In this report, it aims to analyze and evaluate the market segmentation of Apple iPhone 4S. First of all, based on the theory of means end chain, the product is analyzed through product attributes, consequences of use and personal values. Special features of the product lead to the consequence of use, which finally stand for the value of the product. Besides, consumer markets are segmented according to different groups. Therefore, in this report, based on the analysis of four different categories including demographic, psychographic, use-related and benefit sought, it states consumers have different characteristics in terms of different items in each category, and then it identifies three groups of iPhone 4S consumers, including the primary targets of iPhone 4S are people who are loyalty to this brand with some knowledge of it, another two big groups are people who are interested in new high tech phones and people who are chasing social acceptance. It indicates that groups with special features share the same choices when they are making the purchase decisions. Furthermore, based on two reference groups, friends who are using the same products and other people who are interested in discovering applications in smart phones and give comments on the products, this report shows that purchasing decision from reference groups may have very important influence to target customers’ decision-making process. This report has given five recommendations, which is beneficial to maintain existed consumers and attract non-consumers awareness. There are five parts of the marketing, including print advertisement, Internet spreading, eye catching promotion, TV and on site experience.

Table of Contents

1. Introduction of background information 3

1.1 Aim 3

1.2 Background 3

1.3 Scope 4

1.4 Methodology 4

1.5 Assumption 4

1.6 Limitation 5

1.7 Plan 5

2. Consumer analysis 5

3. Market segmentation 6

3.1 Demographic segmentation 7

3.2 Psychographic segmentation 7

3.3 Use-related segmentation 8

3.4 Benefit segmentation 8

3.5 Define of three groups of target consumer 9

3.5.1 The first group: customers with high loyalty to Apple 9

3.5.2 The second group: technical oriented 10

3.5.3 The third group: social acceptance oriented 10

3.6 Primary target market 10

4. Influences from reference group 11

5. Recommendations 12

5.1 Main strategy and consumers’ needs, value and motivation 12

5.2 Ways to reach customers 12

References 14

1. Introduction of background information

1.1 Aim

This report aims to find out the target consumers of iPhone 4S by analyzing different segmentations and to give some recommendations on media strategy by understanding the inter relationship between three groups. Three different groups will be defined and their inter relations will be illustrated.

1.2 Background

As the 5th generation of iPhone, a line of smart phones designed and sold by the company, Apple Inc, iPhone 4S was released on October 4, 2011. It retains the exterior design of predecessor phones but adds a lot of improved hardware applications and software updates. One of the biggest improvements is a voice recognition system called Siri, which is a breakthrough in its field and attracts lots of consumers. A could storage service known as iCloud is also used in iPhone 4S (Boyce, 2011). Compared to old version, the iPhone 4S also contains many other improvements, including speedy dual core processor, superb camera, increasing applications, different language support and etc.

As a high tech cell phone plays music, takes pictures, displays videos, keeps track of schedules and obtains emails and so on, iPhone positions itself as a premium brand at a premium price (Arvidson, 2011). Firms can reach a premium position when it has a competitive advantage over competitors. iPhone 4S, as one of the market leader at its time, has a high protection of intellectual property and thereby having a high margin of profit. Supported by the strategy of the group, fans of Apple are using products in one series from the firm, including Mac, iPhone, iPad, and iPod.

However, as the emerging of Android system, high tech phones such as HTC, Galaxy series from Samsung, come to consumers’ options. Iphone started losing its almost dominating position in this market (Hexakuemion, 2011a). Competition is going fiercer as firms want to get more shares in the market. Nowadays, consumers are having more choices apart from iPhone, therefore the sales of new generation of iPhone is uncertain in the future. It has already lost part of its consumer. One direct evidence is the drop of share price of Apple at the first day of the launch of iPhone 4S (Reference!). Thereby, how to attract consumers’ interest in new iPhone products is what the company is worry about now.

1.3 Scope

This report specifically relates to the iPhone 4S.

1.4 Methodology

Information from relevant books and journals are collected to find out the characteristics of the product and features of consumers. Theories are applied in the analysis of behaviours of target consumers.

1.5 Assumption

It assumes that consumers’ behaviours are in consistent with theories and information gathered is real.

1.6 Limitation

Practical data is not collected directly from customers. Thereby, it is possible that second hand material may have some errors. In the meanwhile, it is a research based on theories rather than practical research.

