Marketing Strategy of Apple - Research Paper Example

APPLE This American multinational corporation listed as AAPL in NASDAQ, was founded in April 1, 1976, in Cupertino, California, United States, known as Apple Computer, Inc for 3 decades after its incorporation in 1977, and later in 2007, changed the name to Apple Inc., due to its expansion from personal computers to consumer electronics. It serves in countries like United States, United Kingdom, Canada, Japan, Australia, India, Switzerland, Italy, Germany, and China. At present, the total employees are around 35000 in more than 250 stores with total sales of $36,537 M worldwide by the Sept 2009 (company website). This company is uniquely different in its marketing and advertising and thus has an individual standing in the consumer minds, making them more loyal towards the brand as well as admires the same. According to the Fortune listing, Apple Inc is the most respected brand of the world today. The products offered by the brand are: Apple Macintosh PCs, the much talked about I-pod and I-phone in the hardware category whereas the software range includes I-Tunes media, I-Work suite, Final cut studio, I-Life suite and Logic studio. It was founded by Steve Wozniak and Steve Jobs, two high school friends, who worked in Hewlett-Packard and Atari respectively. Apple I was designed by Wozniak and sold by the duo first time in April 1976 for $666.66. Apple II came in the market in the year 1977, which has features better than Apple I, the first ever personal computer, which embraced colored graphics, and later next year was another breakthrough invention of the floppy drive, called as Apple Disk II. According to Thomas (2006), the Visi Calc spreadsheet application was a lure for people to buy personal computers. With this, the company grew in size and sales and then Apple III was introduced in the yr 1980. Marketing Strategy followed by a company is the key to achieve increased sales and popularize its products. Various companies follow their own marketing strategies in order to promote their products and increase their sales. Also, it is the key to combat competition in a world where there are hundreds of firms and companies. But, one thing these companies cannot afford to overlook is, customer satisfaction. Any marketing strategy that does not keep customers on the top of the list is bound to suffer loses, no matter how powerful its strategy is. Marketing managers follow their ‘gut-reaction’ to predict if the product they intend to launch in the market will attract the number of customers that they thought it would. Initially, they prefer to bring out products that are not too heavy on the customer’s pockets. Following which, they introduce many other devices that work in accordance with the products launched into the market. Here, I will discuss the marketing strategy of Apple, which operates at an international level. The paper will present how Apple goes about its marketing strategy and what makes its products one of the most desired ones among the crowd. While the paper throws some light on the strategy that Apple uses, one would come across the unique and innovative ideas followed by the marketing managers, which help a great deal in spurring the wheels of the company to greater heights. Often one must have seen the advertisements of Apple I-pods, where only silhouettes of young people are shown and the shimmering I-pod too. The mere show of the I-pod is not what Apple thought of as its prime marketing strategy. The idea behind this was to make the consumers realize that when it comes to listening to music, any mp3 player would do the needful. But, on the other hand, owning an Apple I-pod would make them members of an exclusive group. The white earphones that the I-pod has have now become the new trend, the sign, which separates people who use other mp3 players from those who use Apple. In 2006, an I-Pod commercial showed the ad for the I-Pod Nano and the slogan said- “1000 songs in your pocket.” Also, Apple made use of many popular songs and singers who featured in their advertisements. For example, a few of the popular tracks used were ‘Take California’ by The Propellerheads, which was used for the first generation I-Pods, then ‘Lose Yourself’ by Eminem and ‘Vertigo’ by U2 used for I-Phones and I-Tunes together. And this is just the starting. Apple has marketed its product in such a way that not Apple, but the customers themselves are promoting the product, for Apple. This is something which one can fairly guess, that other companies haven’t thought of. For example, on the upper half of the Apple notebook, one can see that for the use, the apple logo would appear to be upside down. This is because, when the other person sees it, to him it appears straight and glowing. Thereby, Apple