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Executive Summary
The Company designs, manufactures and markets personal computers and related
software, services, peripherals and networking solutions. Apple computers also
designs, develops, and markets a line of portable digital music players along with
related accessories and services. The company’s situation, marketing strategies and
mix relate to the quality value of Apple products and services such as the Macintosh
line of desktop and notebook computers, the iPod line of portable digital music
players, the Xserve server and Xserve RAID storage products, a portfolio of
consumer and professional software applications, the Mac operating system,
the iTunes Store, portfolio of peripherals that support and enhance the Macintosh
and iPod product lines, and a variety of other service and support offerings and sells
its products worldwide through its online stores, its retail stores, its direct sales force
and third party wholesalers, resellers and value-added resellers and sells products
for the purpose of education, consumer, creative professional, business as well as
government customers .
About Apple Inc.
Apple Inc., formerly Apple, Inc., is a multinational
corporation that creates consumer electronics,
computer software, and commercial servers. Apple's
core product lines are the iPad, iPhone,iPod music
player, and Macintosh computer line-up. Founders
Steve Jobs and Steve Wozniak effectively created
Apple Computer on April 1, 1976, with the release of
the Apple I, and incorporated the company on
January 3, 1977, in Cupertino, California. Apple Inc.
(NASDAQ: AAPL; formerly Apple Computer, Inc.) is
an American multinational corporation that designs and markets consumer
electronics,computer software, and personal computers. The company's best-known
hardware products include the Macintosh line of computers, the iPod, the iPhone
and the iPad. Apple software includes the Mac OS X operating system; the iTunes
media browser; the iLife suite of multimedia and creativity software; the iWorksuite of
productivity software; Aperture, a professional photography package; Final Cut
Studio, a suite of professional audio and film-industry software products;Logic
Studio, a suite of music production tools; the Safari web browser; and iOS, a mobile
operating system. As of July 2011, the company operates 357 retail stores in ten
countries, and an online store where hardware and software products are sold. As of
September 2011, Apple has recently been the largest publicly traded company in the
world by market capitalization, and the largest technology company in the world by
revenue and profit.
Established on April 1, 1976 in Cupertino, California, and incorporated January 3,
1977, the company was previously named Apple Computer, Inc., for its first 30
years, but removed the word "Computer" on January 9, 2007, to reflect the
company's ongoing expansion into the consumer electronics market in addition to its
traditional focus on personal computers. As of September 2010, Apple had 46,600
full time employees and 2,800 temporary full time employees worldwide and had
worldwide annual sales of $65.23 billion.1976–1980: The early years
Apple 1 - Apple was established on April 1, 1976 by Steve Jobs, Steve Wozniak,
and Ronald Wayne, to sell
the Apple I personal computer
kit. They were hand-built by
Wozniak and first shown to the
public at the Homebrew
Computer Club. The Apple I
was sold as
a motherboard (with CPU, RAM, and basic textual-video chips)—less than what is
today considered a complete personal computer. The Apple I went on sale in July
1976 and was market-priced at $666.66 ($2,572 in 2011 dollars, adjusted for
inflation.)
Apple 2 - The Apple II was introduced on
April 16, 1977 at the first West Coast
Computer Faire. It differed from its major
rivals, the TRS-80 and Commodore PET,
because it came with character cell based
color graphics and an open architecture.
While early models used ordinary
cassette tapes as storage devices, they
were superseded by the introduction of a
5 1/4 inch floppy disk drive and interface, the Disk II.
The Apple II was chosen to be the desktop platform for the first "killer app" of the
business world—the VisiCalc spreadsheet program. VisiCalc created a business
market for the Apple II, and gave home users an additional reason to buy an Apple II
—compatibility with the office. According to Brian Bagnall, Apple exaggerated its
sales figures and was a distant third place to Commodore and Tandy until VisiCalc
came along.
Apple 3 - By the end of the 1970s, Apple
had a staff of computer designers and a
production line. The company introduced
the ill-fated Apple III in May 1980 in an
attempt to compete
with IBM and Microsoft in the business
and corporate computing market.
Jobs and several Apple employees
including JefRaskin visited Xerox PARC in
December 1979 to see the Xerox Alto.
Xerox granted Apple engineers three days of access to the PARC facilities in return
for the option to buy 100,000 shares (800,000 split-adjusted shares) of Apple at the
pre-IPO price of $10 a share. Jobs was immediately convinced that all future
computers would use a graphical user interface (GUI), and development of a GUI
began for the Apple Lisa.
When Apple went public, it generated more capital than any IPO since Ford Motor
Company in 1956 and instantly created more millionaires (about 300) than any
company in history.
