UK office "had not had any involvement in the creation of online banner ad campaigns" untilthese cases were brought to their attention.

Eagle-eyed Groupon customers have noticed the introduction of asterisks next to Groupon's offers in

recent weeks with the words "Example of upcoming offer" appended below the main advertisement.

Blog posts springing up around the internet suggest that these are not isolated incidents, and that

Groupon is alienating large numbers of its customers with advertising alleged to be misleading.

Some in the industry say that the burgeoning public relations disasters for Groupon aren't even the

company's biggest problem: despite massive revenue growth, Groupon's model is essentially trivial to

replicate for so-called "clone", or copycat, businesses, which may prove to be a worry as consumers
http://paidcontent.org/article/419-groupon-is-becoming-a-lawsuit-magnet/http://latimesblogs.latimes.com/technology/2011/03/groupon-accused-of-bait-and-switch-advertising-on-googlecom-in-lawsuit.htmlhttp://latimesblogs.latimes.com/technology/2011/03/groupon-accused-of-bait-and-switch-advertising-on-googlecom-in-lawsuit.htmlhttp://www.businessinsider.com/groupon-revenue-2011-3http://www.businessinsider.com/groupon-revenue-2011-3http://www.arenaflowers.com/http://skitch.com/wompkin/rqi3f/3-balloons-happy-valentines-day-from-new-york-on-twitpichttp://www.telegraph.co.uk/technology/technology-startup100/8274331/Start-Up-100-Clones-good-enough-for-God-good-enough-for-Europe.htmlhttp://www.telegraph.co.uk/technology/technology-startup100/8274331/Start-Up-100-Clones-good-enough-for-God-good-enough-for-Europe.htmlhttp://skitch.com/wompkin/rqi3f/3-balloons-happy-valentines-day-from-new-york-on-twitpichttp://www.arenaflowers.com/http://www.businessinsider.com/groupon-revenue-2011-3http://www.businessinsider.com/groupon-revenue-2011-3http://latimesblogs.latimes.com/technology/2011/03/groupon-accused-of-bait-and-switch-advertising-on-googlecom-in-lawsuit.htmlhttp://latimesblogs.latimes.com/technology/2011/03/groupon-accused-of-bait-and-switch-advertising-on-googlecom-in-lawsuit.htmlhttp://paidcontent.org/article/419-groupon-is-becoming-a-lawsuit-magnet/


16/46

become familiar with the group-buying idiom and seek out better curated deals from local providers who

have escaped the sort of negative attention Groupon is currently garnering.

These clone sites, particularly the ones catering to specific, narrowly-defined regions and verticals, or

which are attached to trusted brands, will be hoping to take advantage of Groupon's public relations

troubles.

It's likely, though, that the Chicago-based start-up isn't fretting too much: as it's currently gearing up for a

$25bn initial public offering, their competitors are better characterised as Shih Tzus yapping at Groupon's

heels than barbarians at the gate. To put it another way: however many raps on the knuckles it may get

from the essentially toothless ASA, the company is set to rake in $1.5bn this year on current

performance.

But while I don't imagine its founders are lying awake at night, worrying about a possible bit of finger-

wagging from a British advertising standards body, the sorts of numbers Groupon is achieving mean that

if it fails, it could fail spectacularly. Time for a rethink of its advertising strategy, so as not to risk alienate

ing a loyal and rapidly-expanding customer base? I think so.


17/46

Topic: Brand Image

Groupon is a social couponing site which offers its users daily deals. The deals are localised

to cities around the world. Companies come to Groupon with discounted deals they would

like to offer to all of Groupon subscribers and in return Groupon takes a share of the

receipts earned from the offer usually around 50%. Groupon has 143 million subscribers in

35 countries and adds about six cities each month. During a recent IPO Groupon raised $700

million which valued the company at $13billion, it was the 2nd largest IPO for an internet

company since Google raised 1.7 billion in 2004. Google also reportedly tried to buy

Groupon for $6 billion but the offer was rejected.

Groupon growth is down to its marketing tactics. By using social media to get users to

spread the deals as the more that entered the deal the cheaper it would become. Also by

offering vouchers for $25 which were worth $50 to use on the deals on their site. With the

rapid growth of the site by acquiring subscribers looking for bargains and successfully using

social media to attract customers. Groupon has now run into some major problems, they

have been criticised for their marketing efforts and false and misleading advertisements.

They were offering deals that were never there to attract customers. Also their Superbowl

ads which lead to a public apology from the CEO Andrew Mason for an ad that people

though went too far insulting Tibet leading to negative publicity. The companies that

Groupon offers the deals on behalf of are also getting discouraged by customers who only

buy once for the bargain and never again and also making losses on the Groupon deals. Also

the types of companies now offering deals are affecting the people going to the site with

more deals now for cosmetic treatments and other surgeries not to the everyday customers

taste.

Groupon needs to improve its brand image to validate its worth. There are many problems

it is facing and there are now lots of competitors following their model with Livingsocial,

Google, Amazon to name a few offering the same service.


18/46

Strategic Marketing Recommendations:

1)

Problems with Groupons Brand Equity:

Brand equity is defined as the added value which a brand endows a product (Farquhar

1989). There are two major elements to brand equity, brand awareness and brand image.

