iPhone 3GS Marketing Plan
Apple Inc.
Lindsay Berdan
Bus. 103; Marketing
May 26, 2010
Table of Contents
Executive Summary
Pg. 1
Current Marketing Situation
Pg. 1-2
Market Description
Pg. 3-4
Product Review
Pg. 4
Competitive Review
Pg. 4-7
Channels and Logistics
Review
Pg. 7-8
Strengths, Weakness,
Opportunities, and Threats
Analysis
Pg. 8-12
Strengths
Pg. 8-9
Weaknesses
Pg. 9-10
Opportunities
Pg. 10-11
Threats
Pg. 11-12
Objectives and Issues
Pg.12
First-year objectives
Pg. 12
Second-year objectives
Pg. 12
Issues
Pg. 12
Marketing Strategy
Pg. 12-16
Positioning
Pg. 13
Product Strategy
Pg. 13-14
Pricing Strategy
Pg. 14
Distribution Strategy
Pg. 14
Marketing Communication
Strategy
Pg. 14-15
Marketing Research
Pg. 15
Marketing Organization
Pg. 15-16
Action Programs
Pg. 16-17
Budgets
Pg. 17-18
Controls
Pg. 18
Executive Summary
Apple Inc. is one of the world’s most successful companies that designs, manufactures,
and sells computers, portable music devices, and mobile phones. The company also has created
successful product leaders in the electronics industry, such as the OS X operating system,
iTunes, iLife, QuickTime, the iPhone, the iPod, and the Macintosh. In 2007, “Apple was thirty
third for top brands in the world” (Boykin, Fiorini, Tanaka, and Webb, pg.1, 2008). Ever since
the company’s birth back in 1976, Apple has had success with “mass production of electronic
devices.” On June 19, 2009, the company had launched its newest cellular phone, the iPhone
3GS (Datta and Martin, 2007). With innovated products such as the iPhone 3GS that caters to the
market’s demand for the latest technology in portable communication, it is no surprise that Apple
has established and maintained a premium brand built on customer loyalty.
Current Marketing Situation
Apple Inc. was founded in 1976 by Steven Paul Jobs, Stephen Gary Wozniak, and
Ronald Gerald Wayne. In 1977, Wozniak created Apple’s first computer, which became a
leading product of the late 1970s. From then on, Apple has been a major competitor in the
electronics industry. The company is one of the few corporations who has successfully competed
with IBM by introducing the Macintosh computer to the market in 1984(Datta and Martin,
2007).
The public and major corporations, such as IBM, Motorola, and Xerox have developed a
healthy respect for Apple over the years. In 1978, Xerox signed an investment agreement where
Xerox invested $1 million in Apple stock. In 1980, Apple’s stock increased by 1,700% and the
price of these stocks were between $4,340 to $7,800 per stock. In 1992, an alliance with IBM
and Motorola was formed to better serve their consumers’ needs (Datta and Martin, 2007).
Aside from being a great competitor, Apple has maintained a strong financial condition
for the last five years. In 2005, Apple had a positive net income of $1,335 million and positive
operating income of $1,650 million. During the beginning of 2005, the company had $8,050
million worth of assets and at the end of the year, the company had $11,551 million worth of
assets (Rambow, 2005, pg.4). This shows that the company had enough sales to be able to
purchase an extra $3,501 million worth of assets. Investors were pleased to have gained a return
on investment (ROI) that was above market average of around 8 – 12% (meaning that the stock
gave investors a 8 -12% higher return than what other stocks were returning). The reason for this
stock growth was because “Apple had a much stronger sales growth of 68% from Yr2004 to
Yr2005” (Rambow, 2005, pg. 4). Apple’s profitability continued to slowly grow for the next five
years. From 2007 – 2009, the stock’s earnings per share (EPS) grew from 4.85 – 6.36%
(Thomas, 2008, pg. 4). This implies that shareholders enjoyed getting returns on their stocks,
because Apple’s financial condition remained strong from its sales.
Over the years, Apple has extended its product line to include musical devices such as the
iPod, musical downloads such as iTunes, and mobile phones. According to Canalys, a market
research company, Apple was the top vendor for touch-screen smart phones in 2008 and 2009
(see Table 1.1).
Table 1.1
Market Description
In addition to a strong financial condition, Apple held 15% of the smart phone market
share in 2009 (See Figure 1.1). The only two companies that were ahead of Apple were Symbian
(a registered trademark of Nokia) and RIM. Apple’s market consists of consumer and business
users who demand portable communication devices that include with information storage,
writing, and entertainment applications. Specific segments include professionals, students,
disabled users, and corporate users. Table 1.2 show how the iPhone 3GS fulfills the desires and
needs of these market segments.
Customers can choose between a variety of color phone covers and designs to fit their
style and individuality. They can also choose how much storage capacity their phones will need.
The maximum storage capacity for the iPhone 3GS is 32 gigabytes, which is twice the storage
capacity of the iPhone 3G. Professionals, corporate users, and students need more storage
capacity than ever before to quickly send messages, store information, and upload entertainment
(Apple corporate website).
Figure 1.1 Smartphone 2009 Market Share (Canalys)
Table 1.2 Targeted segment needs and corresponding features/benefits
Targeted Segment
Professionals
(consumer market)
Students
(consumer market)
Customer Need
 Portable
communication
 Hands-free
application use
 Multi-task
ability