1.7 Plan

In this paper, it will analyse consumers behaviour relating to the launch of iPhone 4S. Features of the new product attract consumers and groups of people are targeted by Apple will be discussed. The presence of Means-end theory also contributes to analysis consumer behaviour and different ways of segmentation among different group of customers. Finally, five recommendations according to the analysis of consumer behaviour and target market will be analyzed.

2. Consumer analysis

Means-end theory sustains that the way consumers relate to products can be stood for by a hierarchical model of three interconnected levels, including product attributes, consequences of use and personal values (Costa, Dekker & Jongon, 2004). Means end chain refers to the process how the product attributes lead to the benefits and finally goes to lifestyle values (Bagozzi & Dabholkar, 2000).

Product attributes are the main features of the products that make differences. In the case of iPhone 4S, as it is analyzed in the last part, this smart phone has a lot of special features such as the amazing voice recognition system “Siri”, the high speed system iCould, numerous applications, wonderful connections with other Apple products. IPhone 4S by itself stands for the latest fashion. It has a very famous brand name attracts a lot of loyalty fans of this brand. The outstanding applications, systems, and well-known brand name are the biggest attributes of the product.

Consequence of use refers to the benefits consumers get from using this special product. Firstly, consumers can enjoy all the good aspects in applications and system. People get cool experience talking with “Siri”, which is something special that other phones cannot provide. There are a plenty of applications that consumers can choose to experience, including the latest music and games (Hexakuemion, 2011b) In addition, the sensitive touch screen, the fast system, the simple and beautiful design all allow consumers enjoy using the product. Furthermore, iPhone 4S makes consumers’ life easier by combing a lot of functions together in one phone. People can take clear pictures, make notes, set alarms and do a lot of other things with this one small phone. Secondly, consumers get satisfied psychologically. A lot of the loyalty customers are big fans of the brand. Using this product will satisfy them by heart. Moreover, the latest generation will attract people’s attention, which will provide them extra satisfaction (Meyer et al., 2011)

Personal values here refer to the value added. Firstly, as it is noted in the last part, iPhone 4S helps people to simplify their life. They can manage a lot of different things by this one single phone. Secondly, people who use iPhone 4S feel pleasure in their life as they have access to a lot of fun applications and can reach to other people easily due to the easy connected Internet. Thirdly, people are gradually living in an active lifestyle. Notes and alarms can be easily set on this phone to remind them the schedule, helping them to arrange time. Forth, it helps them to improve their self image, giving out a image of fashion and active.

Product Attributes

Benefits Sought

Goals/Lifestyle Value

Numerous applications

Enjoy applications and system

Simple life

Amazing system

iCould

Make life easier

pleasure

Siri

Satisfied psychologically

Active lifestyyle

Sensitive screen

Build self image

Simple but beautiful design

Fashion

3. Market segmentation

It requires creating sub groups from a larger population to target specific consumers in the segmentation of market. There are a lot of different ways to segment a market depending on the business, product or services and the characteristics of consumers. In general, segmentation is to find out the identical features of specific groups of people. Demographic, geographic, psychological, psychographic, socio-cultural, use-related, use-situational, benefit and hybrid are the normally used ways to segment (Reference!). In this report, it will focus on four segmentation bases showing in the context and table below.

3.1 Demographic segmentation

Based on variables such as gender, age, family size, income, education, occupation, religion, race and nationality, customers can be divided into different groups (Kotler & Keller, 2006; Riley, 2012). In case of iPhone 4S, income, age and gender have some impacts when consumers are making the purchasing decision. In the launch of iPhone 4S, the purpose is more to give people who own iPod the priority to get access to iPhone. Thereby, the launching price is lowered compared with other generations in this series. Apple gives out some of its premium to reach more customers. In this case, the target consumers are middle class users who have the ability and are willing to pay for it (Garside, 2011). Furthermore, the numerous simplified applications give people over 30 the chance to use these applications easily. Instead of complex operations, iPhone 4S make it easy for people to use the system and applications. This gives people who are not so familiar with latest fashion in high tech smart phone the chance to use it. Normally, young people are in the first row of fashion as they can easily accept and learn new things. In terms of gender, men can adapt to new changes faster than women, especially in high tech ones. According to the research, over 70% of the users are male (Reference!).

According to the features of the product, the target consumers are more middle class people who are able to pay for this luxury and willing to accept new changes and try these new improvements. At the same time, they are able to pay for it.