First Macintosh – 1984
Steve Jobs began working on the Apple Lisa in
1978 but in 1982 he was pushed from the Lisa
team due to infighting, and took over JefRaskin's
low-cost-computer project, the Macintosh. A turf
war broke out between Lisa's "corporate shirts"
and Jobs' "pirates" over which product would ship
first and save Apple. Lisa won the race in 1983
and became the first personal computer sold to
the public with a GUI, but was a commercial
failure due to its high price tag and limited
software titles.
In 1984, Apple next launched the Macintosh. Its debut was announced by the now
famous $1.5 million television commercial "1984". It was directed by Ridley Scott,
aired during the third quarter of Super Bowl XVIII on January 22, 1984, and is now
considered a watershed event for Apple's success and a "masterpiece".
The Macintosh initially sold well, but follow-up sales were not strong due to its high
price and limited range of software titles. The machine's fortunes changed with the
introduction of the LaserWriter, the first PostScript laser printerto be offered at a
reasonable price, and PageMaker, an early desktop publishing package. The Mac
was particularly powerful in this market due to its advanced graphics capabilities,
which had necessarily been built in to create the intuitive Macintosh GUI. It has been
suggested that the combination of these three products was responsible for the
creation of the desktop publishing market.
In 1985 a power struggle developed between Jobs and CEO John Sculley, who had
been hired two years earlier. The Apple board of directors instructed Sculley to
"contain" Jobs and limit his ability to launch expensive forays into untested products.
Rather than submit to Sculley's direction, Jobs attempted to oust him from his
leadership role at Apple. Sculley found out that Jobs had been attempting to
organize a putsch and called a board meeting at which Apple's board of directors
sided with Sculley and removed Jobs from his managerial duties. Jobs resigned from
Apple and founded NeXT Inc. the same year.
1986-1993: Rise and Fall
Having learned several painful lessons after introducing the bulky Macintosh
Portable in 1989, Apple introduced the PowerBook in 1991. The Macintosh Portable
was designed to be just as powerful as a desktop Macintosh, but weighed 7.5
kilograms (17 lb) with a 12-hour battery life. The same year, Apple introducedSystem
7, a major upgrade to the operating system, which added color to the interface and
introduced new networking capabilities. It remained the architectural basis for Mac
OS until 2001.
Apple saw the Apple II series as too expensive to produce, while taking away sales
from the low end Macintosh. In 1990, Apple released the Macintosh LC with a
single expansion slot for the Apple IIe Card to migrate Apple II users to the
Macintosh platform. Apple stopped selling the Apple IIe in 1993.
1994-1997: Attempts at Reinvention
In 1994, Apple allied with IBM and Motorola in the AIM alliance. The goal was to
create a new computing platform (the PowerPC Reference Platform), which would
use IBM and Motorola hardware coupled with Apple's software.In 1996, Michael
Spindler was replaced by Gil Amelio as CEO. Gil Amelio made many changes at
Apple, including extensive layoffs. After multiple failed attempts to improve Mac OS,
first with the Taligent project, then later with Copland and Gershwin, Amelio chose to
purchase NeXT and its NeXTSTEP operating system, bringing Steve Jobs back to
Apple as an advisor.
1998–2005: Return to profitability
On August 15, 1998, Apple introduced a new all-in-one computer reminiscent of
the Macintosh 128K: the iMac. The iMac design team was led by Jonathan Ive, who
would later design the iPod and theiPhone. The iMac featured modern technology
and a unique design, and sold almost 800,000 units in its first five months.
Through this period, Apple purchased several companies to create a portfolio of
professional and consumer-oriented digital production software. In 1998, Apple
announced the purchase of Macromedia'sFinal Cut software, signaling its expansion
into the digital video editing market. The following year, Apple released two video
editing products: iMovie for consumers and, for professionals, Final Cut Pro, which
has gone on to be a significant video-editing program, with 800,000 registered users
in early 2007. In 2002 Apple purchased Nothing Real for their advanced
digital compositing applicationShake, as well as Emagic for their music productivity
application Logic, which led to the development of their consumer-
level GarageBand application. iPhoto's release the same year completed
theiLife suite.
On May 19, 2001, Apple opened the first official Apple Retail Stores in Virginia and
California. Later on July 9 they bought Spruce Technologies, a DVD
authoring company. On October 23 of the same year, Apple announced
the iPod portable digital audio player, and started selling it on November 10. The
product was phenomenally successful — over 100 million units were sold within six
years. In 2003, Apple's iTunes Store was introduced, offering online music
downloads for $0.99 a song and integration with the iPod. The service quickly
became the market leader in online music services, with over 5 billion downloads by
June 19, 2008.