Brand awareness is the likelihood that a consumer will associate a brand with its specific

product category, and ease at which he does so(Baker et al 1986). While brand image

relates to consumer perceptions about a brand as reflected by the associations linked to the

brand in consumers memory. Like brand equity there is web equity which is used for service

companies based online. It uses the same principles but is more specific to online service

companies like Groupon. Web equity is mainly made up of web awareness and web image.

Web awareness is the consumers familiarity with a dot.com and web image the consumers

perception of a dot.com.

I looked at (C. Page and E.L White) model(Fig 1) that shows the factors that affect web

awareness and web image. I applied this model to Groupon to identify the problems with

their web equity. I looked into Marketer and Non-Marketer Communications, Vendor

characteristics, Product/service characteristics and Web design

Marker and Non-Marketer Communications:

TV advertisement is still the medium with the biggest audience and reach, even with the

introduction of the internet, spend on TV ads has risen from 38% to 46% of overall global ad

share in the last decade. More internet companies are advertising on TV to get awareness.

Google, Expedia, eBay and Bing are just to name a few of the big ones. Groupon has also

advertised on TV. It had a Superbowl ad which was meant to be humorous but turned out to

be offensive and got a negative reaction from the public(2). Also their other TV ads in my

option make them feel like a dodgy, cheap internet company I wouldnt trust. After the

Superbowl ad their revenues fell by 30% in February 2011.

More than $5.5 billion was spend on online display advertising in the first half of 2011.

Groupon uses a lot of display advertising to attract customers to it sites by displaying their


19/46

discounted deals. In the US and Europe there have been many complaints against them for

misleading ads showing deals that dont actually excised. Their banner ads again in my

option seem tacky and dodgy and something I wouldnt click on (Fig 3). In 2010 click through

rates were still only 0.09%. One in a thousand clicks the ad.

Social media is a very important communication method for Groupon. 78% of companies

use some type of social media communications and the two main benefits customers want

from businesses on social media are a discount and to purchase. Groupon offers both of

these. Groupon lets users share the deals with their friends on social media. People want to

show their friends activities they can do together or just great discounts they would like.

Groupon gets a lot of referrals from WOM on social media but also from offline people

telling each other. WOM communications can be up to 65% of a sites traffic (Cognitiative

1999). WOM and social media are great tools for Groupon but its important they can keep

the WOM positive and not produce negative things for people to talk about like they are

currently doing. Their marketing efforts are important to get consumers aware of the site.

Web Design Features:

Once a customer enters a website their first impressions are of the web design. We all know

first impressions are important and the brand image can be portrayed by what the site looks

and feels like. (C. Page and E.L White) found eight factors which are important for a positive

website experience and therefore positive brand image. Its important Groupon offers the

best in each factor to insure the web site has a good brand image. Reliability: Navigation:

Quality Information: Product Comparison: Personalisation: Experiential: Speed of

Downloads: Ease of Ordering:. Quality information is the main factor they have to look at as

their site again looks untrustworthy, cheap and tacky and somewhere I wouldnt buy, just

for that I have heard from WOM thats its good. All the other factors work well on the site

and I have never had any problems with. The main concern I would have is the overall image

of the site which for me just doesnt look good and a site I wouldnt trust if not for WOM I

have heard about it.


20/46

Vendor Characteristics:

Groupon has mainly a good customer service with the companies it works with andcustomers who buy the deals. Companies do feel like when they work with Grouopon they

get a once off increase in sales and are not actually acquiring new customers, just customers

who want a once off bargain. With Groupon taking 50% of the receipts from the deal

companies normally lose money in hope that the publicity will help grow brand awareness.

Some companies now look unfavourably upon this service now. It can attract the wrong

customer just bargain hunters, customers who do come back will except cheaper prices, it

can also send the wrong message that you are a discount business. Some companies are

complaining about the service as it did have the desired outcome as expected. Customers

buying the deals are mainly satisfied as they are getting great daily discounted deals. They

have had some complaints over mis-leading advertising and showing deals that arent

actually available.

The security and privacy on the site is mainly good and has had little complaints. Some of

the main issues I see are that when you enter the site a pop up box enters the screen asking

you to enter your email and register, it doesnt seem you can continue till you enter the

email address. It small writing at the is already registered is the only way to continue

without entering your email, there is no X button to cancel(4). This could be a privacy

concern for some people and not everyone wants to sign up, some just want to look at the

deals to see if they are interested. Once you enter your email you get an email everyday

about the daily deals which again is a privacy concern. The site in my opinion doesnt have

an all-around trustworthy feel. The sites seems like it could be a scam with the offers and

the banner ads also look untrustworthy. With a lot of sites and banner ads offering things

that are too good to be true, Groupon looks like another one of these scams. If people had

never heard of it before it would be a site I would find hard to trust.

Product/Service Characteristics:

Groupon offers different products and services everyday. Companies offer deals for

Groupon to use and Groupon choices which deals they want to use. The selection process


21/46

can be unfair and they normally chose the deal which will make the most money for them.

