Know-How Exchange : Student Questions

There's a wealth of information online:

https://www.google.com/search?q=ipod+marketing+strategy

Dear ggyawali

The Apple marketing strategy for the iPod is simple:

Assess the rate of declining CD sales (find a need)
Develop a product to capitalize on this decline (present a solution to the need).
Declare war on tape and CD delivery methods (reinvent the SONY Walkman).
Create demand (coolness and hip factor).
Give people flexibility and freedom of choice (“1,000 songs in your pocket”).
Give people more choice (iTunes is the perfect “back end” product).
Ask for feedback and present upgrades (one up man ship factor).
Offer multiple formats (Mac and PC).
Add the ability to carry images and video (more upgrades).
Add the ability to record sound (yet more upgrades).
Generate and license third party spin offs (cases, holders, speakers, etc.).
Generate a swarm of imitators (reinforcement of the iPod’s design).
Cut the price and introduce multiple formats for all price points.

The profit for Apple is in the back end, in iTunes, because by offering so much choice, Apple controls a huge chunk of the recording industry distribution, which in turn drives down CD
sales even more.

And by offering gift cards, Apple makes it easier to buy, and creates a nice margin in unused pennies here and there because of their price structure (a $50 iTunes gift card will only buy you $49.50 worth of music, so Apple makes an instant profit of 50¢
per card. Multiple that by ... say, 100K gift cards sold and you've got an instant profit of $50,000. and that's just one style of card and a number of cards plucked from thin air.

And all those iPod holders and cases? Anything with the Apple logo on it or that uses the trademarked name "iPod" is licensed. So Apple gets another cut for basically renting out their names.

Very savvy, and money in the bank.

I hope this helps.

Gary Bloomer
Wilmington, DE, USA