Disabled Users
(consumer market)



Hands-free
applications
Express
individuality
Music
applications
Corresponding Features/Benefits
 Mobile phone offers WI-FI access and
users are able to multi-task between
websites and applications on phone’s
home screens.
 Allows user voice to call and play music.
 Built-in compass and maps that allow
professionals to locate places
effectively.




Hands-free
applications
Zoom features
Visual and
hearing
applications

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
Corporate Users
(business market)




Schedule details
Information
exchange
Fast
communication
Product Review
The iPhone 3GS offers the following features:
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
Compatible with many applications such
as internet applications, music
download, video applications, and photo
applications
Built-in iPod for music access, download,
and recommendations.
Phone covers come in a variety of colors
and designs.
Zoom feature allows visual impaired
users to see screen better.
Mono audio allows hearing impaired
users able to hear phone better.
Hands-free applications such as voice
control allow users to make calls and
play music hands-free.
Visual impaired users can change screen
to black and white to see screen better.
Calendar and Google Docs access allow
corporate users to save information and
to quickly access saved information.
Voice memos and text messaging allow
users to quickly send messages.
Wi-Fi access and word applications allow
users to save, edit, copy, and share
information.

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




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




















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










Is twice as fast as the iPhone 3G
Visual voicemail
3.5 inch touch screen
MobileMe
Download ringtones
Multitask ability
Microsoft Exchange ActiveSync
iPod
Music download
Music recommendations
Safari web browser
Save and sync bookmarks
E-mail access
View e-mail attachments
Software-based keyboard
Map access
WI-FI access
Shoot, edit, share, and watch videos
3-megapixil camera
Photo application
Share and sync photos
Allows user’s voice to make calls
Allows user’s voice to play music
Language selection
Text messaging
Built-in compass
GPS
Maps with traffic information
Cut, copy, and paste words
Photos and videos
Voice memos
Voice control
Built-in accessibility
Zoom
Change display to white and black
Mono audio
USB connection
Internet tethering
Application download
iTunes access
Add websites to home screens
Stock charts
Calendar
Nike + iPod