Companies have to make really discounted deals which lose them a lot of money just to get

onto the site. Companies see it as worth the loss as they get publicity and a heavy stream of

customers who they hope will then return which is not always the case. On Grouponrecently there have been the same recurring deals about surgeries and different treatments

and you can see how many people buy them and theres not many as they are still

expensive even after the discount. The same deals seem to be offered everyday and not

many new ones. Some deals they are offering arent impulse buys and are very specific and

not to everyones taste. The prices of the deals are over 150 which is expensive for a deal

website. According to the (Harvard Business Review July-August 2011) only 4% ofGroupons

revenue comes from deals over $150 which there seem to be a lot of now. Groupon is losing

customers coming to the site everyday due to these deals and lack of new deals. Also

instead of one deal there seems to be up to ten and are the same deals each day. Also

people are receiving more than one e-mail each day about different deals. The figures show

Groupon was down again 32% in March while Livingsocial was up 59% in revenue from daily

deals(5).

2) Brand Revitalisation Strategy:As we can see above Groupon has many problems with it brand equity. It needs to change it

brand identity so it can change its brand image to regain lost customers and fight off

challenging competitors. Identity stems from the source or company, image is received by

the receiver or the consumer(Nandan, S 2004).I used (Aakers Managing Brand Equity

1991) model(Fig 6) to recommend strategies that could help Groupon improve its brand

image and regain and increase customers. By looking at the problems to Groupons brand

equity from (C. Page and E.L White) model, here are some revitalisation strategies Groupon

could use to improve their brand equity according to (Aakers, D.A 1991) model.

Brand Loyalty:

To increase loyalty to Groupon they should change their website look. They should change

the design and look so it looks trustworthy and easy to use. They should re-design the


22/46

website for a more professional look. The website should be less cluttered and an easy on

the eye look that would portray trustworthy likewww.ebay.iewebsite is a good example.

Companies who are offering deals are feeling they are losing out and Groupon is getting less

companies wanting to offers deals because of this. Groupon should help the companies get

what they want from the deal. Companies could offer deals to increase loyalty like 10% off

first visit, 20% of 2nd and 30% of 3rd instead of giving a once of 80% off. This would help

companies get customers back. Or if after the deal they return with a friend they get 20% off

that order. These offers would help the companies acquire new customers and not just once

of bargain hunters after a few visits customer would become more loyal. These offers could

be included in the deals that are advertised on Groupon. Groupon could help companies

pick the right deals to suit what they want instead of companies offering deals to Groupon.

Groupon could show them how previous deals worked for other companies and the effects

after 6 month-12months. Companies could then decide which companies they are most

alike and what kind of deal would best work for them. Groupon should work with the

companies to increase loyalty.

To increase customers buying the deal loyalty, they should improve the deals which I will

talk about later. Also give customers discount on deals if they share what the bought with

friends on Twitter/Facebook. If the customer checks-in at places when they are at the deal

they bought they could earn extra discounts. Groupon could give more credit on the site

away for loyalty measures. You already get 6 if you recommend a friend. They should

expand on this with credit for social media sharing and check-ins as it spreads WOM about

Groupon.

Brand Awareness:

Groupon should continue with TV ads but improve the quality of them. At the moment they

look like an untrustworthy internet company like many other internet companies

advertising on TV. The ads should talk about the discounts but they should hire a better ad

agency to produce them. They could have simple ads like Tesco that show the product and

how great it is and then at the end say the unbelievable price they sold it for.
http://www.ebay.ie/http://www.ebay.ie/http://www.ebay.ie/http://www.ebay.ie/


23/46

Their banner ads should also do the same and look more professional and trustworthy as we

see in (Fig 3) its not something you would click on. They should emphasise the name more

as it is well known and make the ad look less tacky. The big words, prices and picture dont

work well together. They need to change the banner ads to be clearer, less cluttered and atrustworthy ad.

WOM is very important for Groupon. As stated above they could use social media to

generate WOM about the offers. Also their overall image needs to improve to spread good

WOM. Now there is bad WOM about Groupons Superbowl ad and other misleading ads.

They need to clean up their image with better ads and offer more suitable deals with big

discounts to generate again better WOM.

Perceived Quality:

Some of the offers Groupon now offer are recurring and are for products/services that

arent once of impulse buys but specific to certain people for treatments/ surgeries.

Groupon is losing customers as these arent the deals they want to see, 96% of revenue

come from deal under $150, 72% from under $50 and 44% from under $25 according to the

(Harvard Business Review July-August 2011). This cheap impulse buy offers are what people

want not deals over a $150 for Dental check-ups Deep penetrating Light treatments

Facial injection treatments these even on discount are expensive and not something most

people would buy through a deal website. These deals are bad for the quality of the

website. They should concentrate and getting deals that worked well on the website before

that target at a large audiences. 2 large smooties for 4 at Zumo sold 3098. Tour for two

people at the Aviva Stadium sold 1781. They should only offer deals which will attract wide

audiences and be good for the image of their site. They should stick more to consumer

goods and services and not treatments and surgeries. They are already dividing the site into

different sections for deals like Groupon Getaway and National Deals they could have a

section for treatment and surgeries if there is a want for them.

Brand Associates:

Again Groupon should only associate itself would other companies who have positive brand

image and not with companies that could damage Groupons. If Groupon has an offer and


24/46

then customers arent satisfied with the product/service provided by the company,

Groupons image gets hurt as well because they offered the deal for this company and could

lose their customer over a bad relationship with one of the companies offering the deals.

By offering great deals customers want, customer will have a positive feeling towards

Groupon as they are saving them money. Groupon has a great reason to buy for customers

as they have a great offer and must buy today to get it, attracting consumer back each day.

Groupon needs to clean up its marketing tactics to get a better image from consumers and

what companies they offer deals from.

