Apple iPod's Promotional and Positioning Strategies

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Case Details:

Case Code : MKTG179
Case Length : 14 Pages
Period : 2001-07
Pub Date : 2007
Teaching Note :Not Available
Organization : Apple Inc
Industry : Digital Music Player
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

It was placed as a product of the present generation and presented a picture of "coolness". Commenting on the fad that iPod had created, John Zhang, Professor, Wharton University said, "All MP3 players do the same thing, but nobody else has the 'cool' factor of iPod. It's a status symbol: You're young, cool, vigorous if you have one."6

Background Note

Steve Jobs, Steve Wozniak and Ronald Wayne founded Apple Computers on April 01, 1976. At that time, Steve Jobs worked for Atari, Steve Wozniak worked for HP and Ronald Wayne was Jobs' collegue at Atari. They assembled the first personal computer (PC) in Jobs' father's garage, custom-made for a local computer store. They assembled fifty such PCs exclusively for this store and sold them for US$ 666.66 per system. This system was called Apple I. Later, they built another 200 PCs before the next version was worked upon. Apple was incorporated on January 03, 1977.

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In April 1977, Apple II was launched which was a much improved version of its predecessor. The differences lay in the display, which used graphics and color. However, when the system was designed, it was realized that the company would need a lot of financing to market this product.

It was at this time that Mike Markkula, a venture capitalist, invested US$ 92,000 in the company.7 In May 1980, Apple III was released to compete with IBM's first PC named the IBM-PC.

By then, Apple was employing several thousand workers. Apple III was priced at US$ 1,395. However, due to a design fault,8 this product failed and thousands of Apple III computers were recalled.

Apple made losses of over US$ 60 million due to this recall. Apple came out with its initial public offering (IPO)9 in December 1980. Around 4.6 million shares were sold for US$ 22 each in this IPO. In January 1983, Apple launched LISA10.

It was Apple's first GUI11 computer, which introduced the words 'mouse', 'icon', and 'desktop' to the world. LISA was priced at US$ 10,000. Apple introduced Apple Macintosh in 1984. It was built inside a beige case and came with a black and white monitor, a mouse and a keyboard. It was the first personal computer with a floppy drive...

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6] "Companies That Use Combative Advertising May End Up with a Black Eye," Knowledge@Wharton, June 14, 2006.

7] "1976 -1979: The Beginning",

8] It did not have a fan to cool the interiors. The computer was designed such that the heat generated by the interior electronics got dissipated through the casing, thus avoiding the cooling fan. However, the design of the case was insufficient to cool the components inside and Apple III was prone to overheating. This caused the circuits to disconnect from the motherboard.

9] Owen Linzmayer & Bryan Chaffin, "This Week in Apple History",, December 16, 2004.

10] LISA is an acronym for Local Integrated Software Architecure.

11] Graphical User Interface is a graphical (rather than purely textual) 'communication' with a computer. Elements of a GUI include such things as windows, pull-down menus, buttons, scroll bars, icons on the desktop, wizards, and the mouse. For example, if a system is not GUI enabled, the user would have to write the command in a programming language to, lets say, take a printout. However, because of GUI, there will be an icon which is especially for the printer which makes taking the printout very simple (Source:


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