One of the most fundamental factors that determine a successful business is the possession of feasible, clear and achievable business and corporate strategies with a purposeful organizational sense of direction. It is a statement of fact that business and corporate strategies are unachievable without a well laid-out plan at attracting a solid customer base for the organization (Parkinson, 1991). Customers are the facilitators of profits for organizations and any company that intends to remain in business should take the issue of customer service very seriously. Evolving a well-planned customer service automatically translate into programmes set out by companies to draw new customers and retain old ones. This forms the basic tenets or principles of marketing upon which organizational success in business rest.
Though the aforementioned assertions have briefly introduced the core elements that drives a successful business, however, it takes far above the points mentioned for a business firm to survive in whatever industry that it locates itself. This is due to the vociferous competing forces that are struggling with the business firm for the same customers and for the similar goods being offered by the industry. Despite the high rate of competition that threatens and even shut down some businesses, Jobber (2007) asserts that the principles and practice of marketing forbids customers to be chased about at whatever price. However, good marketing principles were identified as factors that would set a company to gain competitive advantage over the rest of the market players. Therefore, companies all over the world have been developing and establishing crack marketing team whose responsibilities will include devising policies and programmes that would impact on the company’s products through which the company can gain competitive edge (Jobber, 2007; Srinivasan et al, 2009).
Having dwelt on the necessity of good marketing strategies for the success and survival of businesses in the highly competitive industries, this report will now narrow down its view on the case study of this research; APPLE Incorporations, one of the leading players in the computer retailing industry not only in the U.K., but globally. Suffice it to say that the computer retailing industry world over is a highly competitive one with many players competing for the patronage of their products. It may be rightly put that the industry is indeed saturated with products and services of the competing companies, however, the continuous growth in technological innovations has continued to enliven the industry and continued to open doors of marketing and sales opportunities for the industry.
APPLE INCORPORATION: Background of the Company
The company Apple Computer Inc. was established and cited in California, U.S.A on the 1st April, 1976 as Apple Computers Inc. for the design and manufacture of computer electronics, computer hardware and commercial servers (Hormby, 2005). However, in the year 2007, the company shed the word “computer” from its name to Apple Inc. to reflect its new business expansion into consumer electronics and telecommunication hardware. Apple’s most popular hardware products include Macintosh computers, the iPods, iPads and iPhone. Meanwhile for the software, Apple boast of the Max OS X operating system, the iTunes media browser the iLife suite of multimedia and creativity software; the iWork suite of productivity software; Aperture, a professional photography package; Final Cut Studio, a suite of professional audio and film-industry software products; and Logic Studio, a suite of audio tools. Presently, the company has about 284 retail stores in ten countries across the world. (MacRumors.com, 2010).
Apple Inc. is globally identified with the Apple logo partly bitten on the right though the logo has witnessed remarkable metamorphosis within the company’s history as shown in figure 1 below.
Figure I. The metamorphosis of Apple logo from 1976-2010.
The first logo (1976) B. Logo used from late 1976 C. Monochrome-themed logo 1998
Apple’s Mission Statement
Apple Inc. has a well defined mission statement which harmonized the concern for employees, customers and community in its drive to pursue profitability as quoted below;
Apple computer is committed to protecting the environment, health and safety of our employees, customers and the global communities where we operate. We recognise that by integrating sound environmental, health and safety management practices into all aspects of our business, we can offer technologically innovative products and services while conserving and enhancing resources for future generations. apple strives for continuous improvement in our environmental, health and safety management systems and in the environmental quality of our products, processes and services. (Company’s website, www.apple.com 2010)
Slogan represents one of the critical features used by companies for marketing purposes as it is included in the elements that make up branding with which products and services are identified. Apple’s first slogan upon the commencement of operations in 1976 was “Byte into an Apple”. Afterwards, from 1997-2002 another slogan; “Think Different” was adopted for advertising campaigns. This slogan had a lasting impact on the brand image of Apple Inc. as it laundered their image and increased the popularity of their products with the media and the customers. Even though the company has since shed this slogan, it is still closely associated with Apple. Apart from these aforementioned slogans, Apple has different slogans for its various product lines; “iThink therefore iMac” for iMac promotion, “Say hello to iPhone” has been used for iPhone, to mention but a few.
Without any iota of doubt, Apple Inc. can stand to be counted amongst the main contenders with the likes of Microsoft, Google, and IBM for the market leadership of the computer retailing industry. Let us now examine the organizational orientation of the company.