3.2 Psychographic segmentation

In this category, social class is the basis of the segmentation. The market is segmented based on the different interests, opinions, self images, values, personalities, attitudes and activities of the consumers (Thomas, 2007). Different people may have different interests. People who are interested in iPhone 4S will at least have some interests in high tech product. The fast system, special voice recognition “Siri”, and enormous applications must have some attractions to them. Moreover, people in different lifestyle with different personality will also impact their choice. The targets of iPhone 4S are people who live in a fashionable life and who are curious about novel innovations.

3.3 Use-related segmentation

According to the usage rate, awareness status and brand loyalty, markets can be segmented. In terms of usage of the products, there are heavy users, medium users, light users and non users (Gogia, 2011). In general, the more frequently a product is used by a consumer, the bigger is the chance that the consumer will purchase it. Heavy and medium users will have more chance to buy the product while non users will not make the purchase. Turning to awareness status, consumers can be distinguished according to their knowledge about the product into unaware, aware, interested and enthusiastic. People who are enthusiastic or at least interested will have more chance to use the product. If a customer does not even know the existence of the product, there is no way that he will purchase it. Brand loyalty is also important when people are making decisions. There are three types of people, including no loyalty to brand, some loyalty and strong loyalty fans. People who have strong loyalty normally have more possibilities to use the product from the specific brand. In Apple´s case, there are a group of people who are in love with products from this firm and willing to buy different versions of product from this firm. This is also how a brand get premium over other ones. A lot of people choose iPhone because they have used other products such as iPod, or iPad. Moreover, these products can be used together easily, which increases the chance for loyalty customers to continue their consumptions in the firm.

The target of IPhone 4S also include these loyalty customers. They know a lot about products in this company. They are heavy users and enthusiastic about the new products. In addition, they are willing to pay for extra money to get new versions.

3.4 Benefit segmentation

Different customers get different benefits from the same products (Haley, 1995). For example, some customers are attracted by the convenience of iPhone 4S because of the simplified system and applications while some other choose to use iPhone 4S due to the very high social acceptance of the product. As a lot of people are using it and making recommendations on it, the possibility increases that other people will also see it as the first choice. Iphone is the leader in smart phone market. With its loyalty users, iPhone has a very large market share at the beginning of its launch. People will see it as something more than a phone rather something fashionable and something that can stand for social status. The wide social acceptance also attracts a lot of users. In other aspect, people could also be attracted by products that can last for a long time or products that are economical for the money.

In the case of iPhone, the convenience attracts a lot of people. Besides, various applications, special system and cool design are different benefits for different people. Customers are also attracted by these.

3.5 Define of three groups of target consumer

This report will define and analyze three groups of target consumer as below:

3.5.1 The first group: customers with high loyalty to Apple

The first target group is people who have high loyalty to Apple. In general, as is shown in the table below, iPhone 4S attracts a lot of different groups of people. First, there is a group of people who has strong loyalty to this brand, acting as the role of primary customer. Primary group consumers are mainly people who are the big fans of the products of Apple company, not only iPhone but also products in other series such as iPod, iPad and iTouch. People in this group may have more than one product from the firm. They know well about the features and the benefits of the products and they are willing to pay for the extra money to get these features. They are the people from the middle to high class in the society and have the ability to pay for the new products in the company. They are the main consumer group of the company. This is also the main reason why Apply can have a higher price than most of its competitors.

3.5.2 The second group: technical oriented

The second group is people who are attracted by the novel design and functions of the product. These people are adults in the middle class, who are curious about new high tech products. They use smart phone quiet frequent. A superior product could simplify one’s daily life.

3.5.3 The third group: social acceptance oriented

The third group is people who chase after social status. Social acceptance and fashion are the main reason of their purchase. They are capable to pay for iPhone 4S as their daily supplement, they still need to use external material to differentiate with others and make them feel confident. Among these three groups, the first group is the primary customer. They are the reason why Apple can enjoy premium in the market.

3.6 Primary target market

In this report, the first group above mentioned is considered as the primary target group. These loyalty customers support most of the consumption of the products. In addition, they lead the fashion of the product. Their preference on the product makes it possible for Apple to chare a premium price because they are willing to pay for the special experience of the brand. This is also the main reason why Apple can have a higher price than most of its competitors. This group of customer supports the premium strategy of Apple. This explains the competitive advantage which Apple obtains. Therefore, people who have high loyalty to Apple can be regarded as the primary target market.