2011–present: Post–Steve Jobs Era
On January 17, 2011, Jobs announced in an internal Apple memo that he would take
another medical leave of absence, for an indefinite period, to allow him to focus on
his health. Chief operating officer Tim Cook took up Jobs' day-to-day operations at
Apple, although Jobs would still remain "involved in major strategic decisions for the
company." Apple became the most valuable consumer-facing brand in the world. In
June 2011, Steve Jobs surprisingly took the stage and unveiled iCloud. iCloud is an
online storage and syncing service for music, photos, files and software which
replaced MobileMe, Apple's previous attempt at content syncing. This would be the
last product launch Jobs would attend before his death. It has been argued that
Apple has achieved such efficiency in its supply chain that the company operates as
a monopsony (one buyer, many sellers), in that it can dictate terms to its
suppliers. Briefly in July 2011, due to the debt-ceiling crisis, Apple's financial
reserves were greater than those of the US Government.
On August 24, 2011, Jobs resigned his
position as CEO of Apple. He was replaced by
Tim Cook and Jobs became Apple's
chairman. Prior to this, Apple did not have a
chairman and instead had two co-lead
directors, Andrea Jung and Arthur D.
Levinson, who continued with those titles.
On October 4, 2011, Apple announced
the iPhone 4S, which includes an improved
camera with 1080p video recording, a dual core
A5 chip capable of 7 times faster graphics than the A4, a voice recognition system
named Siri, and cloud-sourced data with iCloud. It was released on October 14,
2011. On October 5, 2011, Apple announced that Jobs had died, marking the end of
an era for Apple Inc.
On October 29, 2011, Apple purchased C3 Technologies, a mapping company, for
$240 million. C3 is the third mapping company Apple has purchased so far.
Product Strategies
Apple Company has designed a range of products and services to meet the
needs of education customers. These products and services include the iMac and
the MacBook, video creation and editing solutions, wireless networking, professional
development solutions, and one-to-one learning solutions. The iPod remains a
mostly closed and vertically-integrated platform. Although Apple provides
documented interfaces for hardware accessories, developers have no supported
way to add features to the software and although the iPod supports the mainstream
MP3 and AAC formats, the iPod does not support other proprietary formats
like Windows Media and Real Audio, and Apple refuses to license
its FairPlay DRM to other online music vendors. Apple did add Windows PC support
with their second generation iPod series. The service itself is a key component to
marketing mix as the service should be the best advertisement as there is
specialization on product valuation intended for international product marketing
means and develop contacts with people who can be loyal buyers and
recommenders. The taking of the products across national boundaries into fresh
markets, explore channels, guide customers and establish better relationships. The
service itself is a key to the markets.
Product Length and Product Width
Portable Computers – including Mac products such as Mac Book Pro, iMac,
MacBook Air, Mac Mini, Xserve
Servers – including Xserve, Xsan, MacOS X Ser, MobleMe.
Accessories – including MagicMouse, Keyboard, Led Cinema Display.
Wi-fi Based Stations - including Airport Express, Airport Extreme, Time Capsule.
Developer – including Developer Connection, Mac Program, iPhone Program.
iPod – including iPod Shuffle, iPod Nano, ipod Classic.
iPhone – including iPhone3GS, iPhone3G, iPad.
iTunes – including movies, TV shows, audio books, games.
Periphal products – including Printers, Storage devices, digital videos and cameras.
Mac and Accessories
Mac mini, consumer sub-desktop computer and server introduced in 2005.
iMac, consumer all-in-one desktop computer introduced in 1998.
Mac Pro, workstation-class desktop computer introduced in 2006, replacing the
Power Macintosh.
MacBook, consumer notebook introduced in 2006, replacing the iBook, now only
being sold to educational institutions.
MacBook Pro, professional notebook introduced in 2006, replacing the
PowerBook.
MacBook Air, ultra-thin, ultra-portable notebook introduced in 2008.
Apple also sells a variety of computer accessories for Mac computers including
the AirPort wireless networking products, Time Capsule, Thunderbolt Display, Magic
Mouse, Magic Trackpad, Wireless Keyboard, and the Apple Battery Charger.
The MacBook was a brand of Macintosh notebook computers built by Apple
Inc. First introduced in May
2006, it replaced the iBook and 12-
inch PowerBookseries of
notebooks as a part of
the Apple–Intel transition.
Positioned as the low end of
the MacBook family, the Apple
MacBook was aimed at the
consumer and education
markets. It was the best-selling
Macintosh in history, and according to the sales-research organization NPD Group in
October 2008, the mid-range model of the MacBook was the single best-selling
laptop of any brand in U.S. retail stores for the preceding five months.
