Brand Audit of the Apple i Phone

Sonali Budhia (18), Muzzaffar Anjum (05), Pooja Budhia (23), Dinesh Hota (27), Ankit Pattnaik (09) MBA (2010-12) Submitted on 9th Nov 2011

Under the supervision of

Mr. Arvind Tripathy

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Executive Summary
The objective of this study is to make inferences about the iPhones brand equity from a sample of the population. Specifically, the value associated with the iPhones 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 favorable 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 favorable. 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 iPhones points of differentiation whereas for non-users it would be the iPhones 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 judgments amongst users and non-users.

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Contents
Executive Summary ......................................................................................................................2 1.0 Introduction............................................................................................................................ 4 2.0 Brand Awareness....................................................................................................................4 2.1 Depth of Brand Awareness........ ........ ...................................................................................4 2.2 Breadth of Brand Awareness..................................................................................................5 3.0 Brand Image ..........................................................................................................................6 3.1 Strength of Brand Associations .............................................................................................6 3.2 Favourability of Brand Associations......................................................................................7 3.3 Uniqueness of Brand Associations........................................................................................ 8 4.0 Conclusion ............................................................................................................................9 Appendix .............................................................................................................................10 Surveys ....................................................................................................................................14 Survey 1 ..................................................................................................................................14 Qualitative Survey Part 2 ............................................................................................................15 Bibliography ................................................................................................................16

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1.0 Introduction
Strong brand equity is an asset to an organization. Consequently, it is important to have a thorough understanding of an organizations brand equity. Comprehension can be achieved by focusing on and examining the key drivers of brand equity. This report identifies and analyses the drivers of the Apple iPhones brand equity in a brand audit. The audit uses findings obtained by surveying a sample of 200 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 iPhones 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 iPhones breadth of awareness, consumption habits and associations with a degree of purchase situations were analyzed. In terms of brand image, strength, favorability and uniqueness of the iPhones attributes and benefits were tested through a quantitative assessment. 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 Apples strategic planning of the iPhone in the mobile phone market in future.

2.0 Brand Awareness

Consumer familiarity with the iPhones 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.

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 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-ofthe 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% 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.

2.2

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 they would 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 iPhones cuttingedge task manager application.

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 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 utilize the iPhone for its audio and video capabilities. 10% stated they would use it for the iPhones task manager, and three respondents mentioned they would use the iPhone simply for its touch-screen, referring to it as superb and flawless.

3.0 Brand Image

The iPhones brand image was found to be strong amongst consumers by testing the strength, favorability 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 iPhones 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 relevance and consistency of the attributes for consumers existed between users and non-users i.e. different respondent groups.
Relevance: The iPhones 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 respectively 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.

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

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between 5.5 and 6.5 which are the highest scores amongst all the attributes tested. For nonusers, the iPhones aesthetic attributes did not appeal so much the iPhones 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 iPhones 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 iPhones attributes correlated with whether respondents were users or non-users of the iPhone.

3.2

Favorability of Brand Associations

The favorability of the iPhones 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. Favorability of the iPhones image was assessed by observing the level of desirability and deliverability. 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

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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 favorability of the iPhones 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). Similarly, battery life is highly important to consumers (5.0), however respondents associate poor battery life strongly with the iPhone (5.4); battery life is the fourth most important aspect to consumers (5.1) yet it falls in last place in terms of associations with the iPhone (3.0). 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 iPhones points of parity, what makes the iPhone unique to non-users and users are different due to different attitudes regarding the iPhones 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 iPhones 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. One exception to the rule would be size, where non-users usually find the iPhones 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 favor phones of larger size. Points of Differentiation: Amongst non-users the main point of differentiation would be the iPhones 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

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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 4.8. Thus, different attitudes to the same attributes have led to different perceptions as to what constitute the iPhones points of differentiation between users and non-users.

4.0 Conclusion
This brand audit finds that the iPhones 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 iPhones 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-savvy. However, favorability and uniqueness of the iPhones brand image did not perform consistently well, particularly on affordability. Uniqueness and favorability 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 judgments 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 iPhone. 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.

