With nearly 10 million iPhone 6 and 6+ models sold in the first week of their release, Apple is expecting good things with the latest generation of their phone. With larger screens and more intuitive features, when combined with the iOS 8, it is expected to be the fastest, most user friendly phone that this popular brand has created. The real question is this: who does Apple target as their primary customer for the iPhone?
College students are one of the primary target demographics for Apple as they typically have more disposable income and a need for the technology.
iPhone Target Market
Students at any level, in fact, are iPhone target demographics because the use of an Apple product is a bit of a status symbol. After all, you don’t just own a smartphone. You own an iPhone! With its ability to listen to playlists, access social networks, and other socialization apps and features that are readily available, even the good camera in the iPhone makes it a tempting purchase.
- Many businesses use Apple products because they have a higher quality that makes them incredibly useful and reliable. Work gets finished effectively and there are more communication options available.
- Parents are another target demographic because the iPhone can be used as an educational tool thanks to apps that teach phonics, reading, and math.
- Those who make more than $150k as a household are primary targets. 1 out of every 2 households at this income level has at least one iPhone.
- Women are more likely to own an iPhone than men.
- People aged 25-34 are the most likely to own an iPhone, followed by the 18-24 age group. Interestingly enough, the 18-24 group is more likely to own an Android and the 25-34 group is second in this demographic.
- The older someone is, the more likely they are to own an iPhone over an Android if they choose to own a smartphone.
- Caucasians and Hispanics are the most likely to own an iPhone, although their ownership rates with Android phones is about equal.
Maybe a better question to ask would be who isn’t a target demographic for the Apple iPhone. The answer to that question would be the lower income African American community. For households that make $149k or less, just 16% of African American households will choose to invest into an iPhone. On the other hand, 42% of those households will choose to own an Android phone. This makes it pretty clear who Apple wants to target: business professionals, those who are young and have disposable income, and households that approach the magic 1% of income earners in the United States year by year.
How Prevalent is the iPhone Today?
- Households that own a cell phone have a 1 in 4 chance of owning an iPhone, which is up from 1 in 10 households in 2011.
- 35% of households that own a cell phone have one that is not considered a smartphone and another 9% of households don’t own a cell phone at all, providing a unique iPhone target demographic for Apple.
- Every year since 2011, 10% of households in the United States choose to become smartphone owners for the first time.
- Only 8% of households that are 65+ and make less than $30k per year have decided to invest into a smartphone. On the other hand, 77% of households in the 18-29 age demographic who make less than $30k will own a smartphone.
- Because of their popularity, another demographic that is generally overlooked are mobile phone carriers, who often supplement the purchasing price of the phone with an extended contract.
- Apple took 65% of the demographic of households who make $100k per year or more in 2013.
It is pretty clear that Apple is targeting the wealthier demographics in the United States and then trying to market their older products to cheaper price points around the world, but this might end up being a mistake. The fastest growing purchasing demographic in smartphones today is the under $30k salary group and 90% of them are seeking to purchase a smartphone. Because this demographic can get a comparable phone from Samsung at a 50% discount on a brand new phone, Apple is losing dramatically with their price points. Apple, in fact, doesn’t actually start taking the lead in a salary demographic until a household reaches a $60k income level.
Why Does Apple Need to Take a Second Look?
- Their target demographics are only growing by 4% in a year-over-year comparison, compared to the 42% growth rates seen at the under $30k salary demographic.
- Although they do not dominate the lower tiers of income demographics, Apple does consistently lead in overall brand share, which means more households have more than one iPhone at the higher income bracket.
- In 2013, 33% of Apple’s sales went to households that make at least $100k per year.
- The only country where Apple truly dominates the market is in the US. Globally, the only brands that Apple dominates are the ones that aren’t Android related.
- Apple might choose to keep things as status quo, however, because they currently maintain over 50% of smartphone usage in the US and Canada, which is above their actual market share for the iPhone.
Apple needs to figure out a way to market new products to the lower income levels in order to reduce their growing revenue gaps that are creeping into their budget. They’re still making billions per year, of course, which is a pretty amazing statistic in itself, but that trend is waning more dramatically every year. Good products at lower price points could drive this, but when everyone is purchasing an iPhone 6 and you’re stuck trying to get an iPhone 4, there’s actually a negative societal stigma associated with it. To change this stigma, a good low-end iPhone that is brand new could dramatically change the mobile market in the US and around the world.