indirectly makes it customers do the promoting. This is the original logo for Apple which shows Sir Isaac Newton sitting under the Apple tree. This was the logo that Apple adopted after the Isaac Newton logo. It had rainbow colors and was launched in the year 1998. This logo was in monochrome. This is the logo that is in use even now and was launched in 2003. Next, the strategy that Apple followed was to enter the market very late. According to Apple, I certainly did not create the first PC, the first I-phone or the first mp3 player. It simply improved upon the existing technologies and presented them into the market with a bang. Also according to Apple, what it does extremely well is to simplify complex things. What other companies that manufacture mp3 players haven’t been able to do, Apple has done it successfully, thereby increasing its list of fans all over the globe. All one has to do is to plug one’s Apple I-pod in the computer and the rest of the process is dead simple. The songs, with the help of another great feature of Apple, I-Tunes, get automatically synced to the I-pod thereby reducing the need to manually select songs and transfer them into the mp3 player. What makes it cooler is that while the I-pod is syncing to your computer, it simultaneously gets charged too! Besides all this, the message that Apple used to market it products was simple enough. It said- ‘Think Different’. Although this message is no longer being used, still it managed to gather large crowds in an attempt to buy the Apple products. The reason behind keeping simple and short messages is that it is easier to keep in mind and remember. Apple’s description of the iPhone showcases this point wonderfully: “Revolutionary Phone. Widescreen iPod. Breakthrough Internet Device", (Marketing Minds, 2008). But not always does a company gets success. Sometimes, it faces a failure too. Apple tried to bring out a new product of Apple- the PDA’s or the Personal Digital Assistant. But, it failed badly. Even the I-Mac moved past Apple’s product, Lisa. What really makes a company go higher and higher, are the ones who buy its products early. Most of them wait for others to buy and only after gathering enough satisfactory feedback from them, do they buy it for themselves. Such early buyers promote other prospective buyer, which makes them want to buy the product that the others are already using. If one takes a look, early buyers are at a great risk when they buy any such new product that is launched in the market. If at all the product fails, one- they lose their money and two- the company loses other buyers too. Therefore, it is very important that what ever the company launches must suit the needs of the customers and not be too heavy on their pockets. The marketing strategy becomes a big hit when the early buyers promote the product to other potential buyers. The company doesn’t have to do more than attract early customers. The rest is achieved through them. The next step towards increasing the list of its fans, Apple pays great attention towards its style of packaging Apple products. One who visits the Apple website can read through the various feedbacks and first hand experiences of the customers. The Apple I-pod comes in a finely made box with a velvet lining. The I-pod rests in between like a masterpiece! The other cords and user manuals lie beneath the product. The mere opening of an Apple product is an ‘experience’ for its customers. Even before a person has used an Apple product, he has already become its fan while uncovering its beautiful product. Not only Apple has easy to use products, it has style. And it is the style that attracts millions of customers towards it. A big stunt that Apple followed regarding its launch with the I-phone for December 18, 2006 was a big hit. It was all over the news and the Internet that Apple will be introducing the I-phone but it did not. This indeed stirred the excitement of the customers. Carl Howe writes for Blackfriars' Marketing, “…If I-Phone were announced next week, that implies that he (Steve Jobs) has bigger and better things to show at MacWorld." The target customers for the I-phone were students, businessmen, corporate users, etc. According to the Rubicon consulting, March 31, 2008, half of the I-phone users are under the age of 30. Also, most I-phone users were already using other Apple products. This shows that they had complete faith and confidence on the Apple products like I-pod and Mac, and hence, they chose to go for I-phone too. Another inference given by Rubicon was that, “most I-phone users are technically sophisticated.” There are many I-phone communities on various social networking sites, like twitter, face book and others like you tube, bebo, flickr, dig, myspace, etc. Those who are active on the community have