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Marcela Ampon

MKT 301

Lashinsky, Adam. “iPhone 5c: Apple’s Chevrolet Strategy.” CNN Money, Sept.
10, 2013.

I. Introduction
1. It is known to the majority that Apple creates top of the line products
obtaining the latest innovative qualities and technologies, where Lashinsky refers to
the company as “the BMW of the computing and electronics industry.” By making
the iPhone 5c available to the market, Apple released their “Chevrolet Strategy” and
their self-cannibalization tactics. The iPhone 5c is a low-end product made up of
plastic. This cheap material expands Apple’s target market greatly to any American
who is able to afford a 99-dollar smartphone. Questions arise about Apple’s motives:
Is Apple truly about inventive technologies or more concerned with market-
penetration strategies? With the iPhone 5s also out in the market, Apple continues
to exhibit their high-tech capacities as well.
2. To understand this article, it is vital to know that market cannibalization
refers to a situation where a new product “eats” up the sales and demand of an
existing product.
3. Demographic Environment – Apple has increased their market and is
capable to satisfy more of the population’s technological needs, such as the needs of
developing countries. The growth of technology has been increasing rapidly in our
economy, where only the rich can afford the new advancements. Apple has been
able to make these technologies more available by reducing their prices, creating a
diversification of consumers. (Chapter 3)
Product development – Apple introduced an affordable smartphone to
attract a whole new class of consumers. This was a smart move by Apple because
there are not many cheap smartphones out in the market. Because of this, Apple
entered into a profitable market, where there are only a few substitute products.
This affordable smartphone still has exceptional performance, making it a product
that will be hard to beat. (Chapter 2)

II. Environment
1. Competitive- The iPhone 5c is in a competitive market with many other
smartphone development companies. Samsung has recently been Apple’s biggest
threat in the industry, where the Samsung Galaxy S III reportedly outsold Apple’s
iPhone in 2012. Nonetheless, Apple holds a competitive advantage. Their great
reputation and advanced technology will keep them at the top of the smartphone
2. Political Legal – According to The Wall Street Journal, Apple was
undergoing an investigation by the US Senate committee around the time of the
production of the iPhone 5 series. The political issue was that Apple utilized
technicalities in American and Irish tax laws in order to pay little to none of their
corporate taxes. This issue could hurt the company greatly, where many angry
citizens may refuse use Apple devices, let alone buy their new products. Consumers
also may start to believe that Apple is more worried about their market penetration
strategies rather than their innovative creations.
3. Economic – Smartphones are classified to be luxury assets, but in recent
days it has transformed from a want to a need. We currently live in a digital world,
where we see more and more people relying on their high-tech devices for their
everyday tasks. This transition may boost the demand for cheap smartphones in the
US and especially for developing countries such as China and India.
4. Technological – The iPhone 5c meets today’s technological standards. The
device obtains the new iOS 7 software, an 8-megapixel camera, an HD FaceTime
Camera, and the latest wireless networking. But because of Apple’s reputation of
advanced innovation, this alone may not satisfy consumers and many may reason
that Apple has the capacity to produce a better technological device.
5. Social Cultural - Apple has been a leader in marketing in the computing
and electronics industry. They have continuously created brilliant ideas to satisfy
the average American consumer. In the US society, people are in constant demand to
keep up with the latest trends and styles. Apple products are one of these hip trends,
so the iPhone 5c will satisfy this demand to even more American consumers.

III. Marketing Mix Variables
1. Target Markets – Apple’s large target market is a collection of teenagers,
college and university students, business people, young children, and adults who are
primarily in the middle to upper class status. Apple has successfully developed their
products to fulfill the needs of all ages. The iPhone 5c expands Apple’s target market
to a new class and internationally by marketing a product with low costs.
2. Product – Apple is known to have exceptional lines of electronics. The
iPhone 5c is an appealing product because of its low costs, stylish look, and
outstanding technologies. Smartphones are usually more costly, so the creation of
this device increases Apple’s market and increases the use of smartphones. The
increase usage of smartphones will lead to an increase in demand, where it will
drive more companies to create a cheap yet advanced product.
3. Price – The price of the iPhone 5c starts at $99 with a two-year contract
plan. Price strategy was key in the creation of the iPhone 5c. The low cost material
to make the smartphone influenced the low price of the product. The price
deduction is important to attract a new class of consumers. However, consumers
may want to purchase the iPhone 5c opposed to the iPhone 5s (which is much more
costly), and Apple may experience a larger opportunity cost.
4. Promotion - It was reported by 9TO5Mac that Apple utilized Tumblr to
promote the iPhone 5c. Social media plays a large role in modern day society. The
trendy look of the iPhone 5c targets many adolescents, and Tumblr is a great space
to market to these teens across the world.
5. Distribution – After the creation of the iPhone 5s and 5c, Apple has
expanded their distribution of new iPhones to more than 50 countries. This is
significant in relation to the iPhone 5c because people from all around the world can
afford Apple’s technology. This creates the diverse consumption of Apple products,
which is beneficiary to the company’s profit maximization.