Overview of Organization, Product and Brand - Essay Example

Overview of Organisation, Product and Brand Executive Summary The purpose of the study is to explore the different strategies that are employed by Apple Inc in its operations to design products that are attractive to a wide range of consumers from diverse cultural backgrounds. Apple is a renowned multinational corporation which is famous for their different range of consumer electronic gadgets which include Macintosh such as, portable computers, desktop computers. There are also different kinds of digital MP3 and media players, telephone such as, iPod and iPhone. It can be seen that there are also different series of software, peripherals and accessories to support these products. The company offers a wide range of products that are certainly unique and different from those offered by the other rival competitors. This company grew through different stages in its history to reach its present status. This study will attempt to analyse different strategies used by the company such as differentiation, its strategy in segmenting the market, competitive advantage as well as consumer behaviour. Recommendations will also be given in this study about what can be done by the company in order to remain a force to reckon with in terms of mobile computer technology. Company Background Apple was established in the 1976. On April 1st, Steve jobs agreed to sell only 50 Apple I personal computers to the Byte shop which was the first retail computer store chain in the America. Following this development, Apple was incorporated in 1977 when Wayne sold all his shares of the company to the Jobs and Wozniak and then the company was later renamed Apple Computer Inc. After a few years, Apple II revolutionized its operations to focus on manufacturing of personal computers. The Apple II mainly developed a personal computer market which created hundreds of millions dollars. Apple Inc was ranged to be among the Top 500 companies in America just 5 years after its establishment (Apple Inc). In the 1980’s, Apple launched two different kinds of computers namely Lisa and Macintosh. The Lisa was a commercial failure because of its software limitation and high price tag. The Macintosh was the next product to be launched and sold well at the beginning, but sales were weak in the days that later followed. The reason for failure of Macintosh was the same as Lisa which included high prices and limited software capabilities (Apple Inc). In the late 1980’s, Apple witnessed a significant decline in business as a result of wrong decisions that were made. During that time, Apple failed to satisfy at a lot of targeted customers where its products poorly performed and this can be attributed to the fact that Apple invested in the wrong division basing on unrealistic market forecasts. However, Apple’s biggest competitor Microsoft gained the large market share from Apple with the Windows operating system. The Apple’s stock price and market share witnessed a huge slide at that time (Apple Inc). After the big fall, Apple then launched the new Macintosh in an attempt to reinvent its operations. At the same time, Apple was also focusing on building a personal computer market, software, services and other services to solve its financial problems. By the late 2001, Apple had risen to better heights when it launched a series of digital music players which were introduced such as iPod. Since the period when the iPod was launched into the market, Apple Company quickly became the market leader in globe in the production of mobile digital products (Cantrell 2009). From the year 2006, other new products such as iMac and Mac Book were launched and after one year, Apple entered into the mobile phone market with iPhone which is a convergence of iPod and Smartphone. From this experience, the Apple’s market share grew bigger but was still behind Microsoft (Apple Inc). During the current period, Apple is best known for the series of personal computers, iPod, iPhone and a range of other services. Fortune magazine named Apple the most admired company in the world in 2009 (Colvin and Geoff 2009). The Product The main products by Apple can be easily identified in three different categories illustrated below. One of the products is iPod which is a portable digital music player which includes different types of models to target different users. Another main product is Macintosh which has various other accessories and the third main product is the iPhone which is the new generation of mobile phone device. Macintosh and Accessories Mac mini, consumer sub-desktop computer and server introduced in January 2005 (Apple 2009). iMac, consumer all-in-one desktop computer that was first introduced by Apple in 1998. Its popularity helped revive the companys fortunes. Mac Pro, workstation-class desktop computer introduced in August 2006. It replaced the Power Macintosh. MacBook, consumer notebook introduced in 2006. It replaced the iBook. MacBook Air, ultra-thin, ultra-portable notebook, introduced in January 2008. MacBook Pro, professional portable computer alternative to the MacBook, available in 13, 15, and 17 inch variants. It replaced the PowerBook. Xserve, dual processor 1U server. iPod products The iPod comes in four different types with several colors and has seven storage capacities: (Apple 2009). IPod shuffle - 4GB, World’s smallest music player that can now talk to you. IPod nano - 8/16 GB, the thinnest iPod ever. IPod classic - 120GB, 50 percent more capacity for the same great price. IPod touch - 8/16/32GB, The funniest iPod ever. iPhone iPhone is currently available in 2 different models which are listed below (Apple Inc). iPhone 3G 8GB iPhone 3GS 16 and 32 GB Position and targeting Product positioning is the way the product is defined by consumers on important attributes with regards to the place the product occupies in consumers’ minds and position in the market relative to