strategic marketing apple - transtutors...founder steve jobs’s stated “customers do not always...

Strategic Marketing Apple

Author Marly Pena - SID s5040343

7032MKT_ Strategic Marketing Convenor: Bill Merrilles

Word counting: 3352

1 Executive Summary

The present research is the Strategic Marketing on Apple. Apple is a reputed bank and the

market leader in the computer industry. Apple's product quality and design are excellent

making customers very loyal to the company, they could even wait 24 hours in a queue to

buy its products. This brand image has helped Apple to develop a huge loyal customer base.

At the start of this paper a background of the company has been analysed, It shows how

Steve Jobs founded a company (Apple) and how innovation and dedication have made the

company a very successful one, and that It is still growing even after the founder Steve Jobs

death.

Apple's Products like iPhone, iPod, iPad, HomePod iMac, etc. are now the first choice of

many people. In the Market analysis section the resercher has focused on Smartphone

iPhone. With the help of statistics, the researcher has shown Smartphone sale year on year

and how much it will increase in next few years. Market segmentation is analysed with

demographic and behavioural segmentation. Market segmentation analysis has helped to

derive how Apple has managed to attract a particular group of people. Through the market

orientation strategy, it has been identified that Apple has spent significant money and time to

achieve the satisfaction of the customers. Market positioning and perceptual shows the

market position of Apple and what the position of its competitors is. Strengths and

capabilities have been analysed to reveal Apple's sale value and brand image. With the Help

of SWOT analysis, the researcher has tried to evaluate the strengths, weaknesses and

threats which can be its opportunity if Apple applies proper strategy and investment. At the

end, researcher concluded with some recommendation, which can be helpful for the future

development of Apple.

Table of contents

1 ExecutiveSummary...............................................................................................................................2

2 CompanyBackground...........................................................................................................................4

3 MarketAnalysis......................................................................................................................................4

4 MarketSegmentation............................................................................................................................54.1 Demographic Segmentation ......................................................................................................... 54.2 Behavioural Segmentation: .......................................................................................................... 6

5 MarketOriented.....................................................................................................................................6

6 MarketStrategy.......................................................................................................................................76.1 Market Position ............................................................................................................................. 76.2 Perceptual Map ............................................................................................................................ 8

7 StrenghtsandCapabilities................................................................................................................10

8 Swotanalysis.........................................................................................................................................11

10.Conclusions...........................................................................................................................................11

9 References...............................................................................................................................................13

2 Company Background Apple Inc. is an international organisation founded by Steve Jobs in 1976, the company started operations designing and manufacturing hardware devices, software, online services, as well as providing applications and digital content. Jobs initially focused its vision in creating products with amazing technology, impeccable design, quality and most importantly, innovation. The company had a massive successful jump positioning itself as the market leader in 2001 with the introduction of iPod, attracting millions of digital music players who bought the product and also download their favourite music. By 2007 Apple had sold about 100 million devices and billions of music downloads from its iTunes music store. Since the company has grown dramatically. The following year Apple had the successful launch of the first iPhone in where the international company changed completely the perception of mobile phones worldwide with its amazing design and technology (Finkle & Mallin, 2010). The company kept developing great products including the iPad which had a great perception in the market. iPad is touchscreen device and size within laptop computer and Smartphone. The display is measured 9.7 inches, 0.5 inches thin and 1.5 pounds weighed. iPad has its own application for an e-book (iBook).

Figure 1: Apple iPad and watch

The year 2011 had a massive impact in the history of the organisation, first of all iCloud was lounched in the market with a great succes which helped the revolution of cloud computing. iCloud helps users to store pictures, documents, calendars, and music (“Apple Inc,” 2018). Later in the same year Steve Jobs died due to a very aggressive cancer Consequently Tim Cook was positioned as the new CEO and took all the responsibility. During some time Apple was not able to introduce new products, the company rather upgraded the older version products. In the year 2014 Apple bought Beats, a music streaming and headphone manufacturer company for $3 Billion and was able to introduce Apple watch and smartwatch. From the year 2004 to 2014 Apple developed its growth from $8 billion to $180 billion (Nicholas Kolakowski, 2011). Still, now Apple is growing its business with unique and revolutionized product feature. Results tell the story of Apple’s success

3 Market Analysis Apple has a range of different products within its portfolio and is well known for its innovative approach to increase competitive advantage; this document focuses on the smartphone iPhone. According to Statista, a total of 1.47 billion smartphone devices were shipped worldwide by the end of 2017. Although there was a decline of -8.5% compared to the year

before it is projected that by 2021 the numbers will increase and reach 1.7 billion of shipped devices in worldwide, this means nearly half of the world’s population will own a smartphone and it is likely that the demand for these devices’ will increase accordingly (statista, 2018).

