Report on Apple Company - Essay Example

? Report on Apple Company Presented Summary This paper presents a report of Apple Inc, a multinational corporation with headquarters in California, United States. The paper analyzes Apple’s current business and marketing strategies. The company has been successful in the recent years and has even managed to attain leadership in the global market. Among other factors, the successful performance of the company has been driven by its efficient business and marketing strategies. This paper suggests that the company’s business and marketing strategies are also going to influence its performance in the future. Therefore, by addressing the current business and marketing strategies, a potential investor can have a clear picture of the company and can apply the information in making an effective decision on whether to invest in it or not. The business strategies addressed in the paper that are adopted by Apple are product development and product proliferation approaches. The marketing strategies addressed are Apple’s segmentation, target market and positioning strategies as well as the company’s marketing mix. Based on the analysis, Miguel and his co-workers can make wise decisions on whether their company, Tech-Shield, should invest in Apple Inc. Table of Contents Summary ii Table of Contents iii Apple Inc. 1 1.0 Background 1 2.0 Business Strategy 1 Figure 1.0 Use of iTunes 2 Figure 2.0 Some of Apple’s innovative products 3 3.0 Market Strategy 5 3.1 Segmentation, Target Market and Positioning 5 3.2 Marketing Mix 6 3.2.1 Product 6 3.2.2 Price 7 3.2.3 Place 8 3.2.4 Promotion 8 Figure 3.0 Strategy of Promotions 9 4.0 Summary of SWOT Analysis 9 Table 1.0 Apple’s SWOT Analysis 9 5.0 Conclusion 10 6.0 Work cited 12 List of Figures Figure 1.0 Use of iTunes 2 Figure 2.0 Some of Apple’s innovative products 3 Figure 3.0 Strategy of Promotions 9 List of Tables Table 1.0 Apple’s SWOT Analysis 9 Apple Inc. 1.0 Background Apple Inc. is a leading multinational corporation that produces computers, computer software, commercial servers and consumer electronics. Headquartered in Cupertino, California, Apple was founded in 1979 by Steve Jobs and his colleagues. The company has developed a huge portfolio of products, which have successfully penetrated the global market, such as Mac line of computers, iPhone series, iPad series and iPod series among others (Lamido, 2013). Apple Inc. operates in a highly competitive market comprising of well-established manufacturers of consumer accessories and electronics, such as IBM, HP, Dell, Microsoft, Toshiba, Samsung, Nokia, LG and Google. Arguably, the high level of competition has prompted Apple Inc. to intensify its business and marketing efforts in the recent years. Among other efforts, the company’s efficient business and marketing strategies have steered at to attain leadership in the global market (Katie, 1). Arguably, any factor that may influence the performance of an organization in the future is of fundamental interest to potential investors. This paper addresses the business and marketing strategies of Apple as the principal among the factors that will influence its performance in the future. The paper aims at giving a clear picture of the performance of Apple in the two areas to Miguel and his co-workers so that they can make a wise decision on whether their company, Tech-Shield, should invest in Apple Inc. 2.0 Business Strategy Apple Inc. has been using a combination of product development and product proliferation strategies to gain a competitive edge in the global market (Besanko, Dranove and Shanron, 47). Product development refers to the process of innovating new or better products or services to replace old ones (O’Grady, 37). Apple has attained leadership in its target market mainly through continuous innovation of unique products. Apple created iPods and iTunes and by 2003, it had made them available in Microsoft Windows version. Consequently, demand for these products skyrocketed and propelled the revenue for the company to rise to a record high level. By 2011, iTunes accounted for 70% of the global market for digital music downloads (Zyller-Woellner, 5). The figure below shows the percentage of Apple customers who were using iTunes. Figure 1.0 Use of iTunes Source: Lamido (2013) Apple has also been innovating products with higher quality than those of competitors. Examples of the high quality products designed by the company over the last one decade are iPhone, iPod, iPad and Mac. This explains the fact that most of Apple’s new products have been attracting a high segment of consumers in the market. For instance, iPod holds the largest market share (66%) of the digital music industry. This product has been preferred because it is easy to use and due to its fast mover advantages (Besanko, 51). The success of Apple has highly been driven by its ability to develop innovative products that are easy to use and of high quality, and that provide clear product differentiation. Figure 2.0 show some of Apple’s innovative products Figure 2.0 Some of Apple’s innovative products Source: Lamido (2013) On the other hand, product proliferation strategy is an innovative way of creating barriers to entry in the market. In this approach, if a new niche develops, the leader and the most innovative player benefits most (Besanko, 51). Apple, for instance, derived its first competitive advantage in the digital business industry, as the pioneer in provision of online music using iTunes and the iPod. As the other players in the industry started moving into the niche, competition increased in the market. By then, Apple had already enjoyed benefits associated with low level of competition. The increased growth has also been also likely to be facilitated by the fact that Apple’s products and marketing approaches are designed in a way that makes it difficult for competitors to duplicate them (Zyllner- Woellner, 5). Therefore, the combination of product development and proliferation strategies have been beneficial to the company since the perceived value of the company’s products