Ipod Product Background

iPod Product Background

The name iPod refers to a category of portable digital audio players designed and marketed by Apple Computer. It is an exceptionally popular, portable digital music player that stores up to 10,000 songs on its 40GB hard disk. The earlier versions of iPod were only able to function as music players. Currently, it also includes features such as storing addresses, games and calendar. The iPod was originally developed for Mac computers but software was introduced in 2002 to support windows users .

Apple have designed the iPod to work solely with iTunes a media library software program, which lets users manage the music libraries on their computers and on their iPods. iTunes can automatically synchronize a user's iPod with specific play-lists or with the entire music library when connected to a computer .

The iPod is dominating the digital audio player market; it is constantly topping best-seller lists. As of October 2004, iPod dominated the digital music player sales in the United States, with over 92% of the market for hard-drive players and over 65% of the market for all types of players. iPod has sold at a tremendous rate, moving over ten million units in a total of three years .

Apple reported in Q4 of 2003 with earnings of $106,000,000, its highest revenue for Q4 in 9 years. Commentators have speculated that revenue for the Apple iPod could hit $1,000,000,000 in sales at the end of 2004 .

As the market leader, iPod has become the subject of criticism from competitors and other detractors. Some see Apple as using iPod, the iTunes Music Store, and special formats to establish a vertical monopoly to lock iPod users into using iTunes exclusively (and vice versa).

Target Market

The users of iPod are believed to have a number of common characteristics, for the purpose of this report we have divided the target market into behavioural segment, demographic segment and finally psychographic segment. The geographical area is as stated in the initial question Hong Kong, the characteristics outlined below is bound to this area and should not be understood as universally valid market segmentation for iPod users.

Demographic Segment:

• Age 16-34

• Middle income class

• Student/White collar

The average iPod user is believed to be aged 16-34, a age group consistent of students and young white collar professionals. Since iPod uses a skimming pricing strategy and are slightly more expensive then competitors, customers are likely in a middle income class to perceive the iPod as attractive purchase.

Behavioural Segment:

• Benefits sought:

• Taste

• Image enhancement

• Quality

• Heavy to medium users

• Status and value conscious

We believe that the main benefits sought for consumers purchasing an iPod are taste, image enhancement and quality. These benefits are given by the iPod’s design features and quality control in the production process. The iPod customer is believed to be a heavy to medium user of the product, with a focus on everyday usage and portability. Status is also believed to be an important reason for acquiring an iPod; it has a function of a social symbol indicating admirable features of the carrier, such as fashionable and good taste. And finally the perceived customer value is an important aspect of why an iPod is chosen ahead of competitors products.

Psychographic Segment:

• Status seeking

• Materialistic

• On the go lifestyle

The market for iPod is believed to be status seeking individuals that feel that the unique features of the iPod can offer; great design and an on-the-go lifestyle.

Competitor Analysis

There are so many various ways to listen to music. For iPod, there are two types of competitors, direct and indirect competitors. Many different brands of mp3 players are available for consumers to compare and choose. To differentiate iPod from all mp3 player companies, the direct competitors were explicitly narrowed down to mass storage device mp3 players. A few examples would include the new competitive Singaporean brand, Creative. This brand