Apple Inc.’s Organization Orientation
Jobber (2007) stated that companies are bound to have one business philosophy that will continue to guide their business in the production of goods and services; this is what is referred to as organization orientation. There are a few business philosophies that companies can adopt ranging from marketing orientation, production orientation and financial or sales orientation.
Production orientation is adopted by companies whose management are focused on cost. The management drives to achieve economies of scale by going into the production of limited range of products aimed at minimizing production cost. Meanwhile a company with a financial or sales business philosophy would rather focus on short-term returns, hinging decisions more on financial ratios than customer value (Lawson and Wooliscroft, 2004). Such companies lay more emphasis on sales push as against adaptation to customer needs.
Figure II: Apple Inc. Marketing Orientation
Apple Mac, iPods, iPhone, iBooks, Apple OS
Developing technological consumables of the industry, gaming entertainment.
Apple consumer and computer electronics
Customer attraction, satisfaction and retention.
As far as Apple Inc. is concerned, marketing orientation is the philosophy guiding its business, consequently upon the industry that it operates in (see figure II). In a marketing orientation organization, customer need is the keyword. Change is seen as very consistent considering that change is an endemic part of human nature. Therefore, the key to organizational survivor in a marketing orientation is the ability to adapt to the changing needs of the customers which also comes with potential market opportunities.
Apple Inc. is involved in the production of wide range of computer and consumer electronics that are constantly subjected to series of changes based on the changing tastes, specifications and needs of its teeming consumers. This explains the technological innovativeness that Apple employs to meet and satisfy the expectations of its consumers. For example, each year, Apple releases advance models of its existing products laced with modern technologies and fashion flair that would attract the buying attention of its customers (MacRumors.com, 2010). These innovations are usually a product of the market research conducted by its Research and Development department who usually maintains close contacts with the customers through public survey and feedback on bought products (Birzer and Schweikart, 2003). One of the core market strategies of Apple is to seize the opportunity that the changing human nature presents in a marketing orientation to shore up its sales and patronage. Lawson and Wooliscroft (2004) remarked that consumers will readily want to do away with a product when a new exotic model of such product is being released into the market. This gives immense opportunities for companies that uphold the business philosophy of marketing orientation to take advantage of the market flexibility.
Apple’s Core Strategy
Core strategy focuses on how companies’ business objectives can be accomplished after it has been set. This consists of three key elements that facilitate the achievements of such business objectives, these are; target markets, competitor targets and establishing a competitive advantage. Apple Inc. have well-planned core business strategies embedded by the three elements aforementioned and explained below;
Apple’s Target Markets
Central to the core strategy of any organization is the choice of the target market, since marketing is not about chasing customers at whatever price. A strategic decision is usually made on the group of customers that the goods are meant to sell to (segments) and these groups of customers will be the main attraction of the business firm. More often than not, target markets selection emerges as a product of the marketing audit conducted and the marketing objectives adopted by a company.
The target market of Apple includes nearly all the sectors of the society, they set up to provide Apple computers to all age range, the old and the young, and to both sexes. This they hope to achieve in order to gain higher income. Apple has different marketing strategies that can cater to the taste and appeal of such markets (Gottinger, 2003). The company makes strategic arrangements for its stores and branches to be located in the most profitable places where clients can easily see the store and they can be encouraged to visit the store and buy products.
In addition, in terms of market segmentation, Apple has different target markets for its range of products. The company is able to carve different market niche for its different products. Apple Inc. released iPhone into the market in 2007 whose functionalities carries internet-enabled smartphone and iPod. This product was targeted at the upwardly mobile professionals who will like to stay updated as they are on the move. It gave the impression that the phone is worth $599, however, this was reduced to $399 as one part of good marketing strategy that gave the customers that they got a good bargain.
Though there are quite some distinctions in the target markets of Apple’s range of products, however, these segmentations share a meeting point in that Apple Inc. usually targets the affluent customers as their products doesn’t come cheap. There could be variations on the age-range for products, or sex-based targets for colours of the products, or some other characteristics, however, the cost of their products certainly indicates that their products are for those who can afford it. Even though they still bring down the prices of some products to relate with people of lower income, the cost still depicts that it is targeted at the rich. This has paid up in a way for Apple has people aspire to buy their products to symbolise their membership of the ‘high class’.