Year Worldwide shipped devices (Billion

units) 2016 1.473

2017 1.472 2018 1.585 2019 1.642 2020 1.697 2021 1.710 Table 1 Source: (statista, 2018)

Furthermore, looking into the Australian market, according to the ABS Census 2011, the projected number of households in Australia at 2016 was 9,241,497 increasing by 1.88% when compared with the number of households in 2011 (8,419,972). It is projected that by 2036 the numbers will reach 12,681,460 (1.59%) (ABS-Demographic), which means it is likely that the demand for smartphones within the Australian market will increase accordingly.

4 Market Segmentation Based on the definition of Market segmentation which is “the process of splitting customers in a market into different groups or segments"(McDonald, 2012). Organisations, therefore, divide their customers so they gain a better understanding of who their customers are and what are their needs and wants. In the case of Apple which seats as a premium and minimalistic brand that attracts a specific type of market and that offers advanced technology products and services which require additional costs.

4.1 Demographic Segmentation This variable analyzes, gender, age, family size, income, education, occupation, religion, race and nationality, In the case of Apple, income and age have a big impact for customers' decision making. The largest group age that purchases an iPhone are those aged under 24 years old, followed by people who are in the age between 24 – 34 years old who can be considered in the Millennials category, the majority are men who hold a stable income(“Apple Consumer Insights and Demographics | InfoScout.co,” n.d.). This 21-35-year-old group is the main target population for this market analysis, which highlights the potential for the company's next strategy. In another hand, According to IDC (International Data Corporation), Apple experienced a small decline of shipped devices by1.3% from the previous year in where iPhone volumes reached about 77 million of sold devices. However, Apple still positions itself as the market leader occupying the first place in the market of smartphones seller comparing to main competitors such as Samsung, Huawei and LG Mobile. Overall iPhone lineup appealed to a wider range of consumers in both emerging and developed markets. Apple finished second

for the full year in 2017 shipping 215.8 million units, up 0.2% from the 215.4 million units shipped in 2016 (IDC, 2017).

4.2 Behavioural Segmentation: Apple is a premium-innovative brand that is not the cheapest one in the market; the majority of people who purchases its products tend to be young and well-off. For instance, Millennials or Generation Y are people born in between early 1980 and 2000, who are around the ages of 18 to 35 years old. This generation is by far more dependent on technology than any other generations, their use of technology is very high, in fact some of them can use technology as a medium of living (May, 2016).

Apple does all types of research to determine its target audience. In behavioural segmentation, Apple sets some criteria like the degree of loyalty, benefits, Status of the users and Personality. Advertisement through TV and search engines is the main behavioural segmentation strategy of Apple. It helps the customers to be knowledgeable about the products. This brand image has helped them to maintain their business growth. Good customer rate is also showing that customers are looking for newly designed and innovative products. Apple HomePod and iPhone have attracted the Australians through its innovative features and design (“Apple’s smart speaker to hit Oz stores,” 2018). This shows how Apple uses behavioural segmentation to lead the market.

5 Market Oriented It has been believed that Apple uses more a product orientation approach in comparison to market orientation, these believe come from their highly minimalistic designs and the high technology that Apple implements in their products, nonetheless. From a personal experience and as an Apple user I can assure that Apple stores and customer service is by far the best experience I had within the telephone’s industries, the stores impeccably clean and sophisticated, furthermore, Apple technicians are very well trained in many different ways; for instance, they can solve technical issues with any device and simultaneously athey provide a friendly and helpful customer service. A company that is marketed oriented is a company that listens to its customers and do its best to give them what they want and need(Reijonen, Laukkanen, Komppula, & Tuominen, 2012). Apple spends a significant time and money to please its customers spectitaions. The company might have been more of a product-oriented in the past; however It has taking different views in the past years; after Tim cook becoming the new CEO, the organisation has a stronger customer focus. In an interview with CNBC, Tim Cook states “For us, focusing on customer experience, making sure our customers are happy, treating them well. It means making the best product, and we think that if we do those two things well, then the revenue and profits will come”(“Apple CEO Cook: Focus on customer experience, make the best products,” n.d.). This proves that Apple considers their customers as a major focus and that the company creates products thinking about what their customers want and need.

