APPLE INC.
Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
8/10/2014
Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
EXECUTIVE SUMMARY
This report provides an analysis of the current market environment for targeted marketing by age
group in the smartphone industry. We recommend that Apple take a targeted marketing approach
to address senior consumers over the age of 65 in the United States, whose population is the
fastest growing segment.
Market Segments
For the purposes of researching our proposed age demographics, consumers were divided up into
four categories by age. These groups include 18-29, 30-49, 50-64, and 65 and over. After
identifying the various rates of smartphone usage by age group, it is evident that seniors over the
age of 65 have not been effectively marketed to by Apple or other major competitors. This age
group ranks lowest for usage and ownership in the smartphone market.
Marketing Objectives
It is the objective of this study to promote the research and development of a smartphone
specifically targeted to seniors over the age of 65 in the U.S. smartphone market. We have
determined that this segment has different needs than other groups. We believe that a simpler
phone with more individualized customer service can capture this largely ignored market.
Marketing Strategies
To address this markets needs we will offer a simplified phone with a larger display and
keyboard. We will include an advanced camera so that they will be able to hold onto precious
memories of family and grandchildren. The traditional bundle of applications will be replaced by
only a few, and the ability to add more based on individual desires.
Customer service will be the most important feature of this phone. We will provide service that
is accessible on a 24-hour basis, and trained representatives to help seniors specifically. This will
enable a better understanding of client needs, and help consumers become acclimated to their
smartphone choice.
This product will be offered at all possible venues. However, placement will include areas that
are statistically preferred by seniors such as convenience center like shopping malls.
The quality which Apple is known for, and a focused customer service policy, will allow Apple
to sell this product at or near the current market rate for smartphones. This will ensure that the
product maximizes its potential contribution margin toward overall profits.
Controls
The focused customer service and toll free helpline, will enable a great amount a feedback from
our consumers. This allows us to keep a constant monitor on our consumer needs. When this
input is compared to proposed sales targets, a great monitor of product performance is facilitated.
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Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
TABLE OF CONTENTS
1. CURRENT MARKETING ENVIRONMENT………………………………………………………………………….…
1.1 MARKET SEGMENTS……………………………………………………………………………………………
1.2 PRODUCT ENVIRONMENT……………………………………………………………………………………
1.3 COMPETITIVE ENVIRONMENT……………………………………………………………………………
1.4 DISTRIBUTION ENVIRONMENT……………………………………………………………………………
1.5 MACRO ECONOMIC ENVIRONMENT……………………………………………………………………
2. MARKETING OBJECTIVES……………………………………………………………………………………………………
3. MARKETING STRATEGIES……………………………………………………………………………………………………
3.1 TARGET MARKET…………………………………………………………………………………………………
3.2 PRODUCT STRATEGIES…………………………………………………………………………………………
3.3 PROMOTION STRATEGIES……………………………………………………………………………………
3.3.1 CUSTOMER SERVICE…………………………………………………………………………….
3.3.2 ADVERTISING……………………………………………………………………………………….
3.3.3. PERSONAL SELLING……………………………………………………………………………
3.3.4. SALES PROMOTION…………………………………………………………………………….
3.4. DISTRIBUTION STRATEGIES…………………………………………………………………………………
3.5. PRICING STRATEGIES………………………………………………………………………………………….
4. CONTROLS…………………………………………………………………………………………………………………………
5. REFERENCES………………………………………………………………………………………………………………………
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TABLES AND FIGURES
1. Table 1: Rates of Smartphone Ownership and Usage by Age……………………………………………
2. Figure 1: Mobile Industry Operating Profits (2007-2011)………………………………………………….
3. Figure 2: Top Smartphone Manufacturers in the U.S………………………………………………………..
4. Figure 3: Service Provider Subscribers (2010-2013)………………………………………………………….
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Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
1 ANALYSIS OF CURRENT MARKETING SITUATION
1.1 Market Segments
In order to target the growing market of consumers over the age of 65 in the United States, we
have divided the market into four separate age groups. These market segments include
consumers aged 18 to 29, 30 to 40, 50 to 64, and the target market of adults over the age of 65.
Research shows that each of these groups have unique needs and wants from a smart phone. By
identifying what these needs are for the group of consumers over 65, Apple can develop a phone
that more closely matches their desires. By developing a product for this target age group, Apple
can create value for a market segment that is projected to more than double by 2030 (“Projected
future”, n.d.).