Apple’s Competitor Targets
Beside the decisions that are made by companies on strategies that relates to markets, there also assessments on competitor targets. These are the organizations that the company will be competing with in the market. The strengths of the competitors will form part of the components of the core strategies of a company as there should be adequate planning on how the company intends to take on the competitors.
There is a wide range of competitors for Apple Inc. since it is involved in the production of more than one line of products. It has competitors in the consumer electronics production like Samsung, Sony, iRiver, Creative; computer electronics (hardware) competitors like Dell Inc., HP Company, IBM Corp; in computer software like Microsoft, Google, Sun Microsystems Inc. and a host of others.
Apple has been able to recognise and analyse its competitors and devised strategies that would make it to survive the hot competition. . One fundamental strategy of Apple to cope with the strong and intimidating competition in the industry is to carve its customer base and locate its store very close to where it churn out its higher income. Apple also ascertain that the competition in the location where they want to put up their branches are not too heavy in order to reduce the rigour of aggressive marketing that will follow in such environment. Some of these other competitive strategies will be discussed into details in the coming sections of this paper.
Apple’s Competitive Advantage
Day (1999) identified that there is a link between target markets and competitor targets which is established in the competitive advantage. Jobber (2007) described competitive advantage as the achievement of superior performance through differentiation to provide superior customer value, or by managing to attain lowest production cost. There is a major need for businesses to attain a clear performance differential over market competition on factors that are important to target customers.
The computer retailing industry to which Apple is a prominent player is a higher competitive one with several multi-national companies equally plying their trade in within the industry. Particularly, Apple’s diversification strategies give it more companies across a few industries to contend with. In addition, it has been reported that Apple was able to survive the recent economic recession due to its successes in defending its competitive advantage. Porter (1985) classified means of competitive advantage into two when compared with the competitive scope of activities i.e. broad and narrow. This is then divided into the four generic strategies which are Differentiation leader, Differentiation focuser, Cost leader and Cost focuser.
Hardware + Software
Figure III. Competitive Base of Apple Inc.
Apple Differentiation Strategy
A company is said to attain differentiation strategy when it is able to draw a selection of one or more criteria that are used by buyers in an industry and uniquely position itself to satisfy these criteria. This strategy is usually linked with premium price as added value to customers. Differentiation usually gives the customers the justification to prefer a particular good and choose it above its alternative products.
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Apple’s Differentiation Leadership: While the other PC competitors of Apple were struggling to differentiate their products, Apple was able to differentiate from inception. Apple was able to do this by combining the design and making of hardware with that of software. By so doing, they include some specifications in the software that runs better on their hardware. Steve Job, CEO was quoted as saying “People who are serious about great software need to also be serious about great hardware” (Hesseldahl, 2006). This explains why at its core, Apple is a software company who makes specific hardware decisions so as to maximize the value of their software. Apple also makes extremely good “core” software like iLife that set them apart from the rest. The product iLife is reported to be among the best third party software for creating movies, music DVDs and more. The competitive edge here is that the latest version ships with the every new Mac. This is a huge advantage in an industry where the major competitors either focus on the software or the hardware.
Differentiation focus: This strategy prescribes the segmentation of the market by the company so that a portion of it is focused on. Though this is not specifically stated as one of the strategies of Apple, as it claims to position itself to serve the young, old, boys and girls, however, clandestinely, only the rich can afford to buy Apple products. Most of its products are released into the markets at the cost higher than the average industrial price, though the prices are usually later reduced during the decline stage of the product life cycle.
Cost Leadership: Companies adopt this strategy when it aims at attaining the lowest cost position in an industry. Several segments in the market are served and great attention is paid to minimizing cost of production. As long as the price for the products is within the industry average, cost leadership normally result to superior performance. Be that as it may, in the hardware computer retail, Dell computers is able to gain competitive advantage over Apple by outsourcing manufacturing, selling directly to customers and keeping overhead at less than 10 per cent of sales (Jobber, 2007). Though this isn’t to say that Apple has faired badly as the company is able to reduce cost as well by selling directly to customers (having its own retail stores) and doing little R&D.
Cost Focus: This strategy sees a company seeking cost advantage with few number of target market segments. The company seek economies of scale by dedicating itself to the targeted segment of the market often ignored by the other competitors. Thus cost advantages are gained by such companies that provide basic products offering which may be higher than price discount necessary to sell it. Apple Inc. does not appear to seek this advantage or positioned to attain this strategy as the company is positioned to serve the broader market.