Demographic segmentation

income

low

Too luxury for them

middle

Lower premium fits them.

high

Probably already got one or something better

age

young

Interested and easy accept new product

adult

Interested but not easy to learn

old

Not very interested and not easy to learn

gender

female

Not much interest in high tech, but interest in fasion

male

Interested in high tech

Psychographic Segmentation

interest

curiosity

Attracted by high tech product: the fast system, special voice recognition “Siri”, and enormous applications

uncuriosity

Not interested

lifestyle

fashion

Interested in, follow or lead fashion

unfashion

Don’t care about fashion

Use-related segmentation

usage

heavy users

Use iPhone very frequently

medium users

Use iPhone frequently

light users

Use iPhone sometimes

non users

Do not use iPhone

awareness

unaware

Don’t know the product

aware

Hear about the product

interested

Interested to know more about the product

enthusiastic

Totally attracted by the product

Brand loyalty

no loyalty

Switch between brand very easily

some loyalty

Will consider brand when making choice

strong loyalty

Brand is their first consideration

Benefit segmentation

convenience

Easy use is important for these customers

social acceptance

High social acceptance is the reason for this customers

Functions

Various applications, system are the reason of choice.

4. Influences from reference group

Primary customers can be influenced by other people. Many different groups can become reference groups when people are making their purchasing decisions, including friends who are using the same products, sales person from the company, and other people who are interested in discovering applications in smart phones and give comments on the products (Bearden & Etzel, 1982).

Firstly, one of the main reference groups is friend who has used or is using the same product. Thanks to attract by the amazing product, some people started to use this product. Then, they can experience the convenience of the system, the interesting of the applications and the fast speed of the system and many other advantages. Then, they will recommend their iPhone to other people who are also interested in it. Recommendations from friends are always the most convincing way to approach promotions. Target customers can even have tried the products from their friends and be enthusiastic about it. This could be the first step of their purchase decision.

Secondly, people who are interested in discovering applications in smart phones and then give their positive comments online could also be one of the major reference group. After the first decision of purchase this product, target consumers may go to internet to get some more detail information about the product. People who are application oriented will discuss the applications they experience from the phone, arousing interests of customers in primary group, which could attract them to purchase. They may even have a favorable impact as they may come up with insight ideas to improve the efficiency and the quality of applications in the future. In general, purchase decision from reference groups may have essential influence to target customers’ in their decision making process.

5. Recommendations

5.1 Main strategy and consumers’ needs, value and motivation

Considering the features of iPhone 4S, it is important to keep the premium of the product while enlarge its consumer segments market. The strategy is to continuously develop better attributes and value to obtain potential consumer to make them satisfy about the product, this could make customer feel their money worth the price (Liu, 2011). For the primary customers, they are loyalty to the brand. The biggest motivation of their purchase decision is their passion to this product. Their loyalty and preference to the product makes it easier to do the marketing. The only thing to do is to give them access to the product, let them experience it, and then make sure they are interested and finally they will make decision to purchase.

5.2 Ways to reach customers

Firstly, print advertisements should be used to reach primary targets, which are mainly middle class people with good jobs. Making print advertisement in popular magazines will give them the first impression and opinion of the product.

Secondly, apart from print advertising, an important and eye-catching new product promotion is a crucial part of the whole process. This is the beginning of all the purchase decision. A successful one may arise people’s interest in this product and place a positive image of the product.

Thirdly, it should take fully advantage of other general advertisement such as TV, movie and posters. This can spread to more people in a short period. Especially the movie advertising, although it could be very expensive, a good advertising could form a favorable perception in order to achieve non-consumers’ awareness (Shimp, 2010).

Fourthly, it should focus on its new features when doing advertisings. As many people have already known many parts of its old features, the significant improvements of the new generation should be displayed to audience. As there are so many features of this product, the ones that consumers are most interested should be strengthened. When people get awareness from either online advertisement or the description from their friend, they will start to search more information about the product. Therefore, apart from a general introduction, some special advertisements have to focus on its core features. As a high tech smart phone, most of users and potential users often acquire reviews from others in the Internet (Reference!). Hence, it is a good choice to advertise online. Specifically, forums that royalty fans may go will attract the first group of customers. Then, these people will recommend to other people. Advertising in this way is always most effective. In this stage, people know more about the features and get interested in it.

At last, experience stores should be built to provide the chance for people who are interested and enthusiastic about it to try the system and applications. The more involvements among consumers, the more consumption will be made in the future. Via experience stores, they can decide the worthiness of money spending on such a product, like iPhone 4S. Based on the characteristics of the primary target consumers, the purpose of using social media is to promote the awareness of that iPhone 4S is an available now with the same quality, improved system and applications and lower price.