Northwest Missouri State UniversityNorthwest Missouri State University

Apple Marketing PlanMarketing Management

Darren Adams

Alyssa Burns

Andy Chor

Brittany McClure

Marlee Skolkin

Executive SummaryThe company we chose to analyze was Apple; more specifically the product we chose to

focus on is their iPhone. The iPhone has become a norm in America and can be seen anywhere

and everywhere you look. Apple has been very successful in the differentiation of their

products. They are seen as superior and as having the most advanced of technologies. Apple has

achieved this through becoming the first to come up with major ideas in the industry and

perfecting them, many times with other companies following in their footsteps. With the

company being such an icon, not only in America but internationally, we wanted to study it

further and look at the areas that could be improved upon based on customers’ wants and needs.

Based on the surveys we conducted we found that the main issues with the product were how

people felt about the battery life, durability, and size of the screen. We also believe that the

AppleCare program and the way Apple advertises their products could be improved upon within

their company in order to gain more customers, keep existing customers in the future, as well as

create additional revenues for the company.

Situational Analysis

Company AnalysisApple’s strategy is all about innovation. It is about taking the next step up, improving

products as they progress. In order to keep customers loyal, Apple has made it their goal to make

reliable and innovative products that will keep customers in awe. The culture of the company is

to create an environment that is uplifting and brings innovation and change to all products. The

focus of Apple is innovation and brand image. Their advantage is that they make reliable, high-

end products that are still affordable and unique. They differentiate themselves from competitors

because they make a unique product that consumers recognize over other mp3 players, or other

devices similar to Apple’s. From the iMac to the iPod, from PowerBooks to iPads, Apple has an

innovative edge and are what consumers think of when they think of technology.

Customer AnalysisCustomers of Apple tend to be very loyal to the company. Most customers who own one

of the products Apple produces, own at least one other, whether that be the iPhone, iPod, or

MacBook. Based on the research and survey we conducted, we concluded the customer base is

largely both male and female age 18-25, with the second highest market being those aged 35-50.

This is fitting with Apple’s most recent plan of releasing two different iPhones at the same time.

They released both the 5c and the 5s. The 5c which was supposed to be marketed to the younger

crowd who may not have as much money to spend on a phone, as well as being interested in a

more fun and colorful look, and the older business person type, with the sleek, sophisticated

looking 5s. It was found however that there was not that big of a difference in what the customer

wanted between the two different age groups. For only 100 dollars more, even the younger

generations were more interested in the sleek 5s version rather than the 5c, as well as the faster

processor and other features found on the 5s. This became an issue between Apple and its

customers that we believe needs to be addressed. It has been proven from this launch of the

newest product that the customer is more concerned with Apple’s superior product than they are

with saving money, so Apple really needs to focus on keeping their product innovative and

superior for the customer.

Collaborator AnalysisAccording to the Apple website, there are different distributors that you can purchase

Apple iPhones from. The ones they listed were their own authorized distributors. Three out of

the four listed were from Hong Kong while the last one was from Kowloon. It is important to

look at these distributors because it shows that Apple is a global brand and company. They do

not have any authorized American companies reselling the Apple iPhones or Apple products in

general, which means that consumers overseas are most likely the consumers that purchase the

refurbished Apple products, while those in America prefer the newest and highest quality

products (Apple, 2014). The unauthorized distributors in America would be the mobile device

carriers such as Verizon, Sprint, AT&T, etc. These mobile device carriers allow consumers to

sign contracts with them and use one of the many mobile devices that they carry. Apple iPhones

are sold at nearly all of these carriers and even at retail stores such as Best Buy, Walmart, Sam’s

Club, and Target.

The suppliers of Apple would be the different companies that help make parts for the

phone itself. According to the Apple website they have over 200 different suppliers for their

Apple products and they are in charge of making sure all the products are working and

environmentally safe. Apple enforces the supplier code of standards to make sure that they all

follow the same values as Apple (Apple, 2014). This is important for Apple to maintain their

company standards globally and so that things go as smoothly as possible within the company all

over the globe.

Competitor AnalysisThere are many direct competitors to Apple. Samsung, Google, and Microsoft, are

among their biggest direct competitors. All of three of these companies create, develop, and sell

similar products that Apple does, especially when talking about phones. In our area of concern,

the smartphone industry, Apples’ two biggest indirect competitors would be Dell and IBM. Dell

and IBM do not necessarily compete with Apple in the phone industry, but more the computer

industry and still play a vital part in the overall scheme.

Five ForcesPower of Suppliers – Low; they have multiple suppliers who could build their products

Power of Buyers – High; there are many similar companies to buy from

Intensity of Rivalry – High; there are many companies selling similar products

Threat of New Entrants – Low; the established industry makes it hard for small

companies to enter and compete with large already established companies

Threat of Substitutes – Low; no real substitute for the phone industry

SWOT AnalysisStrengths: The strengths of Apple’s iPhone include Apple’s strong brand name, the quality

and craftsmanship of the iPhone, its innovation with new ideas and products, as well as the speed

of its web browser.

Weaknesses: The weaknesses of Apple’s iPhone include its price, the AppleCare program, as

well as the relatively small screen size, the short battery life, and the durability issues with the

phone’s screen.

Opportunities: Opportunities for Apple’s iPhone would be the advancement in new

technology in order to lower prices or offer new features, continuous innovation by coming up

with new ideas or product features, reinventing its AppleCare program, and through sales in

many new emerging markets.

Threats: Threats to Apple’s iPhone include increased competition from international and

domestic sources. Another major threat to Apple’s iPhone includes doing business in a mature

market because for Apple to continue to grow they need to continue to gain market share which

is difficult in this industry.