Weather check
Parental control (Apple corporate website).
Competitive Review
The emergences of mobile phones and mobile phone accessories that can easily
accommodate the needs of disabled users are gaining a competitive advantage in the marketplace
compared to phones that do not accommodate disabled users’ needs. Nokia, one of the world’s
leading suppliers of mobile and IP telecommunications networks, launched the LPS-1 and LPS-3
loopsets, a mobile phone accessory that allows hearing impaired users to use mobile phones
without the usual buzz and hum interference from hearing aids. These loopsets include built-in
microphones that allow hands-free communication (case studies, 2008). Nokia is one out of
many corporations that competes with Apple.
Major competitors include the following:
Nokia. “Headquartered in Finland, Nokia is listed on five European Stock Exchanges and
on the New York Stock Exchange (NOK.A), has sales in over 130 countries and employs more
than 60,000 people worldwide.” Some of the major products that are great competitors to
Apple’s iPhone 3GS are Nokia’s GSM phones and smart phones. GSM phones provide wireless
internet, one-touch dialing for 911 emergencies and for checking messages, adjustable ringtones
for frequency sensitivity, and large screen displays for disabled users. Smart phones include not
only many of the same features that GSM phones have, but they also include keyboards and
multimedia applications as well (case studies, 2008).
Motorola. Headquartered in Schamburg, Illinois, Motorola operates in 76 countries. This
corporation had a very profitable year in 2009; the company had a positive operating cash flow
of $485 million and had $8.5 billion in cash during its second quarter. Over the years, Motorola
has lost sales to Nokia, Samsung, LG Electronics Inc., and Sony-Ericsson. Because of this, “sales
were down 6.1 percent to $5 billion from $5.4 billion…Motorola sales of 8.5 million mobile
devices fell well short of the 10.2 million unit estimated by analysts” (Kitchen, 2010). Also,
Motorola has been losing market share to Apple and RIM in the United States due to slower
product innovation.
Aside from slower product innovation, Motorola contains a good amount of market share
due to its mobile phone, StarTAC. This phone is one of the world’s smallest mobile phone and
has a competitive advantage against competitors that pursue making their mobile phones smaller.
One of the major features that make the StarTAC stand out in the marketplace is its “silicon
integration has tremendously increased the functionality per device, and the StarTAC’s logic
circuitry is implemented in just a few integrated circuits” (Motorola StarTAC, 2002). Trends in
the electronics industry favor the use of silicon integration (Silverthrone, 2005).
Samsung. Headquartered in South Korea, Samsung is one of the world’s top IT
manufacturers and operates in 124 different countries. In 2009, the company had sales of $117
billion. Samsung produces mobile phones, digital cameras, computer and network devices,
digital living appliances, and television monitors (Girardot). Apple’s iPhone 3GS will compete
with Samsung’s Omnia II (SCH-i920) mobile phone. Omnia II (SCH-i920) cellular phone
provides features such as Opera 9.5 web browser, photo and movie editing applications, radio,
video download, email access, virtual user guide, one-touch access to applications, and a screen
keypad (Samsung corporate website).
Palm. Headquartered in Sunnyvale, California. Palm is currently experiencing heavy
debt, which has been holding the company back from being profitable. Palm mostly operates and
sells its products to American consumers, with about 95% of its operations and 79% of its sales
are from the United States (Adkins, pg.3, 2009). Palm’s mobile phone, Palm pixi, offers features
such as a responsive keyboard, a variety of back covers and designs, and social networks such as
LinkIn, Facebook, and Twitter. Users can upgrade to the Palm pixi plus, which contains all of the
same features as the Palm pixi, but has Wi-Fi. Also, the Palm pixi and the Palm pixi plus are thin
and can be easily stored in pockets and purses (Palm corporate website).
RIM. Headquartered in Waterloo, Ontario. “Research in Motion makes the lightweight
BlackBerry wireless multifunction products that are especially popular among corporate users.
RIM’s continuous innovation and solid – customer service support clearly strengthen its
competitive standing as it introduces smartphones with enhanced features and communication
capabilities.” RIM’s BlackBerry offers e-mail access, virtual real-time communication, a
QWERTY keyboard for faster typing and dialing, and a touch screen to navigate and enter data
(RIM corporate website).
Channels and Logistics Review
The following are the channels where Apple sells the iPhone 3GS:

