MARKETING APPLE'S IPOD: MUSIC TO YOUR EARS
Whether it starts with a dream, an idea, or a thought, the road to marketing success is often long and requires research, planning, product alterations, and creative contemplations, which makes it all the more rare to witness the success of the iPod, the brainchild of Apple founder Steve Jobs, who got his product designed, built, and on shelves in less than a year. The cool product of choice for listening to and trading the latest sounds, the iPod has expanded to various models that music enthusiasts have quickly bought up during its brief existence.

Furthermore, its introduction and subsequent acceptance has spawned an entire industry comprised of companies that market compatible accessories. Despite some initial problems with its battery life, the product is going strong, driving the majority of Apple's revenue growth. iPod thus is a prime example of successful marketing.

The Product Concept
Launched in October 2001, iPod was the first portable music player with the capability to download and store thousands of songs digitally. Its sales have reached over 4 million per year. The concept started off in response to consumer wants and in an environment that was ready for a product that would change the tide in the practice of pirating digital forms of music. Jobs saw the need for a good quality player that would allow its users to legally download and customize their music and to trade songs.

In less than three years, his invention had already been termed "a cultural phenomenon" by Brandweek magazine. This is not to say the road to success was without hurdles. Jobs had to persuade the major music labels to allow their artists' songs to be downloaded for 99 cents each, or about $9.99 per album.

After being burned by sites like Roxio's Napster, which allowed peer-to-peer downloading for free, the music industry was hesitant to open its doors to such a proposal. Jobs sold the idea to the recording industry by making sure it would get its cut and relying on his credibility as a well-known name in computers and the head of Pixar Animation Studios. iPod owners would purchase songs via Apple's iTunes Music Store software, accessed through the iMac. The concept represented a cultural change for how people would access, purchase, and listen to music. The support of the industry soon became overwhelming; iTunes now offers more than 1 million tracks, representing 5 major music labels and 600 independents.

Making It Happen

Being first in the market with a very desirable product meant Jobs was able to command upward of $400 for the 40GB (10,000 songs stored) iPod model. More than 1,000 accessories have been rolled out, including car adaptors, custom carrying cases, and home speakers. When other companies realized the power of the iPod, they began cobranding with Apple so that they could get a piece of the action. Hewlett-Packard, Bose, Volkswagen of America, and BMW-which built adaptors into some of its cars' stereo systems-are just a few examples.

Other smaller companies marketed iPod accessories, allowing Apple to extend the iPod's each even further in the retail market. Even U2 got into the game, working with Apple to offer an iPod specific to the band. The iPod's most distinguishing feature, according to Apple's advertising agency, was the white cord that connects the player to the earphones and that identifies iPod users as they go about their daily business, whether that means walking across campus, dancing down the sidewalk, or driving in their BMWs. Anyone can spot a member of the iPod "club."

The introductory multimedia advertising campaign therefore focused on a simple, silhouetted dancing figure with a highlighted iPod and earphones. Apple has a new iPod, which in addition to playing 15,000 songs and displaying 25,000 photos on a 2.5-inch color screen, can play videos. Customers can purchase music videos, short films from Pixar Animation, and TV shows like Desperate Housewives and Lost. There is concern among some network affiliates that this "off TV" viewing will hurt ratings and this certainly may ultimately be true, but the video iPod is an example of the paradigm shift that has been developing.

The Future
The iPod has been such a success that some industry analysts claim Apple would be better off as a marketer of entertainment and consumer electronics rather than a computer company. As CEO, Jobs has a reputation in the marketplace for his creative genius and for personally seeing new products successfully from the initial idea to the product launch. He has been credited with an uncanny ability to spot the next revolutionary innovation that will change the landscape of the marketplace. That's a tough reputation to maintain. Will the company morph into a small electronics marketer?

Will it take a different direction in the not-so-distant future? The answer depends on so many factors that it defies speculation. For the time being, Apple will enjoy its recent successes and prepare for the next big thing. Apple's iPod commands an impressive share of the hard-drive based music player market, hovering around 90 percent. However, iPod is seeing a few serious competitors from other companies. Samsung's Z5 and Sony's new Walkman have earned some recognition and sales.

However, they have some of the same problems other portable players are running into-there are not as many accessories for them as for iPod, their synchronization with the computer to upload songs is not nearly as effortless, and their ease of use is still lagging behind the simple language developed by Apple. Some analysts suggest that the mini player sector will see more competition in the future as it becomes a casual market and price competition begins. But they expect that iPod will still dominate the larger memory portable player market. Its brand recognition is growing each year as more companies are cobranding their products to make iPod easier to use, cooler to own, and more visible than ever

Questions

1. One critical factor that affects the market potential for a product innovation is the ability to offer a differentiated product that delivers unique and superior value to customers. Discuss the extent to which Apple successfully accomplished this with the iPod and with its subsequent introductions, like the iPod shuffle and the iPod nano.

2. How would you classify the iPod today in terms of its stage in the product life cycle? Why?

3. Provide a description of what you think each type of adopter would be for an iPod. Do you think we are seeing late majority adopters or laggards yet?