Iphone Brand Audit 2

325- 339 Product Management Assignment 1 Brand Audit of the Apple iPhone Georgia Louise Benjamin (217204), Kyle Leong (275059), Polina Dozortseva (298367), Martin Weissbart (364260) Submitted: 10th September, 2009 Tutorial Time: Mondays 10am -11am, Tutor: Ronald Word Count excluding Footnotes, Headings and Appendices: 2176 words 1

Executive Summary The objective of this study is to make inferences about the iPhone’s brand equity from a sample of the population. Specifically, the value associated with the iPhone’s strength in the market was tested through collection and assessment of associations in a sample of current and non-users of the iPhone. This report finds brand equity to be high amongst consumers. Strong brand awareness exists amongst consumers due to high levels of depth and breadth of awareness: With strong brand recognition and recall, it was found that the iPhone possessed top of the mind awareness in a variety of mobile phone categories and consumers were very familiar with the functions and capabilities of the iPhone. In addition, the iPhone also possessed top of the mind awareness in a variety of purchase situations, and is associated with various consumption possibilities, indicating the broad awareness consumers have of the iPhone. In terms of brand image, there were certain common associations that were considered strong, unique and favourable amongst all respondents, specifically ease of use, and innovativeness, or how technologically sophisticated the iPhone is. A singular common negative association would be poor battery life, for which all respondents consistently gave high scores for. However, due to differences in lifestyles, values and needs, differences were found to exist amongst users and non-users regarding their attitudes on which attributes of the iPhone could be considered unique or favourable. For instance, current users find the affordability more desirable than non-users, and current users state that breadth of applications and style would be the iPhone’s points of differentiation whereas for non-users it would be the iPhone’s “superb touch-screen”. Generally, this report finds that whilst brand salience of the iPhone is high, perceptions towards brand performance and brand imagery differ, leading to conflicting brand feelings and judgements amongst users and non-users. 2

Contents Executive Summary ................................................................................................................................................................ 2 1.0 Introduction ....................................................................................................................................................................... 4 2.0 Brand Awareness ............................................................................................................................................................. 5 2.1 Depth of Brand Awareness...................................................................................................................................... 5 2.2 Breadth of Brand Awareness.................................................................................................................................. 6 3.0 Brand Image ....................................................................................................................................................................... 7 3.1 Strength of Brand Associations ............................................................................................................................. 7 3.2 Favourability of Brand Associations ................................................................................................................... 9 3.3 Uniqueness of Brand Associations ..................................................................................................................... 10 4.0 Conclusion ......................................................................................................................................................................... 11 Appendix ................................................................................................................................................................................... 12 Surveys .................................................................................................................................................................................. 16 Survey 1 ........................................................................................................................................................................... 16 Qualitative Survey Part 2 .......................................................................................................................................... 16 Bibliography ............................................................................................................................................................................ 19 3

1.0 Introduction Strong brand equity is an asset to an organisation. Consequently, it is important to have a thorough understanding of an organisation’s brand equity. Comprehension can be achieved by focussing on and examining the key drivers of brand equity. This report identifies and analyses the drivers of the Apple iPhone’s brand equity in a brand audit. The audit uses findings obtained by surveying a sample of 20 people on two occasions. An indirect measurement of brand equity was taken by recording participants’ perceptions of the primary components of equity: brand awareness and brand image. To examine brand awareness, a qualitative assessment of depth of awareness was measured by asking participants to identify the product category in which they perceived the iPhone to fit and indicating the strength of the iPhone’s association with that category. The technique of free-word association was used to uncover consumer perceptions of specific attributes and features of the iPhone. Finally, to determine the iPhone’s breadth of awareness, consumption habits and associations with a degree of purchase situations were analysed. In terms of brand image, strength, favourability and uniqueness of the iPhone’s attributes and benefits were tested through a quantitative assessment.1 The quantifiable scores were used to identify any gaps between consumer expectations and firm deliverables. A conclusion shall then be given presenting current brand attitudes consumers have towards the iPhone, as an indirect assessment of brand equity. It is intended that these findings assist Apple’s strategic planning of the iPhone in the mobile phone market in future. 1Scores were based on a scale from 1 to 7, with 1 being the weakest and 7 being the strongest – e.g. with regards to importance, 1 would be least important, and 7 would be most important 4