discussed some issues with the I-phone. They said that security, battery, coverage, secrecy are some of the main issues with the technology. But Apple has been always sincere and honest and most importantly, transparent with its customers, and specially the early buyers. It is a well known fact that when the I-pod was introduced in the market, it brought about a total annihilation of the products that were competing against the Apple I-pod. There was Microsoft Zune against I-pod. But I-phone grabbed almost 75% of the market share, whereas, Zune did not even have 2% of it. Apple sold 200 million I-pods by January 2009, which in itself is a great achievement. The I-Pod comes in three versions of 10 gigabyte, 20 gigabyte, and 40-gigabyte models, which can be bought at a price of $299.00, $399.00, and $499.00 respectively. Creative Labs CEO Sim Wong Hoo, declared that- "I intend to out-market the I-Pod and everyone else in the music player market. The mp3 war has started and I am the one who has declared war" (Marketing Minds, 1998). Everyone is aware of the results! This is a picture of the I-Pod Nano launched by Apple. Launched in 2005. It was available in 8GB and 16GB models. Other models were the I-Pod Classic, Nano, Shuffle and Touch. What Apple succeeded in doing was, create a Cinderella story, launch by launch of its new products. It met the needs of the school children and college going crowd by launching the I-Pod. It is known that music is the soul of the youngsters. They like to party and dance on mixed tunes, which were hard to find in the early times. Also, even if there were some CDs available, they were too heavy on the students’ pockets. But, with the advent of the I-Pod, its fever spread like wild fire. Now youngsters could mix tunes and create their music by combining the duel effect of the I-Pod and the I-Tunes. Almost 76% students owned mp3 players and among them almost 86% owned the Apple I-Pod. Although there have been many such companies who have launched such mp3 products, but, no one has managed to create such an effect on the younger generation as has Apple. To attract the younger crowd first was a smart and an intelligent move by Apple. Those who owned the I-Pod directly promoted the product and indirectly marketed for the company. This was the first step that Apple took in getting itself placed firmly in the market. Not only this, it also made it a point to create an attractive design for their products. Especially it is one of the most solid ways to attract the youngsters. It is the look that keeps them glued to the product. It's the brand values of creativity, diversity, and individuality, combined with a line of well-designed products that deliver, that has converted this generation of teenagers into Mac addicts (Goodstein, A., 2007). The Apple brand personality is about lifestyle; imagination; liberty regained; innovation; passion; hopes, dreams and aspirations; and power-to-the-people through technology (Marketing Minds, 2008). It is also said that had the company not settled the price of its products at a premium level, it would have perished long ago. Only because Apple had concentrated on the price-premium, it is still able to rule the senses of its community of users. Tony Herman in his website gives the comparison between Mac and PC. He says that on PC the hardware and the software are not compatible. On the other hand, the same operating system runs on the I-phone and the laptop. This is dead simple and easy. The manner in which Apple synced its hardware and the software was phenomenal. It was easy and convenient for its customers to work on and sync the I-pod or the I-phone with their computers or laptops. What I like is that even in a tough economy, Apple keeps their prices up. They know what they're worth and don't compromise. That's a lesson we can all learn from. (Herman, T., 2009) The technology that Apple uses is definitely top class, but the manner in which it has priced the products is also commendable. Apple also makes it a point in catching hold of the emotions of its customers. This is the sole reason why Apple has an ever-increasing number of users. Be it I-Mac, I-Phone, I-Pod, there is a hoard of gadget freaks that now prefer products of Apple. The reason being, it makes them stand out of the normal crowd that uses products other than those of Apple. Apple has now also opened several retail stores of its own, where it gives a different feel to its visitors. Anyone who visits these retail stores gets a feeling that he is in a different environment. The person himself feels as if he’s standing out of the crowd. The staff at the Apple retail centers is so enthusiastic and yet so calm, that they don’t push their prospective customers. They let them decide on their own. There is a very interesting fact