Brand Design and Value - Essay Example

?Brand Design and Value Introduction Marketing, in the twenty first century, plays a crucial role for the success of businesses as it attempts to create a niche in the global market (Balmer & Gray 2003). This situation has become more serious in the face of changes happening in the market, which results into tougher competition among organisations (Olins 2003). In view of this, marketing adapts to the challenges of change as it moves away from traditional marketing towards its more contemporaneous ideals (Schmitt 2000). Traditional marketing views the field as an exchange transaction that is valued because of the benefits incurred and the moment that the exchanged is concluded, there is an assumption that equilibrium is attained. However, twenty-first century marketing is affected and transformed by the following: globalisation, rapid developments in information and computer technology, digital platforms of communications, the development social awareness of corporations, and the recognition of consumers’ rights and the change significance of consumers in marketing (Domegan 2008; Elliot & Percy 2007; Hastings &McDermott 2006; Kotler et al 2006). Since, contemporary marketing places the customer ‘at the heart of all transactions’, thus, satisfaction of their needs and adding value to their experiences have become some of the primary drivers for the continued innovation of marketing (Bignell 2002; Schmitt 2000). In this regard, this study will look into one of the most important facets of marketing – brand design and its value to the company. Marketing is not just simple offering of products to the customers. It is primarily geared towards satisfaction of clients’ needs. However, as there are other companies who are producing the same products aiming the same goal of satisfying customers brand becomes a necessary tool. Brand is a name, term, sign, symbol, or design or a combination of these that identifies the goods or of a seller and differentiates them from those of competitors” (Kotler et al, 2006: 312). Moreover, brands also refer to the “tangible and intangible attributes that represent the company and also symbolise the customers’ perception” (Kotler et al, 2006: 109). In this case, brand designs are not just the physical attributions of the brand. It includes the emotional, experiential and cognitive connection that the customers may experience upon the use of the product. In this sense, brand design becomes the conduit in establishing the brand equity and loyalty that has been recognised as profitable for the shareholders and a more definite source of long–term sales (Doyle 2008). As such, this study will look into the impact and value of brand design to a selected company. This is significant as it help in gaining a better understanding of the correlation between brand design and its value. At the same time, it helps identify other possible factors that may influence the relationship between brand design and its value to the company. For this study, Apple is the selected company that will be analysed. The paper will have the following structure. The first part is the introduction wherein a brief discussion of marketing branding and the various influences of affecting contemporary marketing are provided. Likewise, the purpose and structure of the research are also given. The second part will deal with an overview of Apple while the third section will deal with segmentation, targeting and positioning of the brand. Meanwhile, the fourth part will undertake an evaluation of brand design and the fifth part will address the question ‘how important is the brand for the business. Finally, the last section will contain the conclusion and recommendation of the study. Apple Inc: A Brief Overview Apple was founded by Steve Jobs, Steve Wozniak, and Mike Markkula on 1976 and incorporated on 1977. The first products of the company were Apple I, II and III. These products were moderately successful in the market. In 1983, they released Lisa, which was a failure. However, by 1984 the Macintosh was released with its infamous commercial, which was aired in the Super Bowl. Macintosh revolutionised computers as it came to be known as affordable and personal computer (Baca & Rizzo, 2008). In 1986, Jobs resigned as the CEO of the company. During this period, the company suffered a decade of set back with failed CEOs and unsuccessful products. By 1997, Jobs returned as Apple’s CEO and since then, led the company to new heights (Baca & Rizzo 2008). Apple has experienced tremendous growth in computer and mobile technology. With their introduction of iPod, iPad, iTunes, iMac, Mac series and iPhone, the company has proven not only its innovativeness in developing technology, but it also has a knack for creating incipient needs. This approach has proven to be very effective since by 2010 Apple is ranked as top-valued technological company with market