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Apple’s corporate website: Customers are able to purchase the iPhone 3GS online.
Apple store: Features every Apple product in over 200 locations.
AT&T stores: The iPhone 3GS is available in service provider’s store.
eBay: The iPhone 3GS, along with other iPhones, are available for purchase on this
auction retail website.
This channel strategy is focused mainly in the United States; however, the iPhone 3GS will also
be sold in countries such as India, England, France, Japan, Germany, and other countries
(Boykin, Fiorini, Tanaka, and Webb, 2008).
Strengths, Weaknesses, Opportunities, and Threats Analysis
Strengths:
Position in the electronics industry. One of Apple’s major strengths is its years of
experience in designing, manufacturing, and selling electronic devices. Because the company is
one of the most mature businesses in the electronics industry, Apple is capable of mass
production of the iPhone 3GS without probably running into much difficulty. New entrants in
this industry do not have the luxury of easily mass producing mobile phones and may run into
financial and production difficulty. Due to these difficulties:
A new company entering this market would have one of two choices available: 1) They
sell their product at a higher price to make up for the fact they can’t sell the same volume
as a company like Apple Inc. and must hope that the consumer sees the higher price as a
indicator of better quality. Or 2) They sell their product at a lower price probably
occurring a loss per unit in hopes of selling a high volume and banking on sales of
applications that can be purchased for the phone. In either situation it is extremely risky
as both could lead to the company’s collapse (Johnson, Lee, Middleton, Ngai, and
Palmeri, 2008).
Hype. One of Apple’s greatest strengths is its ability to establish customer loyalty, where
not only customers purchase Apple products, but also talk about them to family and friends.
According to Armstrong and Kotler, authors of Marketing an Introduction, “thanks to Apple’s
deep understanding of consumer behavior, the Apple brand engenders an intense loyalty in the
hearts of core Apple consumers. This consumer love affair with Apple has produced stunning
sales and profit results” (pg. 135).
Weaknesses:
Pricing policy. “By setting a high price point, Apple is adopting a skimming strategy,
whereby it initially targets a narrow segment of the market with a high willingness-to-pay, as
opposed to the mass market” (Reading, Wahl, Hesse, Volz, Nguyen, pg. 7). Apple could expand
its iPhone 3GS sales substantially if it catered to the mass market. “Since the iPhone has margins
30% higher than comparable smart phones, Apple has some opportunities to innovate with its
pricing” (Reading, Wahl, Hesse, Volz, Nguyen, pg. 7). iPhone 3GS prices range for $199 to
$299, which is more expensive than Palm’s pixi ($49.99) and Motorola’s MOTO EM 330
($95.99). The mass market has the opportunity to shop elsewhere for similar products at lower
prices. With its pricing policy, Apple tries to appeal to an audience who consumes the latest
technological advanced gadgets, despite the price.
Limited distribution channel. The iPhone 3GS is only sold through a limited number of
channels such as Apple’s stores and website, AT&T stores, and eBay. For now, the iPhone 3GS
is “only supported by the AT&T network. A future entrant to the market could create an
advantage by making their product more available for multiple carriers and multiple retailers”
(Reading, Wahl, Hesse, Volz, Nguyen, pg. 7).
Battery life and replacement options. One of the main issues that iPhone 3GS consumers
have complained about is phone battery life and replacement options. Most mobile phones on the
market can have their batteries replaced by their users. iPhone 3GS users have to mail in their
phone to Apple’s headquarters to have the battery replaced. “The charge for this service is $79
plus shipping and handling which costs $6.95…the cost to replace a battery for any model of the
BlackBerry costs $39.99, a difference of $45.96” (Reading, Wahl, Hesse, Volz, Nguyen, pg. 5).
This is a hidden cost that the user will probably have to deal with eventually. This is also a
weakness for Apple, because even though they make a profit off battery replacement, they lose
customer loyalty due to consumers knowing that the company is just trying to make a profit off
battery replacement and not focusing solely on customer service.
Opportunities:
Distribute iTunes content. Apple has gained an extraordinary amount of market share in
the music industry by being one of the few companies to release digital music through an online
store (iTunes). iTunes offer the latest music and allows users to download songs in digital format
for a fee. As the market’s demand switches from CD format to digital format, Apple has the