Groupon could make associations with other companies to boost business. They could link

with Ryanair and if someone is flying to Madrid give them a link to the Madrid Groupon so

they can see if there are any deals from now until they go there that they could use. Also

link with travel agents who could buy up a certain amount of some deals and then offer

them in packages they sell.

By doing these few recommendations Groupon could change its brand identity and improve

its brand image. Research shows loyalty is an important outcome of brand equity (Aaker

1996) and vital for dot.com success. Its important to keep customers as it can cost up to

six times as much to acquire new ones (Frederick Reichheld of Bain & Company 2006)..

By changing the brand identity in these ways the consumer will perceive the brand image in

a more positive light. After the miss-leading advertisements and bad WOM about Groupon

these changes can help reconstruct and improve the companys brand image and fight off

increasing competitors.


25/46

Bibliography:

Page, C, White, E.L (2002), Web equity, A framework for building consumer value in online

companies,Journal of Consumer Marketing, Vol 19, No 3 2001.

Nandan, S (2005), An exploration of the brand identitybrand image linkage: A

communications perspective,Journal ofBrand Management, Vol 12, No 4, p264-p278, 2005.

Available from:

http://web.ebscohost.com.remote.library.dcu.ie/ehost/pdfviewer/pdfviewer?sid=5ea89595

-5fae-45a3-a43a-7eee50cb2c4c%40sessionmgr14&vid=11&hid=15, [Last Accessed: 3rd Jan

2012].

Harvard Business Review (2011), Deconstructing the Groupon Phenomenon, Harvard

Bussiness Review, July-August 2011. Available From:

http://web.ebscohost.com.remote.library.dcu.ie/ehost/pdfviewer/pdfviewer?sid=cefa6e3b-

85ec-414a-aaf0-2560584f4d2e%40sessionmgr14&vid=4&hid=15, [Last Accessed: 3rd

Jan

2012].

Moran, J (2011), Groupon Down 32%, LivingSocial Tight On Its Heels, Available from:

http://articles.businessinsider.com/2011-03-25/tech/30009907_1_groupon-daily-deals-livingsocial,

[Last Accessed: 3rd Jan 2012].

Korhan, J (2011), Why Groupon is bad for small business, Available from:

http://www.jeffkorhan.com/2011/06/why-groupon-is-a-bad-for-small-business.html, [Last

Accessed: 3rd Jan 2012].

Wasserman, T, (2011), Google Click Through Rate fell in 2010 study, Available From:

http://mashable.com/2011/08/19/google-click-through-rates-fell-in-2010-study/, [Last Accessed: 3

rd

Jan 2012].

Business Wire (2011), Internet Ad Revenues at Nearly $15 Billion in First-Half 2011, Up 23%, Second

Quarter 2011 Breaks Record Again, Available From:

http://www.businesswire.com/news/home/20110928006009/en/Internet-Ad-Revenues-15-Billion-

First-Half-2011, [Last Accessed: 3rd Jan 2012].


26/46

Fulgoni, G (2011), The Lure of TV Advertising for Internet Businesses,Available From:

http://blog.comscore.com/2010/09/lure_tv_advertising_for_internet_businesses.html, [Last

Accessed: 3rd Jan 2012].

Brownlee, J (2011), Facebook to challenge Groupon with their own social deals service,Available

From: http://www.geek.com/articles/news/facebook-to-challenge-groupon-with-their-own-social-

deals-service-20110314/, [Last Accessed: 3rd Jan 2012].

Kurien, J, (2011), How Groupon Changed Online Marketing, Available from:

http://sparksheet.com/how-groupon-changed-online-marketing/, [Last Accessed: 3rd Jan 2012].

Heine, C, (2011), Groupon Before IPO: A Marketing Timeline, Available From:

http://www.clickz.com/clickz/news/2122888/groupon-ipo-marketingtimeline, [Last Accessed: 3rd Jan

2012].

Barr, A, Baldwin, C (2011), Groupon Inc raised $700 million after increasing the size of its initial public

offering, becoming the largest IPO by a U.S. Internet company since Google Inc raised $1.7 billion in

2004. Available From: http://www.reuters.com/article/2011/11/04/us-groupon-

idUSTRE7A352020111104, [Last Accessed: 3rd Jan 2012].

Yiannopoulos, M, (2011), Groupon's image problems spread to Europe, Available From:

http://www.telegraph.co.uk/technology/social-media/8413336/Groupons-image-problems-spread-

to-Europe.html, [Last Accessed: 3rd Jan 2012].


27/46

Appendices:

Fig 1: Web Equity Framework:

2:http://www.youtube.com/watch?v=vVkFT2yjk0A

(Fig 3):

Source: http://mastercom.over-blog.com/article-groupon-ad-banners-invasion-wtf-67989003.html
http://www.youtube.com/watch?v=vVkFT2yjk0Ahttp://www.youtube.com/watch?v=vVkFT2yjk0Ahttp://www.youtube.com/watch?v=vVkFT2yjk0Ahttp://www.youtube.com/watch?v=vVkFT2yjk0A


28/46

Fig 4:

Source: www.groupon.ie

Fig 5:


29/46

Fig 6:


30/46

Apples iPad 3 Competitive Strategy

Article: http://www.thetechlabs.com/tech-news/ipad-3-features/
http://www.thetechlabs.com/tech-news/ipad-3-features/http://www.thetechlabs.com/tech-news/ipad-3-features/http://www.thetechlabs.com/tech-news/ipad-3-features/


31/46

Apple iPad 3 Features & Release Date. by Joel Fernandes

The Apple iPad is one of the best-selling tablets in the world, and the iPad 3 is one of the

most anticipated devices from Apple this year. This article explains you about the new

features that are to be included in the iPad 3.

