Marketing Principles - Apple Inc - Essay Example

? Marketing Principles: Apple Inc. Executive Summary The aim of the paper is to demonstrate the concepts and process of marketing, including segmentation, targeting and positioning as well the extended marketing mix and their uses in implementing the marketing plan for a selected company. The company selected for the paper is Apple Inc. The demonstration of the marketing principle and the concepts is done in the paper in four parts named as tasks. Task one presents the definitions of marketing and explains the marketing processes and concepts of Apple Inc. evaluating the costs and benefits. Task two analyses the macro and micro environmental factors that influence the marketing decisions and it also examines the concepts of segmentation and recommends segmentation criteria and targeting methods to be used for two products in Apple Inc. Task two also identifies factors that influence buyer behaviour and it also proposes a new positing strategy for a product of Apple Inc. Task three describes the development process of products of Apple Inc. aimed to achieve sustainable competitive advantage and it also evaluates a range of distribution methods of Apple Inc. to provide convenience to a target group of customers and it discusses the various pricing methods used by Apple Inc, and critically evaluates the pricing strategy of the company. Another section of task three explains the concepts of integrated marketing communication and discusses the elements of promotional mix as relevant to Apple Inc. Task four of the assignment examines the nature of extended marketing mix and discusses their relevance to service marketing and evaluates the marketing mix variables for two segmentation of the consumer market and discusses how different it would be for business –to-business services (B2B). This section also examines and discusses the differences between domestic marketing and international marketing assuming that Apple Inc. is to enter the international market. Marketing Principles of Apple Inc. Introduction Steve Jobs, Steve Wozniak and Ronald Wayne established Apple Computers in 1976 and the company was incorporated in 1977 to become Apple Computers, Inc. In 2007, the company was renamed as Apple, Inc. by removing the word ‘Computer’ from its name and this also symbolises the change of focus of the company from computers other consumer electronic products. Presently, the company is among the world leaders in designing, manufacturing and marketing of a number of electronic products and services which includes personal computers, mobile communication and media devices, portable digital music players and various related services, software, third-party digital applications and content, networking solutions and peripherals. The products and services of the company specifically include Mac, iPod, iPhone, iPad, Apple TV, operating systems like OS X and iOS, a portfolio of various professional and consumer software applications, iCloud, a wide range of services, accessories and support systems. Apple inc. reaches to its consumers through its global network of 394 retail stores, such as Mac App Stores, iBook Store SM, App Store SM and iTunes Stores, scattered in fourteen countries of the world. Besides retail stores the company sells its products and services through its direct sales force, online stores and a third party distribution network including dealers, wholesalers, retailers and resellers (value added). By revenue, Apple Inc. is the second largest IT Company of the world after Samsung electronics and it is the third largest manufacturer of mobile phones in the world after Samsung Electronics and Nokia. In 2008, Apple Inc. was declared as the most popular company in the US and it was also declared as the most popular company in the world consecutively from 2008 to 2012 by the reputed business magazine, Forbes. The company ranks second public trading corporation in the world by market capitalisation of US $ 414 billion (approximately). Apple Inc. manages its business operations with its permanent and temporary workforce. Its permanent workforce has 72,800 full time employees while the temporary workforce has 3.300 employees. In 2012, the annual revenue collection of Apple Inc. was over $ 156 billion. In December 1980, Apple Inc. became a public limited company at $ 22 per share and generated capital much more than any IPO since Ford Motor Company went public in 1956. By going public, the company immediately and historically created a record number of millionaires (approximately 300) which was never done by any company. The marketing principles of Apple Inc. have played a key role in its success (Dickson, 1996). Task1  a. The Marketing Process Abratt (1993) defined marketing as a set of activities and strategies of a company made to make products or services available to consumers and to satisfy consumers while making profits in offering products or services. The set of marketing activities and strategies include designing a product or a service, promoting it, pricing it and making consumers known about it and delivering them. Jones (2005) defined marketing as a management process which allows movement of a product or service from concept to consumers. The management process includes 4 P’s of marketing mix: Product – Identifying, selecting and developing a product Price – Determining price of the product Place – Selecting a distribution network to make the product available to consumers Promotion – Developing and implementing a strategy for promotion of product The marketing philosophy of Apple Inc. is based on three clear, simple and concise points defined by its marketing and finance advisor Mike Markkula who was appointed by Steve Jobs in 1977 when the company was incorporated. The three points include Empathy, Focus and Impute. Empathy refers to understanding and serving consumers better than others, Focus refers to forgetting about other things and Impute refers to ensuring that whatever is done serves consumers, always and everywhere. b. Marketing Concepts and Marketing Orientation Marketing concepts and marketing orientation of Apple Inc. are based on well-thought-out philosophies of effectiveness, social responsibilities and efficiency maintaining a balance between the company, its customers and society. The marketing concept and marketing orientation of Apple Inc. was crystallized by Mike Markkula in the end of 1970s. It focuses on achieving organizational goals being more