generated through superior design and innovation proves to be inimitable competency (Zyllner- Woellner, 6). This implies that Apple will continue to lead in the PC industry as long as this benefit exists. However, the achievement of this benefit is not automatic for the company. The product proliferation strategy has one significant shortcoming; it leads to high pressure for local responsiveness and for cost reduction (Katie, 8). This creates difficulties in realizing the strategy. However, the approach can be quite paying if a company succeeds in obtaining considerable level of customer acceptance and low cost structure (Katie, 12). Further, for the strategy product development and proliferation strategies to be successful, a producer needs to give thorough information to consumers regarding the uniqueness of the innovative products. Although Apple has been applying the method, it has not been able to attain an optimal point. As Katie noted, most of the users of PC and other innovative products produced by the company do not know much information about the company’s technology and the uniqueness of its products. To ensure that maximum benefits are derived from new and innovative products in the future, Apple needs to come up with ways to inform and to persuade consumers from the very entry of their innovative products in the market (Besanko, 63). 3.0 Market Strategy 3.1 Segmentation, Target Market and Positioning Apple has been employing an efficient market segmentation strategy (Besanko, Dranove and Shanley, 63). Market segmentation refers to the process of identifying unique characteristics of consumers, grouping consumers with homogenous traits and devising unique marketing strategies that suit each group (Lamido, 2013). The selected consumer categories may be constrained by factors such as psychographics, demographic, budgetary, buyer behavior and benefits sought among others (Lamido, 2013). To define segments in the target market, Apple Inc. mainly relies on psychographic aspects using lifestyle and personality information (Lamido, 2013). Currently, Apple’s products are designed to target different groups in the market such as students, businesspersons, schoolteachers, doctors, travelers, moms, dads, kids, vacationers, teenagers, sanitation workers, rockers, Hispanics, generation X-ers, baby boomers, African Americans and hip- hoppers (Lamido, 2013). As Lamido explains, most of the consumer groups targeted by Apple have good internet fit. Apple has been utilizing this opportunity by marketing its products mainly through the internet platform. Amidst increased use of internet over the last few years, internet marketing has played a great role in increasing the company’s market share at a higher rate than competitors increase. For instance, market research data released by iSuppli in 2012 indicated that Apple’s sales of digital music products stood at 66% in the global market (Zyllner- Woellner, 6). According to Mark, a greater percentage of the sales were facilitated by internet marketing. An analysis conducted by Mark, in late 2012, indicated that Apple had a well-developed “ecosystem” in the global market. Based on the company’s marketing strategies, Mark suggested that the ecosystem is likely to persist or even to become stronger in the future (Besanko et al, 74). This implies that the share of Apple in the global market is expected to continue growing in the future. Apple’s positioning is designed to target brand loyal and less-price sensitive consumer. While designing its products, the company focuses on adding value in order to meet needs of consumers and focuses on offering premium brands (Besanko et al, 75). For instance, Apple has recently demonstrated its brand positioning in developing the unibody MacBook and MacBook Pro, which are larger and higher, priced than previous iMac brand products. The company also replaced $499 Mac mini with another model that was initially priced at $599 (Lamido, 2013). 3.2 Marketing Mix Marketing mix refers to a combination of four factors (products, price, promotion and place) that a business organization can modify to generate a desired marketing strategy. Marketing mix comprises of a set of tactical tools derived from the four elements (also known as 4ps) that an organization can blend to produce the desired response in the target market (Zynna- Woellner, 7). 3.2.1 Product Product refers to anything that can be offered to the market for consumer’s attention, acquisition and consumption, and that is aimed to satisfy a want or need (Besanko et al, 86). In today’s business environment, it has become increasingly necessary for organizations to create innovative products in order to keep customers interested. Apple’s high level of innovation has driven most clients in the global market to prefer its products. As mentioned earlier, the company has developed innovative hardware products such as latest iPad, iPod, Macintosh Computer, iPhone and many more. The company has developed various portable devices that facilitate watching of videos and movies. Apart from this, Apple has been leading innovation in the mp3 industry over the last one decade (Zyllner-Woellner, 7). Creation of innovative products has facilitated Apple to achieve rapid growth over the last one decade. Apart from the products, the company has been luring and maintaining clients through innovative support services. The company’s website has numerous support services that are available for customers. If, for instance, a product is not functioning correctly, a customer can refer to guidelines that are provided in the website on how to fix it. Customers are also able to download support systems and useful information about products from the website. The company has also established different offline service centers all over the world (Besanko et al, 87). 