In a nutshell, the Apple iPad3 will feature a new, thinner and sleeker design, down nearly 20

percent in size compared to the iPad 2. It will also support full touchscreen HD display with a

screen resolution of 2048 x 1536.

Apart from that, the iPad 3 will have a lighter battery life, reducing the weight of the tablet.

However, the battery is reported to cost 20 to 30 percent more than the current iPads

battery, which will also have a longer battery life.

It is also expected that the iPad 3 will have a wireless charging technology, which will be

able to charge the battery and transfer data wirelessly.

iPad 3 Features

Lets now take a look at all the features in depth:

A6 Processor

The current Apple iPad 2 has a 900MHz dual-core ARM Cortext-A9 processor, Apple A5

chipset and PowerVr SGX543MP2 GPU. This certainly made the Apple iPad 2 a powerful

tablet and a main competitor in the world of tablets. Now Apple is aiming to make the

competition tougher by sporting an A6 Quad-core Processor in the iPad 3. This would make

the iPad 3 as powerful as any high-end desktop.

According to Linley Group senior analyst Kevin Krewell, We expect the A6 will be a quad-

core ARM Cortex-A9 design, which would be competitive with next years best mobile

processors. In 2012, Nvidia will offer a quad-core Cortex-A9 processor, and Qualcomm will

have the aforementioned MSM8960, a dual-core A15-class processor operating at 1.7GHz.

Fabricating Apples A6 in 28nm (instead of the 40nm process Nvidia is using for its quad-core

part) will reduce both die cost and power, yielding a much better product.
http://www.thetechlabs.com/latest/apple-ipad-2-review/http://www.linleygroup.com/newsletters/newsletter_detail.php?num=4736http://www.linleygroup.com/newsletters/newsletter_detail.php?num=4736http://www.thetechlabs.com/latest/apple-ipad-2-review/


32/46

iOS 5

The iPad 3 will come with the latest iOS 5, which will host the multi-touch gesture

technology. However, analyst and tech enthusiasts predict that Apple would introduce OS X

Lion for the tablet, since it will be powered by a quad-core processor.

This will also include multitasking features, such as notifications, task-finishing, app-

switching, location and background sound.

3D Feature and New Retina Display

Apple enthusiast expected the Retina Display feature on Apple iPad 2; however, Apple has

been working majorly for an improvised version of it to include it in the iPad 3. The iPhone 4

currently supports the Retina Display with a screen resolution of 960 x 640. Apple explains

Retina Display as: Developing pixels a mere 78 micrometers wide, Apple engineers were

able to pack four times the number of pixels into the same 3.5-inch (diagonal) screen found

on earlier iPhone models. The resulting pixel density of iPhone 4 326 pixels per inch

makes text and graphics look smooth and continuous at any size.

With the Retina Display feature, the screen resolution of the iPad3 will be 2048 x 1536

pixels. However, it is said that the third version of the tablet is delayed due to Retina Display

issues, and Apple is expected to ship the tablet in early 2012.

There are speculations that the tablet will display the 3D view. Although its too early to

expect features like 3D display, devices like the LG Optimus can record videos in 3D, and

output the same through HDMI.

Cloud Computing

Apple announced its Cloud services during the WWDC 2011, and will definitely include the

iCloud technology both in the iPhone 5 and iPad 3. With iCloud users can store photos, apps,

calendars and access songs on iTunes without having them to store in the phones memory.
http://www.thetechlabs.com/tech-news/iphone-5-features/http://www.thetechlabs.com/tech-news/iphone-5-features/


33/46

Camera

The iPad 3 will come with an improvised camera, since the previous version of the table

didnt seem impressive enough. Unlike the iPad 2, the new tablet will come with LED flash to

support the camera. It is expected to have a 5MP camera with 1080p or 720p video

recording quality of 60 frames per second. The technology made by OmniVision will help

reduce the size of the table by 20 percent.

Fingerprint Proof

Apple has already been granted patents on this technology, and is working real hard to

make the iPad3 fingerprint proof. The touch screen will be coated with oleophobicmaterials, which will reduce the oil and fingerprints on the screen.

Apple iPad 3 Release Date

There isnt any official word from Apple on when the iPad 3 will be released; however,

rumors indicate that it will be announced sometime early next year. Reports state the trial

production is likely to start this October. One of the major reasons why the launch of the

device has delayed is due to the Retina Display technology. It is also said that it could be

delayed because of legal issues with one of Apples main supplier, Samsung.

The price and availability of the iPad 3 is still unknown. Please make sure that you keep

visiting this page to stay updated.

Apple iPad 3 Price

Though the tablet promises quite a lot of new and exciting features, rumors indicate that it

could be priced at a very high range. However, with the competition kicking in, I expect that

the iPad 3 will be set at a reasonable price. Nevertheless, are you going to buy the new iPad

3? And what other iPad 3 features are you expecting? Let us know by adding your views

below.