2.0 Brand Awareness Consumer familiarity with the iPhone’s attributes, features and uses is very strong, which indicates deep and broad awareness of the iPhone and thus, high brand awareness overall. 2.1 Depth of Brand Awareness Depth of awareness was measured through brand recognition and brand recall of the iPhone within the sample population. Strong brand recognition and recall indicate that the iPhone is strongly embedded in the knowledge structures of consumers.  Brand recall was found to be very strong; consumers’ ability to retrieve the iPhone from memory was high. For example, when asked for general mobile phone brands in their immediate consideration set, the iPhone was the second-most mentioned brand by all respondents. Although for music phones, the iPhone was only mentioned within the top 3 brands for 45% of all respondents, 85% of all respondents mentioned the iPhone when asked to name a smart-phone, and 71% of all respondents mentioned the iPhone amongst their top 3 choices for multi-media enabled phones. Thus, it can be observed the iPhone possesses top-of- the mind awareness when it comes to general mobile phones, as well as multi-media and smart-phones.  Brand recognition was found to be strong. It is very easy for consumers to identify the iPhone from rival mobile phones. 100% of all respondents knew the iPhone was a high-tech mobile phone by Apple. 75% of all respondents have either seen an iPhone advertisement, or walked past an iPhone store promotion in the past month. 35%2 of all respondents currently own an iPhone, and 85% of all respondents recognized iPhone user imagery to be of young, outgoing and tech-savvy people. Further, all respondents were aware of the Apple brand and logo and 65% of all respondents consistently connected several key associations of the Apple brand with the iPhone, i.e. stylish, innovative, sophisticated and cool. 2 i.e. 7 out of 20 respondents are current iPhone users. 5

2.2 Breadth of Brand Awareness Breadth of brand awareness of the iPhone was also found to be high as respondents associated the iPhone with a broad range of purchase and consumption situations:  Purchase situations: Consumers associate the iPhone with a broad range of purchase situations. The iPhone was named amongst the immediate consideration set for 85% of all respondents when asked which general phone brands would they consider should they require a new phone. When narrowed down to specific product categories, the iPhone still performed well: 65% of all respondents mentioned the iPhone as their first choice when purchasing a new multi-media phone. Also, 71% of all respondents mentioned the iPhone as their first or second choice should they need a phone with web-browsing capabilities, and more than 50% mentioned the iPhone as their potential business phone of choice due to the iPhone’s “cutting- edge” task manager application.  Consumption Situations: Consumers are also broadly aware of how the iPhone can be utilized. In addition to making calls and sending text messages, 85% of all respondents mentioned use of multi-media applications (such as games) as part of how they would use the iPhone. 100% of all respondents stated that they would use the iPhone for web-browsing (including email), and 35% of all respondents stated they would utilise the iPhone for its audio and video capabilities3. 10% stated they would use it for the iPhone’s task manager, and three respondents mentioned they would use the iPhone simply for its touch-screen, referring to it as “superb and flawless”. 3 i.e. to listen to music and watch movies. 6

3.0 Brand Image The iPhone’s brand image was found to be strong amongst consumers by testing the strength, favourability and uniqueness of those associations. It was found that differences in responses correlated with whether respondents were users or non-users of the iPhone. Thus, differing evaluations of the iPhone’s attributes and features could be explained by whether or not consumers use the iPhone. 3.1 Strength of Brand Associations There are several common associations of the iPhone amongst consumers in general which are strong in nature, i.e. those associations are deeply connected to the iPhone in the minds of consumers. Although differences in the relevance4 and consistency5 of the attributes for consumers existed between users and non-users i.e. different respondent groups.  Relevance: The iPhone’s most relevant attributes amongst all respondents in general were found to be ‘ease of use’ and ‘innovation’ (i.e. how technologically sophisticated it is). Both attributes received 5 or more out of 7 from 85% and 75% of the population respectively6 on how relevant those two attributes of the iPhone are to their current usage situation. Therefore it would seem that the most important benefits sought by all consumers offered by the iPhone are simplicity in product operation and sophisticated technology. 4Relevance refers to how appealing current attributes are to the current product usage situation of consumers 5Consistency refers to the number of times consumers mention the same attributes for the same situation repetitively across many questions 6 Please refer to table 2.4 in appendix 7

