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Apple Inc.

The iBrick:An Indestructible and Fully Waterproof Smartphone

Christian Gudino, Alec Monaco, Chad Sorensen, Ben Sullivan

BUS 306 – Marketing

Presented to Professor Carol Davis

May 04, 2014

Table of ContentsExecutive Summary 5

Situation Analysis 7

Market Summary 7

Segmentation Analysis 9

Geographic 9

Demographic 9

Psychographic 10

Market Analysis 10

Market Needs 10

Market Trends 12

Market Growth 13

SWOT Analysis 13

Strengths 13

Weaknesses 14

Opportunities 14

Threats 15

Competition 15

Product Offering 16

Keys to Success 17

Critical Issues 18

Marketing Strategy 19

Mission Statement 19

Marketing Objectives 19

Financial Objectives 20

Target Markets 20

Demographics 20

Geographics 21

Psychographics 21

Positioning 21

Strategies 22

Marketing Mix 22

Pricing 22

Distribution 23

Marketing Communications 23

Marketing Research 24

Financials 24

Break-even Analysis 24

Sales Forecast 25

Expense Forecast 26

Controls 26

Implementation 26

Marketing Organization 27

Contingency Planning 27

References 28

Appendix 32

List of Tables & Figures

Figure 1: Survey Respondents Who Have Damaged a Phone 11

Figure 2: Respondents Who Have Owned a Smartphone 12

Figure 3: Break-even Analysis 24

Figure 4: Sales Forecast 25

Figure 5: Expense Forecast 26

Executive SummaryThe iBrick is a new smartphone device to be introduced by Apple Inc. that features

water-proofing, a crack-resistant screen, and an impact-damage absorbing frame. These core

features were incorporated as a response to a survey conducted for primary research that found

that 45% of respondents had damaged a smartphone by dropping it, over one-fourth had broken a

smartphone by dropping it in water, and 81% claimed they would be interested in a new

smartphone that could prevent these scenarios. The iBrick offers consumers true innovation, as it

will be the first smartphone on the market that can prevent both impact and water damage.

Though the iBrick functions like any smartphone currently on the market, and thus can be

advertised to the general public, the iBrick’s unique features make the product a prime candidate

for differentiated marketing. The iBrick’s primary target market consists of men and women,

ages 25-34 who enjoy an adventurous, outdoor lifestyle. Adventurous consumers would greatly

benefit from a smartphone that is durable enough to be taken anywhere on land, and versatile

enough to be taken completely underwater. Due to the strength of Apple’s brand and the smooth,

high-tech capabilities of the iBrick, the phone will attract not only the adventurous consumer, but

also the “average” consumer who is fed up with replacing fragile and expensive smartphones.

Similar to Apple’s other iPhone products, the iBrick’s primary competitors will be other

market leaders, Samsung and Sony. These competitors have recently released smartphone

models that are water-proof, such as the Sony Z-series Xperia, and the Samsung Galaxy S4. That

said, the true threat to the iBrick will not be direct competitors, but instead product substitutes.

Currently, there are a number of companies that offer smartphone cases that can prevent water

and/or impact damage. OtterBox, LifeProof, and Urban Armor Gear are all companies that offer

smartphone cases that increase a smartphone’s durability and versatility; these companies are

offering consumers a cheap, replaceable alternative to purchasing an improved smartphone

model, and therefore are perhaps the greatest threat to the iBrick.

The iBrick will be distributed primarily in North America and Europe, where long-

established Apple advertising campaigns can properly target the iBrick’s primary target market.

Though Apple’s extensive distribution channels will allow for the iBrick to be sold in

burgeoning markets such as China and India, the product will not be as well-received as lower-

cost competing models.

Based on the iBrick’s sales forecast, which was created using data from Apple’s release

of the iPhone 5 and iPhone 5S, the product is expected to sell 23 million units in the first quarter,

and 77 million units in the first year. The iBrick’s sales will slowly decrease over time as the

product’s technologies become obsolete and newer, more advanced models come to take its

place. The iBrick is expected to sell 60 million units in its second year, and 40 million units in its

third. At the unit price of $600, the iBrick will break even before the end of the first quarter of

the first year.

The success of the iBrick is heavily dependent upon Apple’s historically efficient

distribution channels and advertising campaigns. The iBrick’s innovative technologies and

enhanced versatility, coupled with the strength of the Apple brand, should create a successful

smartphone product that is attractive to more than just the adventurous consumer.

Situation AnalysisThe smartphone industry is one that is easily characterized as highly innovative and

ruthlessly competitive (Cromar, 2010). With every new product introduction, consumers expect

the most advanced and updated technological features possible. However, in the past few years,

smartphone manufacturers have been focusing heavily on improving software capabilities and

data speed, while simultaneously ignoring longtime issues in the smartphone market.