3.2.2 Price Price is one of the principal factors that influence consumers to purchase a product. Price refers to the value of a product at the market, which is expressed fiscally by the seller. As Besanko et al explained, the price of a product must be fixed according to its brand and quality. Price may fluctuate in certain periods as the value of a product in the market changes (Zyllner-Woellner, 7). Price is also an important factor to the seller since it influences the amount of revenue to be derived from the sale of a product. It is also essential for sellers to consider the prices of similar products by competitors while setting the price to offer in the market. Apple sells most of its products at the same price. However, the company has set different prices for different consumer segments. It targets brand loyal consumers and hardly fluctuates the prices of its products. As mentioned earlier, the company’s products are a bit more expensive compared to similar products that are sold by competitors. However, Apple’s products have many more good features compared to similar products offered by competitors (Besanko et al, 89). This is one of the reasons why Apples products are valued higher than those of its competitors. 3.2.3 Place Place is also referred to as distribution or channel. An organization distributes its products or services to customers through the method. Organizational products can be distributed to consumers either directly or indirectly (Hassan, 55). Indirect distribution refers to the use of intermediaries such as wholesalers and retailers. In the direct method, an organization sells its products directly to customers. As mentioned earlier, Apple is a multinational company with headquarter in California, US. By the end of 2012, Apple had opened around 394 retail stores meant to design, develop and to sell the company’s products directly to consumers. The largest offline retail store is located in London. The company also distributes its products through online resellers such as Wal-Malt, Amazon, cellular, eBay and electronic retailers (Hassan, 56). 3.2.4 Promotion Promotion can be defined as communicating and explaining to consumers about attributes and uses of a product. Usually, promotion encompasses activities such as personal selling, direct marketing, public relations, sales promotion and advertisement. Promotion enables consumers to become familiar with a product and its value. As Besanko et al explained, for a promotion activity to achieve success, communication to potential clients must be effective (Hassan, 55). It is also essential for the promoter to get feedback in order to use the information in analyzing and improving promotion strategies in the future. Information on the customer’s perspectives can also be valuable in improving products to suit their needs. Apple utilizes numerous promotion methods to lure consumers to purchase its products. The company’s products are advertised through the internet (social media, website, pop up ads and banners) and by means of store advertising, magazine ads and TV commercials. The company also engages in marketing campaigns (such as “the iPod people” and “Think different Campaigns”). Apple has also been promoting its products through giving offers, (such as iWork software, and “mobile me” promotions). Apple’s promotion strategy has been effective in attracting more customers to purchase its products. Figure 3.0 Strategy of Promotions Source: Lamido (2013) 4.0 Summary of SWOT Analysis The following are the strengths, weaknesses, opportunities and threats of Apple Inc based on the current review Table 1.0 Apple’s SWOT Analysis Strengths Use of product development and proliferation strategies Superior quality of products Excellent marketing mix Weaknesses High priced products Opportunities Technology Advancement leading to new markets Fast growing industry Threats High level of competition in the industry Substitute products Apple’s SWOT analysis shows that the company has more strengths than weaknesses. This shows that the current business and marketing strategies adopted by the company are favorable to growth. The company can offset the impact of threats by utilizing the available opportunities. The study shows that the company has potential for growth in the future. 5.0 Conclusion  Business and marketing strategies are some of the key factors that influence the performance of a business organization in short- and long-terms. Thus, the business and marketing strategies adopted by the organization are among the significant factors that should be considered by an investor while making investment decisions. Apple adopted strategies such as product development and product proliferation approaches to enable market penetration and maintaining a competitive advantage in the global markets. The company is likely to maintain a leadership position in the industry as long as it continues to apply the same procedures in the future. However, it will also be necessary for the company to put more efforts in informing consumers regarding new and innovative products. Apple’s current marketing strategy is highly efficient. The combination of its segmentation, target market and positioning strategies has contributed immensely to the success of the company in its industry. The current marketing mix for the company has also contributed to the achievement of the company. The company can achieve a higher level of success and maintain its leadership position by capitalizing on its strengths, utilizing available opportunities and addressing the current weakness. Generally, the analysis shows that, with the current trend, Apple Inc is likely to continue performing well in the future. Thus, an investor can consider it as a potential candidate while making investment decisions. 6.0 Work cited Besanko, David, Dranove David and Shanley, Mark. Economics of Strategy. New York, NY: Wiley & Sons, 2009. Hasan, Rajibul. Apple Inc. Munich: GRIN Verlag, 2013 Katie, Joseph. Critical marketing audit: The case of Apple Inc. Munich: GRIN Verlag, 2013. Lamido, Kamal. Analysis of Apple Inc. Marketing Mix. 28 Sept. 2013. http://www.academia.edu/2647488/The_Analysis_of_Apple_Inc._Marketing_Mix . 28th Oct. 2013. O'Grady, D. Jason. Apple Inc. Westport: ABC-CLIO, 2009 Zylla-Woellner, Judith . Corporate Strategy for Apple Inc. Company. Munich: GRIN Verlag, 2013 Read More