However, for current iPhone users, the numerous applications coupled with sleek and cool design hold significant relevance for their current usage situation, with each scoring an average of between 5.5 and 6.5 – which are the highest scores amongst all the attributes tested. For non-users, the iPhone’s aesthetic attributes did not appeal so much – the iPhone’s Sleekness and coolness scored 4.2 and 3.6 out of 7 in terms of relevance towards current usage situation amongst non-users. In addition, the iPhone’s touch-screen and web-browsing capabilities scored averages of 6.5 and 5.9 respectively. Thus, the iPhone holds different relevant benefits for different consumers, depending on whether they are users or non-users, resulting in differing attitudes amongst consumers regarding the usefulness and relevance of the iPhone.  Consistency: Generally, “poor battery life” was a very strong association amongst all consumers. On average, respondents rated poor battery life a 6 or 7 as a strong association they possessed towards the iPhone. “Ease of use” and “innovation” also received consistent scores, with all respondents consistently giving both averages of 6 and 5 respectively. However, perceptions of weight, size durability and aesthetics were inconsistent. Non-users generally described the iPhone as heavy, bulky, fragile and antiquated. Current users, in contrast, described the iPhone as sleek, cool, “just the right size” and portable. Thus, once again, differences in perceptions of the iPhone’s attributes correlated with whether respondents were users or non-users of the iPhone. 8

3.2 Favourability of Brand Associations The favourability of the iPhone’s overall brand image is found to be moderate at best. This is due to positive associations with certain attributes being negated by negative associations in others. Favourability of the iPhone’s image was assessed by observing the level of desirability and deliverability7 .  Desirability: It was found that the iPhone possessed attributes that overall were desirable to respondents in general. The three most desirable attributes of the iPhone were: “innovation” (5.8), “simplicity” (5.1) and “coolness/sleekness” (4.9). Therefore, it can be inferred that generally, benefits sought by consumers for mobile phones are: technology, facility and adherence to a certain social image. Less desirable were the physical characteristics of the phone: weight (4.4), battery (4.2), size (4.2) and durability (4.2). With a score of 3.3, affordability is the least desirable attribute of the iPhone. In terms of affordability, it can be observed that iPhone users relative to non users were more favorable towards the price than non-users, with respective averages scores of 4.8 to 3.1. This could be due to users placing a higher value on the iPhone and/or having a higher disposable income to purchase such a product.  Deliverability: Deliverability is high in terms of the top 2 preferences of consumers: simplicity and innovation. Sleekness and coolness, although not highly important to consumers (4.3, 3.8), are highly associated with the iPhone (5.3, 5.7). Hence, consumers perceive the iPhone to exceed expectations on the above attributes, and this increases the favourability of the iPhone’s brand image. Consumers are unsatisfied with regards to affordability and battery life. While affordability is important to consumers(5.1), consumers do not strongly associate it with the iPhone(3.0)8. Similarly, battery life is highly important to consumers(5.0), however respondents associate “poor battery life” strongly with the iPhone (5.4) 9; battery life is the fourth most important aspect to consumers(5.1) yet it falls in last place in terms of associations with the 7Desirability of the iPhone refers to whether the iPhone and its attributes are viewed in a positive light. Deliverability is the degree to which consumer expectations are met. 8 Please refer to table 3.2 in Appendix 9 Please refer to table 3.2 in Appendix 9