about the brand architecture about the Apple products. The suffix ‘i’ that Apple puts in front of its products’ names, is only for those, which are consumer products. After the huge success of the Apple I-pod, it launched the I-Mac. All it said for the promotion of the I-Mac was, “from the creators of I-Pod”. This was enough for the prospective buyers and also those who were already using an Apple product, to get readily attracted towards the new I-Mac. Also, those who finally got hold of the new product, found it super fast and easy to use. The look and feel of the computer created by Apple was phenomenal. The presence of Apple in the corporate market was yet another proof of its ever increasing popularity and stardom. When Microsoft launched its first Excel in 1981, it ran on the newly released Apple Mac. Such was the position Apple held from the beginning. Apple announced that it would launch a new version of its Mac Operating System, named the “Snow Leopard”, in 2009. This would facilitate the incorporation of Microsoft features, thereby allowing the businessmen who wish to use Apple Mac for their corporate uses, or as mail clients. On the other hand, Microsoft is also continuously introducing advanced versions for Apple products. As a result, now the product used by the same business officials for their mail clients and other uses is the I-Phone. The reason being that it is completely compatible with the email servers of Microsoft. The MacBook Pro that was launched for the professional market. It was launched in January 2006. It had a 15.4’’ wide screen. In June 2007 Apple upgraded the MacBook Pro, replacing cold cathode fluorescent lamp (CCFL) backlit LCD displays with mercury-free LED backlit LCD displays and arsenic-free glass (Jobs, S., 2008). Talking about the marketing share of Apple, a company known as Net Applications, is known to have been keeping a track of the marketing share as well as the operating systems through search engines, has reported that Apple has a total marketing share of 10.41%, if the share of I-Phones is also included. These numbers continue to be good news for Apple, a company trying to buck a nasty recession along with the rest of the industry (Martin, M., 2009). According to Jim Dalrymple, who has been following Apple and Mac for a period of around 15 years, the unit sales of Apple jumped from 1.7 million in the first quarter of 2008 to 3.9 million during the same period in 2009 (Vertygo Team, 2009). According to some new techies, Apple has generated a new way of attracting prospective buyers towards it. It has started thinking like its customers. Usually when a person loses his/her mobile, it is indeed impossible to recover the handset. But, Apple has made it possible for its customers. If its customer loses the phone by any chance, Apple recovers it for them. Amazing indeed! Also, one can realize that Apple targets key customers wherein it gives incentives. For example, it has launched a trick where it gives an I-Pod free with purchase of an Apple I-Mac. On the other hand, it is giving free bags on purchase of some I-Pod product. Such is one of Apple’s strategies to attract those buyers, who want to stand apart from the crowd. Those who were not so tech savvy were also compelled to try the Apple I-pod once. Apple made a very successful attempt in baiting customers. The low cost strategy of promotions done by Apple won it several and in fact, satisfactory amount of press coverage. The Think Different campaign introduced Apple’s new slogan in 1997 which was followed by the Switch campaign followed in year 2002. Get a Mac campaign is the recent advertising strategy by Apple which is highly influencing the results (Vertygo Team, 2009) It also launched a one minute advertisement which simply featured several famous celebrities of various fields like Albert Einstein, Bob Dylan, Martin Luther King, Jr., Richard Branson, John Lennon, R. Buckminster Fuller, Thomas Edison, Muhammad Ali, Ted Turner, Maria Callas, Mahatma Gandhi, Amelia Earhart, Alfred Hitchcock, Martha Graham, Jim Henson, Frank Lloyd Wright, and Picasso in order. According to Dan Tynan, from PCWorld, Apple to him is like a big tent where once one enters; it is difficult to come out of it. He says that Apple has the ability to create a situation known as ‘lock in’, where if a customer buys a product of Apple, there is a huge probability that he would buy the next product from Apple again. Although he claims that some customers don’t find it comfortable that their I-Pods are stringed to only the I-Tunes and that no other software can be attached to the hardware. The software hardware pair created by Apple can be thought of as one other way of binding the customers to only Apple products. The fact still remains that the products designed and launched