opportunity to sell more iPhone 3GS units, because the iPhone 3GS allows users to download
music through iTunes. Prospective customers in Apple’s target market are demanding mobile
phones that offer both communication and music applications (Johnson, Lee, Middleton, Ngai,
and Palmeri, 2008).
New social device. One of Apple’s target markets are students. These individuals
purchase electronics that express style and individuality. Since the iPhone 3GS comes in a
variety of different colors and designs, Apple has the opportunity to gain market share in this
targeted segment due to fulfilling the demand of expression of style and individuality. According
to Armstrong and Kotler, “customers buy from Apple because the brand itself is a part of their
own self-expression and lifestyle. It’s a part of what the loyal Apple customer is” (pg. 135). In
addition, professionals are able to communicate worldwide and can choose from a variety of
applications, such as text messaging, voice control, MS Word, and email (Apple corporate
website). All these applications give Apple another opportunity to gain market share in the
electronics industry and to promote a good brand image.
Threats:
Similar devices. There are some mobile phones that are similar to the iPhone 3GS. RIM’s
BlackBerry, like the iPhone 3GS, offers internet access, web applications, and a touch screen to
navigate and enter data. Most of RIM’s BlackBerry phones are 4.4 inches in height and are 2.4
inches in width, which is similar to the iPhone 3GS that has a height of 4.5 inches and a width of
2.4 inches. Also, BlackBerry consumers can choose from a variety of different phone covers.
These covers come in a variety of different colors and designs, just like iPhone 3GS covers (RIM
and Motorola corporate website). Some mobile phones that are similar to Apple’s iPhone 3GS
are less expensive (Mobile, pg.26).
Highly developed market. The electronics industry is a very competitive industry that
requires companies to constantly engage in research and product development in order to stay
competitive. According to Moore’s law, technological advancement doubles every twenty-four
months (Turner, 2010). Apple has to constantly be engaged in product innovation to keep up
with technological advancement and to gain a competitive advantage by offering consumers the
latest technological advanced products. Highly developed markets are markets where there are
many companies competing for market share. Many of these businesses heavily advertise their
products to position themselves in the consumer’s mind. Apple is involved with less advertising
and promotes its brand through its reputation. In order to keep up its good reputation, the
company needs to continue to provide consumers quality electronics to continue to distinguish
itself from its competitors in this highly developed market and to keep up the positive image of
its brand (Mobile, pg. 26).
Objectives and Issues
First – year objective: Apple’s objective in the first year (2009) was to sell a total of at least 7
million units (Mobile, pg. 8).
Second – year objective: Apple’s objective in the second year (2010) is to sell a total of at least 8
million units (Mobile, pg. 8).
Issues: One of the main issues that Apple faces is similar devices to the iPhone 3GS.
Competition may take away the company’s market share if competitors’ phones are more
technically advanced “[Apple] will invest heavily in marketing to create a memorable and
distinctive brand image projecting innovation, quality, and value.” The company “must measure
awareness and response so [Apple] can adjust [its] marketing efforts” (Armstrong and Kotler, pg.
MP7, 2009).
Marketing Strategy
Apple’s marketing strategy is based on positioning its brand through the sale of high
quality electronic devices. “[Apple’s] priority consumer market is middle-to-upper income
professionals who need one portable device to coordinate their busy schedules, communicate
with family and colleagues, get driving directions, and be entertained on the go” (Armstrong and
Kotler, pg. MP7, 2009). Also, the company caters to businesses who want their managers to stay
in touch when they are out of the office. These companies are usually multi-million dollar
corporations with over a hundred employees. Apple’s secondary market consists of high school,
college, and graduate students “who want a multimedia, dual-mode device. This segment can be
described demographically by age (16-30) and education status” (Armstrong and Kotler, pg.
MP7, 2009). The company’s secondary market also consists of hearing and visually impaired
individuals who want mobile phones to have zoom features, color changing features, a mono
audio feature, and hands-free applications (see Table 1.2).
Positioning: Apple will be positioning its iPhone 3GS through its brand identity and