Table 1: Rates of Smartphone Ownership and Usage by Age
Rate of Smart Phone Ownership
Rate of Internet Use on Smart Phone
Rate of Texting
Rate of Email Usage on Smart Phone
Rate of Video Recording
Rate of Picture Taking
Rate of Application Downloads
Rate of Mobile Banking
Ages 18-29
Ages 30-49
Ages 50-64
Ages 65+
83%
77%
97%
65%
68%
94%
65%
45%
74%
69%
92%
61%
54%
90%
53%
33%
49%
40%
72%
38%
23%
78%
25%
21%
19%
13%
34%
12%
23%
44%
8%
7%
The table above illustrates demographic differences between the four age defined market
segments (Duggan, 2012). There are extreme differences in the percentage of people who own
smart phones as the age of the person rises. There also appears to be a large difference in what
features those smart phone owners are interested in using. By studying these difference, we will
be better able to determine what type of smart phone product could be more appealing to an
older generation of user.
Ages 18-29
By comparing the percentage of ownership and the ways in which smartphones are used it
becomes readily apparent that this age is the most saturated of the segments. However, it is also
interesting that this segment has the lowest income level. According to statistics from NPR
Planet Money, people under the age of 25 only average about $27,514 in income per year (Vo,
2012).
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iPhone for an Older Generation
MKTG 301W Section 001 Team 2
This age group has the most interest in smart phone technology, and also possesses the greatest
amount of understanding. This is a result of the fact that this technology was readily available to
them for a large percentage of their lives. However, this is also one of the weakest age
demographics to target for market growth opportunities. Given the fact that they have the lowest
amount of income, and the market is already saturated, there may be much larger growth
potential in other segments. Also, this segment size is projected to decrease from about 23.5% of
the population to 21.2% by 2060 due to decreases in birthrate (“U.S. census”, 2012).
Ages 30-49
This segment of the population contains the group of consumers with the largest amount of
purchasing power. Form the ages of 45 to 54 the average household income is at its peak of
about $78,517 (Vo, 2012). Still, the high rates of ownership and usage that are displayed in Table
1 indicate that this demographic is being successfully targeted already. Consumers of this age
only trail the group between 18 and 19 in ownership and usage, and according to the data it is not
by much. By the year 2060 this segment is expected to increase in size, but their overall share of
total population will decline (“U.S. census”, 2012). This segment certainly cannot be ignored,
because of the large amount of cash flow they possess. However, there may be larger
opportunities in other markets that are not as saturated, where the industry is not focusing as
significantly in marketing to them.
Ages 50-64
This segment we begin to see a significant drop in usage. Only about 50% of the members of this
group own a smartphone, and a there also substantial drops in the use of certain features. This
group does include some of the largest income generators, but on average makes a little less than
the previous segment. It is important to pay attention to marketing opportunities for this
segment, because soon they will be part of the proposed targeted group. This group is made up of
the Baby Boomer generation, who are the reason for the large growth expectations of consumers
65 and over. There are similarities between the needs of this group and the next. For example,
both groups seem to favor text messaging and picture taking over other applications on their
smartphone. Parallels like these are essential to selecting the correct product for marketing to an
older generation.
Ages 65+
The older population will represent just over one in five U.S. residents by 2060 (“U.S. census”,
2012). A great reason for the increase in older Americans is that life expectancy has continuously
grown over the past 40 years. These trends indicate that this segment will continue to grow and
represent substantial opportunity to meet their needs. By comparing the extremely small
percentage of cell phone users in the group who have smart phones (19%), we see a segment of
the population that has largely been ignored by marketing efforts. The consumers in this do show
a rise in the percentage for using features such as text messaging, picture taking, and a small rise
in video recording. By creating a product that caters to the specific wants of this group, Apple
has an opportunity to realize sustained growth in a growing market.
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Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
1.2 Product Environment
According to Pew Research 90% of all Americans have a cell phone, but only about 58% have a
smartphone (“Mobile technology”, 2014). Of those 58%, the smallest group of Americans who
own a smartphone are the fastest growing population. Market products are failing to meet the
needs of the age group of 65 and older.
Current smartphone offerings include standard features such as a touchscreen, and attached
camera for picture or video, and an ability to connect to the internet via cellular towers or Wi-Fi.