value of over $ 290 billion compared with Microsoft’s $210 billion (Helft & Vance 2010). Apple Inc., together with subsidiaries, designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players, and sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Its products and services include iPhone, iPad, Mac, iPod, Apple TV, the iOS and Mac OS X operating systems, iCloud, and various accessory and support offerings, as well as a range of consumer and professional software applications (www.yahoofinance.com). Furthermore, in the last three years, the company has been experiencing tremendous growth. The table below shows the income statement of the company in the past three years. It is observable that there is continuous profitability in the company. In fact, it has been predicted that with the current performance of Apple in the market, will continue in the next five years (www.businessweek.com). Table 1. Apple Inc.’s Income Statement from 2009 - 2011 Period Ending Sep 24, 2011 Sep 25, 2010 Sep 26, 2009 Total Revenue 108,249,000 65,225,000 42,905,000 Cost of Revenue 64,431,000 39,541,000 25,683,000 Gross Profit 43,818,000 25,684,000 17,222,000 Operating Expenses Research Development 2,429,000 1,782,000 1,333,000 Selling General and Administrative 7,599,000 5,517,000 4,149,000 Non Recurring - - - Others - - - Total Operating Expenses - - - Operating Income or Loss 33,790,000 18,385,000 11,740,000 Income from Continuing Operations Total Other Income/Expenses Net 415,000 155,000 326,000 Earnings Before Interest And Taxes 34,205,000 18,540,000 12,066,000 Interest Expense - - - Income Before Tax 34,205,000 18,540,000 12,066,000 Income Tax Expense 8,283,000 4,527,000 3,831,000 Minority Interest - - - Net Income From Continuing Ops 25,922,000 14,013,000 8,235,000 Net Income 25,922,000 14,013,000 8,235,000 Preferred Stock And Other Adjustments - - - Net Income Applicable To Common Shares 25,922,000 14,013,000 8,235,000 In addition, it is also expected that the company’s performance will be higher than the industry’s performance in the next five years. This shows that the company has a solid footing in terms of profitability. In this condition, it has been maintained that the continued strong performance of Apple in the market is due to whole gamut of factors that are working together, not only establishing the niche of Apple in computer and mobile industry, but also securing and sustaining it in the next few years (Grossman 2010). In terms of Apple’s rank vis-a-vis its competitors, according to Quarterly Mobile PC shipment and Forecast Report, Apple has dominated the market in 2011. Rank Brand Units Share 1 Apple 13.6 21.1% 2 HP 9.7 15.0% 3 Dell 7.5 11.6% 4 Acer Group 7 10.9% 5 Lenovo 4.8 7.5% Source: Display Search Quarterly Mobile PC Shipment and Forecast Report Data presented shows that Apple’s approach to the market is successful. Apple’s feat is remarkable since there is global economic slump and yet, Apple continues to dominate the market despite the fact that Apple products are considerably expensive. In this condition, the next important step is understanding the market position of apple by looking into the traditional four Ps of marketing- price, product, place and promotion. Apple and 4Ps of Marketing As mentioned earlier, the price of Apple is considerably higher compared with other similar products in the industry. However, it has been observed that the premium price of Apple, although considered as one of the company’s weakness, has been used as one of the strategies of the company. Apple’s higher price entails the idea that Apple will not join the bandwagon for cheaper computer and mobile products. Instead, since the company is relying on its excellent quality, high customer satisfaction and superlative service, it has taken the competition to a different level – premium quality, innovation and value. In addition, it has been observed Apple spends for its R&D. As such, some claims that it is the reason why Apple commands such a high price. However, the high price of Apple is not a deterrent for its loyal customers in purchasing and acting as evangelisers for the product. Since, Apple loyal customers’ experience of Apple is worth its price. Since Apple ‘does not settle for anything less than excellence’ (The Cooks Doctrine in Apple, 2009), the product is known for its very high quality. The company does not compromise quality with quantity and because of this; the market is assured that when they purchase any products of Apple they will not only be satisfied, but that it will perform beyond their expectations. Furthermore, in case, the customers find some concerns with their apple products, the company addresses the issue right away. These show how attuned Apple is with the needs, concerns and demands of the customers pertinent to their products. Below is one of the commercial ads of Apple’s ‘Think Different’. This is perceptible in the products of Apple. For example is