Strategic Brand Manager of Apple - Case Study Example

Strategic Brand Manager of Apple Contents Contents 2 Executive Summary 3 Introduction 3 Literature Review 4 Market environment review 8 Critical Analysis and Discussion 10 Conclusion and Recommendations 12 References 14 Appendix 16 Executive Summary This case highlights about the Smartphone Company Apple and its business condition in UK market. The market of UK is near saturation. It is dominated by huge competition. The most important competitive factor of this market is the price of the product. Many Chinese companies have captured a large part of the market. Customers of UK are very much conscious about price rather than quality. They are also very tech friendly. This resulted in a high penetration of Smartphone in the UK market. This case also focuses on the issues that though the Smartphone companies are trying to increase its market share but lowering its price, still they are not very successful. It is recommended that in this situation the company should create a unique brand image which will differentiate the brand and its products. For creating such brand image it should implement different integrated marketing communications. This case also describes about the two models of integrated marketing communications highlights all the ways of marking and promoting the brand. The company Apple is also present in the UK market. It is holding second position in the market. Apples PR strategies are also very innovative which always creates a suspense and excitement among the people. But presently it is facing completion from different brands of Smartphone. It is also facing a price war with its competitors. In this present situation if Apple introduces different innovative strategies regarding its marketing mix then it can continue to hold its market position. Introduction Integrated marketing communication involves in the process of brand messaging through traditional and non traditional marketing channels by using different promotional tools. It is an approach to fulfil the objectives of marketing campaigns. This communication process highlights the value of the business plans that evaluate the role of the company in different marketing communications like public relations, advertising, personal selling, promotions etc. This business model focuses on the coordination of different communication techniques of marketing. It helps the organisation to evaluate its communication system from the customer point of view. Integrated marketing communication considers all the possible ways of the company to communicate with its customers. It also broadens the scope of coordination among the employees internal marketing system. This process of marketing communication has become an essential concept in the present business scenario. With the advancement of technology the ways in which the stakeholders interact have changed. The theory of integrated marketing communication was established long back and in the present time acquired by real time complexities, many ways of communication, multimodal business strategies etc. This process of communication is growing its importance for search marketing. When a person decides to purchase a product or service then he often do an online search so that they can find more information about the products and its selling companies. According to the review the customer forms a perception about different companies who are selling the product and determines from whom he is going to purchase. The company Apple applies many strategies and plans for conducting its integrated marketing communication system. Literature Review The marketing mix has remained the pillar stone of marketing community. The market mix was proposed by Professor Mccarthy in 1960s. The marketing mix as proposed by Mccarthy was comprised of 4 marketing mix elements Price, Place, Promotion and Product (Kotler, 2012). The marketing communication forms part of the promotion element of the marketing mix. Marketing communication can make use of both personal and impersonal marketing communication channels. The marketing communication mix is comprised of 8 major elements that are: 1. advertising, 2. Sales promotion, 3. Events and experience, 4. Public relations and publicity, 5. Direct marketing, 6. Interactive marketing, 7. Word of mouth, and 8. Personal selling. The communication cycle are made up of the following parts (Stromback & Kiousis, 2011). Messaging Before designing any communication strategy the thing that is required at the first point is to determine the message that needs to be communicated. If the message that the company needs to communicate to its customers is not well defined then designing an effective marketing communication strategy is almost impossible. Targeting After deciding on the message that needs to be delivered the next important step is to select the target customer. There are various stakeholders that are associated with the company. The information that each of this different stake holders seek is different. So selecting the target audience is very important before sending out any information. Distributing The method used for distributing the information is also important. Whereas some channels are cheap in respect of information distribution other channels are comparatively costly. Monitoring and measurement Distributing of information has no value if it is not effective. After the information has been communicated the next important step is to estimate the value and impact of that information among the target recipients (Oliver, 2004). There are various marketing communications model that try and explain how communication helps in marketing a product. Marketing communication plays a very important role in deciding the life of a product and its effectiveness. A good communication strategy can make a brand by means of the image that it creates in the mind of customers. On the other hand poor communication strategy can devastate a brand. Some models of communication strategy are as follows. AIDAS model This is a very old but a very popular model of marketing communication. This model was first proposed in the year 1900s. The model describes steps in order to create customer attention, sustain interest, creating desire and getting the customer to act. The model was modified in 1911 by A. F Sheldon to change the definition of first step and add a fifth step to the original model (Eagle, Dahl, Czarnecka and Lloyd, 2014). The 5 steps of the model are Attention: Any communication strategy is ineffective if it fails to reach the customer or get his attention. So the first step of this model involves getting customer attention. Interest: The communication is strategy can be said to be successful if and only if it creates interest about the product in the minds of customer. To aid in this regard the model proposes that the company must