The connectivity is critical. This enables the phone to use all of its “smart” features such as
internet, GPS navigation, email, and downloading applications. A few models have other
hardware additions, such as a fingerprint scanner for security purposes.
Pricing on the units differ depending on the carrier, and what specials are currently being
offered. According to a Forbes article, “The Real Price of a Smartphone”, the cost of a typical
smartphone with a 2-year contract can range from free to $200. The real cost of a new
smartphone can vary from $300 to $649 for most popular brands (Louis, 2013). Companies have
enjoyed a very favorable contribution margins on these highly priced product, which has led to a
very favorable profit margins. This has been especially true for Apple. The large growth enjoyed
by Apple can be seen in Figure 1 below. “Apple's operating profit converged with the declining
profit of the number one cell phone manufacturer by volume Nokia around the end of 2008, and
then really took off, with the line becoming almost parabolic after the iPhone 4 was introduced.”
(Daniel, 2011)
Figure 1: Mobile Industry Operating Profits (2007-2011)
(Daniel, 2011)
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Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
1.3 Competitive Environment
Figure 2: Top Smartphone Manufacturers in the U.S.
(Vansanth, 2014)
Figure 2 illustrates the percentage of the U.S. market share for the five top smart phone
manufacturers. Apple currently enjoys the largest percentage at 41.60%. The next most
influential manufacturer is Samsung at 26.70%. Samsung and Apple are by far the most
profitable manufacturers in the industry. “Apple took 56 percent of the operating profits for
feature phones and smartphones in the third quarter of calendar 2013. Coming in close second
was Samsung, which took 53 percent of industry profits.” (Hughes, 2013) Needless to say, at this
point the industry appears to be in a two-horse race. Other manufacturers are taking losses as
Apple and Samsung dominate.
Apple
Apple has been extremely successful in targeting the two groups that are listed above.
Applications enable college students to have easy access to information and the ability to record
notes for class. The iPhone is able to provide up to the minute communication for business
people to use with clients of colleagues. Games and music have provided countless hours of
entertainment for users of many ages. However, there has been a fundamental failure in
identifying the needs of consumers over the age of 65.
Apple has demonstrated strengths in areas such as design, innovation, and quality according to
the Tokerud Consulting Group (Shannon, Tokerud, & Tomyris, 2013). Apple has been able to
create an image for themselves as the more luxurious and hip of the two competitors. Features
such as a glass body and simple yet elegant design are often touted as important features of an
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Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
iPhone. Simple, easy to use technology may be just what is needed to attract an older consumer.
Apple’s ability to innovate effectively is a big reason that they were first to the market place with
a smartphone that supports applications. It is these applications that have allowed the iPhone to
become the dominant force it is in the marketplace. The flexibility that is created by the
abundance of application that are available through iTunes allows the iPhone to meet the needs
of millions of different consumers, who have different needs.
Some of the weaknesses that are identified by the Tokerud group include premium pricing, being
slow to develop cloud computing features, and reliance on a one-size fits all mentality (Shannon,
Tokerud, & Tomyris, 2013). Competitors have been able to steal away market share in lower
income markets. They have appealed to consumers who would like larger screens. There is
something to be said for screens that are easier to read or watch media on. Cloud computing is a
growing area as it allows consumers access to their information no matter where they are and
what devices are present.
Samsung
Samsung’s line of Galaxy smartphones have successfully targeted consumers from 18 to 49 with
similar tactics to the iPhone. Samsung provides a wide variety of applications that are available
through its Google Android operating system. The applications have the same capabilities as
those listed above and many more, just like the iPhone. Where Samsung’s targeting differs is in
the variations in its product line. This enables them to market toward lower income consumers
by offering cheaper versions of the galaxy. Different models have allowed Samsung to market
toward consumers that desire diverse features such as a bigger screen, or a stylus for interaction
with the phone.
Along with different models to target different markets, Samsung has other strengths that include
an open source operating system that allows for more personal customization. They have
displayed a great ability to market its brans in the U.S. and abroad, and due to some sacrifices in
design hardware are able to create low production costs for themselves. They currently possess
the largest share in mobile phones, although they are second in smartphones (Jurevicius, 2013).
Some of the weaknesses include a lack of innovation, which has led to patent infringement
lawsuits from Apple. Samsung does not have its own operating system or software, so it must
rely on Google for updates to the Galaxy’s hardware. Samsung loses focus in the smartphone
market because it is focused on so many different activities. Currently Samsung competes in four
different industries, where competitors are concentrated on a narrower window (Jurevicious,
2013).