Context Analysis Apples products have had a huge impact on today’s society in terms of economics, social

trends, and technology. The first iPhone came out in 2007 and sparked a social technological

revolution. Up until 2007 people were content with limited social media and app availability on

their cell phones. When apple presented our society with the mobile connectivity to the internet,

as well as touch screens our culture adapted quickly, while changing too. Apple has created a

sense of wealth for its consumers. Not only have the consumer benefited, but apple has

benefited too through selling their product successfully, creating a stable inflow of cash.

EconomyA common critical issue Apple is having with their brand reputation is that they are

constantly being criticized for outsourcing to Chinese workers. It isn’t just that work is cheaper

abroad, but that factories overseas are more flexible, and the quickest. The factories abroad have

workers with industrial skill that has caused Chinese workers to surpass their American

counterparts. Americans are among the most educated workers in the world and the nation has

stopped training people in the mid-level skill set that factories, such as Apple, need.

Modernization has caused these kinds of jobs in the US to disappear gradually. Still, even with

manufacturing jobs being outsourced, the presence of Apples work force in the United States has

more than quadrupled in the last ten years. Apple has nearly 600,000 jobs created indirectly or

supported by Apple for U.S. workers in manufacturing, engineering, transportation, and sales.

There are currently 250 US stores in 44 states with 100+ locally hired employees.

Social TrendsThe brand that the apple iPhone has developed is one of status socially. The Apple

iPhone displays mass brand recognition that has created an iconic culture. Before Apple sparked

the Social Revolution with the release of the iPhone people were perfectly content with limited

connectivity, but now it is customary in our daily lives. Our culture significantly changed when

we acknowledged the fact that we have on-demand entertainment at our finger tips with the

iPhone. Family, friends, and colleagues strongly influence a person’s choice of mobile device.

Consumers base their decisions psychologically on “what people already did” which tends to

cause consumers to perceive that they can get more reliable products, also known as Social

proof. Social Proof (also called information social influence) is a tool that Apple uses for their

iPhone by effectively recording and sharing its top sales to the general public in order to affirm

the consumer’s emotional response. Every new release of an iPhone is covered by various media

channels, the brands image is revolutionary. Corporations have made huge profits off of

manufacturing accessories for the iPhone.

TechnologicalThe technological environment refers to new products and new market opportunities.

Consumers in this day and age want to do everything faster, as well as easier, causing companies

to combine multiple technologies into one effective product. The iPhone allows music to be

stored directly onto the device’s hard drive, has a multi-touch display, and consistently updated

software. Apple is on top of the market with innovation of new products with short life cycles.

The technological competition in the mobile devise industry keeps getting more and more

competitive as companies keep improving.

Political and Legal FactorsApple is subject to laws affecting its domestic and international operations and has an

established presence worldwide. Countries all have their own regulations, taxes, etc. and Apple

needs to constantly be aware of these things in order to successfully sell their product in the

global market. It is reported that more than half of the brand’s sales come from countries other

than America. America’s relationship with countries where Apple has spread their

manufacturers, in order to reduce operating costs, such as Ireland, Korea, and Czech Republic

affects the brand. Conflict in the Middle East directly affects Apple because of the uncertainty

of the relations of those countries with the US. In order for Apple to sell the iPhone globally

there are many things the brand has to be aware of because policies are different and the brand

needs to know these policies well.

Current Marketing Plan

OverviewApple is a unique company when compared to other competitors in the fact that they do

little, if any advertising for the iPhone. There are two big ways the iPhone gets marketed to its

customers, which are both, ironically, free for Apple. The first is word of mouth. Owners of the

iPhone are normally those who have owned Apple products before, whether that be the previous

version of the iPhone or the iPod, computer, etc. and enjoy the superiority of the product. The

consumers spread the word about how great the iPhone is, or how well they are treated by Apple

as a loyal customer to other consumers, which leads to their massive reach over the consumer.

This method is good for targeting the younger generations. When these generations hear about

the iPhone and witness its greatness because a friend owns it, they desire to have it as well.

Owning the iPhone has almost become a norm amongst the American population. People always

desire to be on the same level of popularity as everyone else which is why they have to have the

latest and greatest version of the iPhone, which helps keep Apple’s sales up continuously. Apple

also appeals to the older generations; the working class ages 45-50 because they need a high end

product that is compatible and can complete the multiple tasks the need to get done. (Dowling,

2014)

The second form of advertising that Apple relies on, which they also do not necessarily

pay for, comes from phone providers, or collaborators. They are the ones who cover almost all

ads you will see for the iPhone. Verizon, AT&T, and Sprint are a few who have demonstrated

that you can purchase the newest model of the iPhone through their company. Again, Apple

pays little to no money and the iPhone is advertised on radio and television for them due to these

mobile providers’ advertisements. Social media is one of the few ways that Apple may advertise

for themselves. You can like Apple on Facebook, or follow them on Twitter. Sometimes you

will also see the newest model of the iPhone at the side of Facebook in the advertisements.

StrategyApple uses a differentiation strategy where they set themselves apart from other cell

phones in the market. They produce a high-end product that uses little advertising to appeal to a

broad customer base. Brand image is a huge part of Apple’s success. When you see their logo,

everyone can associate the triumphs within the company. A differentiation strategy is normally

difficult to pursue since you have to give your product features that will make it outshine similar

products in the same market. Apple executes this strategy well, as it is still one of the leading

phone providers out there. They also provide multiple accessories more the iPhone all of which

can be found in their store.

TacticsApple does not have many tactics for advertising as they do not do much advertising for

themselves. They rarely produce television and radio ads unless a new product is coming out.

Even then, they only run for a very short period of time. The cell phone providers are the ones

who do cover those segments and display the iPhones and all of the features that they have. We

believe that if Apple themselves did more advertising they could promote more of what they

believe is important and will appeal to more customers. Apple does, however, advertise on

social media to reach the younger generations of customers. The reach that they receive from

these advertising tactics is huge (Brownlee, 2013). Customers also enjoy the product so much

that they are transformed into loyal customers.

