International Marketing: Apple Inc - Essay Example

? International marketing: Apple Inc. Table of Contents Executive Summary page 3 2. Introduction/background page 4 3. Current Scope and scale of international marketing tactics and strategies of Apple : page 6 4. An outline for the future development of international marketing of Apple : page 11 5. Conclusions : page 15 6. References : page 16 Executive Summary International business and marketing are growing day by day because of the favourable business climate existing everywhere at present. The entry of globalization has revolutionised and rewrote many of the existing traditional business principles and concepts. Cross cultural or cross border business is the order of the day at present. Business strategies such as outsourcing and offshoring are getting more prominence now because of the extremely globalized business world. Domestic marketing and international marketing are extremely different activities even though the core concept of both remains the same. The marketing techniques used successfully in one country may not be successful in another country or region because of the differences in cultural, social, economic, political and legal structures between countries. Because of the huge advancements in technology and subsequent evolutions of new business concepts, traditional marketing principles are getting meaningless. It is difficult to canvass current consumers with the help of traditional marketing techniques. Updated or modified marketing strategies are necessary for an international company to market its products successfully in the market. Apple Inc. is a reputed company in consumer electronics business. It is the most valuable technology company in the world at present and the second largest company in the world in market capitalization. One of the major success factors of Apple Company is its innovative international marketing strategies. Instead of trying to market their products with a standardized marketing technique, Apple used customized marketing techniques for each country in which it operates. The success of Apple Company in international marketing is a lesson to all other organizations which have aspirations in doing international business. Introduction/Background “Apple was founded in Cupertino, California on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne to sell the Apple I personal computer kit” (Apple Inc. History, 2008). During the last 35 years of history, Apple faced lot of challenges and opportunities. Even though it was starred as a computer company, at present it has taken out the word computer from its name in order to change its image from a computer company to a company interested in consumer electronics business. Currently Apple Computers is known as Apple Inc. Krazit (2008) has pointed out that the Wall Street is expecting Apple to report “earnings per share of $1.07 on revenue of $6.9 billion in 2008”. In his opinion “Apple is a company which is under-promising and over-delivering” (Krazit, 2008). At a time when most of the other American companies struggled because of recession, Apple seems to be one company which escaped from the injuries of global recession. “ In the 1980’s and 90’s, many people thought that Apple Company may collapse because of the huge competition it faced from Microsoft. The introduction of Windows operating system by Microsoft gave upper hand to Microsoft and the popularity of Apple products started to decline. However, Apple bounced back during at the beginning of 2000 with the introduction of its popular “i” series products. The ability to define and develop new products and services and deliver them to market is the fundamental source of value creation in companies and an important enabler of competitive advantage” (Bordia, et al, n.d, p.1) Microsoft was the arch rival for Apple Company at the time of its entry into the market. At present, many other companies such as Samsung, Amazon and Google are causing severe challenges to Apple Inc. apart from Microsoft. The business battle between Apple and Microsoft is often labelled as the battle between Steve Jobs and Bill Gates. It should be noted that Steve Jobs was instrumental in Apple’s success whereas Bill Gates did the same for Microsoft. These two intellectuals mesmerised the modern technology world because of their ability to think differently and to introduce new products into the market. Even though Steve or Apple suffered lot of setbacks initially from the hands of Gates of Microsoft, at present they are succeeded in pushing Microsoft far behind. Kim (2010) has pointed out that Apple is currently the second largest company in the world in market capitalization and also the most valuable technological company in the world (Kim 2010). The battle between Apple and Microsoft is still going on even though Apple currently holds upper hand. The introduction of “i’ series products such as iPhone, iPod, iPad, ituyne, iMac, iTouch etc at the beginning of the twenty-first century gave Apple upper hand in the consumer electronics industry. The phenomenal success of “i” series products in the market is often cited as the outcomes of carefully formulated marketing strategies by Apple and that is why I took Apple as the company to know more about the strategies of international marketing. It should be noted that Steve Jobs is no more and the business world is looking anxiously about how Apple is going to fill the gap of Steve. No other entrepreneur in the world can currently claim the same charisma of Steve; not even Bill Gates. Under such circumstances, Apple’s business and marketing strategies are analysed through microscopes at present. With the introduction of Galaxy series of tabs and mobile phones, Samsung is currently causing stiff competition to Apple in the market. The