1.4 Distribution Environment
Distribution or placement of the available smartphone products are provided by middle men in
the current U.S. market. These middlemen are primarily made up of cell phone service providers
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Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
such as AT&T, Verizon, Sprint, and T-Mobile. These four, along with several smaller providers,
distribute smartphones at a subsidized price that typically comes with a 2-year service contract.
This provides an option to purchase the product at a reduced price, but also forces the consumer
to sign a lengthy contract that is difficult to break without paying a fee. Figure 3 provides a
breakdown of how many subscribers each of these distribution channels have in the U.S.
Through 2013, Verizon and AT&T have lead with Sprint and T-Mobile being the only other
significant competitors.
Figure 3: Service Provider Subscribers (2010-2013)
(“Grading the top”, 2014)
Current growth of the distribution environment is steering away from lengthy contracts. Nocontract smartphones were first introduced to low end consumers at discount stores such as
Walmart. Typically older phones that were considered outdated were offered at an inexpensive
pay by usage plan. However, service providers are now finding it advantageous to offer similar
deals. Some consumers have indicated that they are willing to switch to different service
providers for advantages such as no contracts. Another trend in distribution is to allow
consumers to not pay up front. Service providers divide the cost of the phone into the monthly
billing cycle, which allows consumers to purchase a phone without a large initial expense.
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Marketing Plan
iPhone for an Older Generation
MKTG 301W Section 001 Team 2
1.5 Macro Economic Environment
Economic
Current Economic trends have the smartphone dominating the cellular industry. This is shown in
the Figure 1. The rise of profitability in apple was directly related to the rise in popularity in
smartphones versus other cellular phones. However, “Analysts are becoming even more
concerned that the top smartphone makers such as Samsung and Apple are facing oversaturated
markets.” (Moore, 2013) There is evidence that smartphone owners that have traditionally traded
in phones when new tech arrives are now simply holding on to their older phones. Growth is a
problem that is faced by major smartphone manufacturers. Between 2012 and 2013 Apple stocks
declined as high as $700 a share to as low as $300 (Moore, 2013). This is due to lower sales that
is influenced by a lack of growth in the market. Therefore, it is very important to identify new
market opportunities. One of these opportunities is the growing population of senior citizens.
Technological
Some current trends that are identified by citeworld.com include higher screen resolutions. This
allows users to access webpages without distortion. It also enables clearer pictures and videos on
devices. This trend would be helpful in our goal of attracting a senior market, because physical
limitations that occur when aging make larger screens attractive.
LTE is now the new dominant network. It is still in its infancy in many parts of the world, but the
increased demand for data has encouraged the faster network. Gaming is starting to become a
target market for vendors such as Samsung and Apple. Because of the increasingly powerful
processors, mobile gaming is now a viable way of encouraging more interest into smartphone
sales. Just as the smartphone has replaced GPS devices and cameras to a large extent, we may
soon see an end to mobile gaming devices as well. These additions are not necessarily beneficial
to the proposed target market of 65+.
Last and possibly most important is that there is an increasing focus on low-end devices. Where
the high end market may have plateaued, there is a growing market for cheaper options. This is
especially true in other areas of the world. This will mean that vendors must find a balance
between performance, price, and profit. Our evidence suggests that low-end devices are not
necessarily a desire of American seniors. They desire quality over low price, which allows
Apple an opportunity to maximize profits in this target segment (Ricknäs, 2013).
Growing technological and economic trends in the macro environments make the opportunity of
identifying the needs and marketing to older U.S. citizens not only desirable, but also essential.
Apple needs to act upon this potential market as quickly as possible.
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iPhone for an Older Generation
MKTG 301W Section 001 Team 2
2. MARKETING OBJECTIVES
Our company is planning to introduce a new product line of smartphones in the United States, by
creating a smartphone geared towards individuals over the age of 65. This product will have
limited functionality in comparison to other smartphones on the market, with individualized
applications that will appeal to our target market. The product features a larger screen and text, a
simplified interface, and a 24 hour live support desk. Although competitors offer accessibility
options to appeal to our target market, a product completely catering toward this market is
largely unexplored territory. This product will allow for greater profit margins because of
reduced costs, which stem from our targeted-functionality approach.
