Apple Marketing Strategy analysis - Essay Example

?Vision, Mission and Objectives of Apple Inc Apple is considered as giant in the consumer electronics market and its products are considered as one of the most successful and hot selling items. From a mediocre organization to the best firm in the industry, Apple has made tremendous progress in terms of product innovation and service delivery. It started as a computer manufacturing and selling firm however, it has now transformed itself into a consumer electronics manufacturing firm with product range as wide as TVs, MP3 Players, Smartphones and Tablet Computers. History of Apple Inc Apple started as Apple Computers Inc during 1977 however, Apple rolled out its first personal computer during 1976. Steve Jobs and Steve Wozniak started the company with an aim to manufacture and sell personal computers. As a result of this effort, Apple-1 was introduced during 1976 and Apple afterward continued to build upon its technical superiority and was able to expand its overall range of products. Leadership & Culture Over the period of time, Apple remained under the control of different CEOs however; its glory and success came under the leadership of Steve Jobs – the co-founder of the company who was also later on removed from this position during 1990s. One of the key reasons for the success of Apple as a firm was the leadership style and approach adapted by Steve Jobs. It is argued that Steve Jobs broke almost every principle of leadership and cultivated a new and unique style which allowed Apple to dominate different markets at the same time. Considered by many as dictator and tyrannical, it was the unique vision and micromanagement ability of Steve Jobs which contributed mostly towards the success of the firm (Emerald Group Publishing Limited). It was because of this leadership style of Steve Jobs that the overall culture of Apple evolved as a culture with strong accountability and very clear and swift communication from the top. Most of the decisions were centralized and revolved around Steve Jobs owing to his personal genius and detailed oriented leadership style. Much of the Apple’s culture as well as corporate success was dependent upon the innovative genius of Steve Jobs, his ability to manage everything on his own and enforcement of a strict corporate culture with very little tolerance for dissent and low performance. (Allen) The Mission Statement “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.”1 The above Mission Statement of the firm suggests that Apple has been able to dominate four different market niches in consumer electronics industry i.e. personal computers, digital music, mobile phones and mobile media and computing. Though the mission statement seems vague but it clearly outlines the current ambitions of Apple and its will to dominate different markets at the same time. Exceptional factors contributing to the success of firm One of the key factors behind the success of Apple was the leadership of Steve Jobs under whose visionary presence; firm was able to transform itself into a giant in consumer electronics industry. Steve Jobs expanded the overall vision for the firm and included other product ranges coupled with effective market strategies which allowed Apple to become number 1 firm in the industry. The leadership and corporate culture of firm helped Apple to enforce strict accountability and create further room for creativity and innovation. Such approach therefore resulted into the development and marketing of products which became hot selling due to their innovativeness and ease of use for end users. Apart from this, Apple’s products are considered as of highest quality and durability along with their ability to offer a complete experience to customers. Apple started its music portal with the name of iTunes through which it offers its customers digital music, TV shows and movies. Those consumers who use the products of Apple such as its MP3 player IPOD can directly download the music and movies for immediate play. Similarly, consumers using Apple Iphone and IPAD can also directly download and play music and movies through their devices for immediate play. Such overall experience of using the products therefore provides Apple a relatively upper hand as compared to other competitors. Apple therefore consciously chose the strategy of bundling its products with services it offered through its iTunes store and potentially locked in customers through this strategy. The overall combination of exceptionally high quality products, better and sleek designs, style as well as innovative marketing strategy are some of the exceptional factors which have resulted into the overall success of Apple. External Factors & Strategic Marketing One of the key external factors important for strategic marketing of Apple is its market segment. Apple has been focusing on teens/students and young professionals who need entertainment on the move. The changing preferences of this market segment require mobility of entertainment and data and Apple therefore has accordingly catered to such needs of its consumers. A change in the overall preferences of this market segment therefore can be one of the key strategic variables for Apple to manage. Strategic marketing efforts of the firm therefore are focused upon continuous evaluation of the changing trends and preferences of this market segment and accordingly change the overall product offering to suit the needs. Another important external factor is