iPhone (3.0)10. Thus a benefit sought by consumers (i.e. significant battery life) is not satisfied by the iPhone and presents an area of future improvement 3.3 Uniqueness of Brand Associations Although consumers generally have the same perceptions as to what are the iPhone’s points of parity11, what makes the iPhone unique to non-users and users are different due to different attitudes regarding 12 the iPhone’s unique selling points . However, this indicates consumers do perceive the iPhone to possess unique brand associations that differentiate the iPhone from competitors. Based on the high quantitative scores gathered, it can be observed those unique associations are strong.  Points of Parity: The iPhone’s attributes found to be points of parity are product quality, web- browsing capabilities and simple functionality, where amongst all respondents the average score for both was 5.1, 5.4 and 5.3 respectively out of seven on how good those attributes were compared to other phone brands on the market – “rival phones”13. One exception to the rule would be size, where non-users usually find the iPhone’s size to be big and bulky, hence the low mean of 3.6 out of 7. This is in contrast to 5.1 for current users, who seem to favour phones of larger size14.  Points of Differentiation: Amongst non-users the main point of differentiation would be the iPhone’s touch-screen, as on average, they rated it a 6.4 out of 7 on how good it was compared to rival phones. However, current users only gave it an average of 5.5, with style and breadth of applications scoring highly with averages of 6.7 and 6.4 out of 7 respectively in contrast to non user average ratings of 4.3 and 4.815. Thus, different attitudes to the same attributes have led to different perceptions as to what constitute the iPhone’s points of differentiation between users and non-users. 10 Please refer to table 3.2 in appendix 11 i.e. features which establish the iPhone’s membership in particular product categories 12 i.e. points of differentiation, the iPhone’s desirable and unique attributes that enables it to differentiate itself and drive consumers to it instead of rival phones 13 Refer to table 1.1 in appendix 14 Refer to table 1.2 in appendix 15 Refer to table 1.3 in appendix 10

4.0 Conclusion This brand audit finds that the iPhone’s brand equity is high overall. Brand awareness is quite high meaning consumers are very familiar with the iPhone. This is due to high awareness depth and breadth: strong brand recall and recognition exists amongst all respondents, which is indicated by the ease by which consumers can retrieve the iPhone from memory , as well as identify the iPhone and discuss its attributes and benefits. In addition, consumers connect the iPhone to a wide range of purchase situations and consumption possibilities. The iPhone’s brand image is also quite strong. Consumers in general perceive it to be an “innovative”, i.e. technologically sophisticated phone that is easy to use and is generally used by young outgoing people who are technologically-savy. However, favourability and uniqueness of the iPhone’s brand image did not perform consistently well, particularly on affordability. Uniqueness and favourability of associations differed between users and non-users. This could be due to different lifestyles and needs, which result in different evaluations of the iPhones attributes and benefits. Thus, although brand salience of the iPhone is high, differences exist regarding perceptions of brand performance and brand imagery, resulting in different brand judgements and feelings. This could be due to an influx of new rival smart phones over the past year that offer consumer more choice and sets the bar higher for the iPhone16. Thus, the iPhone needs to continue focusing on its key value drivers of product innovation and branding efforts to compete effectively in an increasingly competitive mobile phone market in future. 16 I.e. when the iPhone first came out it was the first smart phone of its kind to offer multimedia functionality, a touch screen and web-browsing capabilities. Now there are dozens of such phones in the market, many of which offer more advanced technology than the iPhone and focus on beating the iPhone on specific functionalities, for e.g. Nokia for audio and video capabilities and the Blackberry for task functions and email 11