Smartphones are incredibly expensive products that many consumers find themselves

replacing all too often. According to a survey conducted in the U.K., among 1,486 recently

destroyed iPhones, the most common causes of breakage were being dropped, crushed, or

damaged by water (Snol, 2013). Apple holds the lead market share in the original equipment

manufacturer (OEM) industry with a commanding 41.6% to Samsung’s 26.7% market share

(Zacks Equity Research, 2014). The manufacturing market leader has consistently led the OEM

market in innovation and in consumer loyalty (Eddy, 2014). Though this innovation has kept

Apple ahead of the curve for a very long time, the company has found that many consumers,

those loyal to Apple included, believe that Apple is past its peak (Guglielmo, 2014). Apple can

improve and restore its reputation by capitalizing on the long-unaddressed consumer need within

the smartphone market for more durable smartphones. For these reasons, Apple will market its

new product, the iBrick, a smartphone that is both waterproof and completely resistant to impact

damage.

Market SummarySmartphones are expensive and fragile pieces of technology that have become so

commonplace in modern society that they are seldom treated as delicately as they ought to be.

For the purpose of this marketing plan, a survey was conducted among smartphone users. The 10

question survey asked respondents what type of smartphone they owned, if any, and if they had

ever broken or damaged a smartphone in the past. The survey garnered over 70 responses, and a

transcript of the questions asked can be found in this report’s appendix. Among respondents,

more than 44% claimed they had owned a smartphone that was damaged by being dropped, and

more than one third claimed they had cracked a screen before. The survey also found that nearly

one-fifth of respondents had replaced a prematurely damaged smartphone more than once. Issues

with smartphone fragility have existed in the smartphone industry since its inception, and many

consumers have been forced to cover their phones with replaceable cases in the absence of a

more durable smartphone model.

Apple competes in many different markets pertaining to the smartphone industry. The

company is involved in computer manufacturing, prepackaged software, electronic stores,

software, and peripheral equipment manufacturing (Apple Business Summary, 2014). The iBrick

would fall under Apple’s smartphone and computer manufacturing departments, as it seeks to

improve the hardware of existing smartphone models.

The smartphone industry has been growing and expanding consistently since its

inception; however 2014 is expected to bring about a lull to this growth (Maisto, 2014). Since

Apple’s release of the iPhone 5C, top smartphone manufacturers have been racing to corner the

market for affordable smartphones that can be made available to emerging markets in developing

nations (Holliday, 2013). This market expansion will set a new price standard for smartphones;

while demand for smartphones will rise continuously, manufacturers will be forced to lower

smartphone prices and as a result can expect a much smaller growth in annual revenues (Maisto,

2014). This drop in revenue growth is expected to hit all top manufacturers in the smartphone

industry; however, Apple certainly has the power and sustainability to last through the shift in

market demand. Because Apple does not rely on appealing to the mass market for any of its

products, the company is expected to show much higher resistance to the shift in market demand

(Reuters, 2014). Additionally, Apple once again ranked as the lead market share in the original

equipment manufacturing market, making the company the effective leader of the smartphone

hardware market (Eddy, 2014).

Segmentation AnalysisGeographic

Apple is trend with all of the products it has come out with; iPods, iPads, Macs, and

iPhones. One way that Apple is a trend is that it is increasing its perforation in the education

market as well as with the launch of the iPhone 5 sharing data plans with any other Apple

product that people own. iPhones are all around the world, not only that, but they are built from

all around the world which include countries such as: China, Thailand, Malaysia, the Czech

Republic, South Korea, Singapore, and the Philippines. The market has increased so much more

around technology, keeping up with every movement isn’t easy, but Apple has created a phone

so simple that anyone can use it. iPhones are designed to make consumers lives easier, when

Apple created the iPhone they wanted to target a market that is social on a daily basis. In the

U.S., iPhones are the most popular item on the market and growing quickly as technology

increases.

Apple is a very well-known brand. Not only in the U.S., but also around the world. iBrick

will be introduce in the U.S. and from there own it will expand to China. China being where the

iPhone is built, the iBrick will have such an impact to these countries. People that will want their

hands on the iBrick will be everyone from a business person, to an adventurous person, to an

eldelry person. Eventually the iBrick will expand around the world, everyone will want their

hands on one. Not only will people be amazed by the iBrick, but as well as satisfied with the

product they invested in.