monopoly of iPhone in the smart phone market is challenged by Samsung now. Under these circumstances, business pundits are anxiously looking at the future moves of Apple Inc. Krazit (2008) has pointed out that the Wall Street is expecting Apple to report “earnings per share of $1.07 on revenue of $6.9 billion in 2008”. He has also mentioned that “Apple is a company which is under-promising and over-delivering” (Krazit, 2008). Timmer (2009) has mentioned that “Apple’s revenue crossed $ 10 billion mark in the first quarter of 2009 which was a big change from the last quarter $ 7.9 billion mark” (Timmer, 2009). Kim (2010) also expressed similar opinions. “Apple's market capitalization - the sum of its outstanding shares multiplied by its stock price - finished at $222.07 billion, ahead of Microsoft's at $219.18 billion Wednesday, May 26, 2010” (Kim, 2010). Mac OS has grown from 6.38 in 2007 to 7.57 in 2008 and 9.63 in 2009 whereas globally it grew from 2.5 in 2006 to 3.4 in 2008. Apple on July 21, 2008 announced their financial results for its fiscal 2008 third quarter ended June 28, 2008. The Company posted revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share (Apple Reports Record Third Quarter Results, 2010) As a student, I found all the above figures as outstanding, especially in the recession period. It should be noted that most of the other American companies struggled to survive during the recession period whereas Apple is maintaining a good growth records even at recession period. These facts encouraged me to select Apple as an ideal organization to learn more about international marketing. Current Scope and scale of international marketing tactics and strategies of Apple China is the largest market for Apple after America. It should be noted that China is the most heavily populated as well as most rapidly emerging economies in the world at present. Apple knows this fact well and did everything possible to exploit Chinese market as much as possible. Apple already established business alliances with many of the mobile companies in China. Currently, China Unicom is the only official iPhone carrier in China, but numerous reports have indicated both China Telecom and China Mobile will gain access to Apple's handset by the end of 2011. China Mobile is the largest carrier in the world, with more than 611 million subscribers (Oliver, 2011). Apple has already established many stores and business units in China and India like overseas countries which are developing more rapidly than any other country in the world. It should be noted that western market is not so promising for Apple products because of the declining economies whereas Asian region is promising. So, Apple is currently shifting its focus from the west to east as part of their international marketing strategies. Apple gives more emphasize to brand building activities. It realised that the name Apple Computers is no more helping them to boost its international reputations as a company in consumer electronics. So, Apple decided to change its name from Apple computers to Apple Inc. in 2007, as part of their brand building strategies. This change in name was inevitable since Apple shifted its focus from computer business to consumer electronics goods. It should be noted that brand value plays an important role in international marketing. Apple has realized that the word computer in its name may send wrong signals to international customers. For example, a layman may consider Apple as a computer company rather than a consumer electronics company and may not purchase products other than computers from Apple. In order to avoid that, Apple changed its name. Another major change implemented by Apple as part of its international marketing strategies and brand building is the log change. Multicolour Apple logo has given way for single colour logo as part of the internationalization of business. (The Evolution and History of the Apple Logo, 2009) Suman, (2010) has pointed out that a logo definitely has to speak for the organization. In his opinion, allowing the consumers to brainstorm and answer the unsaid part will help the company immensely as far as logo design is concerned (Suman, 2010). It should be noted that Apple’s logo was carefully designed to catch the attraction of the people. The company name and the logo shape resemble a familiar fruit to the customers. Apple is one of the favorite fruits to people all over the world. Apple realized that once the name of the company is identified through its logo, customers will develop more attraction towards its products. Apple Company has cleverly taken out a portion of the apple from its logo in order to create a feeling that somebody bites it. They wanted the consumers to think about the bitten portion more and more so that their logo will be stored more deeply in the minds of the consumers. “With the release of the iMac on August 15, 1998, Apple was able to put to rest some its past failures” (Dougherty, 2010).Apple has incorporated letter “i” to its new products which helped them to generate feeling among the customers that Apple products are leading them towards an imaginary world from the real world. it should be noted that iPhone was the first touchscreen phone in the market iPad was the first tablet PC in the market. Products such as iTune, iTouch, and iPod also led the customers towards a new world of experience. Current customers are not much bothered to think twice before purchasing an “i” series product. In other words, the letter “i” has mesmerized the consumer electronics business world. “i” series products are attracting people all over the world because of the huge charisma generated by “i” series products from Apple. Apple was focused only in the computer business earlier and therefore they considered Microsoft as