34/46

Overview:

Apple was founded by Steve Jobs, Steve Woznial and Ronald Wayne in 1977 and now provides a

range of services that include Macintosh Computers, iPhones, iPads and iPods. It had annual

worldwide sales of $65.23 billion in 2010. Apple is also branded as one of the valuable public

limited companies.

The Apple iPad is the most successful selling tablet in the world. It released the original iPad in

January 2010 and the iPad 2 in March 2011 and it is estimated that Apple has sold around 25

million iPads. The iPad has around a 68% market share of the tablet market, with Google

Android OS with 27% and Research in Motion and HP with 5% respectively.

There have been rumours that Apple is going to release the new iPad 3 early this quarter in

2012. Apple has not officially announced when the official release date is or what the specific

features are. Reports say it will thinner, lighter, HD screen, better battery life, Finger print proof,

5mp LED flash camera and wireless charging technology to name a few new features. We will

not now till Apple confirms them.

Apple needs to compose a competitive strategy for the iPad 3 so it can fight off growing

competition and further increase its market share.


35/46

1) Apple Current Competitive Strategy:

(Zhou, Yim,& Tse, 2005) argued that the three most important sets of strategic learning

behaviours in high-tech markets are subsumed under customer orientation, competitor

orientation and technological orientation.

Apple is definitely a technology orientated company. They are also customer and

competitor orientated but overall are mostly technology orientated.

Technology Orientated:

With the speed with which the technology is adopted in a product-market (Glazer & Weiss,

1993). It is based on not knowing whether the technologyor the company providing it

can deliver on its promise to meet specific needs(Moriarty, 1989). Apple is very technology

orientated, Steve Jobs avoided focus groups as he said how can I ask customers what they

want when they dont know. The customers dont know because the technology isnt there

yet. No one knew they wanted a personal computer, iPod, iPhone or iPad, Apple has been at

the heart of creating these devices and markets. Apple finds out what the next big thing is

and makes it. Jobs when asked what market research he did he responded with Did

Graham Alexander Bell do market research when creating the telephone. Apple is very

technology focused and is looking at breakthrough technologies that can in Jobs words

change the world.

Customer Orientated:

Apple is customer focused aswell but creates products that it thinks customers want based

on technology. Apple then gets feedback from customers after they release their products.

For the first iPad they asked customers what they like and dont like and also features they

would like to see. They took this feedback into consideration when releasing the iPad 2.

They will do the same when releasing the iPad 3. They are still more technology orientated

and will incorporate features into the iPad 3 that customers didnt know were possible.

Apple can get feedback for new ideas from visionaries and early adopters and also look at

how the early and late majority use the device and what it can do to improve. Apple is also


36/46

very concentrated on the design and it looks to make the design as customer friendly as

possible.

Competitor Orientated:

Apple does keep a close eye on its competitors but is more technology focused to produce

top of the range products that will be better than any competitors. Apple produces high

quality, high tech and great designed products for the upper market. Apple focuses on

having the best technology and design. Apple looks at it competitors products to see what

the competition is. Even with a lot of competition apples main aim is still just to produce

high quality, high tech and great designed products and do it better than its competitors.

There have been many lawsuits between Apple and other technology firms over patents and

stealing ideas e.g Microsoft, Samsung, HTC, Google. Jobs swore to destroy Android as he

saw it as a copy of Apples idea. Apple is more focused and what it does and what

technology it can produce then what competitors are doing.

As we can see from the above, Apples current competitive strategy is to be very technology

orientated and produce the latest technology product with a great design. It creates

products consumer didnt know they wanted and out does it competitors with better

technologies.

2) Industry AnalysisTo look at what factors effect Apples decisions in making its competitive strategy I used

Porters 5 forces analysis(Porter, 1980)(Fig 1) to see what factors in the industry could affect

Apple when making a competitive strategy for the iPad 3.

Bargaining Power of Customers:

The customers do have a high bargaining power, with so many options available in the

tablet market. Now you can get the Blackberry Playbook at $300 and Amazons Kindle

Fire for$199. Apple iPad 2 is between $400 and $800 depending on the model. Customers

do have a wide choice but Apple still has one of the most advanced tablet products, so if

customers want to have all the features they will have to pay for them which apple offers.


37/46

Bargaining Power of Suppliers:

Apple has many suppliers it works with to make the iPad. Suppliers dont have that muchbargaining power because of the size of Apple. Apple does want to work with the best

suppliers. Only if a supplier has a product no one else can come close to offering do they

have a high bargaining power over Apple. Apple works with Samsung and LG to help make

the iPad screen. They also have suppliers for the different components for the iPad, Battery,

chips etc. Most of the suppliers can be easily replaced as most offer similar services. Ones

with something Apple want have a higher bargaining power.

Treat of New Entrants:

There is not a high treat of new entrants as it is a high tech market which would need high

capital start up and also high knowledge of the products and market. Most of the main

technology companies already have tablet devices so it would be hard for a new entrant to

disrupt the market.

Threat of Substitute Products:

There are a few products that could be substitutes to a tablet device. A smartphone,

Desktop computer, laptop/notebook or a netbook are the main substitutes. According to

(Fig 2) the tablet device will have 23% of the computer market share by 2015 growing by

20% in 4 years, with Desktops, laptops and netbook sales all falling. The tablet is expected to

destroy the netbook market, the laptop sales stay mainly the same and the continued

decline of desktops. Tablets have little threat of substitutes as for now they are a substitute

for other devices.

