PART 1: CASE STUDY (30 MARKS)

A case study about the iPhone is provided below. You must read the case study, watch the video in the link provided at the end of the case study and use the information from the case study and the video to answer the questions. Note: If you do not follow this requirement, you can only score 30% marks for each question. No more than 200 words for each question.

Case study: The psychology behind a new iPhone releaseand why its so hard to resist

Since Steve Jobs announced the first iPhone at a MacWorld event in 2007, Apple has released more than 20 iPhone models. Over 80% of Americans had a smartphone in January 2019, and the same year, there were 900 million active iPhones in the world, according to Apple CEO Tim Cook. Yet when Apple announced the iPhone 12 on Oct. 13, an estimated 2 million people preordered the device in the first 24 hours alone.

So why, when iPhones are already ubiquitous, do fans hype and covet every new iPhone release? Here are the psychological reasons its hard to resist the new iPhone.

Were attracted to whats next

Each new iteration of the iPhone has new features: For example, the iPhone 4 in 2011 brought the first front-facing selfie camera, while the iPhone 5S in 2013 introduced Touch ID fingerprint scanning. The iPhone 12 boasts a larger screen, faster 5G network connection and more advanced cameras.

But even if your current iPhone functions fine without all the new bells and whistles, people are attracted to those improvements in quality and capability, says Kelly Goldsmith, associate professor of marketing at Vanderbilt University in the Owen Graduate School of Management.

Each new phone, and also Apple as a brand, represent innovation and tomorrow, which consumers tend to hold to a high regard, says marketing consultant Katie Martell. We really do live in a world where whats new and whats next is considered most valuable.

Its part of your identity

In 2011, Apples competitor Samsung debuted a commercial that parodied people in line outside of what resembles an Apple store, waiting for a new smartphone release. If it looks the same, how will people know I upgraded? asks one customer in line.

Having the latest and greatest phone is a status symbol, Goldsmith says. Its something that you carry with you all the time, so it conveys information about you to other people, she says.

Your phone is also a strong mechanism for something called self-signaling, a concept in behavioral economics that has to do with how your actions influence your beliefs about yourself.

In this case, having the newest iPhone can boost your self-esteem and remind you that youre not outdated. Every time you look at that phone it tells you something about who you are, and it reinforces certain aspects of your own identity, Goldsmith says.

Apple in particular tends to empower consumers with messaging about what they can do with their new iPhone, Martell says. For example, Apple encourages people to share their photos shot on the iPhone with the hashtag ShotoniPhone, to be included in Apple billboards and ad campaigns. This signals to consumers that, youve got that power in your hands.

Theres perceived scarcity

When a new iPhone becomes available, its customary to see lines snaked around Apple stores hours before they open. Apple fans want to be the first to have and use a device, and avoid having to wait for shipping delays. (Even this year amid the pandemic, people waited for the iPhone 12 outside Apple stores around the globe.)

To consumers, a line outside of a storefront signals that whatever is inside is valuable. There are two behavioral economics concepts at play here: social proof (convincing people that other people want the product) and scarcity (the fear that there may not be enough), Goldsmith says.

CHENGDU, CHINA - NOVEMBER 17: Customers line up to enter an Apple flagship store on November 17, 2020 in Chengdu, Sichuan Province of China. (Photo by Xie Li/VCG via Getty Images)

VCG | Visual China Group | Getty Images

Research has shown that when you think an item is scarce, it heightens your arousal and makes you feel panicked to make a decision quickly. The perception of scarcity makes you less discerning and more likely to go with your favorite item, rather than research other options.

That just makes you want to click buy, makes you want to get the line and makes you not want to miss the boat, she says.

Consumers respond, almost too strongly, to these scarcity marketing tactics, says Goldsmith.

Its a social experience

Apple has done an excellent job of leveraging the social experience around waiting for the iPhone, and anticipating the iPhone and discussing the iPhone, Goldsmith says. With the Apple announcements and drop dates and long lines, its a different experience than you would feel with any other of their competitors, Martell says.

Please watch the following video link and then answer the questions below:

https://www.cnbc.com/2020/12/08/the-psychology-of-new-iphone-releases-apple-marketing.html

Who is the target customer of the iPhone and what is price strategy of the iPhone? (5 marks)

ANSWER 1): ** answer box will enlarge as you enter your response

What is the product strategy of the iPhone? (5 marks)

ANSWER 2):

What is the brand positioning of the iPhone? Provide the point of difference and the point of partity of the iPhone to other competitors (10 marks)

ANSWER 3):

Apple encourages customers to buy the iPhone more. Discuss about the factors impact consumer behaviour that Apple uses. (10 marks)

ANSWER 4):