In order for the organization to been able to produce such high technology and maintain the high standards of design, Apple uses intensive market research, taking also into account competitors’ position within the market place.

6 Market Strategy

6.1 Market Position Founder Steve Jobs’s stated “customers do not always know what they want until you show it to them” (“Myth Busted: Steve Jobs Did Listen To Customers,” 2013) this is a very strong state where his marketing strategy is based on. Apple does not necessarily look to waste marketing research to find people’s wants and needs. The organization prefers to make customers want to use their products based on the innovative and sophisticated products. The high technology organization positions itself as a premium brand offering services and products with advanced utilities that require additional costs. Hence, Apple targets people who have the desire to experience and pay extra for the high-tech and the sophisticated design. Additionally, The Unique Selling Point (USP) for Apple is “changing the world for better” It was clearly seen in the very successful Apple’s add called “Think Different”(“Steve Jobs Think different,” 2013). The current brand positioning is “all about the experience”(Rasyidah, Razak, Hamizah, & Zawawi, 2017).This highlight’s the fact that Apple focuses on giving a completely different experience to its customers by designing products with great technology and giving them the best customer service. The fact that Apple develops and generates revenues from four different platforms such as Hardware Design, Software development, Digital Media and Publishing, makes the organization an unique company in the marketplace. Apple does not compete in price with its competitors they rather concentrate in their unique value proposition, which is “Beautiful design that works out of the box with ever-small packaging” Apple also stands for its simple, clean and minimalistic designs where “Simpler is better” (“7 Key Strategies That You Must Learn from Apple’s Marketing,” n.d.), creating products with impeccable, light, clean and easy to access.

6.2 Perceptual Map Figure 2 shows the similarities between Apple’s main smartphones competitors, which are Samsung, Huawei, and LG mobile, in relation to price and High Technology. Apple competes fiercely with the international company Samsung; the two brands have higher standards in comparison to the other competitors working under the premium model and targeting similar demographic profiles. These two companies target people with higher income and who are prepared to pay higher fees; however, they demand excellent standards of products. On the other hand, LG mobile is positioned at the lowest for both price and quality, followed by Huawei which offers better technology and reasonable prices; these two competitors targets a group of the population that are seeking to purchase low-cost mobile phones and who demand a basic level of technology and design, therefore, in this case, Apple’s main competitor is the also premium brand Samsung.

A good example that reflects the perceptual map is showed in figure 2, which displays the

current prices (24thof March 2018) for smart mobile phones. As it can be seen, Apple iPhone 8 and Samsung galaxy offer the higher prices while Huawei and LG prices are much lower.

Figure 2 – Smartphones current price – Source (“Mobile Phones price comparison - Find the best deals on PriceSpy,” 2018.)

Moving forward, Apple aims to remain its brand in the high standard category and continue positioning as the market leader with the view of retaining its existing customers and attracting new ones.

7 Strenghts and Capabilities Apple’s strengths are mentioned below: Brand image – Apple is the strongest and valuable brand in the global market. With the help of its brand image, Apple is able to make a good amount or profit in each year. As a brand, Apple has been able to maintain customer satisfaction level. Customers of Apple are so loyal to its products that they can wait in a queue for an entire day only to purchase the latest version or new products. It shows how superior quality and designed products can help to create a good brand image. There are different stories about where the name Apple came from, one of them is that Steve Job’s favourite fruit was Apple and a second one is that he named his company after a Beatle’s album (Brashares, 2001); Hence, after all the company was named and the brand is now identified by Apple. Market growth and profit margin show how the brand Apple is dominating the market. This capability will surely help the brand to enhance its business worldwide. High-profit margin – Apple always try to maintain its profit margin. This helps to adjust the price to ensure the profit growth. Apple’ net quarterly profit, gross historical and operating profit margin for the last 10 years and the current profit margin is 21.13% in 2018.

Figure 3: Apple Profit margin History Source: (“Apple (AAPL) Profit Margin History | MacroTrends,” 2018)

The above graphs show that Apple has significant profit margin, which is helping the company to come up with new technology and new upgraded accessories. Innovation process – Apple is well known for its innovation. All its competitors have failed or are failling to create such quality of products and features, this shows the uniqueness of Apple. Apple’s intensive growth strategy helps to develop its innovation process. Rapid and advanced innovation helps the organisation to enable competitive advantage.