their major competitor. However, Apple realized that computer business alone may not help them in doing international business successfully. So they diversified into other areas of consumer electronics business. The diversification of business brought many new competitors into the picture. For example, Samsung is currently causing stiff challenges to iPhones in international market. Samsung’s Galaxy S2 is believed to be the smartest phone in the market at present. iPhone was the market leader in smartphone category earlier. Now Apple is developing iPhone 5 with extra facilities and features to counter the threats from Samsung. The ability to read the market pulses and changing business environments are the unique features of Apple. It should be noted that Microsoft has actually introduced tablet PC’s much before than Apple. However, those tablets failed to capture the market because of the untimely introduction. In other words, tablets and gadgets were not a necessity a couple of decades before whereas at present it is a necessity because of the huge advancements in technology and changes in living standards. Apple was successful in feeding the consumers with the right product at the right time which is the major success factor of their business. “I think, therefore iMac”, the slogan introduced for the selling of iMac computers was an innovative advertising strategy” (Imac Computer: I THINK. THEREFORE, iMAC, n.d). Advertising is an area in which Apple introduced many innovative concepts. TV ads, print ads, and internet ads were used judiciously by Apple to attract customers towards Apple stores. Instead of using unique marketing strategies all over the world, Apple used different marketing strategies at different parts of the world to attract the customers. Apple knows that even for same product, different marketing strategies are necessary in international market. Markets are different politically, culturally, economically and legally and therefore different marketing strategies are necessary everywhere. For example, David Beckham could be a good brand ambassador for Apple in European countries whereas he may not be much effective in Asian markets. In Asian markets, people like Sachin Tendulkar or Jackie Chan could be effective brand ambassadors. Apple knows this fact very well and they are using the services of domestic celebrities for international marketing activities. “Apple's "I'm a Mac/I'm a PC" ads have been widely regarded as one of the company's most effective campaigns” (Reisinger, 2010). Apple stores all over the world are decorated uniquely and beautifully to attract customers. These stores have the ability to convert ordinary visitors into purchasers because of the attractiveness of the stores as well as the abilities of the sales people. Newham (2007) has pointed out that “Innovation is what gives life to a business in a market economy. The businesses that never get going or if they do, then fail or fail later under pressure of a changing economy or marketplace have all failed to innovate appropriately” (Newham, 2007). It should be noted that currently no other organization in the world has introduced wide range of innovative products as Apple did. Many of the so called new products entered the market were mere modifications of existing products. However, products such as iPhone, iTune or iPad were completely new products when they entered the market. “Apple scored a runaway hit with its digital music players (iPod) and online music store (iTunes). Other products include mobile phones (iPhone), servers (Xserve), wireless networking equipment (AirPort), and publishing and multimedia software” (Apple Inc.Cupertino, CA United States, n. d.). In fact Apple delivers more than what it promises and therefore consumers all over the world have blind trust upon Apple products. It should be noted that Apple develops new products secretly and even the employees of Apple may not get enough information about the new products at the time of its development. In other words, Apple was successful in surprising the world with their new products and most of its new products delivered more than what was expected of it. In short, Apple believes in market leadership rather than followership which helped them to establish strong brand awareness among the customers all over the world. An outline for the future development of international marketing of Apple Even though Apple products tasted big success in China, it failed to attract Indian customers. India is currently one of the rapidly developing countries in the world and many people think that India will become an economic superpower in near future itself. However, Apple’s marketing strategies were failed to convince the Indian customers properly and Apple should redefine its marketing strategies for Indian market in order to achieve its targets in future. Some people argue that the heavy prices of Apple products are the major reason for its failure in Indian market. However, it should be noted that Samsung and Nokia like companies are selling their expensive products easily in Indian market. Unlike the initial argument that it was the steep price tag that queered the pitch for iPhone in India, many analysts, say there is more to the debacle than just the pricing. “Besides a very high price tag, one main reason behind iPhone’s failure in India is that there was a very weak link as far as consumer confidence was concerned,” says Anshul Gupta, senior research analyst, Gartner Inc., an information technology research and advisory firm. Apple’s rivals in India, industry observers and analysts say that a flawed sales and distribution model and communication failure were the biggest reasons behind iPhone’s debacle (Mehta & Ghosh, 2008). Apple should focus more on Indian markets in future to attain its