effective that its competitors. The company aims to create, deliver and communicate customer value focusing on four pillars: integrated marketing, customer needs, target market and profitability. Sales concepts are different from marketing concepts as sales concepts focus on seller’s needs of converting product into cash while marketing concepts focus on buyer’s needs and their satisfaction (Chatterjee, Hoffman and Novak, 1998). The marketing concepts have changed the marketing orientation of Apple Inc. and the marketing orientation of the company focuses on following philosophical concepts which guide its activities:  The Production Concept The Product Concept The Selling Concept The Marketing Concept The Societal Marketing Concept Task2 a. Analysis of the Macro and Micro Environmental Factors The macro environmental factors which influence the decision making, strategies and performance of Apple Inc. include legal, social and political conditions, demographics, technological changes, natural forces and economic factors. Some of the examples are changes in interest rates and exchange rates, competitors, natural calamity, regulations of the government, changes in cultural tastes, etc. The micro environmental factors which influence the decision making strategies and performance of Apple Inc. include the common public, its suppliers, distribution channels, customers, competitors, etc. (Hooley, Saunders and Piercy, 1998). b. The Concepts of Segmentation and Targeting The integral parts of a marketing strategy and business plan are the market segmentation, targeting, market positioning and market mix. Market segmentation is required for understanding customers and their needs. While marketing refers to the management process aimed to anticipate, to identify, and to satisfy the needs of customer with profitability market segmentation refers to the management process aimed to divide whole market into small segments where characteristics and needs of customers match. The factors which help in market segmentation are percentage of sales in the segment, requirements of customers, and the way of using products by the customer. It also helps in deciding price and place for the segment and preparing alternative marketing strategy. Principles of Segmentation Market segmentation is done using the principles of – Macro Segmentation and Micro Segmentation. Macro segmentation According to principle of macro segmentation the factors which are considered for market segmentation include the location, size and usage rate of the product or the service in the particular segment. Micro segmentation According to principle of micro segmentation the factors which are considered for market segmentation include type of product (used, purchased, produced), usage of the product (how, where, why are they used), technology, policy of purchase, the decision- process and the relation of the seller with the buyer. Types/Methods of Segmentation Different methods of segmentation include: Geographic segmentation Demographic segmentation Geo-demographic segmentation Psychographic segmentation Behaviour segmentation Multivariable segmentation Targeting and Positioning Targeting “Targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter” (Kotler, 2000) Targeting is a tactical and analytical approach used to select segment (s) for marketing the product in the selected segment (s). It requires understanding different characteristics like needs, requirements, usages of the segments and the factors which are important for targeting are: Identification of Ability – need to identify attitude, behaviour and needs of consumers Accessibility – accessing customers and enabling customers to access Substantiality of the segment Sustainability of the demand Action ability for the segment Dependability on the segment c. Factors Influencing Buyer Behaviour and Positioning Strategy Buyer behavior There are various factors which influence the buyer behaviour and affect their decision to select, purchase or consume a product or service. The buyer behaviour of Apple Inc. can be categorized as follows: Cultural Factors – Cultural factors include culture of buyer, his/ her sub culture and social class. Social Factors – Social factors include family, reference groups, status and role Personal Factors - Personal factors include economic standard, self concept, personality, age, occupation, life style, etc. Psychological Factors - Psychological factors include attitude, beliefs, learning, motivation, perception, etc. Positioning ”Positioning is arranging for the product to occupy a clear, distinctive & desirable place relative to competing products in the target consumers’ mind ” (Kotler, 2000) Positioning of a product implies to what Apple inc. does with the mindset of its targeted consumers about its products and services. The positioning of a product or a service in the mindset of its consumer is done by Apple Inc. considering following factors: Clear messages avoiding confusions such as Byte into an Apple, Think Different, etc. Credible message to be believed such as iThink, therefore iMac, Say Hello to iPhone, etc. Consistent messages as most of the messages are being used for a long time Competitive products and services underling given factors: Friendliness Customer service High technical performance Convenience Brand strength/desirability Any other differentiating factor Task3 a. Product Development to Achieve Sustainable Competitive Advantage Apple Inc. is known worldwide for its unique products which have helped the company in achieving sustainable competitive advantage. For development of products Apple Inc. has utilised multiple branded partners, it has broken norms of the industry turning down lucrative financial incentives to maintain the uniqueness of its products so that its consumers are focused on the brand of Apple Inc. and not on the providers of its components. Since the middle of the 2000s, Apple Inc. made tie ups with suppliers like Microsoft, ATI and Intel for providing many software and hardware solutions for its various products. In February 2012, Apple Inc. has the acquisition of app-search engine Chomp, recently, in March 2013; it finished the acquisition of a Silicon Valley startup, WiFiSlam, which is making mapping applications for smart phones. The company focuses on maintaining not only the quality but also the uniqueness of its products (Jones, 2005). b. Distribution Methods to Provide Convenience to a Target Group of Customers Apple inc. reaches to its