give out adequate information about the product to the customer such that the information helps to satisfy his query, wants and needs. Outcome: The next important step in the model is judging the outcome of the effort that has been put in to communication. Desire: The communication strategy should create a desire in the minds of customer to acquire that product. Action: The communication strategy should not stop at creating desire but should result in some action leading to the purchase of the product. Satisfaction: This measures the feedback of the customer after the customers have made the decision of the purchase as a consequence of an effective communication strategy. DAGMAR model DAGMAR is the abbreviation Defining advertising goal for measured advertising results. DAGMAR model was proposed by Russell in 1961. Coney said that achieving hierarchy of communication model leads ultimately to the actual purchase of the product (Leitner, 2007). According to Coney the domains of marketing goals and advertising goals are different from each other. The various steps of the model are Awareness: This is the first step of the model. In this step the company tries to create awareness about the product in the minds of customer. Comprehension: In this stage the customer is aware of all the product characteristics of a particular product and brand. Conviction: At this stage the customer is convinced at the emotional level that he prefers the product of a particular brand over others. Action: At this stage the customer actually makes the purchase of the new product. In the Integrated marketing communication it is aimed at distributing consistent information about the brand across all channels of communication (Percy, 2008). Integrated marketing communication was developed as a tactical level and not as a theoretical model. The model does not support any chance of miscommunication or misrepresentation of data (Joseph, 2011). Market environment review The UK Smartphone market is characterised by a mature market. The market is almost nearing saturation and so is characterised by huge competition mainly based on price. Consumers now a day are more tech friendly than they were earlier. Most the decisions that customers now a day take regarding the purchase of a smart phone is influenced by online reviews. Rise in the no. of competitors resulting in rising no. of Smartphone’s available means that the companies will start becoming more competitive on price front and in terms of the features that they offer. In UK Smartphone has reached a penetration level of about 70% or higher. In this situation for any Smartphone company to increase its market share the strategy should be either to compete on price front or to create a brand image based on differentiation. Even in the case where a company wants to compete on the price front it cannot afford to compromise on the quality front. As seen in the figure 1 in the appendix the market share of UK is dominated by android platform based smart phones occupying around 54% market share. Next in line in respect of market share is apple and its platform ios having 32% market share (Arthur, 2014). The case of matured and saturated markets in case of Smartphone means that market share of a company may go up or down based on the features of the new model and its price range. In such a market no particular product or a company is immune and cannot commit that its market share will remain intact no matter what are the changes that is sweeping currently across the market. Sales may suddenly go up and down based on the launch of a good handset on a particular company. Since the current breed of customers is so tech savvy and net friendly it means that they will do a lot of searching and look for reviews on the net before making any purchase. In fact Moto G could capture about 3-4% of the market based on its low price and good online reviews that set the tone for the purchase of the Smartphone. The recent entry of mobile handset manufacturers from China such as Huawei, Lenovo and ZTE means that the war on the price front is bound to get more intense. The Chinese companies have very less brand recognition especially in the UK market but their price offering is very good in terms of the features they are offering at the particular price (Wayner, 2002). The competition in the Smartphone market is likely to be based on price, quality, amount and speed. Another factor that is likely to influence the industry is the introduction of 4G services. The introduction of 4G network service will influence and instigate customers to upgrade their current smart phones or to buy a new one. The fact that will motivate customers in this regard is the fact that the smart phones that were sold to the customers in the period prior to autumn of 2012 did not have 4G enabled in their devices (Arthur, 2014). The phone market in the UK had reached saturation in the 1990s. But the saturation at that time was different in its effect on the products. At that time the mobile phone as a commodity went from being rare and scarce available to a select few to being a common place with everybody carrying one in their pocket. Nowadays with the advent of smart phones and its regular up gradations the customers almost carry a minicomputer in their pocket. The memory of a typical Smartphone now a day is greater than the memory that a large screen computer had in the days of its foundation. This increased processing power and capabilities of a Smartphone have now meant that providing customer service for the smart phones has now become all the more difficult. Coupled to this is the fact that industry is seeing the entry of new competitors’ every now and then especially in the form of companies from the far east who are ready to take the war on price front. These companies due to their cheaper labour cost are able to manufacture phones at very less cost and sell them at a very less price. Such prices are proving to be very steep and hard to attain for the companies such as Apple. In the light of all the competition happening and the fight to take maximum control of the limited market share available companies have to compete fiercely on price front at the same time not compromising on the quality (Kitchen and Pelsmacker, 2004). This means that the companies have to bring their production cost lower or sell the phones at reduced prices and risk their viability. Critical Analysis and Discussion The chosen company over here is Apple and their Smartphone business that is iphone is the product over here. Target audience- If we analyse the Smartphone business and its market in UK we find that the market is mature market and is nearing saturation (Yueh, 2014). The market is characterised by huge competition in respect of market players who compete fiercely in terms of quality. In the specified market there is no well defined market