Corporate Responsibility and Marketing Strategies of Apple - Case Study Example

CORPORATE RESPONSIBILITY AND MARKETING STRATEGIES OF APPLE Table of Contents Introduction 3 Ethical and Corporate Responsibility of Apple 3 Marketing Strategies of Apple 5 Customer response towards ethical increase of pricing 7 Recommendations 7 Conclusion 8 References 9 Introduction Apple Inc., headquartered in Cupertino, California, is best known for its computers and other electronic gadgets like iPhone, iPad, etc. Apple enjoys the fifth position in the Fortune 500 list with a market valuation of $479069 million (Fortune 500. 2014). According to the Interbrand Best Global Brands report (2014), Apple is the worlds most valuable brand; with $118.9 billion valuation (Elliott. 2014). The company was co-founded by Steve Jobs in 1976 and after him Tim Cook over took as CEO. This paper will attempt to focus on the corporate responsibilities and Marketing strategies of Apple. Ethical and Corporate Responsibility of Apple Apple follows the highest standards of social responsibility and ethical conduct and also wants their suppliers to do the same. The business conduct of Apple states four primary practices: Honesty, Respect, Confidentiality and Compliance. All business dealings should be conducted with honesty and ethics. All the co workers in the entire management should be treated with respect. Confidential information about the company and its customers must be protected. All the business decisions should comply with applicable laws and regulations. Apple practices highest standards of ethics in all its endeavors. The employees must not involve in any types of corruption, bribery, extortion in order to obtain any advantage. All their business activities should be recorded in details and be disclosed without any alterations. Anonymous complain management mechanism should be implemented to help workers report about workplace grievances. All intellectual property rights and confidentiality of customer information should be respected. The suppliers of Apple are required to create safe working environment for the workers, treat them with respect and dignity and use environmental friendly practices, wherever Apple product are made or their services are provided. To assess the compliance to these codes of conduct, Apple performs surprise audits to the supplier units and the supplier is found to violate the standards, it will jeopardize the business relationship. According to the Supplier Code of Conduct, the supplier should not discriminate any worker on the grounds of age, disability, gender, race, religion, sexual orientation, etc. The work place should be free from all types of harassments and threats. Suppliers must ensure that all the workers are working on their own free will. There shall be no under aged labor in the factories or in any process of the operation. Legal juvenile workers should not be given tasks that can put their health and safety at risk. The working hours should not cross the maximum of 60 hours per week, including over time. The supplier must eliminate all forms of safety hazards in the work process. The management should be prepared for all sorts of potential emergency situations in the work place. Apple is also committed to protect the environmental interests. Suppliers shall dispose all the hazardous substances by following the legal, systematic and standardized approach and also they shall reduce water wastage as much as possible. Apple also encourages its Suppliers to indulge in social and economic development in the community in which they operate. The supply chain of minerals should be managed in accordance with the OECD due diligence guidance. However in certain incidents are contradictory to Apple’s practices. Apple and Samsung have been fighting a patent war for quite some time now. Both the companies had filed law suit against each other on the grounds of copyright infringement. It is unethical for both the companies to act in such a manner (THE WEEK. 2014). In 2011, the work place environment was so miserable that workers started committing suicide by jumping off the building. The workers were woken up at the middle of the night for briefing and were subjected to severe work pressure. The work overtime was increased by almost three times. To stop the suicides, Apple had put nets below the building to catch falling workers, but it did not improve the worker-employer relation. In July 2013, Pegatron, one of Apple’s suppliers was accused of violation labor regulations. It was alleged that Pegatron factories were violating a lot of Chinese laws and even the standards of Apple’s own code of conduct. The work time often exceeded Apple’s benchmark of 60 hours a week limit, and some of the employees had their salaries withheld. After 2011 suicide incidents, Apple has made a lot of changes in their work place environments and made amendments in their code of conducts. In response to the Pegatron issue Apple replied that if their audits found that workers were underpaid or their salaries are withheld, they would compel Pegatron to pay them in full (Campbell. 2013). Marketing Strategies of Apple Apple is known for its uniqueness, both in terms of product design as well as brand image. Steve Jobs believed that the customers hardly know what they want and often quoted Henry Ford, ‘if customers were to ask what they want, they would say faster horses.’ He made Apple to be the trend setter, by introducing of something unexpected. Eventually the marketing strategies of Apple have changed after Steve Jobs’ death. Jobs wanted to cater to a much narrower and niche market with a short product line. This decision has led to high brand valuation of the company. The products gained high aspiration value for their premium nature. Due to a very narrow target market, the revenue structure was not so appealing. After Tim Cook took over as CEO, he made some changes in the marketing strategies. He tried to cater to a larger customer segment by increasing the product line. Apple has always been criticized for their over priced products and they were out of reach for many. Tim Cook realized that introduction of a low price version of their products will appeal to the mass market and will eventually increase their sales and revenue. The company realized the growing trend of larger screen sizes in mobile phones, keeping that in mind it launched the iPhone 6 and 6 plus. The company has also recognized the growing trend of smart watches and other wearable gadgets. This has led the introduction of the Apple Watch (Apple. 2014). Though smart watches have been dwelling in the market for few years now, but Apple has introduced their smart watch with a completely different value proposition. Recently several health monitor applications have been integrated in the iOS to keep the customers at prime of their health; as a result it had added more value to its products (Smith. 2014). Today where every company wants their communication to stand out in the minds of the customers, Apple has successfully created their marketing communication that creates top of the mind brand recall (DeMers. 2014). Unlike other companies who bombarded the customers’ brains with a lot of information which is hard to remember, Apple tried to focus on making the customer’s decision making process simpler. The research conducted by CEB showed that an advertisement with a simple and minimalistic approach has resulted in 86 % more sales than the ads which are not (CEB. 2012). From its television commercials to billboard ads, all of them maintain the same simplicity. It focus on the decision making process of the customers, not on the product list or its specifications. The television commercials speak how Apple products can improve their lives and not what the product is made of. The communication only talks about the bare essentials in a language which is easy to understand for everyone. Customer response towards ethical increase of pricing In order to ensure employee welfare, an increase in product price can lead to various situations for apple. Considering the fact that majority of the target consumers of Apple are from niche segment, the pricing is not the sole decisive factor for product purchase. However, increase in price of their products can also hamper the prospects of market expansion of the brand. If Apple is able to justify the increase in price and communicate it to their consumer base, the reactions of niche segment may be supportive. On the other hand, the potential new customers not belonging to the high income group can be demoralized by increase in price. Judging the situation, it can be advised that Apple should rather design a different strategy for gathering funds for employee welfare and not by increasing the pricing of the products. Recommendations In order to build a competitive advantage over its rivals, Apple must cater to a wider range of target markets and eventually focus on building products for the mass market. This will increase the customer base and also generate revenue. For example Samsung appeals to the mass market by offering a range of devices, from low-end to high-end. As a result Samsung has gained popularity among the mass as well as niche market. The iOS should include cross platform compatibility, that is, iOS devices should be able to communicate with other devices. This will definitely increase the popularity of the iOS devices like iPhone and iPad. Just as android (Google) and windows mobile (Microsoft) devices can communicate with each other seamlessly and have been increasing the brand equity of their respective companies. Conclusion Apple has successfully changed its marketing strategies to cater to larger target group and at the same time retained its uniqueness for which it is best known. Apple enjoys a very high aspiration value and a premium brand image; however the company must not be complacent about its stature. Today the market is crowded by a mass of noisy advertisements and Apple has successfully broken the clutter with its simple and minimalistic ads, which not only promote the “coolness”, as Jobs explained, but also it creates a clear communication to its customers. References Apple. (2014). Apple Watch. Retrieved from https://www.apple.com/in/watch/features/ Apple. (2014). Supplier Responsibility. Retrieved from https://www.apple.com/supplier-responsibility/labor-and-human-rights/ Campbell, M. (2013). Apple supplier Pegatron accused of violating Chinese labor regulations. Retrieved from http://appleinsider.com/articles/13/07/29/apple-supplier-pegatron-accused-of-violating-chinese-labor-regulations CEB. (2012). To Keep Your Customers, Keep It Simple. Retrieved from http://www.executiveboard.com/exbd/marketing-communications/decision-simplicity/index.page? Chun, R. (2011). CEO Tim Cooks greatest opportunity. Retrieved from http://www.imd.org/research/challenges/corporate-social-responsability-apple-opportunity-rosa-chun.cfm DeMers, J. (2014). Heres The Simple Secret To Apples Marketing Success. Retrieved from http://www.forbes.com/sites/jaysondemers/2014/07/08/heres-the-simple-secret-to-apples-marketing-success/ Elliott, S. (2014). Technology Titans Lead Ranking of Most Valuable Brands. Retrieved from http://www.nytimes.com/2014/10/09/business/media/tech-companies-lead-ranking-of-most-valuable-brands-.html?_r=1 Fortune 500. (2014). Apple. Retrieved from http://fortune.com/fortune500/apple-inc-5/ Smith, C. (2014). Apple iOS 8.0.2 arrival means HealthKits apps are finally here. Retrieved from http://www.trustedreviews.com/news/apple-ios-8-0-2-arrival-means-healthkits-apps-are-finally-here THE WEEK. (2014). Apple copyright case could cost Samsung $2bn. Retrieved from http://www.theweek.co.uk/business/apple-vs-samsung/57621/apple-copyright-case-could-cost-samsung-2bn UNIDO. (2007). What is CSR? Retrieved from http://www.unido.org/en/what-we-do/trade/csr/what-is-csr.html Read More