8 Swot analysis Apple’s success shows the ability to use its strengths. Detail strengths, weaknesses, threats and opportunities of Apple are analysed below: Strengths:

• Apple has a strong brand image. • Profit margin is very high. • Innovation and design process is very effective.

Weaknesses: • Service is limited to high-class people. • Product price is very high. • The distribution network is very limited.

Opportunity: • Need to expand the distribution network. • Growing demand for tablets and smartphones. • Opportunity for new software markets.

Threats: • Growing market competition. • Imitation and duplicity in products. • Labour cost is rising in the market.

From the above SWOT analysis, it has been identified that Apple is growing its market through its brand image and innovate products. Despite its good brand image, it can't be ignored that Apple product price is helping its competitors to grab the market (“Apple’s smart speaker to hit Oz stores,” 2018). Hence Apple needs to review its product price to reach all level of customers. It not only helps to grow its customer base but also to lead the market. The distribution network of Apple is also limited. Thus distribution network also needs to be developed. Moreover, Apple needs to take action immediate regarding to the imitation of its products. This not only decreases the image of the brand but also encourage its competitors to grab the market and consequently It will hurt the loyal customers of Apple. Hence it can be said that continuous innovation will help Apple to grow its market along with loyal customers. Apple has the potentiality for further growth.

10. Conclusions From the above marketing strategy analysis, it has been identified that Apple marketing strategy iPhone is fruitful. Apple’s unique selling point and innovative product lines have been primary differential factors in Smartphone market as far as the competition with other market players is a concern. Apple's products are user-friendly and lucrative. Its iPod and iPhone along with its Homepod have attracted the customer's mind. Brand image creates blind faith among the mind of the customers. Hence, Apple’s name is enough to attract its customers. Apple’s target market is youth group. It is because of the energetic, modern and love to use innovative Technology and products they are fascinated with it. Thus the marketing strategy is helped Apple to develop its market. Despite it so many positive approaches and innovation, it has been also identified that Apple distribution centre and

product price is very high. The perceptual map shows Samsung is almost close and compites fiercely with Apple in comparing product price and technology. Hence, it can be concluded that to grow its market globally, Apple needs to be more focused on its weakness and threats.

9 References

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Apple Consumer Insights and Demographics | InfoScout.co. (n.d.). Retrieved March 17, 2018, from https://infoscout.co/brand/apple

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from https://books.google.com.au/books?hl=en&lr=&id=XUf-KtNv8IgC&oi=fnd&pg=PA5&dq=Why+Steve+Jobs+named+his+company+Apple&ots=hCeJ58ZbMZ&sig=N3n4IgXXRuZ05MIshA_0wN1ZoOc#v=onepage&q=Why Steve Jobs named his company Apple&f=false

Finkle, T. A., & Mallin, M. L. (2010). STEVE JOBS AND APPLE, INC. Journal of the International Academy for Case Studies, 16(7), 31–40. Retrieved from http://search.proquest.com.libraryproxy.griffith.edu.au/docview/814791833?accountid=14543

IDC. (2017). IDC: Smartphone Vendor Market Share. Retrieved March 17, 2018, from https://www.idc.com/promo/smartphone-market-share/vendor

May, J. (2016, July 31). Millennials and technology drive the innovation train. The Tennessean. Retrieved from http://search.proquest.com.libraryproxy.griffith.edu.au/docview/1807753749?accountid=14543

McDonald, M. (2012). Market Segmentation: How to Do It and How to Profit from It. New York, UNITED KINGDOM: John Wiley & Sons, Incorporated.

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Myth Busted: Steve Jobs Did Listen To Customers. (2013). Retrieved March 28, 2018, from https://www.forbes.com/sites/drewhansen/2013/12/19/myth-busted-steve-jobs-did-listen-to-customers/#13bdb1c487f3

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Rasyidah, W., Razak, A., Hamizah, N., & Zawawi, A. (2017). Brand Positioning by Apple Inc. International Journal of Business and Management Invention ISSN (Online, 2319–

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More Market-Oriented and Brand-Oriented? Journal of Small Business Management, 50(4), 699–716. https://doi.org/10.1111/j.1540-627X.2012.00372.x

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ABS-Demographic. Australian Demographic Statistics, Sep 2016. Retrieved from http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/3101.0Sep 2016?OpenDocument

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