With the launch of our product, our objectives are to reach 20% market share of our target group
within the first two years, maintain revenue growth of 10% annually, and to achieve 55% market
awareness within the first year of marketing operations. We believe these goals are possible with
a focus on an appropriate marketing mix. Our policies of superior customer service, targeted
advertising, and product placement that matches senior habits will enable us to reach the
intended audience.
3. MARKETING STRATEGIES
3.1 Target Market(s)
When reviewing the market segments for smartphones, our research indicated a group of
consumers that are almost entirely overlooked by our competitors. American senior citizens are a
growing segment of the United States population that provide wonderful opportunities to a
company willing to engage them. According to the 2010 Census, this was the largest number and
highest percent of seniors accounted for by a census. From 2000 to 2010, the senior segment of
the U.S. population grew by 15.1%, which is a much faster growth rate than that of the total U.S.
population of 9.7%. By 2030, America's population of seniors is estimated to be 71.5 million,
which will be almost double of the current population of seniors. When researching this target
market to determine if there was a viable market for this new product, we looked at growth of
this segment of the population, spending habits, what seniors were looking for in a smartphone,
how much time seniors spend on-line and what they do online.
One of groups that we took into consideration is that of the baby boomers. These are the
individuals that were born between 1946 and 1964. During this time there were 77 million
Americans that were born. What is important to note about this group is that those individuals
born in 1946 started to turn 65 in January of 2011 (“50+ fact”, 2014). So with each passing year,
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MKTG 301W Section 001 Team 2
more of these baby boomers are joining the ranks of seniors and that is why it was important to
incorporate their statistics as part of this plan.
When taking into account the Baby Boomers and senior's incomes, we focused our research
towards their purchasing power and spending habits. Baby Boomers and seniors control more
than 75% of the wealth in the United States. Even though their average total family net worth has
declined, both groups still have a net worth that is three times greater than the younger segments
of the population (“50+ fact”, 2014). When it comes to spending, it has been estimated that Baby
Boomers outspend the other segments of the U.S. population by roughly $400 billion dollars.
3.2 Product Strategies
After conducting thorough research to determine what seniors were looking for, we determined
what their specific wants and needs were. Because of various health reasons, physical conditions
or wants, senior’s needs are different than those of other segments of the population. Seniors are
simply looking for a smart phone that is designed for them. The smart phone that we will offer
them will take into account any physical limitations that seniors have due to aging, personal
preferences and how they use their devices versus other segments of the population. Our research
indicated that seniors are looking for a smart phone that has a larger screens, simple interfaces,
lightweight, Bluetooth, and easy to use buttons (Egan, 2012). Our smart phone will offer all of
these features as well as a 13 mega-pixel camera.
Our research also indicated that seniors due not like to pay for products that come in a bundle
package that they do not want (Bharwada, 2010). With our product, we will offer seniors the
choice of what applications come on their phones. There are many applications that come on
today’s smart phones that seniors will never use and we believe by letting them choose their own
applications, we can offer a smart phone with 8 gigs of memory. This will allow for more than
enough storage for any future applications that might be downloaded. This will also allow for
them to store a large volume of pictures that they may take with their smart phone cameras.
We will augment our product with the intangible services that will be of the most benefit to
seniors. We will offer seniors a 100% one-year warranty on their smart phone. We will also offer
free technical service that will allow our customer service representatives to remote into the
smart phone through the Internet to assist with any issues that they may have. We will also offer
free workshops for seniors to attend. Our research indicated that seniors liked social events
where they could mingle, ask questions and learn about products that aren't normally marketed to
them (McQuerrey, 2014).
Overall, we believe what will differentiate our product from our competitors will not simply be
that we are selling a phone designed specifically for seniors. That has already been done. We
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MKTG 301W Section 001 Team 2
believe that it will be the intangible services that we provide and that we are giving seniors the
choice of what applications come on their phones.
3.3. Promotion Strategies
3.3.1. Customer Service
.
Customer service is important because in most instances, your customer service employees will
be the only contact that customers have with your company after they have purchased our
product. It will be our company's goal to stress to the senior smart phone market that our
customer service will exceed their expectations. Our customer service will be available toll free,
24 hours a day.
Keeping our customers satisfied will be of the utmost importance. Seniors expect a company to
have good customer service and that it is a positive experience. A source from our research
showed that 91% of seniors have stopped doing business with a company because of poor
customer service. The same study showed that 84% percent of these people would actually be
willing to pay more for a product that would offer them a better customer experience (“Meeting
and exceeding, 2012).