DemographicAfter viewing all the results, not only from the survey that was conducted for the iBrick,

it was noted that more women buy or have an iPhone than men. Men are most likely to own an

Android-based phone because they find the iPhone simple according to a survey conducted by

Pew Research Centers Internet American Life Project RSS. Most people that own an iPhone

make more than $75,000 of household income. People want what is popular, with the iPhone

coming out every year or so people want to be updated with the latest trend. The best targets for

iBricks are between the ages of 20-34, as well as people between the ages of 40-55. Seniors, 65

and older are slowly growing into the use of a smartphone.(Pew Research Center, 2014) These

demographics show what would be best for the iBrick’s demographic.

Behavioral/PsychographiciBricks attract anyone that has an active and adventurous life. People love iPhones mainly

for the camera it carries. It is simple and easy to take photos wherever one is located. The survey

that was conducted for the iBrick analyzed why people own a smartphone. People that are

between their twenties to thirties own a smartphone, this group of people are always on the go

with their busy lives. The target psychographic believes that this group of people will use their

smartphones more often than any other group ( Pew Research Center, 2014). These are just a few

targeted psychographics to the iBrick.

Market AnalysisMarket Needs

Smartphones are incredibly sensitive and advanced pieces of technology that should,

ideally, only be replaced every few years. However, most smartphone owners find themselves

replacing their phones all too often. One survey, conducted in the U.K., found that the average

iPhone is damaged or destroyed within just 10 weeks of purchase (Snol, 2013). Because the price

of a new smartphone can be quite high, many users will suffer through a broken phone, or

attempt to cover their phone with a protective screen before any damage can occur. Most

consumers have simply accepted that smartphones will always require great care and caution,

because this need has gone unaddressed for so long. However, the iBrick can change the

consumer attitude on smart phones, and create a new demand for a more durable and versatile

smartphone model.

A survey was conducted in hopes it would support the hypothesis that there would be a

demand for impact and water resistant smartphones. This hypothesis was supported when over

81% of respondents claimed that they would be interested in purchasing an iBrick smartphone.

Additionally, 51% of respondents claimed they would be willing to pay at least $100 more for an

impact resistant phone than a regular smartphone. The survey also verified that impact damage

and screen cracks were the most common causes of smartphone damage (refer to Figure 1).

Figure 1- Survey Respondents Who Have Damaged a Phone

Apple’s customer loyalty and market ubiquity also proved promising for the iBrick, with

nearly 60% of respondents claiming they currently owned an iPhone (refer to Figure 2).

Furthermore, the iBrick will likely prove strong competition for leading smartphone case

manufacturers. While half of respondents claimed that they owned an OtterBox, Lifeproof, or

Urban Armor Gear smartphone case, a majority of respondents (55%) claimed that they did not

enjoy buying cases for their smartphone. This shows that smartphone cases, as seen by many

consumers, are a temporary and mediocre solution to a long unaddressed need.

Figure 2 - Respondents Who Have Owned a Smartphone

Market TrendsThe smartphone market is one that can make identifying trends difficult. Because

products in this market are highly valued for being innovative and ground-breaking, the

environment is constantly changing. Most recently, the smartphone market has been trending

toward affordability and availability. Many smartphone companies, most notably Apple, are

releasing products aimed at lower-income individuals, often in foreign countries, in order to

penetrate new markets globally (Ricknas, 2013). By focusing on low-end devices, lead

smartphone manufacturers are hoping to expand their overseas operations and gain more market

share in international smartphone markets. This trending strategy for smartphone manufacturers

is a response to the expectations that the U.S. smartphone market will stagnate in growth within

the next few years (Blodget, 2012).

In order to adjust to the high demand for low-priced devices, smartphone manufacturers

are trending towards running all supply and packaging operations out of China. In 2013, 38% of

all mobile phone shipments were carried by Chinese brands. ABI Research has predicted that in

2015, more than half of all mobile phone shipments worldwide will come from China (Patterson,

2014). The availability and low-cost of Chinese labor, coupled with China’s centralized location

in Eastern Asia has made the country an incredibly powerful manufacturing giant in the tech

world, a trend which will continue to grow in coming years.

Market GrowthIn 2014 the smartphone market is expected to experience an uncommon lull in growth.

Apple and Samsung have both released new smartphone models aimed at emerging markets in

foreign nations; these cheaper models have set new, lower price standards for the market, which

is expected to bring about a much slower growth in revenue (Reuters, 2014). Global shipment

growth has been predicted to slow from 45% in 2013, to 25% in 2014, with U.S. and European

markets seeing a paltry 7% growth in 2014 (Holliday, 2013).

Conversely, the smartphone market is expected to continue expanding geographically

into new world markets 2014, with expectations being set for deeper market penetration in

emerging markets and developing nations such as Russia, India, Indonesia, and Latin America

(Lin, 2014). These emergent markets have shown a growth in the demand for smartphones; in

2013, for the first time, smartphone sales outperformed normal mobile devices globally. While

these new market opportunities will provide new possibilities for leading smartphone companies,

Apple and Samsung, the low-cost requirement of the products being sold in these nations will

lead to revenue drops across the board within the smartphone industry (Reuters, 2014).