Where Could Apple Dominate Even More With The iPhone?
- When looking at the best iOS apps, five out of the top ten downloads are games, compared to just 2 out of the top ten Android downloads.
- Only 3 out of the Top 40 downloads for the iOS are utility apps, whereas 9 of the Top 40 Android apps are utilities.
- Apple does have three solid shopping apps in GroupOn, Target Cartwheel, and Black Friday, but Android dominates with everyday shopping environments like eBay and Amazon.
- Younger people tend to have less income, which means they typically prefer Android because it is a more affordable platform.
- Apple users tend to prefer alternative and indie music over the classic rock, metal, and country of Android users.
- Most iOS users are in some sort of professional or managerial role, while Android users tend to be more likely to have a tech job.
- Drama and comedy is the preference of the typical iOS user, while Android users tend to prefer action or horror movies.
When you start digging into the personalities that are in each demographic, you begin to see some clear definitions toward who prefers Apple and who does not. The most disturbing part of this set of demographic statistics is the fact that people in tech jobs prefer an Android platform instead of the iPhone. As technology increases and more tech jobs become available, unless something changes from where it is today, Apple might just find itself losing their market share in the near future. That’s why changing the focus of the iPhone in some key areas, such as productivity, could create a tremendous advantage that could make sales skyrocket. Could this be accomplished by lowering the overall profit margin or supplementing the purchasing price in effective ways, like cell carriers are doing right now for new customers?
Is It Really a Rich vs. Poor Demographic?
- Android users might have less education overall and lower incomes, but they are also more pragmatic and tech-savvy.
- Apple users tend to like living larger than life and pursue their dreams of career and happiness.
- Android users are fatalistic, sad, and looking for some sort of escape and this is something that Apple could tap into with the right plan.
- The overall goal of Apple, however, seems to be to transform into a luxury goods brand, especially with their hiring of Burberry’s CEO to run their retail business division.
- Apple has a 15.3% market share of smartphone vendors and the global market share is virtually identical at 15.6%.
- The production cost of the iPhone is typically under $50 per unit, yet the average retail price of one is above $600.
- With over 1.2 million apps at a global annual revenue of $1.7 billion, it could be said that everyone is a target for Apple if the conditions are right.
There is certainly a rich vs. poor feeling to the target audience of Apple. It’s almost like those who don’t have a lot of money are willing to purchase an iPhone just so it seems like they can fit in with the demographics that they want to be in. Despite this, however, Apple does have a wide influence in every demographic and virtually anyone who wants a smartphone will consider an iPhone at some point in time while shopping. That’s ultimately the goal that Apple has in marketing their smartphone. With brand saturation causing many to at least look at the iPhone, there is no better form of advertising in the world today. That will help them to continue reaching out to other demographics who may not choose the iPhone as their smartphone of choice with their first impression.
How Is The Global Market For Apple?
- Since 2009, Android market shares have increased dramatically while Apple shares have remained relatively the same.
- It is only in the United States where this trend has been reversed.
- Despite this fact, Applies average quarterly revenue on iPhones alone exceeds $26 billion.
- Apple actually has a greater share of the tablet market with their iPad, at 74% of total US tablet sales, but their average revenues per quarter from this product are just 25% of the iPhone.
- In the Q1 2014, Apple sold over 50 million iPhones for the first time. Compare this to Q3 2007 when only 270k iPhones were sold and the growth is phenomenal.
- Nearly 700 million iOS devices have been sold since 2007, accounting for more than half of all people who have access to the internet at any given time. 500 million of these devices have been iPhones.
- 10% of the total iPhones that have been sold all time were purchased in Q4 2013.
- The iOS share of global smartphone shipments is above 35%, which means Apple is shipping more product globally then they are typically able to sell.
As Apple transforms into a luxury brand, it will either do one of two things: shift the demographics into even wealthier areas where it becomes an exclusive brand OR build up desire within the lower income brands because it provides someone making less than $30k a way to be equal with someone who makes $150k. Whatever the case may be on an individual level, there are two key demographics that will always be part of the Apple community: graphic designers and music professionals. Apple products make it easier in many ways to create these items and that will always give them a specific market share. If they can reach out to tech groups and create cost-effective products, even if it is in a yet-to-be created off-brand, then Apple will dominate well into the future as they are today in the US market.
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