Because personalized customer service is very important to seniors, we will ensure that each one
is treated in a polite and professional manner. They prefer to conduct business face-to-face
because they value the relationship that is established between themselves and the employees of
the company they are doing business with (Bharwada, 2010). We will post signs throughout our
stores that inform seniors that if they do not receive a business card from an associate, they can
call an 800 number to let our customer service know about what happened. This will ensure that
our employees make every effort to approach and talk to these customers.
If a senior calls our technical support for assistance, we will make sure that they talk to an
operator and not an automated system. They will be given their own 800 number that will allow
them to talk to customer service representatives that have been specially trained in customer
service support for seniors.
We believe that our exceptional customer service plan will benefit our company in two ways. It
will increase our target markets satisfaction level with our company, which will in turn lead to
free advertising in the form of word-of-mouth advertising. It will also provide feedback toward
customer satisfaction. This will enable us to make necessary changes to our product in the future.
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iPhone for an Older Generation
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3.3.2. Advertising
As with any product, advertising is one of the most critical parts to any company's ability to get
their goods to the consumer. Our advertising plan will be to stress the dependability of our
product and the quality of our brand. Our research indicates that seniors are risk-averse and
prefer to deal with reputable companies that offer hassle-free products and services (Bharwada,
2010). We will make sure to stress Apple’s brand name in our advertising so that seniors know
they are dealing with an established company.
We will focus our advertising towards radio, television and print media. Our research indicates
that seniors do not respond well to email and web-based marketing, so we will place very little
emphasis on these areas. In regards to using radio and television advertising, we will contact
radio and media outlets to obtain information on which programming attracts seniors
(McQuerrey, 2014). We will then use this information to purchase time slots during these
timeframes that allow us to maximize the amount of seniors that we reach. Our print media
advertising will focus on publications that seniors enjoy, and will have a larger font size that
makes our ads easier to read.
Another important feature that our research indicated about advertising to seniors is that they do
not respond well to spokespeople that are their age. Seniors prefer to have spokespeople that are
roughly ten to fifteen years younger than they are (Bharwada, 2010). Seniors believe that if they
purchase a product that is being sold by someone of their own age, they are basically associating
themselves with that product and old age.
Seniors populations differ throughout the U.S. Initially, we will advertise nationally on a limited
basis. We will focus our advertising primarily in Texas, Florida, California, New York, Arizona
and South Carolina, because these states currently have the highest concentration of seniors
(Bolden-Barrett, n.d.). We will use the results of advertising in these areas to make any changes
or improvements to our advertising before taking our advertising completely to the national
level.
3.3.3. Personal Selling
For the senior demographic personal selling will be the main effort of our company. Currently in
the US, 37% of the total population is over the age of 50. Of that group, only 30% of them use
the Internet. Seniors prefer to do business face-to-face. Our salespeople will be courteous and
offer each customer their utmost attention. Our sales force will not be judged on quantity of
sales, but in customer satisfaction.
Because seniors are very loyal, our customers will grow due to returning patrons, who are
satisfies with our excellent customer service. After each sale, our salespeople will provide them
their business card and let the customer know that they can call them if they have any issues with
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their smartphones. Also, salespeople will call the customer within one week of the purchase to
check if the customer has any questions about their smartphone. Our salespeople will be given
bonuses based how many clients are retained and how many clients were not retained. Our
emphasis will be on customer satisfaction and not quantity because it will not cause our sales
people to have to rush through to get the sale. They will have the opportunity to establish that
personal relationship that seniors look for.
3.3.4. Sales Promotion
Sales promotions will not be a major part of plans for the senior market. Our research indicates
that seniors are less conscious about prices and deals than other segments. This is because
seniors are looking for quality products, which they do not mind paying more for. It also
indicates that they are not as likely to show any type of significant response to sweepstakes and
telemarketing efforts (Bharwada, 2010).
The sales promotions that we will offer are a senior discount, and a loyalty discount for returning
customers. We will offer a senior discount of 5%. We will not advertise this because seniors do
not like to associate themselves as being old, and we want to avoid the possibility of offending
anyone by reminding them of their age. On average, seniors tend to be very loyal customers. We
will offer them a 10% loyalty discount every time they renew their contracts.