SWOT AnalysisStrengths

In the market today, there has not yet been a smartphone product that is indestructible.

The iBrick is backed by a strong marketing strategy that introduces many strengths. The Apple

iBrick is a smartphone that is durable and eliminates the need for a bulky case. The phone’s

features include: crack resistant glass, shock absorbent casing, and new waterproof technology,

allowing a consumer to use high definition video, photographs, and great sound quality.

Underwater use would also be possible. Unlike any phone case today, such as Lifeproof, one

would be able to operate the phone while it is fully submerged.

Apple is probably one of the most well-known companies when it comes to the making

of technology that is cutting edge and something that everyone wants to have in their possession

(History, 2014). For being so popular and innovative, Apple has been a well trusted organization

for many years with a good reputation for satisfying its customers.

WeaknessesEven though Apple has a great reputation for its innovation and trusted technology, it

also has its weaknesses just like any other company. One weakness is its price of high-end

products. It would be difficult for consumers to purchase the iBrick when it is in such a high

price range. Newer advanced technology is always expensive and is also constantly changing;

therefore most consumers usually wait a certain amount of time before buying a new product

because the price drops significantly over time. According to a survey conducted for the iBrick,

most people would buy a higher priced smartphone that will last.

Another weakness of Apple products is the constant updates that can take a couple hours

or up to all day depending on the model of the device and the last time the phone was updated.

Updates are designed to make sure the consumer is caught up with the latest technology to make

one’s everyday life easier. Updates for applications are different than updates for the iBrick

itself. Apple updates are a lot more important than the application updates because Apple is the

primary manufacturer and if that is not taken care of, then that leads to software issues. If an

Apple product has not been updated in a while, it has a tendency to lead to problems in the long

run.

Opportunities The iBrick smartphone has the potential to open up a new market. Consumers will see

that their purchase of this product would be beneficial in the long-run and well worth investing.

A survey conducted for the iBrick also proves that most people who own a smartphone have at

least broken the screen or phone itself once. The iBrick product can be used underwater and is

also indestructible, and should have great future opportunities in the market.

ThreatsCurrently Apple has been experiencing a lull in market growth. Targeting a more

concentrated lower-end market, could be possible threats for the iBrick smartphone. Apple’s

future revenues are expected to decrease with having a slower market growth rate, so

manufacturing a product like the iBrick could be a risky move.

Apple’s latest released product, the iPhone 5C, is a more colorful and affordable

smartphone attracting the lower-end market. If many smartphone users purchased this phone

already, then the probability of the iBrick being successful and popular fast is very low. The

consumers that just bought this product will most likely wait until the market trend of the iBrick

starts. Even though it might take some time to get popular, an indestructible smartphone is a

unique product that has the potential to attract customers.

CompetitionCompetitors in this market are numerous, though so far none have been able to truly

capture the interest of the OEM market majority (Zacks Equity Research, 2014). Everyone who

owns an iPhone has an idea of the fragility of their glass screens and aluminum frame, but the

market for a more durable smartphone remains untapped. Many companies have attempted to

produce and sell a water-resistant smartphone, but thus far not too many seem to have latched

onto the idea as a necessity.

The Sony Z-series Xperia is one of the most recent competitors, having just released a

smartphone of this nature and claiming to have a line of underwater apps ready to be released.

But Sony is not yet a trusted name as far as the smartphone market is concerned. Apple has the

majority in this market and if the iBrick can do everything that the Z-series can and more, they

will be the first choice by many (Sony, 2014).

OtterBox and LifeProof are leaders in the smartphone case market. They both provide

strong, durable, and waterproof cases made to protect smartphones from the accidents of

everyday life. The problem with them is that if their product fails, and they do quite often as our

survey has shown, these companies will only warranty the case, not the phone. Neither case

gives the phone quality underwater functionality. This is important because when these cases get

wet, the touch screen is rendered virtually useless. They are also very bulky and don’t fit into

one’s pocket very easily which can be uncomfortable for the consumer (Waterproof, 2014).

Sapphire crystalline is the material from which the iPhone 6 screens will possibly be

comprised, claiming to be more durable than the standard soda-lime glass used in most of our

smartphones. It is less susceptible to surface scratching, but more susceptible to breaking after

every day use, heavier, and costs more than Gorilla Glass (Corning, 2014).

Gorilla Glass is a quickly expanding company producing durable glass for use in smart-

devices. They claim to have a longer enduring and stronger glass product than any currently on

the market, and they hold public demonstrations to prove this. They currently partner with many

mobile device and electronics producers. We would like to partner with them if possible, having

them as our supplier rather than our competition, with both companies benefitting exponentially.