leader and the market share varies widely based on a new model introduced in the market. The competitors compete not only on the quality front but also based on price (Grant and Meadows, 2012). The price based competition is more intensified by the fact that more players of the market has entered from eastern countries such as China. The additional characteristic of a Smartphone industry and specially UK market is that customers are very tech savvy these days. In fact most of the purchases these days are made by the customers after lot of information searches. To succeed in such kind of competitive environment Apple must ensure that it is able to compete on the price front. The entry of new competitors from china in the form of Lenovo, ZTE and Hawei has taken the war on price front by providing same quality of Smartphone at a much lesser price. These companies do not have a good brand name (Aaker and Loughlin, 2009). Apple already commands a good market share of the UK Smartphone market and is at the second position behind Adroid (Williams, 2014). However in view of the competition that is at stake in the UK smart phone market even Apple cannot sit idle on its laurels and has to bring in new products to stay relevant in the market and sustain its position in the market (Page, 2014). Recently Apple has brought a new Smartphone named iphone 5c which it has priced low to broaden its market. However a satisfying factor for companies like APPLE is the fact that 4G services has recently been launched in UK market and the handsets that were sold prior to autumn of 2012 did not have the technology to support 4G services. So in effect such customers will be forced to buy new smart phones. But the problem is that every Smartphone company in the block including the new Chinese players will try to incorporate new technology aimed at alluring the customers towards buying the smart phone from their company. Media selection and communication mix management- To increase the market share in such a competitive market Apple’s aim should not only be limited to include new technology in the smart phones but also communicate the information to the customers. To effectively communicate the information the company may use integrated marketing mix to communicate the same information uniquely across all channels in order to influence the customers and make a purchase decision. Apple as a case has a very good PR strategy. Apple uses the strategy to giving out less information about the company and uses the strategy of creating and preserving element of suspense around the company. When Apple launches a new product it calls for a press release. Every minute details of that press release are prepared in advance including list of the persons who will be invited. Apple has a list of journalists and bloggers who always are invited. These are people of highest reputation in their field and most importantly they write favourable articles for the products of Apple (Swann, 2014). Before the release of new products the PR team scans news proper and gossip trending the market regarding customer expectations and accordingly releases information either to support or reject the view (Lashinsky, 2012). By implementing Integrated marketing mix apple may try to boost its already good marketing and advertising strategies in short communication strategies (Kim, Han and Schultz, 2004). Apple uses social networking sites like facebook and twitter to promote its products. It also uses print media as the mode of communication between customers and the company while advertisements also help on the purpose. Brand positioning- Apple has a good brand image in terms and its brand is recognized as one thriving on innovation. Apple follows differentiation strategy to project its brand as special and different from its competitors. Through the years the company has strived to retain this exclusiveness and illusiveness about the company through its products, promotion and other elements. The customers’ generally associate apple with good quality phones that are built for a special class of customers. Apple can try to change its brand perception that it is not only for the rich and wealthy but everybody can afford it (Duncan, 2002). Conclusion and Recommendations Through the case it is seen that the smart phone market in UK is already very competitive and is nearing its saturation. The market is characterised by customers who are tech savvy and make a very informed purchase decision. Since the various smart phones that are offered in the market are similar to each other in terms of feature the main competing point between the various companies is often price. The competition has further intensified with the entry of Chinese players in the market. These Chinese companies do not command a good brand value and image in the minds of customers. However one of the features and advantage that they provide to the customer is providing the same feature in much lesser price. Apple enjoys a good market share of the UK market with its dominant presence just behind Samsung in terms of market share. However apple as a company cannot afford to sit on its laurels and has to continuously work on being better and better. It is because in the Smartphone market no particular company can be called as the market leader and fortunes change often depending on the introduction of a new hot and competitive model by a particular company. Since the customers are very tech savvy and are informative about the Smartphone before they decide to choose a particular one so communicating right information to the customers is very important to increase the market share. Apple can achieve this by implementing integrated marketing mix to communicate uniform information across all communication channels. It can try to change its brand perception that it is not only for the rich and wealthy but everybody can afford it (Duncan, 2002). References Aaker, D. and Loughlin, D. 2009. Strategic Market Management: Global Perspectives. West Suxxes: John Wiley & Sons. Arthur, C. 2014. How to keep on selling smart phones when weve nearly all got one already. [Online] Available at: http://www.theguardian.com/technology/2014/apr/27/smartphone-market-saturation-apple-samsung. [Accessed 29th November 2014] Arthur, C. 2014. Motorolas Moto G bites into UK budget Smartphone market. [Online] Available at: http://www.theguardian.com/technology/2014/apr/01/moto-g-boosts-motorola-mobile-smartphone-sales. [Accessed 29th November 2014] Duncan, T. 2002. IMC: Using Advertising and Promotion to Build Brands. New York: McGraw-Hill. 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[Accessed 29th November 2014] Yueh, L. 2014. Is the smartphone market approaching maturity?. [Online]. Available at: http://www.bbc.com/news/business-29339251 [Accessed 29th November 2014] Appendix Figure 1 UK Smartphone market share Read More