Apple Business Marketing Strategy

Apple B usiness Marketing Strategies Analysis M odule: Marketing Management A uthored by: Kazeroonian, S H S tudent ID number: 0933841 Word Count: 2511 D ate: 7/12/2012 Contents 1 Introduction …………………………………………………………………………………………………………………… 2 1. 1 2 Company Background ………………………………………………………………………………………………. 2 Situational Analysis …………………………………………………………………………………………………………. 2. 1 Market Growth ……………………………………………………………………………………………………….. 3 2. 2 Porter Five Forces Analysis ……………………………………………………………………………………….. 4 2. 2. 1 The Bargaining Power of Buyers …………………………………………………………………………. 4 2. 2. 2 The bargaining power of suppliers ……………………………………………………………………… 4 2. 2. The threat of new entrants ………………………………………………………………………………… 5 2. 2. 4 The threat of substitute products ……………………………………………………………………….. 5 2. 2. 5 The intensity of competitive rivalry …………………………………………………………………….. 5 2. 3 SWOT Analysis…………………………………………………………… ……………………………………………. 5 2. 3. 1 2. 3. 2

Weaknesses……………………………………………………………………………………………………… 5 2. 3. 3 Opportunities …………………………………………………………………………………………………… 5 2. 3. 4 3 Strengths …………………………………………………………………………………………………………. 5 Threats ……………………………………………………………………………………………………………. 6

Marketing Strategies ……………………………………………………………………………………………………….. 6 3. 1 Products …………………………………………………………………………………………………………………. 6 3. 2 Pricing Strategy ……………………………………………………………………………………………………….. 6 3. 3 Promotion Strategy ………………………………………………………………………………………………….. 3. 3. 1 People Buy what Other People Have …………………………………………………………………… 6 3. 3. 2 Help your Customers Help you …………………………………………………………………………… 7 3. 3. 3 TV shows and Movies………………………………………………………………………………………… 7 3. 4 Placing and Distribution Channels ……………………………………………………………………………… 7 4

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Apple Inc. has incorporated numerous features that are unique and well known in the market today. We consider that there are several Apple products with several appealing features such as: iMac, iPod, iPhone and iPad. These products represent a revolutionary era for the development of Apple. By placing such products in the market, Apple Inc. has attracted a lot of customers in one way or another. Highly advanced technology, simplicity and design, and the sense of luxury are the main features integrated in these products. Moreover the comfort and convenience that these products provide are very crucial.

This market plan aims to analyse the marketing strategies that have been used by Apple Inc. in order to develop its worldwide domination in all aspects of the computers (PC, Laptops and Tablets), digital music players, mobile phones, and multimedia and telecommunication industries. Furthermore, the core competence and company mission will be analysed in order to determine which focus points Apple should try to enhance in the future. 1. 1 Company Background Steve Jobs, Steve Wozniak and Ronald Wayne established Apple on April 1, 1976 in order to sell the Apple 1 computer kit that was hand built by Steve Wozniak.

Demand convinced Jobs that there was a distinct market for small computers and with a clear vision and consumer friendly product, Apple went public in 1980 and became the most successful initial public offering since Ford Motor Company in 1956. Meanwhile, Steve Jobs left the company and stiff external competition with other companies such as IBM and Microsoft throughout the 1980s nearly forced apple into bankruptcy by the mid-1990s. However, to stay afloat, Apple started to innovate their PC products lines and expand into the digital music players industry. Apple was a company that was based on innovation and when I left Apple we were ten years ahead of anybody else. It took Microsoft ten years to copy Windows” said Steve Jobs. In 2001, apple introduced its new innovated iPod portable digital audio player. The product was phenomenally successful at the time (over 100 million units were sold within six years). In the last decade, Apple has achieved unparalleled success in different markets and now designs, manufactures and markets PCs, Mobile Phones and Music player with its unique applications and iTune software.

However, Apple’s revolutionary CEO, Steve Jobs, passed away in 2011, and today Apple continues to lead in industry in innovation with its award-wining computers, OS X operating system and iLife professional applications. Apple Business Marketing Strategy |2 2 Situational Analysis Apple makes enormous efforts to differentiate its products from its competitors by developing products that have already been out in the market, making them exclusive and giving them new features. In most of the scenarios Apple has not been the first to the market and as a result, the risk of being first to the market is lower.

Moreover, Apple always focuses on one rather than many. Compare to their closest competitor, Samsung, Apple make people and customers excited and wait for their new technology and product. For instance, by introducing Siri technology (which had already been existed before Apple iPhone 4s) Apple could make the iPhone 4s special from other smartphones at the time which the leads Apple commands a one third share of the smartphone market. However, the iPhone and iPad have combined to help iOS dominate competing mobile operating systems with a two-thirds share of the market.