product differentiation. “Apple has remained aloft as brand because of the identity it forged for
itself, which is being an alternative for those who dislike Windows” (Company Report). Over the
years, consumers have regarded Apple’s brand identity as a premium brand, which offers quality
electronics for non-technical users.
In addition to the company’s premium brand image, Apple has also distinguished itself
through product differentiation. Apple has “forged another niche by creating a product that has
become a leader of its own, the iPod.” After the iPod was introduced, Apple went on to become a
leader in the mobile phone industry by introducing the iPhone, a cellular phone that was different
in terms of design and the features it contained compared to competitors’ mobile phones at the
time. One of the main disadvantages of the iPhone was that the phone couldn’t be used in some
parts of Asia, since some parts such as Japan and Korea run on a 3G network (Brannon,
Danforth, Lubeck, and Nitz). Apple catered to market demand for worldwide communication
access by introducing the iPhone 3G. The iPhone 3GS is the evolved version of the iPhone 3G
that has all the similar features and more.
Product Strategy: The iPhone 3GS features are stated in the Product Review. As
technology advances, Apple will have to develop a new iPhone to keep up with competition.
This new phone will probably be the evolved version of the iPhone 3GS. Almost every iPhone is
an evolved version from another iPhone. For example, the iPhone 3G is a more technologically
advanced product compared to the regular iPhone and the iPhone 3G evolved into the iPhone
3GS.
Pricing Strategy: The iPhone 3GS was introduced to the market at $700. Apple used the
skimming approach to capture its key accounts (consumers willing to pay a high price for the
latest technical advanced products). After a couple of months, Apple dropped the price down to
around $200 to $400. Prices vary due to the number of gigabytes particular phones contain. The
more gigabytes a particular phone has, the more expensive that phone will be. Apple intends to
keep mobile phone prices higher than the average market price of mobile phones to ensure that
the brand continues to promote an image of high quality luxurious products (Jasso).
Distribution Strategy: See Channels and Logistics for a list of distribution channels.
Retail channels such as Apple and AT&T stores are supported by the company’s manufacturing
facilities. Some of these facilities are supported by over 200,000 employees who assemble
iPhones and other Apple products. Employees are provided with at or above their country’s
minimum wage, housing, banks, a post office, supermarkets, a hospital, and recreational facilities
such as swimming pools, soccer fields, internet cafes, and TV lounges (Apple news). “Most of
the assembly of the iPhone takes place in Taiwan with a company called Foxconn” (Andersen,
Bildtt, Collins, McCurry, and Swanson, pg. 17, 2009). Finished goods are shipped to the United
States and other countries where Apple products are sold.
Marketing Communication Strategy:
“By integrating all messages in all media, [Apple] will reinforce the brand name and the
main points of product differentiation” (Armstrong and Kotler, pg. MP8, 2009). Apple will need
to research about prospective consumers’ culture, wants, needs, and demographics to effectively
choose the best messages to put in commercials and online retail stores. The iPhone 3GS will
first be featured at expos, such as the MacWorld Expo, Apple Expo, and the WorldWide
Developers Conference. “Research about media consumption patterns will help [Apple] choose
appropriate media and timing to reach prospects before and during product introduction.” To
create buzz, Apple will launch an advertising campaign, where commercials will be seen on
television and YouTube to promote product (iPhone 3GS) awareness and benefits (Armstrong
and Kotler, pg. MP8, 2009).
Marketing Research:
Apple used the skimming strategy to not only make profits from key customers, but to
also test how the market would respond to the new product. This strategy gave the company the
opportunity to change iPhone 3GS prices and to develop new marketing strategies if necessary.
According to Wharton’s marketing professor, Peter Fader, the iPhone product line has many
differences compared to other cellular phones in the marketplace. “There is a social risk [with
people wondering] ‘What kind of phone is that?’ as well as functional risk” (Fader, 2008).
Not only does the skimming strategy tests how the U.S. market responds to the iPhone
3GS, but also helps evaluate responsiveness in foreign markets. By using this strategy, Apple
was able to change its marketing strategy in India. Apple had to change iPhone prices in India to
get Indian consumers interested. Also, Fader states that some Wharton professors saw “a clever