Competitive Rivalry within the Industry:

The tablet market is very competitive. The main OS are Apples which is only for iPad, Google

Android which is many devices such as Asus, Samsung, Motorola, HTC, Sony, Toshiba, LG

and Acer. Then there is also Research in Motion which produces Blackberry Playbook


38/46

tablets, Windows 7 tablets with HP and Dell, Amazons Kindle fire and Barnes and Nobles

Nook. There a lot of companies competing in the tablet market. Apple still holds nearly 70%

market share and also has one of the best tablets design and feature wise. The industry is

very competitive and devices are now becoming a lot cheaper.

3) Target Market Strategy:After looking at Apples current strategy as technology orientated and looking at the tablet

industry, I can now look at the target market for the iPad 3 and also what recommendations

I would suggest to make the launch a success.

Miles and Snow (1978) have a frame work for targeting market and gaining a competitive

advantage. There were 4 main types of strategy. Prospectors, Differentiated Defenders,

Low-Cost Defenders, Analysers. Apple falls under two of the strategies Prospectors and

Differentiated defenders, Apple should further use these strategies to compete in the

market.

Prospectors:

Prospectors are the most proactive and innovative of thestrategy types. Exploration for

new opportunities is acentral theme in the literature on innovation (March,1991). Apple

use an inside-out process of R&D driven innovation. Customers are not always able to

articulate their needs. Customers have needs of which they are not aware. They are real,

but not yet in the customers awareness (Slater & Narver, 1998). Apple will hope the iPad 3

which is R&D driven will satisfy the customers needs with the latest technologies they

didnt know they wanted. Visionaries and early adopters will be the first to buy Apples iPad

3 who will pay a price premium for the technology just as it comes out.

Differentiated Defenders:

Differentiated Defenders are skilled at segmenting the early and late majority markets to

identify those segments that value superior quality and service (Slater & Olson, 2001). Apple

offers its iPad at a premium price but for that price customers do get superior quality and

service. Apple also segments well with its offering of different size capacities for different


39/46

prices. They also offer 3G as an extra on the iPad at extra cost. Apple needs to keep

differentiating from the other tablets and keeps it premium price and more importantly be

perceived as the highest quality product on the market. With Apple having its own OS it

easy to keep differentiating from other tablets who all run the same OS Android.

Some of the recommendations I would suggest to Apple in their marketing mix for the iPad

3 are as follows. These along with their normal launch will give them a competitive strategy

for the iPad 3. Apple is already the most valuable company in the world but based on these

findings here are a few changes I would make to their normal strategy for the iPad 3.

Product:

Should have USB and HDMI slots all other devices have them and are very importantfor most people to have, even with the iCloud, Apple needs to have these slots not

to lose customers to other tablets.

Reading on the iPad 2 is hard so the screen should be anti-glare like amazon kindlewhich is easy to read from and doesnt strain your eyes.

Apple has always kept its software and hardware linked only for Apples use. Thereare already apps in the Apple store for cross platform communication with otherOSs. Apple should have an app like the Messages one they already have but can

send messages not just to Apple devices but cross platform OSs. Users could send

messages and make calls/Video calls over the internet through the app to any other

device.

An attachable keyboard which is sold separately that can turn the iPad 3 into a lowpowered laptop. It wouldnt compete with the Macs as its not as powerful. It would

be easier for the user to type for writing documents and could be detached when

finished typing.

Along with the other improvements mention in the article it would make the iPad 3 abig improvement on the last. Apple being tech orientated could introduce some

technologies none other devices have.


40/46

Place:

Usual Apple stores, retailers, online. Pop-up Apple stores in some cities for certain amount of time to draw attention.

Stores would still have to stick to Apple normal stores great design and could have

design features that can be easy moved so the store can change cities.

Also small glass cube shops, smaller version of their flagship shop in New York. Thesecould be assembled in shopping malls during busy periods. Launches, Christmas etc.

Price:

Apple already has a very good pricing structure and is the most valuable company inthe world.

As there have already been two version of the iPad, its crossed the chasm and pastmainly just visionaries and early majorities who are willing to pay a very high price

premium.

For the early majority they want a high quality product which is not just a fade and isgoing to last. Its got to that stage where tablets are here to stay and replacing

notebooks(Fig 2) as light powered laptops which are small, light and easy to carry.

Apple should keep it premium price as the top tablet device but slightly lower it toaccommodate the early majority. For a 32gb should start at $500, 64gb $575, 128gb

$650 and all devices should come with 3G as standard. Customers then have to get a

contract with a mobile provider for the 3G internet. Apple should make a deal that

they get a % of each iPad which signs up to 3G for offering it as standard, increasing

the number who will buy it for these mobile providers.

Instead of lowering the price of the iPad 2 they should discontinue it as it would eatinto the sales of the iPad 3. It could act to help Apple compete with low cost tablets

but I think it would more likely take sales from the iPad 3.

Promotion:

Apple dont have Steve Jobs for the launch so need to try make it better even thoughhe isnt here to do it. They should have special guests at the launch. A movie star


41/46

whos movie come pre-installed on the iPad 3. A band whos album comes with the

iPad3. They could have celebrities there endorsing charities which would improve

Apple image. They have had special guest for launches in the past with Mohamed Ali

and U2. They should be big stars which would bring a big hype around the productwhich Jobs used to provide.