The graph below indicates that after Apple introduced the iPhone 4s, the iOS market share has reached to the peak of 61% among all the smartphones. Figure 1: Smartphones Market share *Retrieved from http://seekingalpha. com/article/839661-the-iphone-s-growth-rate-has-peaked on 24/11/2012 2. 1 Market Growth Apple Inc. ’s Market started growing in 1997 then decreased slightly, until 2000. From then on it is steeply growing. Starting in the U. S. , after the comeback of Steve Jobs, Apple started selling overseas as well.

Since many of Apple’s parts and products are produced outside the U. S. (Europe and Asia), not only are the production costs lower, but Apple also got to have better insights in those markets According to the latest Apple annual report announcement, Apple Inc. has made the total net sales of 156,508 million dollar in 2012 which as compare with 2010 it is considerably increased by 240%. The financial history of Apple over the past three years is shown by the table below which illustrates a very successful growth. Apple Business Marketing Strategy 3 Figure2: Apple annual financial report *Retrieved from http://investor. apple. com/financials. cfm on 24/11/12 However, the largest income of the Apple has come from the iPhone product which approximately consists of 58% the entire products have been sold by them. Furthermore, the enormous increase of Apple income is done by introducing iPad mini as their one of recent product. According to the Apple announcement in November 2012, they have sold three million iPads in just three days which is their biggest achievement in the last decade. . 2 Porter Five Forces Analysis Porter five forces analysis will be used to determine the attractiveness of the market and to analyse the needs and trends in the macro-environment. It is also used to identify the situation of iPhone, iPod, iPad and iMac among its competitors and customers, and clarify what the general environment for their operations is. 2. 2. 1 The Bargaining Power of Buyers Generally, Apple buyers have not many options for a specific product and one of the biggest issue for the customers is the high price.

In this market segmentation, the buyer concentration is medium, since a lot of young people are using iPod or Mac from apple, so they think iPhone will be a revolution mobile phone that contains a lot of especially features. Apple intends to introduce one model per year whereas Samsung gives variety of options with lower prices. As it is mentioned earlier, Apple focuses on “One” rather than “Many” which it makes customers think this is something special from the others. 2. 2. 2 The bargaining power of suppliers

Almost 90% of the Apple products are procured and manufactured by other suppliers which are mainly the chipmakers and touch-sensitive display producer (for touch screen products). Apple Inc. has been cooperated with many chipset produce manufactories for long time, including Intel Apple Business Marketing Strategy |4 (Provided CPU), Micron Technology (Provided digital camera CMOS) and Samsung (Flash memory chip). A lot of chipset producers have a good long term relationship with Apple Inc. Therefore, the bargaining power of supplier is low. 2. 2. The threat of new entrants Since there are considerable investments to be made for setting up PC industry, new entrants would be reluctant. Though there is scope for white-box PC’s having a share of 35% world-wide in 2006, but since the existing companies have created strong branding awareness, this threat would be low. 2. 2. 4 The threat of substitute products The more differentiation of product the less likely the switch to a substitute will occur. Of prices are higher then, the company with the higher price has to provide justification for the increase.

But what makes Apple the winning company among the very competition intense sector in several industries that they work in, is their unique brand image and customer loyalty. However, with technology undergoing paradigm shifts, coping with these changes can make life difficult for the players in the sector. 2. 2. 5 The intensity of competitive rivalry Apple faces stiff competition from Dell, HP, IBM and Microsoft in the computer industry and Samsung and HTC in the mobile and tablet industry. However, in the Digital Music industry apple dominate among all its competitors.

Moreover, there is one important factor which makes industries less competitive including the brand equity and expensive switching costs. Overall, the intensity of competitive rivalry is medium high in most of the markets that apple is involved in. 2. 3 SWOT Analysis 2. 3. 1 Strengths Apple’s current strengths are the huge market share they possess when it comes to music players, iTunes as well as mobile phones (iPhone), tablets (iPad), and personal computers (MacBook and iMac). 2. 3. 2 Weaknesses A weakness that recently occurred is that one of Apples founders passed away.