There have been three separate designs of the MacBook: the original model used a
combination of polycarbonate and fiberglass casing that was modeled after the iBook
G4. The second type, introduced in October 2008 alongside the 15-inch MacBook
Pro, used a similar unibody aluminum casing to the 15-inch Pro, and was updated
and rebranded as the 13-inch MacBook Pro at the 2009 Apple Worldwide
Developers Conference in June 2009. A third design, introduced in October 2009,
used a unibody polycarbonate shell as aluminium is now reserved for the higher-
end MacBook Pro. On July 20, 2011, the MacBook was quietly discontinued for
consumer purchase in favor of the new MacBook Air. However, Apple continues to
sell the MacBook to educational institutions.
iPAD
The iPad is a line of tablet computers designed, developed and marketed by Apple
Inc., primarily as a platform for audio-visual media including books, periodicals,
movies, music, games, and web content. The iPad was introduced on January 27,
2010 by Apple's then-CEOSteve Jobs. Its size and weight fall between those of
contemporary smartphones and laptop computers. The iPad runs the
same operating system as the iPod Touch and iPhone—and can run its own
applications as well as iPhone applications. Without modification, the iPad will only
run programs approved by Apple and distributed via the Apple App Store (with the
exception of programs that run inside the iPad's web browser.
Like iPhone and iPod Touch, the iPad is controlled by a multitouch display—a
departure from most previous tablet computers, which used a pressure-
triggered stylus—as well as a virtual onscreen keyboard in lieu of a physical
keyboard. The iPad uses a Wi-Fi connection to access local area networksand the
Internet. Some models also have a 3G wireless network interface which can connect
to HSPA or EV-DO data networks and on to the Internet. The device is managed
and synced by iTunes running on a personal computer via USB cable.
Apple released the first iPad in April 2010, and sold 3 million of the devices in 80
days. During 2010, Apple sold 14.8 million iPadsworldwide,representing 75 percent
of tablet PC sales at the end of 2010.
By the release of the iPad 2 in March 2011, more than 15 million iPads had been
sold– selling more than all other tablet PCs combined since the iPad's release. In
2011, it is expected to take 83 percent of the tablet computing market share in the
United States.
iPOD
iPod is a line of portable media players created and marketed by Apple Inc. The
product line-up currently consists of the hard drive-based iPod Classic, the
touchscreen iPod Touch, the compact iPod Nano, and the ultra-compact iPod
Shuffle. iPod Classic models store media on an internal hard drive, while all other
models use flash memory to enable their smaller size (the discontinued Mini used
aMicrodrive miniature hard drive). As with many other digital music players, iPods
can also serve as external data storage devices. Storage capacity varies by model,
ranging from 2 GB for the iPod Shuffle to 160 GB for the iPod Classic. The iPod line
was announced by Apple on October 23, 2001, and released on November 10,
2001. All of the models have been
redesigned multiple times since their
introduction. The most recent iPod
redesigns were introduced on September
1, 2010.
Apple's iTunes software can be used to transfer music to the devices from
computers using certain versions of
Apple Macintosh and Microsoft Windows operating systems. For users who choose
not to use iTunes or whose computers cannot run iTunes, several open source
alternatives are available for the iPod. iTunes and its alternatives may also transfer
photos, videos, games, contact information, e-mail settings, Web bookmarks, and
calendars to iPod models supporting those features.
For iOS versions prior to iOS 5, the iPod branding is also used for the media player
applications included with the iPhone and iPad; the iPhone version is essentially a
combination of the Music and Videos apps on the iPod Touch. (As of iOS 5, separate
apps named 'Music' and 'Video' are to be standardized across all iOS-powered
products.) In either event, the iPhone and iPad have essentially the same media-
player capabilities as the iPod line, but they are generally treated as separate
products.
Discontinued models of the line include the iPod Mini and the iPod Photo, the former
being replaced by the iPod Nano, and the latter reintegrated into the main iPod line
(now the iPod Classic).
iPHONE
The iPhone is a line of Internet and multimedia-enabled smartphones marketed
by Apple Inc. The first iPhone was unveiled bySteve Jobs, then CEO of Apple, on
January 9, 2007, and released on June 29, 2007. The 5th generation iPhone,
the iPhone 4S, was announced on October 4, 2011, and released on October 14,
2011, two days after the release of iOS 5.0, the Apple operating system for handheld
devices.
An iPhone can function as a video camera (video recording was not a standard
feature until the iPhone 3GS was released), a camera
phone, a portable media player, and an Internet client
with email and web browsing capabilities, can
send texts and receive visual voicemail, and has both Wi-
Fi and 3G connectivity. Theuser interface is built around
the device's multi-touch screen, including a virtual
keyboard rather than a physical one. Third-party as well
as Apple application software is available from the App
Store, which launched in mid-2008 and now has over
500,000 "apps" approved by Apple. These apps have
diverse functions, including games, reference, GPS
navigation, social networking, security and advertising for
television shows, films, and celebrities.
There are five generations of iPhone models, each
accompanied by one of the five major releases of iOS (formerly iPhone OS).
The original iPhone was a GSMphone that established design precedents like
screen size and button placement that have persisted through all models.