the fluid nature of technology and subsequently higher probability of the introduction of new products. These characteristics of the industry pose constant threat of introduction of new products at relatively higher pace. In order to manage and retain the existing customer base, Apple therefore has to come up with innovative strategic marketing approach to achieve the same. Considering the wider range of products, Apple’s marketing strategy may also face a challenge in terms of managing the entire portfolio of products at affordable costs. Apple’ s pricing strategy has been unique in the initial years of its new product launch however, subsequent variations are offered at relatively same price indicating that the firm may not continue to charge premium prices for its products due to introduction of new and cheaper substitutes. SWOT Analysis and its Impact on Business Strengths 1. Highest Quality Products 2. Strong Brand Image 3. Large Market Share 4. Strong consumer base in developed countries. 5. Better Supply Chain Strategy (Goldman) Weaknesses 1. Propriety hardware and software which can only be used on Apple’s own systems. 2. Health related issues with the use of products designed and development of Apple’s products. 3. Dictatorial leadership style and organizational culture. 4. Lack of presence in emerging markets. Opportunities 1. May sell low priced editions of its products in developing countries. 2. Apple may enter into emerge markets. 3. Allow other manufacturers to use its operating system to earn more revenue and dominate the software side of the market. Threats 1. Threats of new and cheaper substitutes 2. Legal environment especially anti-trust laws. 3. Declining economic growth and low consumer confidence in developed economies. The above SWOT analysis suggests that Apple can leverage its large market share and stronger brand image to sell in markets where it is not officially selling. However, in order to add much needed flexibility, Apple may have to revamp its organizational culture to capitalize opportunities present in other markets. New and cheaper alternative may continue to threat the market dominance of Apple as new firms are entering into the markets and offering much cheaper products offering same functionalities as offered by Apple’s products. Strategic Uncertainties One of the key strategic uncertainties is the fluid nature of technology which keeps on changing. The rapid pace with which technology transforms itself is relatively hard to manage even for large firms. The shift towards mobile computing and devices has changed the way consumers now perceive personal computing. The emphasis on mobility of entertainment and inability of the existing technology to offer superior experience to consumers therefore may continue to pose greater uncertainties for the firms including Apple Inc. Another important strategic uncertainty related with Apple is outsourcing of Apple’s products. Apple outsources the manufacturing of all its products to vendors mostly located in China. Considering the traditional business environment in China and role and involvement of Chinese government there is a greater uncertainty related with the management of Apple’s supply chain. It has also been reported that the work environment at most of the suppliers of parts used in Apple’s products is not up to the international standards. (Gupta). Such factors therefore create negative publicity for Apple and may reduce its overall strategic significance and market reputation. Apple therefore has to broaden the base of its manufacturing vendors along with diversifying the suppliers in order to lessen the impacts of any strategic mishaps. Another uncertainty is the economic situation in developed markets and low consumer confidence emerging as a result of current economic crisis. Austerity measures as well as mass level unemployment may reduce the demand for Apple’s premium products. Market Analysis & Trends The market depends upon consumer choices as well as advances in the technology used in products and services offered by Apple. One of the key trends is the preference for entertainment on the go where consumers are willing to listen to their music, watch movies as well as communicate while not binding themselves to a specific location. The element of mobility therefore is of important market trend which can force many firms including Apple to further refine their products to suit this need of the consumers. There is also a new phenomenon emerging within the market which is witnessing convergence of devices. New market trends suggest that the consumers are willing to have their TV, mobile phone communication and other media entertainment in one device. Increasingly this convergence therefore requires not only strategic alliances with different other diversified businesses but also require stronger technology resources to produce such devices. Live entertainment as well as availability of functionalities offered by personal computers therefore is the key market trends which will reshape the way different players dominate the market. There has been a considerable focus on the environmental concerns also as countries are inching towards more commitments to implement Copenhagen talks. If such commitments are enforced seriously, the overall cost of production for Apple may increase greatly due to taxes imposed on carbon emission. This will ultimately result into higher costs for the products and may allow other substitutes to take on the position