Measurement PlansApple’s measurement plan consists of measuring the amount of sales on a quarterly basis.

They really focus on how well the iPhone did each quarter, especially after a new model of the

iPhone was released (Dowling, 2014). They monitor the sales so that they can establish a way to

see if customers enjoy the new features and benefits that the iPhone allows them to have. Then,

Apple can decide if changes need to be made so that the iPhone will still appeal to their customer

base.

Marketing ResearchApple conducts some marketing research before and after the release of a new product.

Before the product is available to the public, Apple conducts a focus group to determine what

this small group of people thinks about the product. This is done to test the iPhone and to see if

there are any aspects that the focus groups dislike immediately. When they determine this, they

can make necessary changes before the phone actually comes out to make the customers more

satisfied with their iPhone. Apple also conducts a follow-up review based on the sales that they

made in the quarter the new model of the iPhone was released. Doing this allows them to decide

if the new model was appealing to the customer and gives them ideas of what they can start

working on for the next version of the phone.

Budget and Current CostsApple spent just over $1 billion in advertising in the year 2013. This is, however, for all

of their products and not just the iPhone. Most of these costs go towards their iPad and other

products since most of the iPhone advertising is either word-of-mouth, or provided by the

carriers. This seems like a large amount to us, but compared to other competitors, Apple is

spending very little on advertising (Brownlee, 2013). (See Advertising Expenses in appendices)

Problems with Current Marketing PlanThe products with the current marketing plan are that they do not advertise for

themselves enough. They are not able to show the features that they want, or appeal to new

customers, such as the older generations they have a hard time reaching. They also do no

advertising for the services they offer such as AppleCare which could help generate more

customers if they became more aware of these things. While they have a steady customer base,

they do lose some people who have issues with the phone. Adding these extra features the

consumer wants, such as a larger screen, better durability, better battery life, etc., will increase

their customer base significantly.

Recommended Marketing PlanFor the recommended marketing plan we definitely want to stick with the leadership and

differentiation strategies. Apple is known for its statement making products and innovation

within the technology field and that is something we do not want to lose within the company.

We have come up with three marketing strategies that we believe will help improve problems, as

well as increase revenues, within the company based on the consumer surveys we conducted.

These three plans cover the issues we feel need to be addressed with the phone itself, the amount

they advertise their products, and the AppleCare program.

Product Differentiation According to our survey, many consumers were happy with their phones, however, they

did want to see some changes made to the product. The biggest concerns consumers had

regarding the Apple iPhone was the screen size being too small, the battery dying frequently and

the phone not being very durable. Apple should take these recommendations and provide a high

quality phone that exceeds the standards of the consumers. This would be a huge investment for

the company, however it would be worth it because consumers would be thrilled to have a phone

with the features they have always wanted. We suggest that Apple stop making their phones out

of glass, and use a more durable material, but something with better quality than plastic. For the

back of the phone titanium or a material like aluminum, and for the actual screen a strong plexi-

glass could all be substitutes for the glass they use now. These options would not break as easily

as glass and in turn would make the phone much more durable. Adjusting the screen size would

be an easy fix; Apple just needs to make the phone either wider, taller, or both. Our target market

is college aged males and females, but creating a bigger phone would also encourage the older

generations to purchase the phone since they could see and use it more easily. Lastly, Apple

needs to create a phone with longer battery life. The people we are trying to advertise to are on

their phones all the time and it becomes a big deal when the battery can only last a couple hours.

Apple should create a phone that dims the screen itself whenever there is different lighting, thus

saving the battery. Applications on phones take up most of the battery life, and we think Apple

could offer a free car charger with the phone along with the regular charger to help with this

issue. While the consumers are on the go, they can make sure they can charge their phones. The

5S iPhone cost Apple around $200 to make (Rooney). The changes we are making we would

assume the phone would cost around $300. Apple charged $649 for the 5S, but for the new

phone we created we will say we would sell it for $650.

ROI: Apple would invest 1,000,000 to create around 3,300 phones that would be the test run. If

the testers liked the phone Apple could choose to make more and charge more for the phone than

the original $650 that we came up with.

Investment: $1,000,000 Annual Return: $1,155,000 ROI: 15%

Advertising As stated earlier, Apple does very little advertising on its own. Most of its advertising

comes from word of mouth. Within our surveys it was found that 46% of people heard about

their phone through family or friends. We believe that with how much money Apple makes that

more of it can go toward advertising new products. More advertising will lead to a greater reach

and therefore more people wanting to buy the newest product. We believe that they need to

target their advertising towards billboards, magazines, and radio advertisements. These seem to

be the most lacking type of advertisements from Apple itself. We would advertise with the

billboards in large cities to reach the most amount of people. The magazine would be national

magazines with a full page ad and the radio ads would be 30 second ads. With the extra

advertising, we believe it would raise the sales by at least 5%. Competitors would like this

marketing plan because they could still be making some sales from consumers purchases their

iPhones through them. Stakeholders would like this plan because Apple would be increasing

their profit and earning a lot more than they invested. Consumers would feel more informed

about the phones if Apple provided more advertisements.

ROI: We calculated the total cost for advertising that Apple should spend would be $80,000.

Sales with the Apple iPhone have grown 16% since 2012 (Financials in Appendices). Last year,

Apples iPhones sales were $91,279. We believe the extra advertising would increase Apple

iPhone sales by 5%.