the other competing products. (Kotler 1999) To find a suitable position for the product, The Company needs to make an analysis of the market and target customer groups. Basically, there are 3 steps that are involved when targeting a market and these include the following: Market segmentation Market targeting Market Positioning The position of the Macintosh (Mac) is a good example that can be illustrated by good understanding of these three steps. As noted, the Macintosh (Mac) has long history that it went through in its development. During the time when the market of product was changing, it can also be noted that technology and economic environment was also changing. These outside changes forced product position and targeting to change. The need to find the correct way for the Mac has been the core issue for Apple Company. Before 1998 During the early days of the computer market, due to microchip and other technology, a computer was a very expensive device to manufacture and even to sell to the customers. Big Companies, Government, Universities as well as Research Libraries were the main targeted group of customers in the market. Apple Company used high quality material to build Macintosh image – “High performance machine.” This market strategy was very successful until 1990. From 1990, the personal computer needs increased significantly which led the whole computer market to change as well. More and more competitors penetrated into this market, such as IBM, Dell and HP for instance. The price and profit for a single device decreased sharply as result of the competition in the market. The old market strategy was not suitable anymore since the market shares were fast decreasing which almost led the Company into bankruptcy. The diagram below illustrates the trends in the market. Figure 1 (http://lowendmac.com/ed/fox/08ff/psystar-strikes-back.html) This is Mac sales record between 1986 -2008. From this figure it can be noted that in 1996, the sales of Mac reached the lowest point in its history. After 1998 The break point was witnessed in 1998. The Apple Company produced an all encompassing computer which was called iMac. As a result of the fact that this product was well designed with high performance, sales increased fast during that same year. This increase in sales awakened the company to know that their products still had the potential and capability to meaningfully contribute to the market share of the computer industry. Due to market related issues and other competitor strategies, sales were beginning to decline again in 2001. During that same year, Apple Inc discovered the company’s “saver “-iPod. This product rescued the whole company and gave sufficient cash flow to rebuild Macintosh in the personal computer market. Firstly, Apple Company began by segmenting the market. From iPod experience, the Company realized that there was a lot of potential in the market comprising of young customers who also had huge buying power. The company then embarked on targeting the customers by segmenting them on the basis of different needs as well as age. Secondly, Apple Company evaluated these market segments. By defining the target market including size and growth, Apple Company found that the teenage computer user groups had big potential and the size of the segments was actually increasing. It was realized that this segment required personalized and unique products. Other competitors in this market such as HP, Dell and Acer could only provide similar computers with Windows operating system. After an evaluation of its products, Apple Company decided to put new Mac series as the new position of market. Like iPod, new Mac has simple style with a single logo: An apple. But this computer still has high performance and beautiful graphic operating system: Mac OS. Under this system, Mac is immune to many computer viruses. Also Mac has a lot of unique softwares like iTunes, QuickTime for instance. With these features, the new Mac started to build products with new image and a simple logo “Cool.” To build this image, Apple Company put a series of various famous advertisements: “Get a Mac”. In these advertisements, Mac and PC becomes people to make a conversation. Mac is a young person and PC is a middle-aged person. These series advertisements have been successful in building product image and customer’s impression. More and more young people choose Mac as their second or third computer. Another advantage of Mac is iPod series. As a result of huge success of iPod, the Apple brand built a huge loyal customer group. Most of these groups of customers were the same market target as new Mac. By using iTunes (software connects computer and iPod), Apple enjoys a competitive advantage because these customers have huge buying will and buying power for new Apple products. To reduce the price issue that can negatively affect buyer will, Apple Company also designed a strategy for Mac product. They give a special discount of 9% of total price for students. This strategy can help product price to match the customer’s expected price which is affordable and this can also help the company build a good image at young people. The new marketing strategy is very successful. The market share diagram is following: Figure 2 (http://www.weblogs.baltimoresun.com) The another table show the Man market share compare PC at US market Figure 3 (http://brainstormtech.blogs.fortune.cnn.com/2009/10/15/macs-grab-record-u-s-market-share/) Competitive Advantage The competitive advantage is one strategy where a company can enjoy great value of its products compared to the other competitors where it has advantage in the industry. For example, the company can offer a low range of prices on its goods and high quality services. The great value compared with the competitors which is differentiation can be offering knowledge, good employees, physical product, quality service and great company brand images (Kotler et al., 