The iPhone 3G added 3Gcellular network capabilities and A-GPS location.
The iPhone 3GS added a compass, faster processor, and higher resolution camera,
including video recording at 480p. The iPhone 4 has a rear facing camera
(720p video) and a front facing camera (at a lower resolution) for FaceTime video
calling and for use in other apps like Skype. The iPhone 4 featured a higher-
resolution 960x640 display; it was released on June 24, 2010. In the U.S., AT&Twas
the only authorized carrier until February 10, 2011, when a CDMA version of the
iPhone 4 launched for Verizon. On October 4, 2011, Apple announced the iPhone
4S. The iPhone 4S added a higher resolution camera (8 megapixel)
with 1080p video recording, face detection, and video stabilization, a faster, dual
core processor, world phone capability (allowing a single handset to operate on
networks based on both GSM/UMTS and CDMA technologies), GLONASS support
and a natural languagevoice control system called Siri.It will be available in 16 GB
and 32 GB, as well as a new 64 GB capacity. In the United States, it was announced
that two carriers, C Spire and Sprint, would begin carrying the iPhone 4 and iPhone
4S on October and November 2011, respectively.
Apple TV
Apple TV is a digital media receiver
developed and sold by Apple.
It is a small form factor network appliance
designed to play IPTV digital content
originating fromthe iTunes Store, Netflix,
YouTube, Flickr, MobileMe,MLB.tv, NBA
League Pass or any Mac OS X or Windows
computer running iTunes onto an enhanced-
definition or high-definition widescreen
television.
Apple offered a preview of the device in September 2006 and began shipping it the
following March. It initially shipped with a 40 GB hard disk; a 160 GB version was
introduced two months later and the earlier model was ultimately discontinued.
In September 2010, Apple announced a second-generation version of the Apple TV.
About one quarter of the size and one third of the price of the original Apple TV, the
new device can stream rented content from iTunes and video from computers or iOS
devices via AirPlay. The new version no longer has the hard drive; however, it does
have an undocumented internal 8 GB flash storage, speculated to be used for
smoother playback of streamed media. All content is drawn from online or locally
connected sources.
Price
The Price forms one of the 4 P’s of the marketing mix. The Pricing decisions and
strategies have an implication on the overall profit of the organization since it is the
factor which determines the income source. Pricing strategy refers to the methods by
which a business calculates how much it will charge for a product or service. It is
based not only on the cost of the product, but also on profit margin and a holistic
view of the market and future viability.
One can say that apart from technology or design, Apple sells pricing. Steve Jobs is
a master of using pricing decoys, reference prices, bundling and obscurity. Apple's
Sept. 1 announcement of new products was a classic example. The popular iPod
Touch media player has been revamped at three price points - $229, $299, and $399
- all costing more than the iPhone, which does everything the Touch can plus make
phone calls.
Such pricing games are vital for Apple, because competition is fierce in the tech
world and product hits just don't last. The current iPad costs $499 in its lowest-
powered configuration vs. the Archos 7 Home Tablet ($189) or the Dell Streak ($299
with a two-year AT&T contract). And competitors are rushing to offer more
functionality for hundreds of dollars less; the Streak tablet throws in a videocam and
phone, which iPads don't yet match.
Pricing Strategy:
Apple uses skimming and premium pricing strategies.
Price skimming involves charging a high price because you have a substantial
competitive advantage. However, the advantage is not sustainable. The high price
tends to attract new competitors into the market, and the price inevitably falls due to
increased supply. A classic example is Apple's iPod. Most iPod consumers are
technically sophisticated, and 75% of them are previous Apple customers. This
consumer base is very likely to contain people who are nearly not price sensitive to
Apple products: The consequence of the iPod's pricing strategy is to progressively
skim off the demand (starting with the less elastic portion), sacrificing high sales to
profit at the beginning.
Premium pricing uses a high price where there is uniqueness about the product or
service. This approach is used where a substantial competitive advantage exists.
Such high prices are charged for luxuries.
Price list of its products:
ipad2- from$499
iphone- from $49
ipod touch- from $199
ipod nano- from $129
ipod shuffle- just $49
ipod classic- just $249
apple TV- just $99
Macbook Air- from $999
Macbook Pro- from $1199
Mac mini- from $599
imac- from $1199
Macpro- from $2499
Marketing tricks adopted by Apple in pricing :
1. Price decoys
Decoys, in marketing, are products, services, or price points that a business doesn't
really want you to take, but rather use as a reference to make another product look
better. The addition of iPad to its product portfolio, potentially cannibalizing product
to its lineup of iPods, iPod Touches, iPads, laptops and computers, one realize that
this gadget is likely a decoy.
