New Ipad Pro & Ipad 9.7- Reinventing the Tablet Market?

Apple Inc.

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Management 620 Marketing Management

Final Course Project (Summer 2017)

MS BAIM - Purdue University

(Kalyan Mupparaju, Shreyas Krishnamurthy, Shubhda Kulkarni)

New iPad Pro & iPad 9.7- Reinventing the Tablet Market?

1. Introduction

The idea of a tablet computer can be traced back almost 50 years to the late 1960’s, where the concept of Dynabook was hypothesized. However, it was only after the launch of the Apple iPad and Amazon Kindle that the tablet market really kicked off.

The Problem

Companies were slow to realize that the uniqueness of a tablet was far gone and that the market needed something new; a product that would revolutionize the way the customer looked at a tablet. Exhibit A highlights, how Apple’s share has been reducing year on year due to competition from other tablet makers. This, coupled with a continuously declining tablet market, it was imperative for Apple to launch a product that would not only bring a change in its fortunes but also of the market. The tablet needs to change with time and adapt to what customers want. With big-screen smartphones and the rise of convertible touch screen laptops, tablets required regular upgrading to avoid being sandwiched by what can be described as members of their own family. Exhibit B captures the declining trend in the tablet market over the past few years. With sales as high as 78 million units in the year 2014 are now a meager 36 million units. Keeping this in mind, Apple has launched two new products this year, ‘New iPad Pro’ and the budget-priced ‘iPad 9.7’, which they believe is the answer to the ever-increasing problem in the market.

Customer: Who buys tablets?

A wide range of customers buy tablets for various reasons. Every consumer who owns a tablet wants a simple way to browse the internet, write emails, play games etc. without having to carry around a full-sized laptop. In addition to this basic functionality of a tablet, different customer segments would be using them to fulfill their specific needs.

Most children under the age of 10 and stay-at-home moms do not have desktop/laptop level computing needs and are more likely to buy tablets at a cheaper rate to meet their basic needs of surfing the internet.

High school and college students are interested in them because tablets offer a convenient method of taking notes in class instead of carrying around a bunch of books. These students also need more powerful machines without compromising on portability and thus are willing to spend more on the tablets they buy.

Competitor: Who are the competitors for Apple iPad?

Even though Apple was not the first company to make modern tablets, they were certainly the ones who defined the segment. They still hold the largest market share in the tablet market but are losing ground to competitors like Samsung, Lenovo, & Microsoft who have built up their strengths in tablets and convertible touch-laptops. Also, the iPad has to compete against the portable non-touch laptops like Apple’s own MacBook Air.

Why buy an Apple iPad over any other tablet or portable laptop?

The minimum requirements (points of parity) of a tablet that almost all manufacturers provide are portability, long battery life, high-quality screen, and an intuitive user interface.

However, iPad has many distinguishing features (points of difference) which encourage the customers to choose iPad over any other laptop. The points of difference are as follows:

1. Stability and Reliability: As Apple has complete control over both hardware and software development, iPads have a more reliable performance and lower occurrences of bugs, compared to other tablets in the market.
2. Computing Power: iPads have come a long way from their initial days and the pro models of the iPad lineup are as powerful as few of the laptop computers in the market. This is a major factor in attracting the students and professionals who want powerful computing without compromising on portability.
3. Superior Purchase Experience: Over the years Apple has built a great omnichannel shopping experience. Apple has unified the customer experience across each of their platforms. As they have been successful in creating a consistent branding across all their channels, their products are instantly recognizable. The iPads take advantage of this too.

Do customers recognize and value iPad’s distinguishing features?

The design of the operating system in the iPads has traditionally been close to the operating system on the iPhones. This design choice has driven the consumers into believing that the tablets with a laptop like operating systems (e.g. Microsoft Surface) are more powerful. Apple is losing sales from the students and professionals segment as they no longer believe that iPad is the best portable solution for their computing needs. Apple has traditionally priced all iPads at more than $500 at the time of release. This approach worked in the initial stages of the product cycle as the novelty factor drove the customers to buy the iPad for higher prices. However, after the entry of dozens of other competitors with Android and Windows tablets, the segment of the customers who use tablets for entertainment purposes primarily, saw no value in spending $500 for their simple needs. Thus, Apple is losing customers from both the target segments, despite putting in significant efforts in portraying the iPad as more powerful than laptop computers.

1. Apple’s Marketing Mix

Price:

Apple has been known to use premium pricing approach for its products.  Because of the innovation and technology in their products, customers are fine with paying a higher price compared to other brands. Also, Apple uses price skimming strategy on the launch of newer models, being the pioneers in this space. Apple is introducing cheaper routes for people to move into its eco system. At the same time, it has brought a higher quality premium priced iPad pro to cater to its elite customer base.

Product:

iPad is one of Apple’s many products having distinctive special features that make it unique.  With the iPad, Apple has concentrated on providing an enjoyable user experience with a high-resolution display, finger print resistant coating, and palm rejection technology which enables the user to hold the device without inadvertently touching the screen.

Apple currently has three product lines of iPad variants namely iPad Pro, iPad, and iPad mini offering different technological features. This level of diversification is required as the tablet market is currently a mature market.  The Apple iPad Pro is a version of Apple’s iPad that is closer to a Mac than an iPhone. It provides the user with an experience like that of a laptop computer, in a highly convenient and portable design.