Investment: $80,000 Annual Return: $95,842.95 ROI: 32%

AppleCare ProgramWe believe the AppleCare program is something that if improved upon could help to

increase the company’s profits. According to our survey 44% of people are not aware of

AppleCare, and 81% of people do not use it. We believe that if they made consumers more

aware of the program through advertising it would increase the amount of people wanting to use

it and therefor increase profits. We also think that if you buy through Apple itself, as opposed to

through a phone company, you should get more features. As of now you get a year of AppleCare

when you buy your product but we think extending it to two years will help encourage the

customer to buy. This marketing plan would encourage consumers to buy straight through

Apple, increasing its profits because all profits they would lose through the carriers selling it

would not have to be lost. Competitors would not like this plan because we would be stealing

sales away from them, however, both the stakeholders and Apple customers would like this

because of the additional year of AppleCare and the increase of sales.

ROI: AppleCare costs the consumers $100, so if Apple were to implement this plan they would

be investing $100 for every phone that is bought. In the last quarter, Apple sold 55.3 million

iPhones (Elmer-DeWitt). The average iPhone costs $600 and if Apple themselves sold 5 million

of those phones they would earn a huge profit.

Investment: 500,000,000 Annual Return: 3,000,000,000 ROI: 50%

4 P’s (Price, Product, Place, Promotion)Product: Apple is known for their high quality products. The products are reliable and are liked

by most users and we plan to continue this strategy.

Price: The price of Apple products is higher than some competitors; however, many consumers

believe spending the extra amount is worth it for the high quality phone they are receiving.

Place: We think Apple should try and focus on selling more phones from Apple instead of the

mobile device carriers. It will make them more profits and they will not have to spend as much

with their collaborators.

Promotion: According to our survey, many iPhone users do not use AppleCare. Our solution

to that is to offer free AppleCare if they buy the phone from Apple. This would need advertising

to be done to attract all users of the iPhone as well as potential new customers.

Contingency Plan

If the proposed marketing plan fails for Apple, Apple should focus on buying out some of

their suppliers or competitors. By buying out some of their suppliers, Apple can cut some cost

that they can then pass along to their consumers. By buying out some of their competitors,

Apple gains market share on acquired company and they acquire the former company’s

technologies. This will help Apple potentially gain market share, which is very hard to do in a

mature market. It also helps them to gain product knowledge on competitors’ products and use

that knowledge to come up with the next innovative thing within this field of technology.

SummaryApple is a very successful company. They sell millions of phones each quarter leading to

a large profit margin. We think that the changes we have come up with can only increase sales

of the iPhone. Fixing the issues with the screen size and durability will draw in multiple

customers who may be put off by these current features. A better battery life will encourage

current customers to not be tempted to change to a competitor’s product. Recreating the

AppleCare program makes customers feel like they are cared about by the company which

increases brand and customer loyalty. Advertising is something that can only help the company.

They make enough profits each quarter to easily be able to spend some more to market their

product more effectively. We believe that making these changes will be beneficial to the

company as a whole. It will increase revenues while helping them to stay superior to the

competitor as well as keeping customers loyal and satisfied with the product.

ReferencesApple. Ed. Apple. Apple Inc., n.d. Retrieved April 18, 2014. http://www.apple.com/about/job-

creation/

Brownlee, J. (2013, November 5). Apple's Advertising Budget is Tiny Compared to Microsoft & Samsung's. Retrieved April 2, 2014, from Cult of Mac: http://www.cultofmac.com/252918/apples-advertising-budget-is-tiny-compared-to-microsoft-samsungs/

Dowling, S. (2014). Apple Reports Fourth Quarter Results. Retrieved March 26, 2014, from Apple Press Info: https://www.apple.com/pr/library/2009/10/19Apple-Reports-Fourth-Quarter-Results.html

Elmer-DeWitt, P. (2014, Jan 19). How many iPhones did Apple sell last quarter?. Retrieved April 17, 2014 from CNN Money. N.p., http://tech.fortune.cnn.com/2014/01/19/apple-iphone-q1-2014/

Harjani, A. (2014, Jan 26). Apple Manufacturing Partner Looks to Build Factory in the US. Retrieved April 19, 2014 from CNBC.com. NBC Universal.

HubPages. HubPages Inc and respective owners, n.d. Retreived April 18, 2014. http://baronhertzog.hubpages.com/hub/How-the-iPhone-Has-Impacted-Our-Culture\.

Rooney, Ben. (2013, Sept 30). What Does it Cost to Make An iPhone?. Retrieved April 17, 2014 from Wall Street Journal. N.p., http://blogs.wsj.com/tech-europe/2013/09/30/how-much-does-it-cost-to-make-an-iphone/

Sanford, G. (2014). apple-history/company history. Retrieved March 20, 2014, from apple-history: http://apple-history.com/h1

The Week Staff. (2012, Jan 22). Why Apple builds iPhones (and everything else) in China. Retrieved April 18, 2014 from THE WEEK. The Week Publication. http://theweek.com/article/index/223580why-apple-builds-iphones-and-everything-else-in-china.

Appendix

Company: Apple’s HistoryApple’s success was started by the dynamic duo of Steven Wozniak and Steven Jobs,

who graduated from the same high school and kept in touch as they went off to college. It wasn’t

long until both dropped out of college together to pursue their dreams of working with

electronics. Wozniak had some experience in computer-design and would create what would be

known as the Apple I. Jobs was a forward thinker and is the one who suggested selling the

machine. The Apple I wasn’t a big hit but with the production of Apple II, which was debuted at

a local trade show in 1977, Apple took off. By the release of Apple III in 1980, Apple had

several thousand employees and began selling computers abroad. In 1981, troubled times

appeared for Apple. They had to lay off employees as it was no longer easy to sell computers due

to a saturated market. Wozniak was injured in a plane crash as well, leaving Jobs in charge of the

company. Things began to look dark for Apple. Many changes were made in leadership, and