Most of our competitors will believe themselves to have an advantage due to the price of

our phone, marketing their cheaper phones to the lower income section of the market. But our

survey research has concluded that we have hit a new and untapped market: a market of

consumers that are willing to pay over $100 for a longer lasting, more durable smartphone.

Product OfferingiBrick’s goal is to create the most adaptable phone possible that can be used in any

adventurous situation in which our consumers might find themselves. As mentioned earlier, we

would like to use the company Gorilla Glass as our supplier. Benefits of Gorilla Glass include:

• Thinness enhances the touch experience.

• High durability better resists the damage that comes with the everyday use of mobile devices.

• A precision surface makes brighter images possible and can be recycled using standard

recycling programs.

• Moldable capabilities provide designers with new options.

(Corning, 2014)

Waterproof technology is becoming more and more available as new and innovative

products reach the market. The iBrick will be incorporating a new product into the mix, which

only hit the market just recently. “Called HZO, the technology creates a nano-scale film barrier

which has special water repelling properties once applied to the inside of electronic gadgets,”

(Mills, 2014). The coating is applied during the manufacturing process and has proven to be the

next step in creating a truly functional underwater smartphone device.

Apple currently makes their iPhone using a material lined with a product called

“Liquidmetal.” Liquidmetal is composed of glassy alloy or composite screen panel material that

is formed by "using a deeply undercooled glass forming liquid. This particular embodiment is

currently concentrated on the iPhone's backside," (Mariano, 2014). The iBrick will use this

material to create the majority of its casing, using an injection mold process to create a stronger,

more durable protective covering. If our product fails within reasonable circumstances, meaning

unintentional breakage, we will be happy to provide each customer with a new one free of

charge.

The iBrick will prove to be the most durable, waterproof, and damage-survivable

smartphone ever produced to keep up with the adventure seeker inside us all.

Keys to SuccessPeople want to carry the best of the best of phones. In order to gain market success in the

phone market, iBrick needs to offer the best features; such as being waterproof, having the best

camera, being able to control various applications all at once, having a unique style that separates

iBrick from the rest of its competition and being unbreakable. The iBrick will be indestructible,

eliminating buying cases, new phones every six months, and avoiding having broken screens.

This leads to consumers saving more money by preventing spending on things that won’t be

required for the new indestructible iBrick.

Since Apple launched its first iPhone in 2007, its prices have been going up. Every other

version that comes out goes up in price. The new indestructible iBrick, one will not have to

worry about breaking a screen or dropping it in water. Another factor that will help the

indestructible iPhone is that more people will want to have it including: construction workers,

active people and adventurous people. The indestructible iBrick will be able to sustain any drop

to the floor and any water being drop on it. The phone will be the best in the market, and people

will want to get their hands on it. Whatever the cost is, people will want an indestructible phone,

wanting to avoid paying more for cases, screen protectors, and insurance. No more paying a

deductible to get a new phone because one has a broken screen or dropped it in the water.

Having this indestructible iBrick is the best of the best, as it will offer and guarantee

customer satisfaction. Customers will be content with the product that they are buying. They will

be able to take it anywhere they desire without the worry of breaking it or having it spill all over

any liquids. This indestructible iPhone will give the best lifetime to its carrier.

Critical IssuesRegardless of Apple’s ability to meet the iBrick’s factors for success, there exist several

potential issues that can occur in the market and bring about an instantaneous end to the iBrick.

Perhaps the most present and alarming critical factor is the smartphone market’s current trend

towards affordable and simplified smartphones. Apple and its top competitors in the smartphone

industry have all unveiled low-cost smartphones aimed at cornering emerging markets in

developing nations in Asia and South America (Lin, 2014). This trend towards low-cost

smartphones could be a critical issue, as it will leave very low demand for a higher-cost,

specialty smartphone such as the iBrick.

The other key critical issue that could pose a threat to the iBrick is the rapid expansion of

the Chinese smartphone market. Chinese vendors make up five of the top ten global market

shares in the smartphone industry, and it is estimated that by the end of 2014 over half of all

shipments worldwide will come from China (Patterson, 2014). This could pose a critical risk to

Apple, as the company recently shifted a large portion of its supply operation to Taiwanese

manufacturer, Pegatron (Dou, 2013). If Apple fails to compete with rapidly growing Chinese

operations, then it may see itself losing market share all over Asia.