by Apple are indeed top class and that there is no competition as far as I-Pods and I-Macs are concerned. Apple has always been consistent in its quality and attraction. No matter there is a constraint put up by the company that binds its consumers to the I-Tunes and I-Pod pair, they still want to be in the clan and experience the all new and that out of the world music experience. Apple designs its products and markets them in a manner that one look of the product is enough to take the prospective buyer on a flight of imaginations where he thinks of owning the same product. Without even wanting to know that technicalities and the inner configuration of the product, the buyer is determined to buy it sooner. This is where Apple always hits a jackpot. Not that the configurations are not good, there sure are. But, there have never been such products in the market that entice the buyers in a single look. Another aspect that defines Apple’s competitive habit in the launch of PowerMac is the looks again. Apple’s competitors launched a 20-inch wide screen computer hoping that they would create an explosion in the market among the customers. But, they didn’t know what Apple had in store. It launched, as an answer to it’s over ambitioned competitors, a staggering 40-inch wide screen Powermac. And this was not all. It also designed it in such a way that it could be used as a TV, a DVD player and a copier, all at the time. The eye-pleasing factor is enough for the company to attract initial customers towards its world. Then again, Apple designed and launched the I-Book. It was meant as a laptop for mainly students. They could take notes, store their photos all in one place, stay wireless and also didn’t have to shed more than required. This was a cool gadget among the students who welcomed the launch of the I-Book with both hands. According to Apple, the I-Book was the smallest computer laptop available in the market. It has a built-in wireless capability and a 512MB RAM and the starting price is $999. Apple followed the strategy of lowering the price, creating something unique and fun and selling it with a zeal. Somewhere the company had the confidence that it could make it big if it followed these few principles that it has been following for years now. I-Mac, on the other hand, was a desktop version of the I-Book. It came in only a single color, white, as is the specialty of Apple products. It was a sleek model and also helped in reducing the ‘desk-space’ on our desks. And also it could work better than most of the computers that were presently competing with Apple in the market. All this and more, attracted thousands of customers towards the I-Mac, and now we can see many of them holding on to their notebooks that flashes the Apple logo, shining with victory! A personal observation tells that if you enter a café or any restaurant, you can see at least three to four people working intently on their differently colored Macs with the Apple logo still glowing towards the onlooker. Chris Morrison, on Bnet says that the marketing strategy of Apple was ‘Insanely Great’. He has plotted some points, which elaborate this shrewd marketing of Apple Inc. According to him, a clear vision of what the customer wants, modesty, insane advertising, smart public relations, and have all converged to make the Apple industry a huge success in the hardware market. Chris says that Apple always plays a smart game in creating a buzz around its public relations and then stunning them with an all new trick. “The genius of Apple’s PR is the way the company uses secrecy and misdirection to generate buzz around its product announcements,” said Nick Ciarelli, a creator of an Apple blog named, ‘Think Secret’. Also, Apple always learnt from its mistake. And indeed, mistakes are the stepping-stones to success and that was what Apple always did. After its Rockr cell phone received a massive blow from the market, Apple took a lesson from this failure and then created the I-Phone. The issues with the Rockr were many. Moreover, it scratched very easily. In the attempt to build a gadget, which could combine all the features of cell phones, personal digital assistants and the mp3 players, Apple launched the Rockr and soon realized that this was not a good choice. However, the I-Phone removed all these shortcomings and not only this; it took Apple to greater heights. But, some say that this failure of the Rockr cell phone was a trick on part of Apple. It was another way to let its contemporaries feel elated and on cloud nine. When Apple was sure that it had created the kind of situation it had aimed for, it launched the Apple I-Phone and that’s when the competitors fell headlong on the ground. The Rokr was a big failure and thus they tapped the opportunity with the introduction of I-Phone just