Economist Dan Ariely, author of Predictably Irrational, gives the classic example of a
Realtor who shows you a home that needs a new roof, right before taking you to a
higher-priced house she really wants to sell. Now consider $499 for an iPad. Well,
compared with a smaller one with fewer features, it suddenly looks great.Decoys
explain why Apple often sells each gadget in a pricing series, such as the new iPod
Touch's $229, $299, and $399 price points for different storage capacities. The $399
"decoy" has clouded people’s judgment. Apple wins the best of both worlds - stoking
demand for products that look like bargains and for all the decoys it sells at much
higher prices. Yes, some people will spend $399 for a music player with slightly
better technology - and Apple makes even fatter margins.
2. Establish a high reference price
Consumers constantly need "reference prices" for comparison to make decisions
about the value. A dress costs Rs.1000.. Is that too much? Not if it's marked down
50 percent from Rs.2000. The trick is, that artificial Rs.2000 reference price may not
really exist. Apple has played this game by launching products such as the iPhone at
artificially high reference prices - the iPhone cost $599 when it first hit the streets -
and then rapidly lowering that price. Apple in essence is using its first-iteration
pricing as a reference to make its current products feel affordable.
3. Obscure the reference price
This is a more clever Apple marketing trick; instead of giving consumers a reference
price, hide the pricing altogether. Candy in movie theaters is a classic example of
price obscurity, because it comes in unusual, large boxes that are shaped nothing
like what you see at other stores.
Apple also obscures references by making its products look like nothing else, from
the first iPod with a unique scroll wheel to the current iterations wrapped in gleaming
aluminum. Apple seems wondrously unique, until you consider aluminum is the
same material you wrap leftover fish in and then it hits you: Apple is disguising itself
so you can't compare prices.
4. Bundle price components to hide what you can
Buy an Apple product and you'll spend more downstream. For every iPad or iPhone
sold, Apple likely counts on your future song purchases, video rentals, and soon iAd
clicks on app advertising.
Apple is not unusual here; almost every mobile handset, for instance, has some of
its costs buried in future monthly data fees over a two-year phone contract. All of this
"bundling" means the price over time is much more than what you think picking up
the Apple gadget.
The pricing strategy is brilliant. By staging a series of perceived technology
innovations and then adding price decoys, reference prices, obscurity and bundling,
The communication breakthroughs are mostly an illusion, but with shiny aluminum in
our hands, cost takes a secondary seat.
Place
Apple has over the years developed a very strong distribution system. it spreads
from the more conventional distribution to the more recent online store
Apple online store
The apple online store was started in 1996 soon after apple acquired NEXT..apple
built the store using nexts’ web application server.it was an immediate success
because the online store did a business of US$ 12million in the first year of its
operation.the setting up of online store was keeping in mind the following benefits.
Making savings in set-up and operational costs. You don't need to rent high
street premises, pay shop assistants or answer a lot of pre-sales queries.
Reducing order processing costs - customer orders can automatically come
straight into your orders database from the website.
Reaching a global audience, thereby increasing sales opportunities.
Competing with larger businesses by being able to open 24 hours a day, seven
days a week.
Being able to receive payment more quickly from online transactions.
Attracting customers who would not normally have investigated your type of high
street outlet.
Improving your offerings using the data gathered by tracking customer
purchases.
Using your online shop as a catalogue for existing customers.
Apple store
Conflict with the existing retailers drove apple to open their own retail
stores..customers didn’t have a pleasant experience when they entered a compUSA
or Sears to buy apple products. Realizing that they were being held over a barrel by
big retailers that were used to calling the shots with computer OEMs and frequently
provided a horrible purchasing environment for Apple products, the company did
what it had to and took control of distribution. Apple took a lot of heat and fought off a
lawsuit from disgruntled retailers when Apple launched the retail stores. But the truth
is that many of those retailers were damaging Apple's relationship with its customers,
at a time when the company was being relentlessly pressured by Dell's direct
distribution model. The combination of Apple's retail stores and well-implemented
online store have helped boost Macintosh sales to record levels.
Apple has expanded and improved its distribution capabilities by opening i retail
stores in key cities around the world in up-market, quality shopping venues. Apple
provides Apple Mac-expert retail floor staff staff to selected resellers' stores (such as
Australian department store David Jones); it has entered into strategic alliances with
other companies to co-brand or distribute Apple's products and services (for
example, HP who was selling a co-branded form of iPod and pre-loading iTunes onto
consumer PCs and laptops though in retrospect this may now just have been a
stepping-stone). Apple has also increased the accessibility of iPods through various
resellers that do not currently carry Apple Macintosh systems (such as Harvey
Norman), and has increased the reach of its online stores.
The very successful Apple retail stores give prospective customers direct experience
of Apple's brand values. Apple Store visitors experience a stimulating, no-pressure
environment where they can discover more about the Apple family, try out the
company's products, and get practical help on Apple products at the shops' Guru
Bars. Apple retail staff are helpful, informative, and let their enthusiasm show without
being brash or pushy.
