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Marketing Excellence revolutionary MP3 player became "the Walkman of the 21st century," and the launch of the iTunes online music store helped drive iPod sales through the roof. >> Apple The iPod was also central in changing the way peo- Apple has transformed the way people listen to music, ple listened to and used music. According to musician play video games, talk on the phone, and even read John Mayer, people felt like they were "walking through books. The company's revolutionary product innova- musicology" when they used their iPods, leading them tions include the iPod, the iMac, the iPhone, and to listen to more music and with more passion. The iPod the iPad. They are the reason the company topped has gone through a series of re-generations, adding Fortune's Most Admired Companies list every year from features like photo, video, and radio capabilities along 2008 to 2014. the way. The iPod introduced many consumers to Apple and Apple reached its impressive market domination initiated a series of monumental product innovations. It through a combination of shrewd product innovation exemplified Apple's innovative design skills and looked, and clever marketing. The marketing effort appealed felt, and operated like no other device. To the delight to both Apple fans and people new to the brand. To of Apple (and the chagrin of competitor Sony), the reach such a broad base, the company had to shift its 480 PART 5 CREATING VALUE channel strategies. It added "mass electronic" retail The launch of the iPad also created media frenzy in ers such as Best Buy and Circuit City (now defunct) to 2013. The multitouch device combined the look and feel its existing channels, which quadrupled its number of of the iPhone with the power of a MacBook and gave outlets. consumers access to music, books, movies, pictures, Besides this enhanced "push" effort, Apple also video games, documents, and hundreds of thousands developed memorable, creative "pull" advertising that of applications at the touch of a finger without mouse or helped drive the popularity of the iPod. The Silhouettes keyboard. Apple followed up with the launch of the iPad campaign featured silhouettes of people listening to and mini, a smaller version of the original, and the iPad Air, dancing with their iPods and appeared all over the world. accompanied by a powerful marketing campaign that This simple message worked across cultures, portraying inspired consumers to do anything with their iPad, includ- the iPod as cool but not beyond the reach of anyone who ing creating movies, building wind turbines, studying coral enjoyed music reefs, and making mountain climbing safer. As the iPod's popularity grew, a halo effect helped In recent years, Apple has faced more serious com- increase Apple's share in its other markets. In fact, in petition for its smart phones, tablets, and other handheld 2007 the company officially changed its name from Apple devices, especially from Samsung and HTC. Investment Computer Inc. to Apple Inc. to help communicate its in research and development is just one way the com- focus on non-computer products. pany remains a leader in this cutthroat industry. It spent Apple's next-largest product launch after the iPod $2.4 billion in R&D in 2011, $3.4 billion in 2012, and $4.5 was the iPhone, its 2007 entry to the cell phone industry. billion in 2013. Creating, producing, and launching new With its touch-screen pad, virtual keyboard, and Internet products is a top priority for Apple. With creative market- and e-mail capabilities, the iPhone launched to huge ing support behind them, these products are the reason consumer excitement; people lined up for hours to be consumers and analysts stay on their toes awaiting among the first to buy one. Investment analysts initially Apple's latest product news. feared that Apple's two-year contract with AT&T and the iPhone's high price would hinder its success. But Questions 74 days after the product's debut, 1 million units had been sold. It had taken the iPod two years to reach the 1. Apple's product launches over the past decade have been monumental. What makes the company so cumulative sales ($1.1 million) the iPhone had reached after just its first quarter. In fact, half the iPhones' buyers good at innovation? Is anyone comparable to Apple switched to AT&T, incurring fees to break their contracts in this respect? with other carriers, just to have a chance to own an 2. How important was the iPod to Apple's current suc- iPhone. cess? Discuss the significance of the iPhone and Over the next few years, Apple dropped the price of iPad launches to Apple's new-product development the iPhone significantly and added impressive picture and strategy video capabilities, video game features, a faster proces- sor, and access to millions of additional applications. The 3. It has been a few years since Apple's last epic inno- iPhone had become yet another game-changing techno- vation. What's next for Apple? logical invention. When the iPhone 4 launched in 2010, Sources: Matt Vela, "Apples' Latest Ad is probably Going b Give You the Chills." Time, January 13, showcasing FaceTime video calling, Steve Jobs declared 2014 www.apple.com, 2013 Apple Annual Report Phone 4 The Most Successful Product Launch in Apple's History, dependent, June 28,2010: Joseph De Avila, Why Some Apple Fans Won't it "the most successful product launch in Apple's history." Buy the iPhone Wall Street Journal, September 12, 2007, p.03: Nick Wingfield, Apple Businesses Jobs died in 2011 and didn't get to witness the success Fuel Each Other: Net Jumps as Mac Sales Top PC-hdustry Growth Rate: Phones, iPods Also Trive, of the iPhone 5 launch in 2012. Apple received more Val Street Joumal, October 23,2007: Teri Yue Jones, "How Long Can the iPod Stay on top. Los than 2 million preorders of the iPhone 5 within the first Angeles Times, March 5, 2006: Beth Snyder Bulik, "Grab an Apple and a Bag of Chips." Advertising Age, May 23, 2005; Jay Parsons, "Als for Apple on Pod." Dallas Morning News, October 6, 2005; 24 hours, far exceeding sales of any preceding iPhone Peter Burrows, "Rock On, iPod BusinessWeek, June 7, 2004, p. 130-31; Jay Lyman, Mini iPod launch. When the phone officially hit the shelves on Moving Quickly. Apple Says TechWews World, February 26, 2004; Steven Levy, "Pod Nation, September 21, 2012, the company couldn't keep up with Newsweek, July 25, 2004: "Apple Computer:iPod Silhouettes," New York Marketing Associafon Stenen Ley. Pod Nation," Newsweek, July 25, 2004 Efe Worldwide, www.effe.org the initial demand