Marketing StrategyThe Apple iBrick has many unique qualities. For one, it is waterproof which is a great

feature. You can operate the phone in the shower, terrible weather like heavy rain, and next to a

pool or ocean without worrying about damaging the product. Another feature is its build-in

shock absorbent casing, where dropping the product off buildings or even being ran over by an

automobile would not be an issue. Since the phone itself will be indestructible, people involved

in outdoor activities and also people that consider themselves having an outdoor/adventurous

lifestyle will be our target market. The product will be highly desired in this market because

consumers with these interests have a lifestyle where they will have a higher possibility of

damaging their expensive and fragile smartphone, than someone who is more cautious and stays

indoors.

Mission StatementOur Mission is to provide consumers with a smartphone designed with them in mind. We

voiced their concerns, and developed a product around them in response that can keep up with

their treacherous daredevil lifestyles. Thanks to our mad scientists and overworked engineers,

you can take your smartphone with you wherever you go. No smartphone will ever be left behind

again.

Marketing ObjectivesAccording to our survey, we found that an astonishing "34 percent of people said their

have broken a phone, 43% had dropped or damaged their phone, and over a fourth of our sample

had dropped their phone in water at some point. These consumers were also willing to pay at

least $100 more for the extra accident-proof technology. Therefore it is our goal to provide a

product that can withstand everyday breakage such as dropping a phone, and even endure repeat

aquatic submersion.

Financial ObjectivesThe current financial objective for the iBrick is to reach a sales volume of 23 million

units in the first quarter, 77 million units in the first year, 60 million units in the second year, and

40 million units in the third. With a standard, non-subsidized, selling price of $600, and total

annual marketing costs of $2.17 billion, the iBrick will reach the point of break-even in the first

quarter of the first year.

Target MarketsOur target market is those who are the nine-to-five Clark Kent during the week, but the

Superman of the weekends. They work in customer service during the day, but the world serves

them when the sun goes down. They surf the web at work when no one is looking, in hopes of

losing yourself in a dream of getting out there in the world and experiencing something amazing.

Demographics

Our target market is not only current iPhone users, but all who recognize innovation

when they see it. It is the middle class consumers who have worked hard for their time off. This

segment of the market is very active. They are family oriented, take their kids to sports practices

after school and like to go on extravagant vacations. They also like their sports from rock

climbing, to surfing, diving, hiking, and exploring.

It is for the college student, who had too much to drink one night and forgot about the

hole in his jacket pocket, leading to another screen-shattering disaster. It is for all those who in

trying to get to work on time, forgot about the phone and coffee they set on top of the car before

driving away.

It is for those with intensive labor-based jobs like lumberjacks, construction workers, the

heavy-lifters, the miners, the park rangers, and the go-getters. It is for the research divers,

underwater welders, oceanographers, fishermen and sailors; but it is also for those who work

normal jobs but experience the occasional phone-handling mishap amid the chaos.

Geographics

The target market will live in more densely populated, suburban areas with access to

rugged terrain as well as the city. Also they range in age from their mid-teens to late-forties.

They are the middle class because they must have the means to be able to afford a high-end

smartphone, require access to data and phone usage plans, and have the resources to go on

adventurous trips and try new and daring things during their leisure. Because of these factors,

regions with slightly above average income levels will be targeted.

Psychographics

As stated before, our target market is the average Joe. It is every man and woman who is

fed up with settling for subpar products. It is for the conspiracy theorists who believe Apple

makes products dysfunctional on purpose, so that consumers have to keep coming back for more.

We tested, researched, developed and experimented until we produced a smartphone to be proud

of.

Smartphone owners require a slightly higher social status than traditional phone users

who only require basic call and text options. These are consumers who like to keep busy whether

with work, games, and music, and are usually technologically savvy.

PositioningApple has created a lot of products in the past in the last 15 years or so, iPhones are well-

known in the market, with Apple launching the iBrick it will be known for its durability and

being indestructible. Previous iPhones are known for having a fragile screen that breaks too

often. Now Apple wants to expand its product buy not only creating iBrick, but launching it and

making it the first indestructible phone. The iBrick will be selling at $600.

iBrick will offer the consumer so much, not only from having an indestructible phone,

but also being waterproof. Now most smartphones that have come out are waterproof, for

example the Sony Xperia and Samsung Galaxy 5. What makes iBrick different from these others

smartphones? iBrick will not only deliver an indestructible phone, as well as water proofed, but

also having a built-in shock absorbent. Unlike any other smartphone that is fragile with screens,

the iBrick’s quality is durable and will have the consumer trust. Consumers will want to have

their hands on this indestructible phone. Even though it is set at high price, it is also an

investment the consumer is making for their benefit. Good thing about the iBrick is that it is

indestructible, which means it can be tossed ran over or thrown from a building and the phone

will be in one piece. Unfortunately, in the consumer’s mind the price might be set high, but if

consumer starts to analyze all the pros and cons the consumer is winning. The consumer is

making a good asset in selecting the iBrick.