the case of iPad. Grossman (2010) claims that when Steve Jobs was asked what is the function of iPad when it was first launched, did not know what specifically iPad is for. This innovation, in fact, has created an incipient need among the consumers. Incipient need is a kind of need that people are not aware until they have been made conscious about it (Doley 2008). In the same way, iPhone has transformed the way mobile phones perform. It has changed mobile phones into smart phones providing users with touch screen, proper mobile browsing, third-party applications and decent music (Kobie 2009). These innovations adopted in the products of Apple have created a platform wherein company turns into reality the saying ‘Think Different’ while keeping the quality of the products that they sell at top quality. As such, there is no close substitute to the products of Apple making its product position rock-solid. In terms of placement, another innovation of Apple is the manner in which the product is displayed or presented to the customers. By establishing stores that have the feel of a boutique wherein the customer can actually try to experience the product, Apple has created a new meaning for customer experience. It creates a sense of closeness to the product. In effect, when many companies use the cyberspace to reach customers, Apple has used the physical space to enhance the technological experience of their customers. Finally, when it comes to promotion, Apple is iconic. It is known for creating provocative advertisements that does not only catch the idealism and ethos of the company, but also captures the imagination and ideologies of its consumers. This is very significant since the contemporary market has a segment that is known as ethical buyers. These are people who are willing to pay an extra price for the commodities or products that they are using as long as it supports the ideology that they are upholding (Memery et al. 2006). Using direct but simple promotions like the pictures shown drives the vision, personality and ethos of the product and the company to its consumers, which includes ethical buyers, techies, and other potential clients. As such, looking at the segmentation or target of Apple products, one can observe that the company does not create a one size fits all technological gadgets. Rather, they create products depending on the needs and demands of the market (Schmitt 2000). This differentiation has ushered in not a homogenous market, but a homogenous experience of Apple starting with the iOS based apps. As Apple continues to respond to the demands of its cutomers and puts at the centre the needs of their clients and come up with unique innovations that addresses their concerns, loyal customers of Apple continue their supporty for Apple products and the lifestyle that is agttributed to it – unique, anti-commercial behaviour, non-conformist and artistic. In addition, Apple gains much out from proetecting its loyal custromers, its community because keeping loyal customers entails lower costs, ensures sales, requires less promotion, and they act as evangelists for the company – free sales persons (Doley 2008; Kawasaki 1990; Kotler et al. 2006). An Evaluation As Apple continues to dominate computer and mobile industry, an important factor that is perceptible in the marketing startegy of Apple is the manner in which it communicates with the customer its corporate identity, its product (Balmer & Gray 2003). The company is effective in lsitening to the expericnes of its customers that it continuously transfroms technological expericnes of its users. This is achieved, not just by pure creativty and innovateiveness, but by listening to that which which is not explicitly said by the consumers. By being attuned to what their customers’ need, the Apple provides the paradigm wherein they offer the customers the services that they need when they want it. It is doing the right thing combined with doing things right that serve as the fundamental principle that guided the marketing stratgey and approches of Apple. This ethos has become so strong among its users that Mac users have created an emotional connection and relationship both with the products and other users of Apple. As such, Apple users speaks of Mac community, Mac life-style, and Mac religion. In other words, thay have formed a Mac cult that are made up of loyal customers who are proud in using Mac not only because of the ideals it represents, but also of the revolutionary image it signifies and the idealism that it concretely manifests. In this regard, it can be inferred that Apple Inc has succesfully and strategically use expriential marketing not only in developing creative and innovative products that can respond to clients’ needs, but it has also paved for the development of brand loyalty built on trust, emotional connection, cognitive relationship, and confidence as Apple continues to develop excellent