They should have their usual imaginative ads through the normal communications.Their ads are usually great so they should stick to the same.

They should improve their CSR as it has got some bad press with allocations of childlabour and un-healthy working conditions in their factories. They could have

promotions if you trade your iPad 2 in you get $150 off a new iPad 3 and the money

from the iPad 2 goes to a charity. It would be a big step for Apple who usual dont do

promotions this would give them a good image and also reward their loyal

customers which they rarely do.

Other CSR programmes could be cheaper iPads for primary and secondary schools tohelp teaching. This would give children their first iPad and in the future they could

become loyal customers.

Another idea to get awareness of the launch could be to make a store completelymade with iPads. They would be the floor, walls and celling. The store would create a

buzz and give them worldwide publicity.

Apple is already a fantastic company and the most valuable in the world. After looking at

their current strategy and the industry for tablet computers there are a few changes I would

make for the iPad 3. Apple usual keeps to the same marketing tactics and price plan. I think

with these few changes it wouldnt upset their loyal customers but would also attract new

ones who have a sceptical of buying from Apple. No matter what Apple does the iPad 3

launch is bound to be a success going by Apples reputation alone.


42/46

Bibliography:

Constantinides, E (2006), The Marketing Mix Revisited: Towards the 21st Century Marketing, Journal of

Marketing Management, Apr2006, Vol. 22 Issue 3/4, p407-438, 32p, Available from:

http://web.ebscohost.com/ehost/detail?sid=1b0056e5-bd66-4e2d-bcac-

0178d438b043%40sessionmgr10&vid=1&hid=21&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=2

0474898, [Last Accessed: 16th

Jan 2012].

Slater, S.F, Hult, T.M.G, Olson, E.M (2007), On the importance of matching strategic behavior and target

market selection to business strategy in high-tech markets,Journal of the Academy of Marketing Science,

Spring2007, Vol. 35 Issue 1, p5-17, 13p, Available From:

http://web.ebscohost.com/ehost/detail?sid=409de3c0-1c91-41a2-a011-

c05f5b0917f3%40sessionmgr11&vid=1&hid=21&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=25

308036, [Last Accessed: 16th Jan 2012].

Karagiannopoulos, G.D, Georgopoulos, N, Nikolopoulos, K (2005), Fathoming Porter's five forces model in the

internet era, info, Vol. 7 Iss: 6, pp.66 76, Available from:

http://www.emeraldinsight.com/journals.htm?articleid=1524148&show=abstract, [Last Accessed: 16th

Jan

2012].

Dybwad, B, (2010), 9 Upcoming Tablet Alternatives to the Apple iPad, Available from:

http://mashable.com/2010/01/27/9-upcoming-tablet-alternatives-to-the-apple-ipad/, [Last Accessed: 16th

Jan

2012].

Rivington, J, (2011), 15 best Android tablets in the world, Available from:

http://www.techradar.com/news/mobile-computing/tablets/15-best-android-tablets-in-the-world-905504,

[Last Accessed: 16th

Jan 2012].

SVPG (2011), Business Strategy vs. Product Strategy, Available from: http://www.svproduct.com/business-

strategy-vs-product-strategy/, [Last Accessed: 16th

Jan 2012].

Ong, J (2011),Apple suppliers say iPad 3 in 2011 canceled due to Retina Display constraints, Available From:http://www.appleinsider.com/articles/11/08/15/apple_suppliers_say_ipad_3_2011_supply_schedule_cancele

d/, [Last Accessed: 16th

Jan 2012].

Arthur, C, (2011), Steve Jobs swore to destroy Android, Available from:

http://www.guardian.co.uk/technology/2011/oct/21/steve-jobs-destroy-android, [Last Accessed: 16th

Jan

2012].

Ambler, G, (2011), 4 Innovation Secrets of Steve Jobs, Available From:

http://www.thepracticeofleadership.net/4-innovation-secrets-of-steve-jobs, [Last Accessed: 16

th

Jan 2012].


43/46

Business Insider (2011), The Best Steve Jobs Quotes From His Biography, Available from:

http://www.businessinsider.com/best-steve-jobs-quotes-from-biography-2011-10#on-why-you-should-take-

lsd-1, [Last Accessed: 16th

Jan 2012].

Forbes (2011),Apple Takes Bigger Bite Of Tablet Market, Android Slips , Available from:

http://www.forbes.com/sites/greatspeculations/2011/09/19/apple-takes-bigger-bite-of-tablet-market-

android-slips/, [Last Accessed: 16th

Jan 2012].

Costello, S (2011), What Are the iPad Sales Figures All Time?, Available From:

http://ipod.about.com/od/ipadmodelsandterms/f/ipad-sales-to-date.htm, [Last Accessed: 16th

Jan 2012].

Kahn, J (2011),Apple grabs 61.5-percent of global tablet market in Q3, 10 times over closest competitor

(Samsung), Available From: http://9to5mac.com/2011/12/16/apple-grabs-61-5-of-global-tablet-market-in-q3-

10x-ahead-of-closest-competitor-samsung/, [Last Accessed 16th

Jan 2012].


44/46

Appendices:

Fig 1:

Source: Porter (1980)


45/46

Fig 2:

Source: http://iinfographic.com/2010/11/ipad-numbers-tablet-takeover/,


46/46

Documents

Marketing Porfolio