consumers through its global network of 394 retail stores, such as Mac App Stores, iBook Store SM, App Store SM and iTunes Stores, scattered in fourteen countries of the world. Besides retail stores the company sells its products and services through its direct sales force, online stores and a third party distribution network including dealers, wholesalers, retailers and resellers (value added). c. Pricing Methods and Critical Evaluation of the Pricing Strategy The products and services of Apple Inc. are known for its quality, uniqueness, warranty, scope, packaging and its wide range matching with the needs and budgets of customers of different segments. The pricing strategy of the company targets the customers of upper class and upper middle class only. The product range does not match the budgets of the customers of lower class nor does the company provide any payment option or financing option to its customers (Ferrel and Hartline, 2005). d. The Concepts of Integrated Marketing Communication and the Elements of Promotional Mix   Integrated marketing communications refers to linking different marketing communications together using the same slogans or messages. It is important for conveying core message, creating brand image and market positioning. The messages of the company like ‘Byte into an Apple’, ‘Think Different’, etc. are uniformly used for different marketing communications such as websites, trade show booths, banners, etc. Product, Price, Place and Promotion (4P’s) are the key elements of marketing mix of Apple Inc. which have the given specifications: Product – Products of Apple Inc. are known for their Brand Value, Quality, Uniqueness, Scope, Warranty and Packaging. Price – Price of the products of Apple Inc. is communicated through price list and sometimes the company offers discounts on its products, but Apple does not offer any terms of payments or financial options or options for lease. Place – Place refers to distribution channels of Apple Inc. including intermediaries, distributors, retailer and direct sellers. The company is concerned about motivation and evaluation of channels, prime locations and logistics such as supply, transport, warehouse, etc. Promotion – Promotion programs of Apple Inc. include both digital media and conventional media and aim to build public relation and advertisement. The company has substantial budget for promotion and estimates results of promotions. Task4  a. The Nature of Extended Marketing Mix and their Relevance to Service Marketing The extended marketing mix of Apple Inc. includes physical layout, provision of customer service and processes. For an IT company like Apple Inc. the extended marketing mix is quite relevant to service marketing as it deals in multiple consumer electronic products which need to be supported by services and for service marketing physical layout not only needs to be efficient and attractive but it also needs to be situated at prime locations for convenience of its customers. Presently, businesses are recognised not only for quality of their products but also for the quality of services they provide after sales. Apple Inc. recognises the importance of ‘Provision of customer service’ as it is regarded as the heart of modern industry and key factor for the loyalty of customers. The company has effective and efficient ‘Processes’ of handling queries and complaints of customers, recognising their requirements and processing their orders (Baines et al. 2005). b. The Marketing Mix Variables for Two Segmentations The marketing mix variables of Apple inc. are different for different segments. For example, the marketing mix variables for its high profile customers of higher income group include sophisticated products of high price range available at key stores of the company and the company has an exclusive promotion campaigns for such products. Similarly, the marketing mix variables for other segment, say student, are different as the products for them have latest features and available at comparatively lower prices. Such products are available at almost all the stores of Apple Inc. and online (Kelley, Hoffman and Davis, 1993). The Marketing Mix Variables of Apple Inc. is different for business –to-business (B2B) services and it uses a number of tactics such as PR and TV are used for brand building, executive events are organised by Apple Inc. for creating demand and the company also uses social tactics to influence its prospective audience. The website of Apple Inc. is the most popular and dominating factor of its marketing mix (Einwiller & Will, 2002). c. Differences between Domestic Marketing and International Marketing Domestic marketing and international marketing are different in many aspects and if Apple Inc. plans to enter into a new international market it would require focusing on many aspects and differences between domestic and international marketing. The domestic market is a developed market and most of its target consumers are facilitated with the internet which encourages online sales for the company which might not be the case for international marketing. Similarly, the digital marketing campaign is cost effective and successful in domestic market but it would need to invest substantially on conventional marketing campaigns in international marketing. Conclusion It is said that Apple Inc. is basically a marketing company and not a manufacturing company due to its effective and efficient marketing principles and processes discussed above. References Abratt, R. (1993), ‘Market segmentation practices of industrial marketers’, Industrial Marketing Management, 22, 79–84. Baines, P., Worcester, R., Jarrett, D., and Mortimore, R. (2005).‘Product attribute-based voter segmentation and resource-advantage theory’, Journal of Marketing Management, Vol 22, 1/2, pp; 1079–116. Chatterjee, P., Hoffman, D. L., and Novak, T. P. (1998) ‘Modeling the clickstream: implications for web-based advertising efforts’, available http://elab.vanderbilt.edu/research_papers.htm, accessed 3 December 2007. Dickson, P.R. (1996) The static and dynamic mechanics of competition: a comment on Hunt and Morgan's comparative advantage theory. Journal of Marketing | October 1, pp; 102 Einwiller, S. & Will, M. (2002)Towards an integrated approach to corporate branding – an empirical study. Corporate Communications, Vol 7(2), pp; 100-9. Ferrel, O. and Hartline, M. (2005) Marketing Strategy, 3rd Edt.Thomson Mathewson R. 2009. 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