Appendix Table 1.1: Mean Scores for how well the iPhone performs in the following attributes relative to competitors, in terms of all respondents Attributes Product Internet Simplicity Size Touch Style Breadth of Quality Capabilities Screen application All 5.1 5.4 5.3 4.3 5.6 5.2 4.8 Respondents (score) Table 1.2: Mean Scores for how well the iPhone performs in the following attributes relative to competitors differentiated between users and non-users Attributes Product Internet Simplicity Size Touch Style Breadth of Quality Capabilities Screen applications Current 5.1 4.6 5.5 5.1 5.5 6.7 6.4 Users Non- 5.7 5.4 5.9 3.6 6.4 4.3 4.8 Users Table 2.1 Strength of Associations Mean Median Mode Sleek 5.65 6 7 Simple 5.15 6 6 Looks big 4.5 5 5 Heavy 4.15 4.5 6 Fragile 4.15 4 6 Poor 5.35 6 7 battery Affordable 3 3 2 Cool 5.65 6 7 Innovative 6.25 7 7 Easy to use 5.4 6 7 Table 2.3 Relevance of Associations Mean Median Mode Sleek 3.85 4 5 Simple 5.65 6 6 Looks big 3.6 4 4 Heavy 3.95 4 4 Fragile 3.95 4.5 1 12

Poor battery 3.8 4 1 Affordable 5.2 5 7 Cool 4.25 4 4 Innovative 5.45 6 6 Easy to use 5.8 6 7 Table 2.2 Strength of associations Percentage that scored >=5 Sleek 85 Simple 70 Looks big 65 Heavy 50 Fragile 45 Poor battery 70 Affordable 20 Cool 80 Innovative 95 Easy to use 75 Table 2.4 Relevance of associations Percentage that scored >=5 Sleek 45 Simple 80 Looks big 35 Heavy 40 Fragile 50 Poor battery 45 Affordable 70 Cool 40 Innovative 75 Easy to use 85 13

Graph 2.1 Strength of associations – Positive associations Graph 2.2 Strength of associations – Negative associations Table 3.1 Satisfaction with iPhone How satisfied are you with the iPhone in terms of these characteristics? Placement Association Mean score out of 7 1 Innovation 5.8 2 Simplicity 5.1 3 Coolness 4.9 4 Sleekness 4.9 5 Weight 4.4 6 Battery Life 4.2 7 Size 4.2 8 Durability 4.2 9 Ease-of-use 3.9 10 Affordability 3.4 Total 4.5 14

Table 3.2 How important to you are the How strongly do you associate these Deliverability: following characteristics in a phone? characteristics with the iPhone? Does the iPhone deliver? Placement Association Mean Placement Association Mean DIFFERENCE score score out out of 7 of 7 1 Simplicity 5.7 5 Simplicity 5.2 - 0.5 2 Innovation 5.5 1 Innovation 6.3 + 0.8 3 Durability 5.2 8 Fragility 4.2 - 1.0 (durability) 4 Affordability 5.1 10 Affordability 3 - 2.1 5 Battery life 5 3 Poor battery 5.4 + 5.4 Life 6 Ease-of-use 4.5 9 Ease-of-use 4.1 - 0.4 7 Weight 4.4 7 Heavy 4.2 - 0.2 (weight) 8 Sleekness 4.3 4 Sleekness 5.3 + 1.0 9 Size 4 6 Big (size) 4.5 + 0.5 10 Coolness 3.8 2 Coolness 5.7 + 1.9 15

Surveys Survey 1 Measuring brand awareness and associations 1. What phone do you currently have? 2. If your phone broke today and you needed a replacement because you were meeting up with an old friend from overseas over the weekend, you have enough money to buy whatever you like, which phone would you buy? 3. If you required a smart phone which would you choose? 4. Do you currently have an iPhone? 5. If yes, what do you use it for? If no, what would you use it for? 6. What do you think of the iPhone’s appearance? What words would you use? 7. How do you feel about the size, shape and weight of the iPhone? 8. How do you feel about the iPhone’s durability and battery life? 9. Is the iPhone easy to use in your opinion? (touch screen, applications etc) 10. Relative to your current/previous phone, is the iPhone affordable? 11. When choosing your last phone how important was price? 12. What sort of people do you think use the iPhone? 13. How would you describe the brand ‘Apple’? 14. Any additional questions, queries, comments? Qualitative Survey Part 2 Awareness Depth: Brand Recall: 1. In terms of phone brands in general, what are the top three that comes to mind? 2. When you think of music phones, which brands do you think of? 3. With regards to Internet phones, which are your favourite three? 4. Which phone brand do you consider to be the IPhone’s most direct/ closest competitor, and why? 5. Can you name one significant point of differentiation that allows the IPhone to stand out from its closest competitors 16