3.4. Distribution Strategies
The distribution strategy for our smart phones will focus primarily on is traditional retail outlets
for two reasons. The first reason is that seniors prefer to have face-to-face contact when
purchasing items. The second reason is that because of the technical nature of our product, we
want to ensure from the beginning of the transaction that the customer is getting exactly what
they want and have had all their questions answered.
Our research indicated that seniors have many preferences when it comes to shopping for
products. They prefer to shop in the morning hours, one-stop shopping, convenience oriented and
located near other shopping venues (Bharwada, 2010).
We will conduct research to determine what hours in the morning that seniors are more likely to
shop. We would then open our stores during these hours once or twice a week to determine if
these extended hours would be needed on a permanent basis. We believe that our current store
locations and how they are set up meet the needs of seniors already. Any future locations will
also be evaluated to ensure that they also meet the requirements of seniors.
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We will also continue to sell our smart phones through our wireless vendors and work in
conjunction with them to provide for the seniors, who purchase our smartphones from them, the
same support that we offer seniors that purchase directly from us.
3.5. Pricing Strategies
Our pricing strategy is to sell our smart phones to seniors for the same price as the current
iPhone. We want to make it the same price for a couple of reasons. Our research indicated that
seniors are willing to pay extra for quality and for products that are different (Bharwada, 2010).
We believe that by associating the price of our senior smart phone to that of the iPhone, we are
associating the phone to the quality and branding of the iPhone. Even though the senior
smartphone does not offer all of the same features as a typical IPhone, we believe that we can
charge the same price. This is due to the fact that we are offering seniors a phone that is different
than the current smartphones on the market.
We believe that this price is one that seniors would be willing to pay. Baby Boomers and seniors
have an average annual disposable income of $24,000 (“50+ fact”, 2014). This amount does vary
in different parts of the country. We will see how the senior smartphone sells in various parts of
the country. If necessary, we will adjust the price based on what the consumer is willing to pay.
We do expect as time passes our production costs will drop. This will allow us to lower the price
and maintain the contribution margin if necessary. Current profit margins per phone are already
very high for our products, which allows us leeway in pricing as well.
4. Controls
For the controls portion of our product we will monitor consumer needs and wants to determine
if we are meeting the requirements of our target demographic. It is crucial that we identify our
consumer’s desires to effectively market our new product. This will be done by:
1. Monitoring sales results. Sales can be measured in units sold, revenue generated or profit
amount. This will be done at the point of sale with the assistance of retail partners. Our goal is to
maintain 10% revenue growth annually. Actual sales in the target market will be compared to the
marketing plan projections to see if any changes need to be made.
2. Identifying problem areas and opportunities for improvement through our dedicated
support service. Our customer support service is a major advantage in terms of internal controls
as it allows us to receive feedback from our customers face-to face while assisting them with any
challenges they may have. Common or reoccurring software problems will be recorded and
corrected.
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3. Perform quarterly customer satisfaction and brand awareness surveys. We will also
monitor customer feedback through polls and surveys. Through said surveys, customer
satisfaction will be highlighted in order to identify key issues customers have with our product.
Also, brand awareness surveys will be conducted as our goal is to reach 55% market awareness
within our first year of marketing operations.
4. Continuously monitor and analyze market data to determine whether customer
satisfaction and sales goals are being met. All of the data we will be collected will be matched
up with our marketing objectives to ensure that we are on track with our goals as well as
maintaining customer satisfaction with our product.
Our company relies on its controls to maximize profit and promote efficient distribution
strategies. Current marketing controls that exist include monitoring target market sales,
budgeting to balance costs, and using customer feedback to produce a product and evolve it as
necessary. By monitoring target market sales, our firm is able to tweak products to fit the need of
its consumer base. These target markets allow for the prediction of brand profitability and
product demand. Balancing budget costs advertising and brand revenue is currently controlled by
increasing and decreasing advertising expenses such as newspaper, determining applicable
market research expenses and increasing sales force to comply with product demand. The
customer feedback, and product reviews, is an important driving force toward product
improvements. With controls in place, we can maximize profit and efficiency at the highest
level. By vigilantly monitoring the market environment we will be able to ensure that we are
making the most educated decisions in regard to the proper marketing mix. Also, we can
determine if there are other demographic markets for this product that we are not considering.
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MKTG 301W Section 001 Team 2
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