Marketing Mix of Apple Inc.
Marketing mix are probably the most famous terms in marketing. It dwells about the ‘tactics’ adopted by companies in their marketing drive within the channels of four elements known as the “four Ps” Product, Price, Place and Promotion. A properly understanding and consideration of these key terms in the marketing plans will invariably transform into feasible marketing programme. Apple Inc. has a well defined marketing mix with a clear segmentation along the lines of the “four Ps” thus;
Apple Inc. Retail Strategy
Direct sales to customers
Figure IV: Apple’s Marketing Mix.
Products: Product is recognised as the core element of the marketing mix as it is the essence of the business and product that is being marketed in addition to providing the functional requirements wanted by the customers. A product that fails to meet the expectation of the customers will be rejected at the market and this would lead to the failure of the business. Apple offers a wide range of products that can be said to cut across some industry as it is a highly diversified company. These products can be grouped as computer electronic; Mac and accessories, consumer electronics; iPad, iPhone, iBook, iPod, software; Macintosh software and operating systems. Apple has several models of these aforementioned products which are also subjected to the theory of Product Life Cycle (PLC). Product life cycle is modelled after the biological life cycle that follows the channels of birth through growth to maturity and finally demise. Products too follow this channel from the time of manufacture, the growth stage where the sales are beginning to pick up to the maturity stage where the product is enjoying highest sales and down to the decline when the sales down due to saturation or other market forces. Apple products also follow this process which is the reason why the company comes out with different models of its existing products. The company takes advantage of its innovativeness to develop new products that would take over the market from its products facing market decline or at the declining stage.
Price: It is the revenue earner of the marketing mix. The price of the product is what the company gets back as its reward or as returns for the products offered into the market. It is the odd element in the marketing mix as the other elements are costs. Apple drives its pricing in the industry at the premium rate as a result of the differentiation that it has in the industry. Apple’s retail strategy with which it sells directly to the consumers enable it to be able to sell its products at controlled price.
Place: Place refer to the availability of the product and the facilitating channels that makes the products available to purchase. Place mainly review the distribution channels and how effective they are for the realisation of the company’s marketing objectives. No matter how desirable a product is, if it cannot get to the customers at the right time and the right place, it will lose valuable patronage. With its retail strategy, Apple is able to directly sell to customers at strategic areas. Part of the retail strategy of Apple include locating its stores in areas where its receives the highest patronage, where there are less competition and where there is avenue to provide support services to customers and also receives feedback from them for its R&D. Outside the U.S., Apple deals with other distribution channels to get its products to consumers through other retailers and sales representatives.
Promotion: Promotion mainly focuses on the media used to communicate with potential buyers on the products offered. Advertising is an important element in the promotional mix, others are personal selling, direct marketing, internet promotion, sales promotion and publicity. Apple Inc makes good use of all these elements of promotional mix. Apple products are well advertised using the electronic and print media, selected customers are targeted for marketing, communication about new products are relayed on the internet and series of sales promotion are done by the company. The company also engages in product-price slash, event and programme sponsorship and other means aimed at raising the awareness of its products.
SWOT Analysis of Apple Inc.
Businesses are reviewed using the SWOT analysis tool that sets to x-ray the internal and external factors that determines the survival of a company within the industry and marketplace. SWOT analysis comprises of the Strength and Weaknesses of the company as part of its internal factors and the Opportunities and Threats of the company which both constitutes the external factors. Sometimes referred to in marketing as the marketing audit, a good SWOT analysis can be used to chart a new course for a business, as the weaknesses could be converted to strength while opportunities are made out of the threats.
Healthy and established Brand
Diversified sources of income
Benefits from retail stores
Growth during meltdown
Favourable lease terms
Faulty products; iPod Nano
Non OS options for Mac
Unstable partnership with others operators IBM, Intel
Competition in technologies
High substitution effects
Vulnerability to leakages
Figure V: A SWOT Analysis of Apple Inc.
Strengths: The strength is the strong internal factors of a company that sets to give it the market advantage. A major source of strength for Apple lies in its very strong brand which one of the most established brands in the world. Apple is not only able to attract new customers, it is also able to retain old customers as customers maintain an enthusiastic interest in its products. In addition, its differentiated products ensured that customers are able to get good value for their money. This partly explains the high customer retention of Apple. Also, Apple does not rely on a single product for its main income as most of its products generate high revenue for the company and this is very beneficial for the company for example iPods, iTunes and iPhones all generated massive income for the company in 2009 with 22 million sales of iPods digital music players and more than 500 million tunes through iTunes with many music companies agitating for price increase in downloads on iPods as more profits are being made by these companies than from the CD sales.