StrategiesThe new Apple iBrick is not like the new average iPhone that comes out once of year.

Apple and associates stepped up their game recently innovating and manufacturing this item that

will be worth every penny. Durability is definitely an important factor to look into especially

with a expensive price, and this is where the marketing mix ties together the adventurous and

outdoor lifestyle community.

Marketing MixPricing

The marketing mix also known as the 4 P’s is price, product, place, and promotion. As far

as price goes which is the standard price for all new iPhones, the iBrick will be $599.99 plus tax.

The main reasoning why Apple is keeping this price is because the company started to lose sales

in the past because their price is already expensive. The iBrick will not change screen sizes, but

will include a lot more interesting features that will make more consumers want the smartphone

even more. (2013, Price)

The features included is waterproof, where the phone can be completely submerged

underwater and can be operated regularly where waterproof casings for the phones today can not

even do that. The other important feature included is its shock absorbency, where the iBrick

could withstand up to one thousand pounds. (2013, May, 29)

Apple will be using online advertising to promote their new smartphone. The reason for

this is because it is the cheapest way and Apple’s history is well-known for its high-end

products and people all over the world will find out about the phone rapidly through this tactic

with online advertising sites like Facebook, instagram, and Twitter exc. All this work will be

manufactured at the main Apple headquarters which is located in Cupertino, California. (2013,

July 24)

Distribution Apple sells the iBrick product at a face of value online or in its stores. It arranges for

subsidies with phone carrier companies for distribution. These companies pay the price of the

phone, charge consumers a couple hundred dollars under the price tag, and then slowly charge

the service over time to make their money back. Distribution is what makes large businesses run

and without the carriers companies can not survive in the market for now. Apple iPhones are

flattening out in sales because of their rates, which puts their company in danger for the near

future. If the iBrick creates enough sales then Apple will still have time in the long run. Apple

would also need time to figure out an alternative plan for distribution if their carriers decide to

back off because they are not receiving enough income (2013, September 25).

Marketing Communications The marketing communications mix is based off five different categories which are;

public relations, personal selling, direct marketing, sales promotions, and advertising. Apple

targeting outdoor and adventurous lifestyle customers relate to some of these categories. First

with advertising the iBrick is on social media websites like Facebook, instagram, and Twitter

where users can not only tell each other about the product, but also share on the internet which

spreads rapidly. This form of advertising is least expensive and can also be very effective if done

correctly.

Public relations also applies to the iBrick because Apple is a very well-known industry.

Publicity is a lot more effective than advertising, so if online social media does not promote the

product enough, eventually people will research and find out about the iBrick on their own time.

Marketing ResearchOur primary research was developing a survey that addressed who owns a smartphone

and what type of smartphone, whether it be an android or iPhone. Also the survey was to help

find out if you have ever broken your screen. Our secondary research was done online. Finding

information on Apple and its market was online. Also the demographics and where iPhones are

built was found.

The iBrick holds a bright future, as the product expands research will be continued and

conducted. Research for the future will be analyzing the iBrick, the positive and negative of

owning an iBrick. The market changes rapidly, so research will be conducted as the iBrick

updates throughout its lifetime.

FinancialsBreak-even Analysis

To reach the point of break-even, in terms of marketing expenses, the iBrick must earn at

least $2.17 billion in revenues. With a unit price of $600, and an expected annual sales volume of

over 75 million units, Apple will reach break-even for the iBrick in the first quarter of the first

year. The iBrick’s high margins and quick break-even make it a perfect product for Apple; a

company well-known for maximizing profit margins and opening week sales (Keizer, 2013).

Figure 3 - Break-even Anaylsis

Sales Forecast In order to best estimate an initial sales volume for the iBrick, sales data from Apple’s

release of the iPhone 5 and iPhone 5S was gathered. Because Apple’s most recently released

model, the iPhone 5C, is a low-price alternative to the traditional iPhone, its sales data would not

be relevant in forecasting sales volume for the iBrick.

Unfortunately, Apple does not release sales information for individual smartphone

models unless that particular model reaches a milestone of significance (Goldstein, 2013).

Through extensive research it was found that Apple’s most recent single-release model, the

iPhone 5, reached an estimated sales volume of 27.4 million in the first full-quarter in which it

was in the market (Shaughnessy, 2013). With a release-weekend sales volume of five million,

the iPhone 5 was more well-received than its successor, the 5S, which shared a six million unit

opening-weekend sales volume with the low-price model, iPhone 5C (Bostic, 2013). Therefore,

because the iBrick is a new model with features never before seen in an iPhone but is not being

released along with another model, it is projected to have a first year sales volume between those

of the iPhone 5 and 5S, approximately 77 million. Sales for the iBrick will decrease over time as

its technologies slowly become outdated and new iPhone models begin to enter the market.

