Executive summaryIndustrial mobile phone market and smart phone industry- Chinese mobile market- How did iPhone change the cell phone and smart phone market ?- Iphone’s market share evolution

Company overview and main business activities- The Iphone proposition- Iphone timeline - The Iphone in numbers

Iphone’s brand competitors analysis and SWOT analysis (Samsung)- Iphone’s SWOT analysis- Samsung analysis- Compared ads

Iphone’s marketing strategies worldwide and in ChinaIphone’s branding strategies

Challenges and solutions

Chinese Mobile Market

Biggest market for smart phoneEvery 4 out of 5 smartphones are ran on Android (2013)Asia Pacific led the growth in both smartphones and “dumb” phones – 77.3% and 11.9% increase respectively iPhone is currently carried by China Unicom and China Telecom, but not by China Mobile

Chinese Mobile Market in graphs

Sale of smartphone in Q3,2012

Chinese Mobile Market in graphs

Percentage of smart phones sold in various price ranges

Chinese Mobile Market in graphs

Percentage of smart phones sold per manufacturer

Chinese Mobile Market in graphs

Market share of each brand

Chinese consumers’ attitude towards smartphones

More than just a phone Entertainment + CommunicationLife style

iPhone = Most desirable phone for consumers“guo fen”

An increasing number of first time smart phone users iPhone = status symbols

How did the Iphone changed the mobile and smartphone industry ?

Before the Iphone: Nokia and Motorola were enjoying record sales of cell phones, based more on fashion and brands than technological innovation

Smartphone market: dominated by Blackberry and Windows Mobile: « a staid, corporate-led smartphone paradigm » focused on enterprise and not consumer needs

Steve Jobs, 2007: « The phone was not just a communication tool but a way of life. »

iOS, in comparision with other OS (Symbian, Black Berry OS, Windows Mobile) permited multitasking and graphics, not only basic communications functions. Rival manufacturers had to spend more on software and app develpment in order to catch up with the Iphone

Iphone’s market shares

NB: Even if market shares in China has decreased from 9.1 to 4.8% from over the past year, we would like to highlight that the charts doesn’ take into account China’s highly heterogenous populations across various regions (e.g. consumers in rural areas). This segment of the population is often first time smart phone user and usually cannot afford an iPhone (thus not the target of Iphone. ). Hence, the charts might be biased.

The IphoneProduct of Apple Inc.Devlepment began in 2004: 1000 employees working on the confidential « Project Purple »Apple created the device with a secretive collaboration with AT&T Mobility (Wireless telecommunication provider) Development cost of $150 million over thirty months

Macworld 2007 convention: Jobs unveiled the Iphone to the public Medias called it the « Jesus phone »

Dark blue: Iphone was available since its original release

Light blue: Iphone was available since the release of the 3G

Green: coming soon

Iphone’s proposition in 2007

The main marketing message was « something different, something cool, user friendly and simply Apple »

Iphone’s TimelineIphone 1 Iphone 3G Iphone 3S Iphone 4 Iphone 4S Iphone 5 Iphone 5S Iphone 5C

June 2007

June 2008 June 2009 June 2010 Ocbr 2011 Sptr 2012 Sptr 2013 Sptr 2013

« This is only the begining »

«The first phone to beat the Iphone »

« The fastest, most powerful Iphone yet »

« This changes everything… again"

« The most amazing Iphone yet »

« Loving it is easy, that’s why so many people do »

« Forward thinking »

« For the colorful »

$499 16 GB $299 16 GB $299 32 GB $299 32 GB $399 64 GB $399 64 GB $399 64 GB $199 32 GB

Iphone in numbers

58: percentage of Apple’s revenue that comes from the Iphone

$22.69 billion: revenue generated by the Iphone and Iphone-related products for Apple durnig the first quarter of 2012 alone

$17.41 billion: Microsoft’s total revenue for the same period (Iphone alone is more profitable than Microsoft)

$150 billion: approximate total revenue generated by the Iphone for Apple since 2007 (more than Apple’s revenue for the 12 years before that combined)

$106 billion: Apple’s market cap in June 2007, when the first Iphone debuted

$524 billion: Apple’s market cap today

Iphone’s SWOT analysisSTRENGTHS

- Customer loyalty- An entire closed Iphone ecosystem- Apple’s brand reputation (product and iOS)- Most fashionable phone- Strong advertising and marketing teams- Constant announcement of new operating systems to keep the interest- Financial performances of Apple

WEAKNESSES

-Expensive price for all devices proposed- Comes without expandable memory - Fixed battery - Expensive accessories - Incompatibily with different operating systems - Decreasing market shares and long term gross margin decline

OPPORTUNITIES

- iTV launch- Growth of tablet and smartphone market- Emerging markets- Increasing demand of cloud based services- Growth of the application market- More innovation in design and performances are always possible