Weaknesses: These are internal factors that inhibit the growth of the company in its marketing activities. Apple has its share of weaknesses in its products and services. For example there have being some barrages of complains over its products like iPod Nano which had being tagged with faulty screens (the company owned up that it breaks under impact). The Mac computer leaves no software options except by using its operating system, though this could be viewed as a marketing strategy, it also reduces sales from those that are addicted to Windows or Linux operating systems. Repairs and upgrade can only be done by Apple-trained technicians, limited range of software available. Mac is not well suited for running some programs such as databases and servers. Also, the corporate destiny of Apple appeared to be tied to one man, Steve Jobs (co-founder), when he took medical leave in 2005 the company’s stock price went down and profitability nose-dived into loss until when he returned.
Opportunities: Opportunities are the positive external conditions that can assist a business achieve its strategies. The current economic meltdown will present opportunities for Apple’s retail store operations and benefit from lower cost leases. In addition, Apple opens its stores in a slow, even handed way to make sure each one is profitable. Other companies that over extended themselves in the boom could have to pull back drastically as their customers are reluctant to spend. That opens opportunities for Apple to negotiate more favourable lease terms in struggling shopping malls (Martellaro, 2008). Also, Apple has never being pressured into lowering prices to increase sales, and customers do not normally expect special sale periods. However, they do see Apple products as better investments as Christmas gifts than many other products (Martellaro, 2008).
Threats: Threats are the negative external conditions that can hinder the business strategies of a company. Companies need to be aware of the ‘impending dangers’ on their business and sought ways to guard against its adverse incidence for the survival of their business. The biggest threats to Apple is the high volume of competition that exists in the technology market, innovativeness is the name of the game and more companies are churning out modern technologies that are threatening the continuous dominance of Apple. The popularity of Apple Mac and iPod may wither down in the face of the rising competition. Also, there is high substitution effect in the innovative and rapidly growing IT consumables market. Lastly, Apple are vulnerable to leaks that could cost the company huge profit. A case in point is the legal case against Bloggers over the leakages of its products Asteroid to the public in 2005.
There is no gainsaying in the fact that Apple Inc. thrives in its marketing drive in every essence of the principle and practice of marketing. Apple Inc is a marketing oriented company in which customers needs drives the business through in-depth research and market interaction. The company has a well grounded marketing mix with all the ingredients necessary for growth embedded in its market planning. Its diversification and retail strategy puts the company in good stead for profitability and its brand image continues to attract and retain valuable customers for the company.
This report further concludes that Apple Inc. is poised to continue to remain relevant in the technological industry in the manufacturing and retailing business of its products as long as it continues to give top priority to the issue of marketing policies and consider the recommendations proffered by this report as highlighted below.
Emanating from the marketing audit of the company Apple Inc. by this report are the following recommendations for the considerations of the organization;
It is of utmost importance that Apple should remain concerned with the rising competition in the industry and maintain its commitment to good technological innovation that would meet customers’ expectations.
The company should avoid making errors on the production of its products as this may gravely impact of its brand image. The problem caused by the faulty iPod Nano, with faulty screen and battery, really affected the image of the company and future occurrence of this could be ominous for the company.
Marketing activities of the company needs to be geared up with through research and feedback policies in place. The R&D department of the company seems to be losing its steam. This should be energized.
Apple should appraise its staff loyalty as this may constitute danger to the company as shown in the recent information leakage to the market about its product. This could cause the company huge loss if not controlled.
Apple should endeavour to appeal to the buying consciousness of all classes of people as contained in the company’s mission strategy. The present pricing policy of the company does not suggest that as its products are quite expensive for the lower class therefore classified as luxury.
Apple should evaluate other parts of this report and consider deriving its core strategy from the marketing audit conducted. The SWOT analysis should be reviewed to convert the company’s weaknesses to strength and make opportunities out of the threats.
Apple Inc. possesses good chance to maintain its relevance in the computer retail industry for a long time if adequate considerations are made of the aforementioned suggestions arrived at upon the report of the marketing audit conducted by this report.
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