products. In this sense, the strong connection that customers have with Apple products is the fundamental strength supporting the brand strategy, marketing startegy and economic strategy of the company, thus, enabling it to sustain its growth and hold in the market. However, as Apple represents the vision of sophistication in simplicity, creativity, innovativeness, revolutionary thinking and making changes by using Mac, it highlights the ideal that it is not production that creates the identity, but it is consumption of the commodity or the product that creates the identity (Bignell 2002). This is important because as Apple draws attention to their products, they established an ideal that is beyond the product. So much so, that they have created followers who are no longer concern with the product, but only with the lifestyle that goes with an Apple product. In this regard, the distinction between the product, the brand and the identity of the company becomes blurred. This blurring of the lines between the brand design and the identity of the company opens the possibility of losing the very ethos that drives the success of the company. Moreover, if the blurring of the lines will continue, it may open the possibility of Apple becoming the norm or the standard in technological developments and no longer the revolutionary force that drives creativity and innovativeness in the industry. In this regard, it can be maintined that the identity and principles in which Apple is known may also become its weakness the moment its customers and supporters lose sight of its vision - innovation and creativity. This scenario has happened in the past when Steve Jobs resigned as CEO of Apple. The Value It cannot be denied that brand design contributes significantly to the economic success, values and attainment of the goals of Apple. This is made possible because of the fact that through brand design the identity, values, ethos, principles, ideals and philosophy of Apple is communicated to the market – both to its loyal customers and to its potential buyers (Balmer & Gray 2003). Futhermore, through brand design, Apple conveys not only the explicit, but it also becomes a concrete affirmation of their trustworthiness, sincerity and truthfulness as they respond to the concerns of their clients and address issues that arise from their products. In this way, they not only keep loyal customers, and attract new clients, but they also persuade socially responsible investors to invest in the company (Doyle 2008). This is essential because being identified as socially responsible opens the positive reputation and investment possibilities for Apple. Finally, brand design is integral to the company because it is through brand design that the company is differentiated, recognised and supported. Through brand design, the product becomes a reality to the customer. The experience is not abstracted from the actuality of the customer, but is combined with the lived life and experiences of the Apple user. In this way, Apple is not just a gadget, but it becomes an expression of self, a way in giving meaning to one’s life. Conclusion and Recommendation Apple’s brand design goes beyond the physical manifestation of what the brand is. It moves towards new meanings,establishing an arena wherein the product, the company and the customer encounters and create a synergy of experiences. In this regard, Apple offers an alternative paradigm wherein brand design and value may meet as both are necessary in sustaining the company in the competitive 21st century global market. Recommendation 1. There is a need to further define brand design in order to maintain a common ground for its understandning the moment it is contextualised among many companies. 2. The significance of brand design cannot be understood in a vacuum. As such, companies should consider internal and external factors inherent in the organisation as they develop their own brand design. 3. Companies may adopt truth and honesty as the fundamental buttress of brand design. (3,026 words) References Baca, R., & Rizzo, J. (Directors). 2008. Welcome to Macintosh. [DVD]. USA: Baca Productions. Balmer J M T & Gray E R, 2003, ‘Corporate identity and corporate communications: Creating a competitive advantage,’ In J Balmer and S A Greyser (Eds) Revealing the Corporation: Perspectives on Identity, Image, Reputation and Corporate Branding, London: Routledge. Bignell J, 2002, Media Semiotics: An introduction, Manchester: Manchester University Press. Davis M, 2009, The Fundamentals of Branding, Switzerland: AVA Academia Publication. Doyle P, 2008, Value-Based Marketing: Marketing Strategies for Corporate Growth and Shareholder Value 2nd Edition, West Sussex: Jon Wiley & Sons. Elliot R, & Percy L, 2007, Strategic Brand Management, New York: Oxford University Press. Grossman, L. 2010. Do We Need the iPad? A TIME Review. 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