of Apple. Segmentation Strategy Considering the overall range of products offered by Apple, it seems that almost everyone is the customer of Apple. However, Apple has primarily focused on two segments of the market i.e. teens and young professionals. Teens or students require entertainment on the move therefore they prefer to carry their music along with them through products such as Apple IPOD. Teens or students are offered products in different ranges thus catering the affordability element in this segment. Since teens and students are not normally high earners therefore Apple has offered them relatively low priced products such as Apple IPod Nano and Shuffle which are easy to carry and provide the same level of functionality. Apple fulfills the needs of entertainment and computing on the go requirements of young professionals. Products such as Apple IPHONE and IPAD cater to such needs of the consumers through offering mobile communication as well as internet connectivity. IPHONE is considered as the highest selling Smartphone based on touch phone technology offering not only the mobile communication but also other elements such as email, listening music, watching movies, connectivity through social networks etc. Apart from this, Apple also offer both free and paid applications which can run on both the IPHONE and IPAD and offer various utilities to end users. Such applications range from games, productivity software and other wider range of applications fulfilling the needs of target market of Apple. (Bradley) Apple however, need to expand this segment by including customers of senior age also and provide them age specific features to increase the overall demand for Apple’s products. Competitive Landscape The overall landscape of Apple is quite complex and diverse in nature considering the overall range of products offered by it. Apple offers products such as personal computers, tablets, Smartphones, TVs, MP3 players, digital music as well as other allied services. This range of products and services therefore put Apple in competition with many firms at the same time. However, the overall competition is based upon both the hardware as well as on software components of products. In personal computing industry, its direct rivals include HP, Dell and IBM whereas in mobile phone market, the major players include Nokia and Samsung. Though Apple is not much into the personal computer industry considering the traditional complexity of its operating system therefore it is not in stiff competition with firms like HP and Dell. However, introduction of IPHONE has virtually redefined the cell phone industry and Apple has become one of the dominating players in the market beating Nokia, Sony Ericson and Samsung. In tablet segment of the market, Samsung is the largest competitor of Apple as Samsung offers Android base Galaxy Tab in competition with Apple IPAD. On the software side, due to open ended nature of Google’s Android operating system, more and more phone makers are using Android operating system in their Smartphone. Similarly, Nokia has partnered with Microsoft to produce Windows based Smartphones thus further broadening the overall base of competition in Smartphones market. (Bajarin) Differentiation and Competitive Advantage Apple is believed to be using broad based differentiation strategy by offering products of exceptionally high quality and sleek designs. Apple however, combines this product differentiation through personalized services such as iTunes to further leverage its products thus creating a unique differentiation advantage for itself. Exceptionally high quality of products and their durable nature therefore make Apple products as more preferable products as compared to other products. Another important feature of the diversification strategy of Apple is also based upon offering products having larger internal memory to save thousands of movies, songs, books and other media. Other competitors so far have failed to offer devices having large internal memory at such prices and as such Apple has been dominating through selective differentiation on different features of its products. Apple’s IPOD classic offers internal storage of 180 Giga bites which no one in the industry offers thus making IPOD as the virtual king in the MP3 music player market. The primary drivers of Apple’s competitive advantage are the ability of Apple to offer bundled services to its customers. The use of IPOD + iTunes combination provides Apple a unique competitive advantage as Apple attempt to lock it the customers through its iTunes services. Customers are offered ready access to thousands of songs, movies, applications, books, magazines and TV dramas that consumers hardly look for other sources to buy such products. No major competitor of Apple has been able to offer such bundled services as Apple has been over the period of time. Works Cited Allen, Frederick E. Steve Jobs Broke Every Leadership Rule. Don't Try It Yourself. 27 August 2011. 27 Feb 2012 . Bajarin, Tim. Apple's Competitors: Is Anyone Even Close? 28 September 2009. 28 Feb 2012 . Bradley, Tony. iPad Marketing 101: All Business Professionals are Consumers. 8 April 2010. 28 Feb 2012 . Emerald Group Publishing Limited. "Leading personalities: Jobs, Polet and Gunn." Strategic Direction (2008): 17 - 19. Goldman, David. How Apple blocks its competition. 22 April 2011. 27 Feb 2012 . Gupta, Poornima. Apple not turning "blind eye" to supply chain problems: CEO. 27 Jan 2012. 27 Feb 2012 . Read More