2007). Product Differentiation Nowadays, the Macintosh is widely known as a revolutionary design in the personal computer market. In the computer history we can see that the Macintosh was the first personal computer to do away with the text command and the Macintosh is offering not so much technically advanced products such that every user can use it relatively easier (In from the cold, 2008). During the contemporary period, even the new design of iMac G5 is user friendly. The whole iMac only has a flat monitor with nothing, all the different parts are incorporated into the monitor (Weber, 2005). From that we can see that Apple is continuing to maintain its good tradition of keeping on providing the new products characterised by innovation and creativity (Kenney, 2007). Also Apple has taken a great advantage by launching the creative products such as MacBook Air, iMac and iPhone. The MacBook Air was described as the “the thinnest notebook in the world.” The MacBook Air is only 0.4-1.94 cm H × 22.7 cm D × 32.5 cm W. The Macintosh personal computer has provided the Apple with a good image that was incorporated into functionality and very cool design (Reppel et al., 2006). The innovative offering from the Apple is not only the Macintosh but also iPod and iPhone. iPod is a digital music player that has included different models to the different users. And the iPod has a significant margin to get the top of the digital music player market. The Apple’s goal is to take the high quality product with the exceptional value to satisfy the customers, very easy to use the product with cool design and great visual; the MacBook Air is a very classic example. By setting the high standards for the industry, suppliers and partners, it is easier to achieve the high quality (Reppel et al., 2006). There is no any accident that the product like Macintosh has such a higher lift than the other PC competitors (Kenney, 2007). Apple has a successful path by enhancing and updating the existing products with launching the new products which provide as much more of technological advancement. The MacBook Pro and Air can be used as evidence to show that Apple is always ready to reinvent its products in the face of competition (Reppel et al., 2006). Service Differentiation Part of Apple’s success can be attributed to the strategies it employs in distribution of the products. This is achieved through use of websites, increasingly Apple stores and selected third party dealers operated by extremely helpful and knowledgeable employees (Weber, 2005). As a consequence, Apple stores manage to achieve great success (Kenney, 2007). The advantage of Apple is that its products are generally user friendly and setup routine with the Macintosh computer. The setup of all processes through different steps is only done in about 15 minutes and it will automatically connect to the internet and update the software and operating system. Another amazing thing is that a lot of application software is already installed, for example, iChat, iDVD, iMovie, iPhone, iTunes and internet web browsing (Weber, 2005). Apple also offers online services with MobileMe which has email, iDisk, iSync, Learning Center and personal web pages. MobileMe is a subscription-based internet suite that capitalizes on the ability to store personal data on an online server and thereby keeping all web-connected devices in sync (Apple.com 2009). Image Differentiation People often believe that Apple’s products are very fun to use. It is a very positive image for the fun loving customers. Additionally, Apple has a lot of loyal consumers who were acquired during Apple’s growing stages. These customers are always excited by the Apple products with an Apple style. Overall, a lot of Apple products contain a factor that denotes creativity and revolution. The Macintosh is a good example from the early product stage in Apple to the wide markets (Micklowski et al. 2008). Consumer behaviour Consumer behaviour in most cases is influenced by various factors which make the people to buy certain products. In attempting to analyse the behaviour of the people towards the products of Apple, it is imperative to highlight the meaning of consumer behaviour for easier understanding. Cant et al (2006:2) define customer behaviour as “the study of individuals, groups, or organisations and the processes they use to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs and desires.” From this definition, it can be noted that the consumers are motivated or influenced by various factors to buy certain commodities or products. By virtue of its unique features in its products which are able to support a range of activities such as mobile telephony, text messaging, internet access, musical facilities and additional wireless information services, Apple is better positioned to appeal to the tastes of many consumers regardless of age. As such, by integrating hardware, software and other specific services, the Apple is distinctive in that it provides end-to-end solutions for users seeking access to email, voice, messaging, and both internet and intranet applications as well as musical players which make it clearly different from other rival competitors in the market. There are basically three distinct products that make Apple a force to reckon with in the mobile communication technology globally and these include; IPod music player, Iphone and McBook. Whilst there are various other competitors in the computer industry, Apple has state-of- the art products that are completely unique from those offered by the other competitors which is another reason that is likely to appeal to the customers to positively change their behavior towards buying such kind of products. Basically, all aspects of the individual which determine his or her buying behaviour such as perception, needs, motives and attitudes are either directly or indirectly influenced by the individual’s ability to learn (Lancaster G &Reynolds P 1999). This is a process where an individual acquires the buying and consumption knowledge about a particular product which will ultimately affect his or her behaviour towards that product. Indeed there are various other computer related products but what makes Apple’s products unique is the fact that they have integrated features such as music, telephony as well as computer services in one small gadget. Having learned about these handsome features, the consumers are likely to be influenced to try the product. Consumers form relevant attitude to buying behaviour as a result of direct experience with the product. It can also be seen that consumer behaviour in this case was greatly influenced by their attitude. McCarthy & Perreault (1990) define an attitude as “a learned predisposition to behave in a consistently favourable or unfavourable way towards market related objects or situations.” Therefore, it can be noted that from this definition the major characteristics of attitude are; attitudes are learned and attitudes tend to be consistent. In the case of Apple, it can be noted that the behaviour of the consumers with regards to their attitude towards the brand is a learned process. Consumers form relevant attitude to buying behaviour as a result of direct experience with the product. The products were developed over a certain period of time where the unique features were incorporated in order to appeal to the consumers and over time, the consumers learned about these features and developed a positive attitude towards them. It can be noted that attitude is a learned process in direct response to what the customers have experienced or consumed from the media in form of advertisements. The youths are particularly interested in fancy things hence diversifying into producing something similar to their requirements is one of the guiding principles in the operations of Apple in a bid to influence consumer behavior. The youths of today are particularly interested in devices where they can enjoy music hence anything in the mould of something that can play music would be greatly attractive especially to this specific target market. A fairly priced device with all the handsome features is likely to appeal to specific crop of consumers and will open new opportunities for market growth. By venturing into something that attempts to retain the scope and focus of business while introducing new features will certainly open up other opportunities for growth. In this case musical devices such as MP3 or MP4 like the iPod with unique features integrated with already existing technology would bring a new lease of products already existing in the market and likely to appeal to even more consumers in different global markets. It can be noted that Apple is actually taking a lead in global as well as mobile technology by virtue of its improved devices which possess extraordinary features that are not found in any other device offered by rival competitors. This greatly influences the behaviour of the consumers as they would develop a positive attitude towards unique products offered. Recommendations Although, Mac has been successful during the previous years and product share still increasing, the truth is that Windows OS still owns 90% of the market share. This means the apple company still needs improve with Mac hence it is recommended that it should keep on innovating new products to sustain competition in the industry. With regards to positioning, The Apple Company needs to keep track of changes in the market and technological developments. It is recommended that it should device methods of trying to reduce product costs and increase target customer numbers so as to operate profitably at full capacity. The price issue is always the first thing to affect people buying. Compared to other PCs, Mac still has higher price which is main reason which can stop people from buying Mac. Also, young people can easily get tired of old things, so there is need to keep on improving the whole product style in order for it to remain attractive for this target group. With regards to the aspect of competitive advantage, the core issue is to keep the whole product and service unique. The “Mac feature” is the main reason that attracts people to buy Mac so the company needs to ensure that these features are constantly being improved. Conclusion Over and above, it can be noted that Apple is a renowned multinational corporation which is famous for their different range of consumer electronic gadgets which include Macintosh such as, portable computers, desktop computers. It uses different strategies in its operations to design products that are attractive to a wide range of consumers from diverse cultural backgrounds. Though it began from humble beginnings, the company managed to rise through different stages to become on of the leading players in the industry of mobile computer technology. Its success can be attributed to innovative developments of its products coupled with marketing strategies such as product differentiation and positioning that are meant to stimulate the interests of the consumers to buy the product. It has also been observed that consumers’ behaviour is influenced by various factors and the youths in particular enjoy fancy things. However, though Apple enjoys continual growth, it has been noted that it still lags behind OS Windows and is recommended that the organisation ought to constantly improve its operations. It has also been recommended that the organisation should review its pricing which is currently very high in order to attract more customers. Reference Apple Inc. Update on 2009-11-12 Cant M.C. (2000), Marketing Management, 4th Edition Juta and Co Ltd, SA. Cantrell, Amanda. Apples remarkable comeback story, CNN, 2006-03-29. Retrieved on 2007-03-02. Colvin, Geoff (March 16, 2009). "The Worlds Most Admired Companies 2009". 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