Awareness Breadth: Purchase Situation: 1. Should a brand new IPhone be released into the market, and its better in every aspect than your current phone, what is the likelihood that you will buy it immediately? 2. Should a brand new version of competitor’s phone (for e.g. Blackberry, Sony Ericsson) be released and is better than your current phone in all dimensions, would you purchase it straight away? Associations 1. On a scale from 1 to 7, with 1 being the weakest and 7 being the strongest, how strongly do you associate the following characteristics/ attributes with the IPhone? Sleek Simple Looks Big Heavy Fragile Poor battery life Affordable Cool innovative Easy to use 2. How relevant are the following characteristics/ attributes on a scale from 1 to 7 with 7 being the most relevant to your usage situation when purchasing a phone? Sleek Simple Looks Big Heavy Fragile Poor battery life Affordable Cool innovative Easy to use 17

3. How important on a scale from one to seven with 7 being the most important are the following characteristics/ attributes to you when deciding which phone to purchase? Sleek Simple Looks Big Heavy Fragile Poor battery life Affordable Cool innovative Easy to use 4. On a scale from one to seven, with one being least satisfactory and seven being most satisfactory, how satisfied are you with the iPhone in terms of the following attributes : Sleek Simple Looks Big Heavy Fragile Poor battery life Affordable Cool innovative Easy to use 5. How would you compare the IPhone with other phone brands on a scale of one to seven with one being terrible and seven being tremendously better than with regards to the following characteristics? Sleek Simple Looks Big Heavy Fragile Poor battery life Affordable Cool innovative Easy to use 18

Bibliography German, K. (12 March, 2009). Nokia still tops smartphone market, but others gaining. Retrieved 7 September, 2009, from Crave: CNET Asia: http://asia.cnet.com/crave/2009/03/12/nokia-still-tops- smartphone-market-but-others-gaining/?scid=rss_c_crv German, K., & Bell, D. (2 July, 2007). Apple iPhone. Retrieved 7 September, 2009, from CNET Australia: http://www.cnet.com.au/apple-iphone-339272960.htm Goroq, D. (14 August, 2008). User Anger: iPhone 3G Problems Emerging. Retrieved 6 September, 2009, from Australian Personal Computing: http://apcmag.com/is_the_iphone_losing_its_sheen.htm Hanlon, J. (15 May, 2009). Best iPhone Alternatives. Retrieved 4 September, 2009, from CNET Australia: http://www.cnet.com.au/best-iphone-alternatives-339293298.htm#vp Hanlon, J. (3 September , 2009). CNET's mega touchscreen showdown. Retrieved 3 September, 2009, from CNET Australia: http://www.cnet.com.au/cnet-s-mega-touchscreen-showdown- 339298282.htm Hearn, L. (1 September, 2009). Android phones hope to take a bite out of Apple dominance. Retrieved 7 September, 2009, from Digital Life: The Age: http://www.theage.com.au/digital- life/iphone/android-phones-hope-to-take-a-bite-out-of-apple-dominance-20090828-f1qo.html Jade, C. (12 August, 2009). iPhone Market Share Up Again. Retrieved 8 September, 2009, from The Apple Blog: http://theappleblog.com/2009/08/12/iphone-market-share-up-again/ Keller, K. L. (1993). Conceptualizing, Measuring and Managing Customer Based Brand Equity. Journal of Marketing , 1-22. Keller, Kevin Lane (2008), Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 3nd Edition, Prentice Hall. Tellzen, R. (3 June, 2008). Smartphones start to swarm. Retrieved 3 September, 2009, from Australian IT: http://www.australianit.news.com.au/story/0,24897,23797503-15302,00.html 19

Iphone Brand Audit 2

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Iphone Brand Audit 2 — Document Transcript