couple years later (Vertygo Team, 2009). This, many say, was a stage designed by Apple, although there is less or no proof against it. According to an online report, Apple spent $150 million to build the I-Phone. The most typical rule followed by Apple in emerging from the few failures that it faced, was that a company should always lead the customers and not follow them. Having followed this strategy, Apple created history by creating new devices with unique features and high quality. Ultimately, Apple succeeds because it not only beats its competitors but also strives each year to beat itself (Morrison, C., 2009). Also, there is no need for a customer to go through the user manual to operate the product. He can always learn to use the I-Pod, I-Phone or the I-Mac within a matter of minutes. This gives the customers a good feeling about themselves. It makes them feel intelligent too!! It can be inferred from the paper that Apple, as a company, has come out with flying colors, even after facing a few failures that every company faces at one point of time or the other. It managed to create a fan following of thousands of youngsters and even middle-aged people who were interested in music and new technologies. The advertising campaign followed by the company as well as the tactics used by the marketing managers of Apple helped in taking the company to greater heights. The innovation and uniqueness that Apple showed and brought about was matchless. Many other contemporaries tried to compete with Apple, but failed miserably. There was no way anyone could even come near to what Apple had achieved. Irrespective of the fact that Apple had many critics and it faced heavy criticism when it launched the Rockr cell phone, it came back with a bang when it launched its I-Phone and created history. It continued its flight when it kept up with its target and quality in each and every Apple product. The Apple logo, the advertisement, everything played a key role in establishing Apple as one of the most successful hardware companies over the globe. Even though it is a hardware company, it hosted its flag of victory when it launched the I-Tunes after the launch of the I-Phone. Apple also made it clear that it created and launched products for every age group. It was not only for youngsters, but all those who had an interest in music and for those business clients who wanted many facilities in a single notebook. Apple also launched the Macbook for youngsters who could use it for making notes and also store photos and music all in one. Apple gave a strong competition to the companies who were trying to outsmart Apple in every way they could. But Apple, due to its yearning to create something new and something that would instantly attract thousands of buyers towards it, created an aura of its own. Once if a buyer entered the realm of Apple products, Apple made sure that it became hard for him to find an exit. Not that Apple had any negative interest, but it was just another way a company could bait early buyers. Even now Apple is working towards its goal of creating a whole Apple clan where people would use only Apple products and obviously with minimum possible critics. The advertising strategy used by Apple made it possible to create a layer of excitement among the young crowd as well as those who were waiting to know what the real product held in store for them. One can easily deduce that owning an Apple product is every person’s dream. Be it the I-Pod, the I-Phone or the I-Mac, whatever is in reach is sure to reach the hands of the prospective buyers. Apple has in fact created revolution among the crowd. And no one, not even the hardest of the critic, can resist using the Apple product at least once. REFERENCES Press Release, 1999. Apple’s Marketing Plans. Apple Inc. News, 2006. The marketing strategy behind a December iPhone announcement. MacDaily News. BlackFriars Communications, Inc. Vertygo Team, 2009. Analysis. Apple Video excerpts and Apple products images courtesy of Apple Inc. Marketing Minds, 2008. Apple’s Branding Strategy. Marketing Minds. Chazin, S. 2009. Marketing Apple. Filliby LLC. Dalrymple, J., 2009. Apple Doubles it’s I-Phone Market Share. CBS Interactive Inc. Goodstein, A., 2007. Teen Marketing: Why Apple’s The Master. Business Week. Msnbc.com Herman, T., 2009. Apple's Marketing Strategy and Why Microsoft Profits are Down. Tony Herman. Jobs, S., 2008. Apple-Environment-Apple 2008 Environment Update. Apple Inc. Martin, M., 2009. Apple market share continues to climb, Windows drops. Weblogs Inc. Morrison, C., 2009. Four Principles of Apple’s Successes (And Failures). CBS Interactive Inc. Morrison, C., 2009. Insanely Great Marketing. CBS Interactive Inc. Tynan, D., 2009. 5 Apple Marketing Tactics That Lock You In. PCWorld. Msnbc.com Read More