business goals. Majority of the prominent companies all over the world are currently targeting India as their future destination. Apple cannot stay away from fortune exploration in Indian soil. Sustainability of business is a popular term in the business world at present. In other words, all businesses organizations should stay away from activities which damage our environment. “Apple products are designed to use less material, ship with smaller packaging, be free of toxic substances used by others, and be as energy efficient and recyclable as possible” (Apple and Environment, 2011). “Apple collected 13 million pounds of e-waste in 2006, which is 9.5% of the products sold 7 years ago. Apple is projecting an increase in this rate to 20% in 2008, and 30% by 2010” (Steve Jobs Issues Statement on Apple’s Environmental Commitments, 2007). Majority of the Apple products are using integrated circuits, batteries and semiconductor chips which can cause huge damage to the environment if disposed unsafely. Apple should improve its recycling abilities so that none of its products may cause any damage to the environment in future. Apple should make use of only environment friendly materials while producing goods in future. Corporate social responsibility is another area in which Apple should focus more in future. Corporate social responsibility means the commitment of an organization towards the community in which it operates. In other words, all the organizations operating in a community are exploiting the community resources in one way or other. So, every organization has a responsibility to give something in return to the community in which it operates. In most of the countries in which Apple operates, they are keener in providing some assistance to the community. Another major challenge Apple may face in future could be the absence of charismatic leadership. It is difficult for another leader to build same charisma as built by Steve Jobs. In fact Apple’s international marketing strategies were revolved around the charismatic leadership of Steve in the past. Steve is no more and Apple should find suitable solutions to fill the vacancy left by Steve. It is often said that Apple failed to develop a dynamic middle management team during Steve era. The absence of a dynamic middle management team could be more visible in future. Apple should do everything possible to build and maintain a dynamic management team at the top and middle level. Even though Apple is currently the most valuable technology company in the world, nothing can be taken as granted. Microsoft is currently looking to make partnerships with other companies to regain its lost position. Samsung, Nokia Google and Motorola are raising stiff challenges to Apple’s business ambitions. Apple should develop suitable strategies to counter the threats effectively. Apple should reduce its production costs as much as possible to fix lower prices to its products and to counter the threats from competitors. Outsourcing and offshoring are some of the business strategies implemented by many of the organizations for exploiting cheap labor markets such as India, China etc. it should be noted that labor costs in these countries are extremely low compared to that in America or Europe. Moreover, skilled manpower is surplus in these countries and therefore Apple cannot formulate its future business strategies without having a close look at options like outsourcing and offshoring. “Before becoming involved in exporting, an organization must find the answers to two questions: Is there a market for the product and How far will it need to be adapted for overseas markets?”(Marketing theory, 2011). According to economic theory, supply should be given based on demand. In other words, Apple should evaluate the market conditions properly before entering a foreign market. For example, if Apple tries to sell its products in underdeveloped and politically instable countries like Pakistan or Somalia, they will never taste success. On the other hand countries like Korea, Brazil, Russia are emerging markets along with India and China and Apple can formulate its future business strategies based on the needs of these markets. In short, economic stability and political climate of a country should be considered seriously by Apple before entering in that country. “If a company offers a product, which is undifferentiated between any of the markets to which it is offered, then standardization is taking place. The benefit of standardization is the ability to compete with low costs over a large output”(Marketing theory, 2011). Culture plays an important role in the consumer decision making habits. “Culture includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man person as a member of society” (Perner, n.d). According to Geert Hofstede, Power/Distance (PD), Individualism (IDV), Masculinity (MAS), Uncertainty/Avoidance Index (UAI) and Long Term Orientation (LTO) are the five cultural dimensions (Hofstede's Cultural Dimensions, 2011). In other words cultural dimensions in one country need not be the same in another country. Language, Environment, Social set ups, legal structure, verbal and nonverbal communication channels and Authority levels in different countries could be different. Conclusions International marketing is not easy as domestic marketing. Organizations should consider various things such as the political, economic, cultural legal, environmental and social aspects of a country before entering that country for international marketing. Apple has many positives in its international marketing strategies. However, it should improve its marketing strategies further to meet the expectations of the ever changing global consumers. References 1. Apple Inc. History. (2008). 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