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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 Quality Internet Simplicity Capabilities Size Touch Screen Style Breadth of application

All 5.1 Respondents (score)

5.4

5.3

4.3

5.6

5.2

4.8

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 Quality Internet Simplicity Capabilities Size Touch Screen Style Breadth of application

Current Users Non-Users

5.1

4.6

5.5

5.1

5.5

6.7

6.4

5.7

5.4

5.9

3.6

6.4

4.3

4.8

Table 2.1 Strength of Associations Mean Sleek Simple Looks big Heavy Fragile Poor battery Affordable Cool Median Mode

5.65 5.15 4.5 4.15 4.15 5.35 3 5.65

6 6 5 4.5 4 6 3 6

7 6 5 6 6 7 2 7

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Innovative Easy to use

6.25 5.4

7 6

7 7

Table 2.2 Strength of associations

Percentage that scored >=5

Sleek Simple Looks big Heavy Fragile Poor battery Affordable Cool Innovative Easy to use

85 70 65 50 45 70 20 80 95 75

Table 2.3 Relevance of Associations Mean Sleek Simple Looks big Heavy Fragile Poor battery Affordable Cool Innovative Easy to use Median Mode

5.65 5.15 4.5 4.15 4.15 5.35 3 5.65 6.25 5.4

6 6 5 4.5 4 6 3 6 7 6

7 6 5 6 6 7 2 7 7 7

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Table 2.4 Relevance of associations

Percentage that scored >=5

Sleek Simple Looks big Heavy Fragile Poor battery Affordable Cool Innovative Easy to use

45 80 35 40 50 45 70 40 75 85

Table 3.1 Satisfaction with iPhone How satisfied are you with the iPhone in terms of these characteristics?

Placement 1 2 3 4 5 6
7 8 9 10

Association Innovation Simplicity

Coolness

Mean Score out of 7 5.8 5.1 4.9 4.9 4.4 4.2

4.2 4.2 3.9 3.4 4.5

Sleekness Weight
Battery Life Size Durability Ease of use Affordability Total

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Table 3.2

How important to you are the following characteristics in a phone?

How strongly do you associate these characteristics with the iPhone?

Deliverability: Does the iPhone deliver? DIFFERENCE

Placement

Association

Mean score Placement out of 7

Association

Mean score out of 7

Simplicity

5.7

Simplicity

5.2

-0.5

Innovation

5.5

Innovation

6.3

+0.8

Durability

5.2

Durability

4.2

-1.0

Affordability

5.1

10

Affordability

-2.1

Battery life

Battery life

5.4

+5.4

Ease-of-use

4.5

Ease-of-use

4.1

-0.4

weight

4.4

weight

4.2

-0.2

sleekness

4.3

sleekness

5.3

size

size

4.2

0.5

10

coolness

3.8

coolness

5.7

-1.9

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Surveys Qualitative Survey Part 1 : Measuring brand awareness and associations:

1. What phone do you currently have? 2. If your phone breaks today and you need 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? iPhone BlackBerry O2 Nokia HTC Dell Samsung Others 3. If you required a smart phone which would you choose? 4. Do you currently have an iPhone? Yes No Presentations Presentations

5. If yes, what do you use it for? Gaming Surfing Chatting Others If no, what would you use it for? Gaming Surfing Chatting Others 6. What do you think of the iPhones appearance? What words would you use? 7. How do you feel about the size, shape and weight of the iPhone? Average 8. How do you feel about the iPhones durability and battery life? Average Good Good

Bad Bad Yes Yes No Imp No

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? Least Imp 12. What sort of people do you think use the iPhone? Businessman 13. How would you describe the brand Apple? 14. Any additional questions, queries, comments? Students V. Imp

Executives

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? iPhone Others 3. With regards to Internet phones, which are your favorite three? 4. Which phone brand do you consider to be the IPhones 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? BlackBerry Sony Ericsson E Nokia Dell Samsung

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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? (0n a scale 0f 1(high)-5(low)) 2. Should a brand new version of competitors 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? (0n a scale 0f 1(high)-5(low))

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 -----------------------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 --------------------------

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Bibliography
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. 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/androidphones-hope-to-take-a-bite-out-of-apple-dominance-20090828-f1qo.html

Keller, Kevin Lane (2008), Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 3nd Edition, Prentice Hall.

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