Figure 4 - Sales Forecast

First Year Sales Forecast Q1 Q2 Q3 Q4 Total

Unit Sales 23,000,

000 20,000,

000 18,000,

000 16,000,

000 77,000,

000

Revenue (in billions of $) $13.8 $12.0 $10.8 $ 9.6 $46.2

3 Year Sales Forecast Year 1 Year 2 Year 3

Unit Sales 77,000,

000 60,000,

000 40,000,

000

Revenue (in billions of $) $46.2 $36.0 $24.0

Price per unit: $600

Expense ForecastBetween 2011 and 2013, Apple spent on average $9.5 billion on selling, general, and

administrative (SG&A) expenses per year. In 2011, SG&A expenses were at a mere $7.5 billion;

however, since 2012, Apple has spent more than $10 billion per year on SG&A. Of these

expenses, advertising costs accounted for roughly $1 billion per year (Apple Form 10-K, 2013).

Though Apple does not include in its 10-K form the distribution of expenses between selling,

general, and administrative, it can be noted that total SG&A expenses should not exceed 7% of

total net sales (Apple Form 10-K, 2013).

For years, Apple kept its corporate marketing department at a roughly consistent 300

employees. However, the company has recently looked towards expanding its marketing talent

and possibly increasing the size of the marketing department to 500 or 600 members (Diaz,

2013). Because the iBrick is a brand new concept for an iPhone model, Apple should err on the

side of caution and hire a large marketing force of 600 employees, each earning $200,000 yearly,

to ensure strong first quarter sales.

Figure 5 - Expense Forecast

Expense ForecastFixed (Total) Selling Costs

Advertising $ 1,100,000,000 Promotion $ 500,000,000 Misc. Marketing Expenses $ 450,000,000 Marketing Employees (600) $ 120,000,000

Total $ 2,170,000,000 Per Month $ 180,833,333.33

ControlsThe iBrick will be displayed at all Apple stores and will be available to be ordered online.

Each phone sold will be recorded for records on how the iBrick is doing in the market. iBrick

must earn at least $2.17 billion in revenues which we will be done through advertising.

ImplementationThe implementation process for the iBrick and Apple is to advertise the phone and

display to consumers why iBrick is so great compared to other smartphones. Before being

launched the product will be tested out in various ways to satisfy not only the customer, but to

prove our mission statement as well, also what we are advertising. The iBrick will show its

durability, waterproofed and most importantly it being indestructible.

Once the iBrick is complete to go, consumers will be able to order their phones online

before it comes out. It will have warranty and be able to have plenty of features to satisfy the

consumers.

Marketing OrganizationApple Inc. will be using business-to-consumer marketing by targeting exactly what

consumers desire. Following up with advertising and public relations the iBrick will be promoted

successfully to the outdoor and adventurous lifestyle market, protecting their expensive

smartphones from destruction. Our marketing department includes the sales representatives,

technical support, manufacturers and personnel. Apple’s iBrick is going to be the first

smartphone that is shock absorbent and waterproof. Without this marketing department it would

not be possible.

Contingency PlanningSome difficulties with the iBrick are that people will want to beat the impossible and

break it, even though it is indestructible, but to prove that there is such thing, consumers will do

their best to break it. Meeting their needs is a must, making sure they are satisfied and important.

So far the present has been successful. The future will also be good for the iBrick, as it

expands and the demand of the iBrick will increase around the world. The worst scenario that

iBrick can face is that someone will be able to destruct the phone, and the sales will decrease

after that. It will only go down in history as a try that couldn’t be pulled off. Then someone else

will want to attempt the same method and hope to pull it off. Another factor would be the critics

and ratings on the phone. Once these scenarios are issued it would be addressed as quickly as

possible to fix them. The iBrick wants to deliver the best to its consumers.

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Appendix

1. Do you own an iPhone?

2. If you do not own an iPhone, do you own a different smartphone?

3. Has your smartphone screen been cracked before?

4. Have you owned a smartphone that was damaged or destroyed by being dropped?

5. Have you owned a smartphone that was damaged or destroyed by water?

6. Have you replaced your smartphone more than once as a result of damage or screen

cracks? If so, how many times?

7. If you have a smartphone, do you enjoy buying cases and cover accessories for it?

8. Have you bought an OtterBox, LifeProof, Urban Armor Gear, or other similar

smartphone case to protect your phone from either impact or water

damage?

9. Would you be interested in purchasing a smartphone that is resistant to impact

damage as well as water damage?

10. If the cost of an impact and water resistant smartphone was $100 greater than the

price of a brand new, standard smartphone, would you still be interested in

purchasing this product?

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