Jobs was forced to leave Apple. This wasn’t the end of Jobs, however. After many leadership

changes and failed leaders, Jobs was asked to return. Jobs began turning the company around,

and in July 1998, Jobs announced that they had profited for the third consecutive quarter,

successfully ending their slump. In the early 2000s, Apple began shying away again, but shot

out of the gates in 2003. They opened many stores across the country and began selling more

than just computers. PowerBooks, iMacs, and most importantly, the iPod were some of the new

products released in these stores. In October 2003, Apple released iTunes for Windows, and the

market exploded. iPods became a must have, the iTunes Music Store had a 70% market share,

and with the release of the first iPhone in 2007 Jobs was finally seeing the future he had hoped

for his company. (Sanford, 2014)

Apple Sales DataSales Data($ in millions) 2013 Change 2012 Change 2011Net Sales by Operating Segment:Americas $62,739 9% $57,512 50% $38,315 Europe 37,883 4% 36,323 31% 27,778Greater China 25,417 13% 22,533 78% 12,690Japan 13,462 27% 10,571 94% 5,437Rest of Asia Pacific 11,181 4% 10,741 8% 9,902Retail 20,228 7% 18,828 33% 14,127

Total Net Sales$170,91

0 9%$156,50

8 45%$108,24

9

Net Sales by Product:iPhone $91,279 16% $78,692 71% $45,998 iPad 31,980 3% 30,945 61% 19,168Mac 21,483 -7% 23,221 7% 21,783iPod 4,411 -21% 5,615 -25% 7,453iTunes, software, and services 16,051 25% 12,890 38% 9,373Accessories 5,706 11% 5,145 15% 4,474

Total Net Sales$170,91

0 9%$156,50

8 45%$108,24

9

Unit Sales by Product:iPhone 150,257 20% 125,046 73% 72,293iPad 71,033 22% 58,310 80% 32,394Mac 16,341 -10% 18,158 9% 16,735iPod 26,379 -25% 35,165 -17% 42,620

Americas Europe Greater China

Japan Rest of Asia Pacific

Retail$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Net Sales by Operating Segment(In Millions)

201320122011

Operating Segment

Net

Sal

es

iPhone iPad Mac iPod iTunes, software,

and services

Accessories$0

$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000

$100,000

Net Sales by Product (In Millions)

201320122011

Product

Net

Sal

es

Apple Three Year Financial History

Results of Operations ($ in millions) FY 2013 FY 2012 FY 2011Net Sales:

Domestic $66,197 $60,949 $41,812 International 104,713 95,559 66,437

Total Net Sales 170,910 156,508 108,249Cost of Sales 106,606 87,846 64,431Gross Margin 64,304 68,662 43,818Operating Expenses:

Research and Development (R&D) 4,475 3,381 2,429Selling, General and Administrative

(SG&A) 10,830 10,040 7,599Total Operating Expenses 15,305 13,421 10,028Operating Income 48,999 55,241 33,790Other Income/Expense 1,156 522 415Income Before Provision for Income Taxes 50,155 55,763 34,205Provision for Income Taxes 13,118 14,030 8,283

Net Income $37,037 $41,733 $25,922

Apple VS Competitor Advertising Expenses

Survey Results

Summary

What is your gender

Male 58 46%

Female 67 54%

What is your age?

15-19

10 8%

20-25

74 60%

26-30

8 7%

31-40

13 11%

41-50

18 15%

Do you have an Apple iPhone? If no, what kind of phone do you have?

Yes 75 60%

Other

50 40%

How did you hear about your smartphone you have?

Radio 5 3%

Television Commerical

40 23%

Friend/Family 79 46%

Internet News 32 18%

Other 17 10%

Did you do any research before purchasing your phone?

Yes 54

43%

No 71

57%

If you previously answered yes, how did you research and where did you find your information?

Internet reviews t mobile website and blogs Online I researched the iphone on the interent by visiting Apple.com and several other websites that had reviews and customer feedback. I also had friends that had the iphone and I asked their opinions Internet review websites. I just talked to my service provider and looked online. What the difference between the Iphone 4 and Iphone 4s was. I looked online at product specs and reviews I read personal reviews about it on different web sites. Internet Online reviews by experts and consumer reviews. I did my research by surfing through various websites and watching review videos of the product. "Verizon website searching for ruggedized phones phonedogg.com, androidforums for model reviews" online, compared it to other smartphones in the market. I just googled and compared some phones other than the iPhone Apple.com, watched a video online about it. cNet reviews. Messing around with friend's phone. price which they offer. Online & local stores-RadioShack I viewed Apple's website and compared it with other companies. Also, I made a visit in the store. review sites and other people who had the phone searched it on the internet and read about its features I looked at reviews online compared to Android phones. I looked at various websites and online articles. The apple website Carrier website internet reviews Reviews online My employer provides my iphone Regarding age above, there was not a slot for over 50 years old. I am over 50. asking friends questions, comparing with android amazon. google search. Look for user reviews. Internet. www.samsung.com Various consumer electronic review websites. I looked up reviews online by searching Google. Online website reviews I used review sites online. internet I compared it with the same ones my friends had and looked at specs and information at cell phone store From the net10 website internet sites I Googled this phone and other phones and read whatever articles and reviews there were. online I found my information on the Verizon website. I looked up reviews on YouTube and talked to my Cell Phone Service Provider about the phone friends, family, internet Internet searches from mobile phone reviews websites I compared the phone to popular android phones by distinguishing which brand had the better operating system that was easier to use and what suited my style/needs. I got information off various cell phone retailers. Verizon, sprint, tmobile, cricket wireless, virgin Mobile. apple.com HI ALYSSA BURNS Compared models on providers website Internet, friends, AT&T representative I read on net about it

Where did you buy your smartphone?

Mobile Device Carrier 77

62%

Amazon/Other Website 11

9%

From a Friend 2 2%

Electronic Store such as Apple, Best Buy, etc. 26

21%

Other 8 6%

Why did you choose your smartphone over their competitor?

Better Camera 31 13%

Bigger Screen 21 9%

Better Battery Life 29 12%

Brand 61 26%

Price 37 16%

Compatibility with Applications

40 17%

Other 14 6%

What are the strengths of your smartphone?