THREATS

-Need to keep up with rapid technological changes- Price pressure from Samsung- Growth of Android operating system- Strong dollar- Threat from cheaper substitutes due to the lack of choice (even if the targeted market is not the same): iPhone needs to keep its « hype »

Brand competitors analysis:Korean conglomerate founded in 1938Mainly products consumers’ electronics but also telecommunication equipements, chemicals, medical equipement, semiconductors etc. Revenue in 2013: $268.8 billion Net income in 2013: $30.1 billion2012: Samsung became the world’s largest smartphone maker

Samsung Galaxy S: third Android smartphone series product by SamsungSeen has the main competitor to IphoneRealeased for sale in June 2010As of 2013, over 25 million Galaxy S have been soldIphone 5S vs Samsung Galaxy S4

Apple’s ‘frenemie’Despite the recent litigation activities, Apple remains a major customer for Samsung which is a key supplier in Apple’s supply chain

Samsung : 32 % of the global smartphone market (stable)Apple: 14% (decreased compared to the same 2012 quarter)However, both companies sold more phones than last year: Samsung: 80 million, Apple: 30 million

Brand competitors analysis: Samsung

Iphone marketing strategy in ChinaProduct

Mobile phone + Digital camera + Ipod + Small computerThe iPhone is delivered in a special package, making you feel you acquire not just a phone but that you

are becoming part of a community

PositioningPrimary customer targeted: middle-upper income professional that need one portable device to

coordinate their busy schedules and communicate with their entourage.Secondary consumer targeted: high school, college and graduate students who want multifunction

device. All these consumers, beside the practical aspect of the phone, want a high social status, fashionable

phone that differentiate themselves from their peers.

PriceHigh price positioning which is part of their exclusivity and luxury marketing strategyIphone 5S: 5’288 RMB for 16 GBIphone 5C: 4’488 RMB for 16 GB Iphone 4S: 3’288 RMB for 8 GB

Promotion A convenient phone, allowing you to have a multi tasking device, but also a fashionable phoneApple store, Apple online store, service provider outlet

iPhone’s brand-building & positioning

Arrogance“Yup, if you don’t have an iPhone, well, you don’t have an iPhone”

Image of “coolness” Never go on sale No star in advertisement A (substantively) identical brand image + service across the globe

Apple Store“Geniuses”

Ads: Samsung vs Apple

Your finger is the password.

若人生是一段旅程 ,何不携 GALAXY S4的精彩同行（ If life is a journey, why not bring a S4 along the way)

Apple Store – part of the Apple experience

Apple Store Nanjing East Road, SH Apple Store 5th Avenue, NYC

Genius Bar

A specific communication strategy notably based on digital marketing

NB: Apple never pays for public ads

Iphone’s 5C marketing strategies in ChinaFor years, iPhone, iconic smart phone in China, was way too expensive for average monthly salaries Announcement of a « cheaper » iPhone + Apple ‘s deal with China Mobil = blast for chinese consumers and opportunity to reach the chinese market ? BUT, Iphone 5C = 4'488 RMB disapointement of the consumers, bad publicity for Apple

Did they therefore jeopardize their chances to reach the world’s fastest expanding smart phone market ?

NO. Apple doesn’t just try to sell as many phone as they can to anybody. Apple strategy : many Chinese don’t have a Smartphone but will soon be able to buy one. Therefore, Apple should make sure that these people buy iPhones rather than something else. Apple could never compete on price in China Offering low price Iphone would damage the brand identity. Luxury goods in China are popular part because they are expensive. Owing an iPhone confers a special status. Offering a low-cost phone in China would have been a terrible idea for Apple—it would have destroyed their brand as a luxury product. If a wider share of China's population could suddenly afford to buy iPhones, the product would instantly lose its cache as the choice of China's elite—a group whose numbers and influence continue to grow.

So why did Apple bother creating a cheaper iPhone and marketing it to China at all? Brand loyalty. Customers who don’t buy iPhone 5 would surely buy iPhone 6Apple is willing to wait for the Chinese market to come to them, rather than the other way around. So by introducing an iPhone 5c at relatively high prices, Apple is banking that the type of customer, rather than the number of them, is what truly matters.

Coping with competition in China

Chinese market became a priority for AppleFor the first time, iPhone 5S and 5C are launched at the same time as they are in the US market

Better customer serviceQuick response to criticism emitted by CCTVUser-friendly Apple Care

Expected partnership with China Mobile

Challenges & solutions

Challenges faced by the product itselfPrice - ￥￥￥

One of the most expensive smart phones currently on the market the most expensive on Dangdang

Lack of innovations on recent modelsPossible solution – better front camera?

Challenges & solutions

PR-Related Challenges Foxconn suicides scandals

a major supplier of iPhones

CCTV 3.15 reportAllegations of different warranty policies for Chinese consumers

Fake charger incidentFlight attendant electrocuted

Thanks for listening !Questions, comments ?