The overall feeling is one of inclusiveness by a community that really understands
what good technology should look and feel like - and how it should fit into people's
lives.
Promotion
Promotion is one of the 4 Ps of marketing (Product, Price, Place, and Promotion). It
is a link of communication between sellers and buyers for influencing, informing, or
persuading a buyer’s purchasing decision.
5 elements: personal selling, advertising, sales promotion, direct marketing and
publicity which together form the promotional mix. Objectives like increasing sales,
new product acceptance, brand equity creation, positioning, etc. basically define the
budgeting to be allotted for each element.
However, promotion has 3 main objectives:
1. To present information to consumers as well as others
2. To increase demand
3. To differentiate a product.
Promotion is done via different mediums. It may be in form of internet
advertisements, endorsements, television commercials, special events, and
newspapers to advertise their product. Apple went through the entire gamut of
promotional mediums to create a brand for itself that people could relate to and recall
in an instant.
Its advertising and marketing campaigns often had that edge, that little quirkiness
that kept them interesting yet functional. Let’s look at some of the successful
integrated marketing campaigns that Apple has had over the years.
Advertising Campaigns
Apple has always been well known for its creative advertising campaigns, designed
to reflect their innovative ideas to market to creative individuals. Some of their
notable ad campaigns include the ‘1984 Super Bowl’ commercial, the 1990’s ‘Think
Different’ campaign, the ‘iPod people’ campaign in the 2000s, and the ‘Get a Mac’
campaign in 2006.
1984
It is Apple’s most iconic advertisement
which launched the Apple Macintosh
personal computer for the first time. This
ad showed a young unnamed heroine
wearing a tank top and shorts running with
a large sledgehammer, chased by a 4
police officers in complete riot gear.
She races towards a large screen with an
image of a Big Brother-like figure giving a speech and hurls the hammer at it. As the
screen is destroyed, shocking the people watching it, the ad concludes with a black
text scrolling over the screen which reads:
“On January 24th, Apple Computer will introduce Macintosh. And you’ll see why 1984
won’t be like 1984.”
It’s been lauded as a classic winning critical acclaim over time. It is now regarded as
one of the most memorable and successful American television commercials of all
times.
Think Different
‘Think Different’ is an advertising slogan created during the 1990s for advocating the
use of Apple computers instead of the usual IBM-derived Windows computers. It was
used in TVCs, print ads and several promos for Apple. The TVC featured 17 20th
century personalities, iconic in their own
respect. The commercial ended with a
young girl with her eyes closed, as if
making a wish.
Print ads in the same campaign had a
portrait of a famous historic figure with a
small Apple logo and the words “Think
Different” in one corner.
In many ways, the new ad campaign marked the beginning of Apple’s reemergence
as a technical giant. This campaign, along with the return of Steve Jobs at Apple, put
Apple in the spotlight and with many new successful products, it marked as the new
birth for the tech giant.
iPod People
Apple introduced this campaign in 2002 when they
launched the iPod. The campaigns included TVCs,
print ads, posters, and for the first time wrap
advertising campaigns. These campaigns were
uniquely different and followed a consistent style
that different from Apple’s usual ads.
The commercials simply featured dark silhouetted
characters against bright-coloured backgrounds. The silhouettes were usually
dancing, (usually accompanied with music in TVCs) holding iPods.
Segmentation-Targeting-Positioning Analysis
Market Segment
Apple Inc. With its entire product range reaches out to a market which can be
segmented into four broad categories which include households, education,
professional and commercial. This classification is done on the basis of need usage
and purchasing power. Table A illustrates the details of market segmentation.
sector segment Power
macen
tosh
4G
Power
book
G4
IMAC Power
macentosh
4G server
ibook Emac Iphone Ipad
consu
mer
Individual
s
Small /
home
office
Students
Teachers
profes
sionals
creative
Large
business
Media
publishin
g
Here we can see that the market segmentation covers a large market area across
demographics but one common feature is high disposable income. Apple competes
for profits. The company carefully picks and chooses its product markets and defines
which segments of these markets in which to compete. This is why Apple doesn't
manufacture nor sell cheap PCs, cheap phones, etc. Apple competes in select
market segments such as the $1,000+ PC market because in that segment Apple
has greater pricing control and thus greater opportunities to realize higher profits.
Targeting strategy
The target market of the company involves almost all sectors of the society.
1. They want to provide Apple Computers Inc to young or old, boy or girl.
2. Middle/Upper income folks who are willing to pay a bit more for a better user
experience. paying 500 more for a computer is not a huge deal if you have a
decent income.
3. People who like to have fun with technology. No other platform offers as many
entry level tools (the whole iLife bunch and more). This includes people who
like to shoot a lot of digital photos or video. It's the whole digital hub concept.