Camera  74 30%

Battery Life 45 18%

Durability 65 26%

Internet Speed 57 23%

Other 8 3%

What are the weaknesses of your smartphone?

Small screen, no 4G LTE, small internal memory Camera isn't what I would have expected. Pretty weak, not good quality. Durability is good if in a protective case. Internet speed is moderate. N/aConnection is bad in the valleys They break easily and if anything goes wrong it's hard to get it fixed. battery life None. Cell coverage. Not really the actual phone. breakable, freezes a lot none really, top of the line. Always has problems, random popups, dies quickly none that i've found Battery life, durability battery life Glass screen cover If you drop it, there is a big chance that the screen will shatter. touch screen is my problem. Nothing I don't own a smartphone. Battery dies super quick and the screen cracks very easily It sucks, I hate it. It doesn't connect to internet 1/2 the time. The battery only lasts 4-5 hours. Icons on the screen disappear. It resets itself, sometimes several times a day. durability, cost Breaks easily, battery life sucks Battery life. Battery life sucks screen size screen shatters easily Battery Life still nothing any compliant. Battery life, processing speed Small keys small screen Some quirks-depending on what software upgrade I do Weight, out of date OS, Itunes store. Slow and crashes a bit battery price limit None Screen could be bigger. Very expensive Not an I phone screen size, application memory durability battery life, camera, & processing speed battery does not last too long No flash Internet is slow One sided camera Out of date pretty much Cannot group message like on an iPhone. No emojis.

Cannot easily change settings on apps like on the iPhone, such as notification settings for each different app internet speed battery life--needs quite a few updates Runs slow when too many applications going Screen gets cracked easily Doesn't hold battery life very long Not enough personalization Its a piece of shit phone. I would not recommend it to anyone. NON EXISTANT BATTERY LIFE, CAN EASILY BREAKIt is slow, but I have an older version so that may be the problem. Battery life Speed expenses Slow moving Very plain and uniform. I wish you could personalize it more It's a little laggy. noneHard to do two things at one time---talk on the phone and write or to look up contacts low processing speed The iphone has some weakness compared to other phones. I am really interested in the different charging capabilities of some of the new phones especially the wireless charging. Also I wish I had a bigger screen. Size They all look the same and there is little individuality. The battery isn't great, but that's been true of all the smartphones I have owned. too fragile As it's gotten older, it seems to have slowed down bad battery Small screen size Battery life, Price to replace Low battery life. Sometimes has issues. Slow and no front camera Really low amount of space, bad camera, old version of Android. Battery life and freezing issues COLOR AND APPEARANCE Battery lifeBattery not real good apps I have a apple iPhone 4S so the whole casing outside the phone is glass. I have no case for it so if I dropped it, it would probably bust the screen. This phone is almost unsafe without a case, defiantly not for clumsy people. cheap and weak camera It is old Tends to have a short battery life I'm pretty satisfied with my phone I have had it for a month. Durability-without a case the glass is so fragile it breaks quite easily. Screen size Small screen My first iPhone only worked great for a year. In hoping my IPhone 5c works much longer! Slow internet loss of service (this could be due to the service provider not the phone) memory gets used up fast the more apps you have the slower the devise runs takes forever to load data It acts glitchy sometimes. "screen easily broken from drops slippery back" It was fragile until I put a case on it. Apple is slow at implementing changes to be a trendsetter compared to companies like Samsung. No free music. Small screen, poor selection of apps Easy to break or crack and battery life. Durability, signal strength The back of the phone is fragile, one drop without a otter box, the back shatters Battery life is short It does not always respond immediately and sometimes the apps freeze up and shut down.

If you own/have previously owned an Apple iPhone, how satisfied with it were you?

1 5 5%

2 0 0%

3 6 7%

4 14 15%

5 8 9%

6 4 4%

7 16 17%

8 14 15%

9 17 18%

10

8 9%

What is your overall impression of Apple products/company as a whole?

