Product chosen for marketing report: Apple iPad

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Australia is a relatively small market, in terms of size, as compared to global market size for tablets. However, despite this the Australian tablet market is considered to be a mature market. (Reilly, 2014) With over 9.4 million of the population owning tablet PCs by the end of 2013, the tablet market boasts of a 40% penetration. The total sales figures of tablets had doubled during the year 2013 to 4.8 million units, with a total market worth of $2.4 billion. (Sadauskas, 2014) However, the market crashed by 28% in the last half of 2014 with only 1.8 million units sold in the first six months (Kennedy, 2014), though the market penetration of tablets is still expected to increase to 85% by 2017 (Fairfax Media, 2013).
Tablet market in Australia is generally defined and segmented by prices with the following divisions:

• Low end (< $200) • Medium cost ($200-$450) • High end (> $450)

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Apple devices are clearly the market leader in Australia, though Android devices are rapidly catching up with their sales figures. For instance the market for Apple tablet grew by 52% in 2013 with 2.6 million units sold during the year. In contrast, the market for Android based tablets grew by 186% with 1.9 million units sold during the same period. (Sadauskas, 2014) The reason for this is attributed to the preference for low cost Android devices with a cost range of about $200. This segment is rapidly growing; it currently accounts for 29% of the market and is expected to occupy 50% of the tablet market by 2018. (Sadauskas, 2014) The segment is also responsible for the reduction in growth rate of Apple tablets from 72% in 2012 to 55% in 2013 and 46% in the 1st half of 2014. To be fair, the reduction in growth rate is not limited to Apple tablets, but also the pricier versions of Android-based tablets like the high-end Samsung tablets. (Kennedy, 2014)

Indicators affecting the Australian tablet market
Tablet technology has a global market place and the latest devices are nowadays launched simultaneously across several countries. The marketing strategy followed is also usually common worldwide. Following are the indicators affecting the Australian tablet market:
• Globalization – Australia occupies a very small portion of the tablet market and thus it does not have a significant impact on the global trends. However, the global trends and developments tend to have a strong impact on the local market trends. Australians are generally keen on keeping up with global trends, especially in the technology domain. (ACMA, 2013)
• Digital technology – One of the key indicators affecting the trend of tablet sales is the technology itself. If the technology moves too fast people would not be very interested in purchasing the current model and will wait for better upgrades. This factor is even more important especially for pricey products such as iPads and is one of the reasons for the 28% drop in Australian tablet sales in the 1st half of 2014. (Fadaghi, 2014)
• Uncertain economic environment – Uncertain economic conditions prompt customers to be more value conscious than when regular economic conditions prevail. This is true for the tablet market as well. Interestingly, uncertain economic indicators have boosted tablet sales. This is because tablets are believed to be more value for money and multipurpose than the traditional disparate technologies – PC, laptop and mobile phones. (KPMG International, 2012)

Market segmentation for iPad
In general there are four variables for market segmentation – Geographic, Demographic, Psychographic and Behavioral. (Kotler, et al., 2004) Apple tablets, regardless of their versions, are all high end product versions in the pricey category. The iPad Mini has a slightly lower price range, though it is still marketed as an exclusive product as all other Apple tablets.

Among the four market segmentation variables, geographic variation is mostly unsuitable for tablet markets. There are three reasons for this: first the products are launched, marketed and sold under the same strategy globally; second, the option of online purchase means all people have equal opportunity to purchase the products; third, the tablet devices necessarily require 3G and/or 4G mobile networks. The last aspect is the only limiting factor, however, while 4G is limited to 19% of the population in CBDs of cities, 3G has a 99% penetration, which means people can still get reasonable services on their tablets. (ACMA, 2013)

Demographic variables are considered to be the most effective ways to segments the markets. Traditionally, Apple smartphones had their target consumers as tech savvy people in their teens and twenties. However, Apple and even other companies are now aggressively promoting their products to female customers. The target customers for Apple iPads are chiefly people who can afford to purchase the products. In this segment, iPads have attempted to project utility to all types of age-based and family life cycle based customers. Families are actively encouraged to purchase tablets with mainstream of Apple iPads selected as the main tablet PCs and lower end Android targeting the secondary market or the second tablets for dependent members of the family. (McKenzie, 2012)

Psychographic segmentation has always been extremely important to Apple, from which it takes off the behavioral segmentation. Apple products, including tablets, are status symbols which people prefer over other similar devices because it demonstrates exclusivity. Australian preference of Apple tablets over other similar products clearly reveals this attitude. The behavioral variable Apple most prefers is ‘loyalty’. In fact research has shown that Apple product owners prefer buying other products from the same company. Apple specifically caters to this behavior by simplifying the interconnectivity between all Apple products, treating them as one product umbrella, by making use of proprietary interconnectivity software/hardware. The company also makes it somewhat difficult to connect to other company’s devices, which is a subtle push towards loyalty. This combined with high-end prices has a downside that has affected Apple iPad sales in recent times – the customers prefer waiting longer times to recycle or upgrade their products, which low-cost tablets are aggressively and successfully battling against. (Chanthadavong, 2014)

Target Market for iPad
As seen in the initial section, tablet market is generally differentiated in terms of price. The common segments are:

• Low end (< $200) • Medium cost ($200-$450) • High end (> $450)
(Reilly, 2014)

Apple iPad, regardless of the models tend to fall in the higher end segment, though a limited number of iPad Mini is available in the medium price range. Apple’s objective has always been to provide exclusivity to its customers, and hence the brand has strived to purposefully create such an ambience. The products are aimed to bring in customers to the Apple family and contain them within. (Chanthadavong, 2014)

The target customers are primarily individuals and families with sufficient disposable income to afford and aim for exclusivity. Till recently, Apple’s target customers were tech savvy men with sufficient disposable incomes, who Apple claimed, had an eye for quality and high technical and esthetic standards. However, Apple has been aggressively expanding its target customer base to include women and customers of all ages, including retirees, as they have a higher level of disposable income. Children have also been pursued as a focus segment, by developing high-quality, user-friendly educational apps that schools promote. (McKenzie, 2012) Essentially this means that Apple’s target consumer segment is not based the – Geographic, Demographic, Psychographic and Behavioral, it is meant for consumers who can afford to buy high-end tablets. However, as the previous section shows, Apple markets its products by stressing on the psychographic element of exclusivity, from which it draws the behavioral element of loyalty – exclusive image to bring paying customers in and loyalty to make them stay.

  • ACMA, 2013. Communications report 2011–12 series Report 3 – Smartphones and tablets Take-up and use in Australia, Canberra: ACMA.
  • Chanthadavong, A., 2014. Australian tablet sales reach 4.8m in 2013: Telsyte.
  • Fadaghi, F., 2014. Australian tablet sales drop 28% in first half of 2014; lack of reasons to upgrade holding back market.
  • Kennedy, S., 2014. http://www.smartcompany.com.au/technology/36061-9-4-million-australians-now-own-tablets.html#.
  • Kotler, P., Armstrong, G. & Cunningham, P. H., 2004. Principles of Marketing. 6th ed. s.l.:Pearson.
  • KPMG International, 2012. Sharing knowledge on topical issues in the Technology Industry.
  • McKenzie, A., 2012. Chapter 8:Segmenting and Targeting Markets.
  • Reilly, C., 2014. Smartphone volume growth in focus as average sales prices decline by 33 per cent.
  • Sadauskas, A., 2014. 9.4 million Australians now own tablets.

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