strategy at work where Apple is ‘testing the waters’ and getting prospective customers
acquainted with its device before a full-scale marketing assault” (Fader, 2008).
Marketing Organization:
The following are Apple’s executives who are in charge of running the company’s
marketing department:
Philip W. Schiller – Senior Vice President of Worldwide Product Marketing. Schiller
oversees the business marketing programs, product marketing, and developer relations. He has
over twenty-four years of experience in marketing and management. “Schiller has helped the
company return to its role as a technology innovator, delivering breakthrough products such as
the iMac, MacBook, Airport, Xserve, Mac OS X, Safari, AppleTV, iPod, and iPhone” (Apple
corporate website).
Ron Johnson – Senior Vice President of Retail. Johnson oversees retail strategy and
performance. “Under Ron’s leadership, Apple has opened over 200 stores to date. Johnson has
over 20 years of experience in retail and merchandising as well as a strong track record for
delivering consistent year over year growth for billion-dollar companies” (Apple corporate
website).
Action Programs
Advertisement. iPhone 3GS ads were launched in the year 2009 and 2010 to build public
awareness of the new product on YouTube and television. These commercials continue to
demonstrate phone applications and how the iPhone 3GS will benefit the consumer. Benefits,
such as how the phone can create a work friendly environment, how users can use the phone for
entertainment, and commuter friendly applications will be discussed in these commercials.
During December of 2010, ads will also be launched on YouTube and television to promote the
iPhone 3GS as potential Christmas gifts.
Facebook. Apple has already launched information on company history and products on
Facebook. The company has requested consumers’ input on the organization. Individuals still
have the opportunity to offer suggestions to Apple and to network with others who share an
interest in the organization. On May 21, 2010, there were over 32, 854 individuals who have
already visited and posted their comments on Apple’s Facebook page (Facebook website).
Expos. In 2007, Apple “revealed the iPhone to the world at MacWorld San Francisco
2007.” Steve Jobs, Apple’s CEO, pre-announced the new mobile device, the iPhone, a few
months before it would hit the market. The iPhone 3GS was introduced in a similar way. Apple
showed the iPhone 3GS at the MacWorld Expo, Apple Expo, and the World Wide Developers
Conference. To better promote the iPhone 3GS, the company continues to hold seminars,
workshops, and educational events about Apple’s products (MavMac). According to Chen and
Rahman, computer science professors at the University of Massachusetts Lowell, Apple’s
iPhones are the new iPod, in which consumers are just as excited and interested in the latest
iPhone versions as when the iPod was introduced (Say).
Budgets
In 2008, Apple had revenue of $7.51 billion with a net quarterly profit of $1.05 billion.
Apple’s growth in revenue and profit was partly due to the millions of iPhone units sold
(Thomas, pg. 3, 2008). By June 11, 2008, estimated iPhone sales were around 10 million to 45
million. The estimates of all iPhone unit sales, including the iPhone 3GS, for the next ten years
was projected to be around 150 million units (Thomas, pg. 4, 2008). The company needs to sell a
minimum amount of iPhone 3GS units in order to at least break-even and not lose money. The
following is a hypothetical example of how many iPhone 3GS units must be sold in order for the
company to break-even:
Fixed Costs: $50,000,000
Wholesale Price: $200/unit
Variable Costs: $100/unit
$50,000,000/ $200 - $100= 500,000 units
If Apple does not sell at least 500,000 units, the company will incur a loss.
Controls
The following are control measures that Apple has developed to ensure quality and customer
satisfaction:

There are many warning signs that could have occurred during the release of the iPhone
3GS. “Early warning signals that [were] be monitored for signs of deviation from the
plan include monthly sales (by segment and channel) and monthly expenses” (Armstrong
and Kotler, pg. MP9, 2009). The costs of designing, manufacturing, and distribution
could not have exceeded revenue from iPhone 3GS sales.

Apple still continues to pay close attention to monthly sales to make sure that sales
continue to be strong and that sales do not have a declining trend in the number of iPhone
3GS units purchased.

The company still continues to pay close attention to technological advancement. Before
competitors release mobile phones that are more technologically advanced than the
iPhone 3GS, Apple will then need to create a new iPhone; one that is more technically
advanced than the iPhone 3GS and one that offers faster communication and applications.
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