They aren't the greatest thing that people think they are. I like android better I don't own an iphone, but I use one for work and I much prefer my personal phone. I'm not a huge fan of the iphone, or Apple products in general. I think people talk about Apple like it's the bests company out there, but in all honesty, I don't think their products are better than any other company and I don't think they are the best in regards to phones Pretty good I think they are a good company Needs some improvements but overall satisfying They are easy to function I love them! I like how they are compatible with other devices that I have. overpriced cheap technology They are very user friendly. quality product High quality and innovative I'm impressed and believe it will only get better good quality--very expensiveGreat people/ Great products I like their products, but they are overpriced Products are overpriced Top of the line they seem good. those who love apple products are annoyingly smug and make me dislike apple because of their attitudes too basic I like them, I just wish they were more durable TOO EXPENSIVE COMPARED TO OTHER BRANDS They are a superior operating system. Ive been using Apple products exclusively for about 20 years. Make high quality products but at a hig price Good strong reputable company that makes high quality products. There alright. I like all their products, they are a bit expensive but more user friendly. They make decent phones but are overrated. They make quality products but they are overpriced. Good Grand macs and ipads are very good products, but i dont like ios on iphones. overpriced I think they make neat products. I have two ipods, one being the ipod touch, I am happy with both of them. I like them a lot and like how they are all set up the same. If you own one you know how to work them all. Cheaper than they lead on to be Well made, but very strict about their programming. Don't like to allow others to mess with the things they make. Highly priced, but able to do that because the products are well made and reliable. They're fast and they have great customer service and I feel like they're the leading brand. overpriced but high quality Innovative company that make high price, high quality products Good marketing, over priced, too proprietary Apple is good, but the only thing i don't like about the iphone is that you always have to go through i tunes to do anything. expensive I am a big fan of the Apple line of phones and tablets. I am not much of a fan of their computes, but the hand-helds are great. Apple is also the first innovator and that is a big plus, but I do feel that they are losing ground to other phones these days. I think their products are overpriced and poorly made. Makes high quality products that are simple and affordable.More compatible with other devices I own (I.e. MacBook and iPad) They are a good company always coming out with new ideas high quality company Speed I don't have Apple products cuz they are too expensive and lower price brands do the same thing. I like Apple products. They are easy to use. Apple was one of my favorite companies, but ever since the death of Steve Jobs the company has been on a downfall. The customer service level has gone down. There is very little innovation. And to be honest they are a company that is behind and needs to catch up. never owned one, probably will replace current phone with one when service agreement is over I feel like Apple is overrated. I love Apple products and think they're really easy to use. I think they're good products, but grossly overpriced Good product, but expensive Always changing/improving Great products. Last forever and have frat warranties Good company but doesn't care about customers good Good quality Its worth the moneyApple makes superior hardware & it's design makes the mark in the whole industry. But the products are so very overpriced, which makes people opt for other alternatives. Quality products Good phones, but I prefer PC computers to Macs. Love them! They are very expensive If you begin to use Apple products eventually you have to convert all of your devices, programs, and adaptors to Apple Products so it is an easy gain of revenue for Apple. good Valuable Good products. Well made for the most part. But seem to be a bit greedy with their product pricing. Very dependable! Very productive and reliable! They seem to make really high quality products. love it Love them, and how all of my Apple devices work together Good product. Terrible battery life. Good, I like their products. I'm impressed with their simplicity, but unimpressed with their price. I think they are good products but are not necessarily as well made as the company claims that they are. Very good phones and company good design long lasting It's alright. I like them. They are good but expensive Very good. Simple use. I don't really trust Apple as a company, especially when it comes to protecting my privacy. I haven't had much trouble with it yet. I am a loyal Apple customer. Love them! Leading the technogoly world! They are very concerned about brand appearance, but I enjoy their products so I don't mind having to pay a little extra if necessary Simple phones for simple minds I love it! It is the best phone I have had. very good Overrated products that have the mainstream by the millions fooled into thinking that iPhones/iPads/iPods/MacBooks are the greatest technology on the market, when in reality they're overpriced pieces of garbage Not good. Bloated. It is very high quality. I have had no problems with it and I would definitely recommend it to others. Apple has many good produts for consumers. There's also a big

price that comes with any item. I can buy a phone that does so much more than an iPhone but I stick with apple because I know I can trust their produts to be above satisfactory. They seem very reliable Apple products are overpriced. You can get a similar product with the same specs for much cheaper from others. great I am pleased with the iPods They are innovative and a leader apple is one of the greatest company I like apple products. I think they do a good job of making everything accessible and personalizable to your preferences

What do you believe Apple and the iPhone are lacking in? What could be improved?

Bigger screen. Price, I think that the price could be lowered "Apple & iPhone lack the following features - 1. Screen Size 2. No/less Scope of customization 3. Price" there signal in the country Screen size, and new features. It should have a big and little slim affordibility I think the design has now become dated and boring. Also, Android has better apps. battery life They should make them so they don't break as easily. The battery life is not good either. I don't know Improve battery life innovation Nothing try to make in small size N/A they have had the same apps and technology since they were created price screen size screen sizes Price Needs a bigger screen. have to offer free apps. durability Durability. Price. Something new other than what other companies are doing Costumizing features, better facilities Price affordabiity Adobe compatibility My phone could be larger. battery life and prices POWER CORDS Have had to get 5 new charger in last year bc after a few months charger stops working . Better quality. New phones like the Galaxy have more quality and better aspects than the iPhone does. Longer battery life. Durability of products. Battery quality dont like the software. Camera quality, I take thousands of pictures of my kids.. If it had a stronger battery I would be totally satisfied with it. I would like to see them have RFID and photos in the texting screen. durability Make their phones more compatible with people that don't know how to work all the new technology Apple is lacking in design. Their phones are simple colors or ones too vibrant like the 5C generation. Also the screen formatting could get more creative letting you design your home screen not just put box icons inside more box icons. Boring. Could improve of the systems you have to use I think the battery life of the iPhone could be improved. Bigger screen nothing I think they should have more customization opeions with the phone. For instance, I would like to switch the font on my messages. They need more variety. Everything from Apple looks exactly the same. LOWER PRICES Maybe a great battery life. make the screen size bigger New models of their products don't usually have much changed with them but they cost much more. There should be more form factors to choose from. There is basically only one type of iphone and your only choice is color. I think they need to make more form factor choices (e.g. iphone mini, standard, xl) and possible some other variations. this would make it more exciting and personalized. Better speed and battery life. Don't know I think the sinc between Apple and other phone companies would be a good addition as well as durability towards the screen. Price! They should be lower in cost so that people can afford them. Androids cost less and do the same thing, they just do it slower. Reaching to overall population. Probably because they have their fanbase but they aren't satisfying peoples other needs like the android phones are doing.Better synching between products. Aka: synching my iPad with my iPhone (iCloud) Battery life no idea, never used one design is a bit stale. No longer revolutionary battery life and being able to re-formate your phone Screen size response to consumer needs Very plain jane and I wish they could incorporate more color and personality into all of their products Battery life price Customer service and lower prices. A way to pay with your phone anywhere. The screen should also be larger. Nothing at this point Battery life and durability Bluetooth Personalization options I think Apple's user interface is lacking in ease of use and features. The battery life durability, customer service Compatibility with PCs and cheaper new phones. Needs a better camera! Nothing really, there's nothing really wrong with them. Not open source. Freedom. Customization. Freedom to download music and movies from anywhere you choose. Screen size Being able to multi-task Customization features. I don't think there are enough differences from one generation iphone to the next. Iphone seems to be lacking behind Android phones. I don't like the lack of controls on the iphone. I need to be able to move back and forth between apps, etc more easily than I can with the iphone. The glass needs to be stronger. Also they need to be reasonable when setting prices...I expect the product to be manufactured in the USA for the prices they are charging. Apple users to be part of an 'exclusive' club of users and now Apple products are so mainstream they

should be less expensive. I feel they are lacking in compatibility. Ease of use could be improved Screen size, internal memory expansion through micro sd cards. Better battery life

How often do you get a new model of your phone?