People are starting to buy into it.
4. Music enthusiasts and fans ages 12-35.
5. Professionals in media and design.
This target market is a larger source of income. The company has different
marketing strategies that can cater to the taste and appeal of such markets. The
company makes sure that its stores and branches are 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. The company also makes sure that competition in the
location they want to put up the branch will not be too heavy.
Positioning strategy
Apple uses the Positioning by attribute and also positioning by user.
Positioning by attribute:
iMac – Extreme hardware, costlier than the regular PC
Mac OS X - Good graphics, many user oriented features more stable than
windows
Final Cut pro – World class movie editing softwares, used by Steven
Speilberg
iPhone – Changed the face of smart phones, the best hardware and software
combination at the moment.
Ipod – Durable, and well segmented into shuffle, nano, classic, touch, and
many more to yet launch.
Positioning by user:
Apple has positioned itself to a certain type of customer, wealthy people, innovators,
peoplewith good jobs, good lifestyle, etc. If Apple targets the poor man type, the
trendy guys will stop buying Apples, because everybody can and Apple is not the
Porsche of the computers anymore, this would hurt more the brand than maybe the
increasing sales because of lower prices, and in good times, where everybody has
more money, Apple would have the problem that they cannot rise prices, because
everybody expects a cheap.
SWOT Analysis
Strengths
• iTunes Music Store is a excellent source of revenue, especially with the iPod and the accessibility on Windows platform.
• Apple Computer are expert in Developing own software and hardware.
• Apple’s niche audience provides the company with some lagging from the direct price competition.
• Giving a face-lift to desktop and notebook lines.
• Web technology can be used to improve product awareness and sales.
• Low debt—more manoeuvrable.
• Apple Computers have good brand loyalty.
• Partnership with Intel Computers in 2006 – Present.
• Strong Research & Development Department.
Weaknesses
• Weak relationship with Intel and Microsoft.
• Weak presence in business arena.
• The product life cycle of Apple products are very small for that reasons revenues are more depend on launch of new products and services.
• Weak presence in markets other than education and publishing.
• Slow turn around on high demand products.
• Apples market share is far behind from major competitor Microsoft.
• In past the relationship between Steve jobs and employee were not good which result in reputation loss.
Opportunities
• Increase in worms and viruses on PCs so the antivirus solution can be developed by Apple
• Large population (Gen X&Y) which are extremely individualistic and name brand conscious.• The ties of apple other companies are weak, Apple can develop good relationship for joint ventures
• Downloadable music and MP3 players are highly marketable.
• The online sales of computer are increasing with rapid speed.
• The laptop market growth is high; Apple Computers should focus to develop new models to cater the need of customers.
Threats
• Companies not seeing Apple as compatible with their software.
• Apple facing strong competition from Dell, HP, Sony and Toshiba in laptop segment.
• Downloading free music from other online source without paying cost is common it may impact the iTunes sales.
• Apple software, Cell phone and hardware are expensive as compared to other competitors such as Dell.
• The long lasting recession may impact the sales of the company due to higher prices of the products and services
• Microsoft launched Microsoft Vista, Windows 7 which is gaining market share.
• The switching in technology is very fast.
Conclusion
We feel that Apple must focus on several key aspects to continue to grow and
succeed.
They must continue a stable commitment to licensing, push for economies
of scope between media and computers, and become a learning
organization.
Apple apparently made a commitment to licensing. Although it should continue,
Apple may want to consider other forms of strategic alliances. An equity strategic
alliance may offer Apple the opportunity to obtain additional competencies. An
effective way for a company like Apple to accomplish this would be in the form of a
joint venture. Apple should continue pushing the new line of media-centric
products. Meanwhile, Apple should not lose focus on its computers. Macintosh
computers were 39% of Apple’s sales in 2005. (Burrows) This very innovative
company exploits its second-mover position. In the future, they will need to
continue innovating to expand the boundaries of both media and computers. One
persistent element of both competitive advantage and risk is Steve Jobs. He is both
synonymous with Apple’s success and has a large equity interest in Apple and
Disney. If he were to divest his leadership position, the reaction of both the market
and consumers would be uncertain. Given his position within the organization as
well as the history of the company when he was gone, Apple must find a way to
learn as an organization. This will allow the company to withstand a departure by
Jobs. Based on the actions of the organization, we feel that the mid-term
performance of Apple will be strong. This period allows Apple time to overcome
their challenges if they move swiftly. For this reason, we feel that they will
continue to succeed and will continue to outperform their peers.
Bibliography
www.apple.com
forums.appleinsider.com
www.entrepreneur.com
www.bloomberg.com
Marketing management -Philip Kotler
Positioning the battle for your mind- Al Ries and Jack Trout