Steve Jobs, one of the big inventors and main persons in Apple died earlier this year after a long time struggle against his cancer. Timothy D. Cook was announced as the new CEO, after being chief executive officer. Critics have claimed Timothy does not have the same charisma and visions like Steve Jobs had, and it is just a matter of time before Apple will lose its edge to their competitors. Apple has also been criticized for its latest product, the launch of Apple iPhone 5. 2. 3. 3 Opportunities

To reverse this downward trend of negative critics, Apple has to continue developing its product and be extra cautious about what the market and consumers want. They have to be more creative in design and invent new and improved products to meet the expectations from the market. They do not have to necessarily invent the iPhone or iPad again. But to meet the threats they would have to improve their products and create an urge for their new products so they can conserve their market shares and sell more products and eventually capture bigger market shares. Apple Business Marketing Strategy 5 2. 3. 4 Threats As it is mentioned earlier, Samsung lead position in the mobile phone market after they released their new mobile phone Galaxy S3. Their products are based on the Android operative system, while Apple’s system is based on their OS X system. Sony and Nokia (Windows mobile phone) have also recently managed to capture huge market shares from Apple and Samsung and in the future they might overtake them. 3 Marketing Strategies 3. 1 Products Apple has a solid track record of innovation in different markets, often changing the way we view those markets entirely.

Apple in most of the time has not been First to the Market and according to the “five secrets of the world’s best marketing machine” by Steve M. Chazin the former Apple Marketing executive, Apple tries to make something good greater. A clear example for this could be the iMac. At the time iMac was introduced by Apple there were Windows All-in-one computers competing with Apple but what actually made iMac so special was its unique design, free of noise and being fast CPUs inside a thin monitor.

Steve Chazin believes that The Mac, iPad, iPod, iTunes and iPhone are all successful because they were late to market and improved on existing designs and functionality. Apple does one thing very well and that is, making complex things easy and elegant, It is no coincidence that Apple users compliment about the exceptional user interface of their iPads, iPods or iPhones. In addition, Apple tries to exert control over the users’ experience with its products. So, apart from the hardware, the company also develops the software so that the user has the best possible experience. . 2 Pricing Strategy Apple is usually referred to as the technology industry’s “high-price” leader. However, of late, the company has been offering its products at lower price points in a clear effort to expand its market. Even so, Apple, at the launch of its products, targets early adopters with higher-than-competition prices. It initially adopts skimming strategy and later launches lower-price versions with fewer features or launches a newer version while continuing to sell older versions at lower price. 3. 3 Promotion Strategy

Apple’s promotion strategy is centred on creating hype. The late Steve Jobs, founder of Apple, was known for hyping up. His theatrical style and panache were successful in creating excitement before the launch of Apple products. These efforts have succeeded in making Apple products aspirational. 3. 3. 1 People Buy what Other People Have If you look at when apple was promoting iPod on TV adverts, they did not show and focus on the product like other adverts you would watch on television, instead there were a long white headsets that could show other people you have an Apple iPod.

The other reason that Apple only advertise Apple Business Marketing Strategy |6 long white headsets with white iPods and they did not show a closed-up picture of their product is that they do not want to only sell their product to customers; however, they want people to experience of joining to a special and exclusive Apple lifestyle and to become a part of iPod community which allows them to buy music through their unique software program (iTunes) and put their music in whatever order they want. 3. 3. 2 Help your Customers Help you

When Apple first introduced their PowerBook, they made them outstanding buy making them in silver colour and have big Apple logo at the back so owners can feel proud and to be different therefore they try to show it off to other people. Apple earned nearly 40% market share on the back of early PowerBooks users. 3. 3. 3 TV shows and Movies Apple relies heavily on working closely with Hollywood in order to promote their product. This gives them opportunity to get their product used by Hollywood stars which have an enormous influence on public. . 4 Placing and Distribution Channels Apple works with number of network providers that they deal with the placing. However, online shopping from Apple. com or giving order in store for a new launched product can take up to two weeks due to the high demand. 4 Conclusion “An Apple computer on every desk” –Steve Jobs. Apple Inc. states its vision very clearly. They have changed our life with their products and services. They have demonstrated the world, that a human has a strong capacity to create huge things with a big impact.

The analysis of the different elements of a marketing plan outline the various aspects involved in the penetration of a new market and the successful launch of a new product or service. Being aware of its own position and capabilities, and seeing opportunities in a new trend a company can enter a new market and develop. On its way, the company has to use its strength, respect its internal weaknesses and consider the outer world with its opportunities and threads Apple Business Marketing Strategy |7 5 Bibliography ? 5 secrets of world’s best marketing machine. 2007). Retrieved 11 24, 2012, from Marketing Apple: http://www. marketingapple. com/Marketing_Apple_eBook. pdf ? Apple Sells Three Million iPads in Three Days. (2012, November 5). Retrieved 11 24, 2012, from Apple: http://www. apple. com/pr/library/2012/11/05Apple-Sells-Three-Million-iPadsin-Three-Days. html ? APPLE THREE-YEAR FINANCIAL HISTORY. (2012, October ). Retrieved 11 21, 2012, from shareholder: http://files. shareholder. com/downloads/AAPL/2199577444x0x444195/E7A8FE5F-883546AB-ACC2-6FA28DFB546D/Three_Yr_Financial_History. pdf

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