Yearly 19

15%

Every time the newest one is realeased 4 3%

Whenever my contract is up 84

68%

Other 17

14%

What wireless provider do you have?

Verizon 33 27%

Sprint 28 23%

AT&T 35 28%

US Cellular 2 2%

Other 25 20%

Are you aware of Applecare?

Yes  70 56%

No 55 44%

Do you use Applecare?

Yes 24 19%

No 101

81%

If you answered no to the previous question, why do you not use Applecare?

Unaware of Applecare

40 42%

Costs Money 39 41%

Not Enough Time 1 1%

Other 16 17%

How did you feel about Apple releasing the iPhone 5S and 5C at the same time?

I think it was a good strategy to give more selection to potential customers great effort thought it was a good idea as one would be cheaper I didn't know they did, so I guess I don't care :) It gave a cheaper alternative I don't know the difference N/a I DON'T CARE REALLY Good idea couldn't care less Fine. The 5C seems to be a cheaper less durable version of the regular models I have no feelings on this It didn't really affect me so I am indifferent. good idea FEEL SO GUILTY Odd! I can't ever find a phone case for the 5c i don't care It didn't affect my decision or opinion. Cost is usually my main decision/opinion maker. Baffled multiple price points -- good idea I think it is silly. Doesn't really make any sense to me. bold but it worked feel good. I didn't know they didGreat idea, it allows the entry for new users to try the iphone at a cheaper price. don't really care and nice that it makes it affordable to others I thought it was stupid because if they had released the 5C afterwards, they would have sold a lot more 5S to teens. Good idea Good It was probably so they could make more money. Didn't mind. Too bad the width of the phone wasn't bigger. No thoughtdDidnt care I don't know anything about them No problems, good decision. I think it was nice that they did that but for marketing reasons and for the sake of their own company I think it would be smarter for them to release them seperately. I don't care Thought it was kind of strange since the 5C was the same exact phone as the iPhone 5 except in color Obviously you can't compete with yourself and expect to win. neutral I feel like the 5C is a waste of time, at least in the U.S. It was good. I did expect the 5C to be more cheaper, though unlike others I love it's design, even more than the 5S. Also I was thrilled to learn about the 64bit processor & Touch ID in the 5S. I thought it was confusing. I don't have an opinion about it. I feel one cannibalizes the other Did not care Was very excited I think its fine. Ok I ended up getting the 5c I thought it was good for Apple. There are a lot of die hard fans out there that will line up for any product that Apple releases. I thought the 5C was overpriced since it was just a regular 5 with a different color case. stupid good I didn't know indifferent Didn't care Indifferent news media No feeling I feel that they could be competing with their own products by doing so Thought it was good, one was cheaper It could have undercut their business The 5c is just a cheap phone. They would have had more sales if they were released seperately. In my personal opinion the 5c is very low class for Apple and they could have done without it. Its not very smart. Good idea it allows users to choose between the flagship 5s for a higher price or allows people to try out an iphone for the first time with the 5c at a much more affordable price. It's good for the consumer. They can choose which product they want instead of Apple trying to make more money by releasing 1 then the other months later so people will buy both. It's a greedy ploy that all companies use. Glad to see they didn't do that this time. It was whatever liked it didn't really pay attention because I'm not up for a new phone until next September. I wasn't buying either, so I didn't care. I think this is a step in the right direction to provide more choices to the consumer, but it didn't go far enough I think it was smart, since some people wanted to latest and greatest thing, the 5S, and if you couldn't afford that, you could still get a 5C. The 5C at some stores dropped by half the price as soon as the 5S came out, so I feel that effected the sales of the iphone 5C. It didn't affect me Probably not their best move however it gives people who didn't want to spend money on the S an opportunity to get a newer cheaper phone with the C Its smart, because people can want some features of a phone and not the extended features. Choices are good. I haven't thought much about it because I'm not going to upgrade for a while. they should slow down with the upgrades. I didnt care Ploy for money It was bad because some people wanted both of the phones. never heard of it It was alright! Doesn't matter i got the 4s Good idea willing to buy 5c due to cheaper price Doesn't bother me. I think the idea was okay, offering a cheaper phone. However, people may not want to buy the 5c as it is only $100 cheaper for a phone of way worse quality. kind of a dumb idea phones are very similar Greedy Didn't know that wasnt smart noot good Does not matter to me its whatever I didn't think it was a smart business move. If they did it separate they might have gotten more sales. I thought this was a bad move since many people think they have to have the latest and greatest Apple products. They probably could have sold more with separate releases. Good to attract cheaper market Smart confused considering the cost difference compared to very little techniqual difference Better than releasing the phones a couple months apart like you would think they'd do. didnt care. Confused why they would

release the phone in such a short amount of time. nothign new, boring I didn't care Not sure about the 5C. It was very risky to release a lower priced phone of a prominent, high-end company already. Not smart No feelings. Doesn't bother me because my phone does everything I need it to do.

Do you use other Apple products besides the iPhone?

Yes 71 58%

No 34 28%

I don't own any Apple Products

17 14%

Do you use applications (apps) on your phone? Was that a reason why you chose your phone?

Yes, but that was not the reason why I chose my phone 62

50%

No, and that did not affect my choice on purchasing a phone 9 7%

Yes, and it did affect my choice on purchasing my phone 41

33%

No, and apps did not affect my purchase 11

9%