Assignment Context and Business Scenario Consumers Take a Shine to Apple Inc. Few companies have fans who sleep outside their doors in order to be the first to buy their latest products. However, this is a common occurrence at Apple Inc. The new iPad sold 3 million units four days after the launch. Headquartered in Cupertino, California, Apple went from near bankruptcy, with a 1997 share price of $3.30, to a brand valued at $153 billion and a share price of more than $600. Apple first entered the public sphere in 1976 with the release of the computer Apple I, created by co-founders Steve Jobs and Steve Wozniak. A few innovations later, the company had more than $1 million in sales. Yet Apple’s luck did not last. Its downturn started during the 1980s with a series of product failures and resulted in near bankruptcy for the company. The return of Steve Jobs, who had been ousted in 1985 due to internal conflicts in the company, instituted major changes for Apple. The company successfully adopted a market orientation in which it was able to gather intelligence about customer’s current and future needs. For instance, the creation of the iPod and iTunes met customer’s needs for an efficient way to download a variety of music and listen to it on-the-go. Although it was once unheard of to access the Internet from a cell phone, Apple’s iPhone made it commonplace. Apple’s investment in the iPad set off a massive surge in demand for tablet computers. Apple has become skilled at recognising strategic windows of opportunity and acting upon them before the competition. Apples Pricing and Promotion Strategies In addition to its revolutionary products, Apple’s success in pricing, promotion and distribution have also contributed to its popularity. Apples products are traditionally priced high compared to competitors. For example, the new iPad retails for approximately $499 in the USA (although models with additional gigabytes are more expensive), while the Amazon Kindle Fire retails for $200. Apple’s Mac computers are often more than $1000. Yet rather than dissuading consumers from Department of Business Page 2 of 8 adopting the products, the high price point provides Apple with an image of prestige. Apple also stresses the convenience of its products as well as the revolutionary new capabilities and features they have to offer. Thus, it attempts to create value for customers prompting them to pay more for Apple products than for those of its competitors. Even with high-quality products, companies rarely achieve the success of Apple. Apple encourages demand for its products through several types of promotion, including word-of-mouth marketing. Early on, Apple supported “evangelism” of its products, even employing a chief evangelist to spread awareness about Apple and spur demand for its products. Successful evangelists spread enthusiasm about a company among consumers, often through word-of-mouth recommendations. These consumers in turn convinced other people about the value of the product. Through product evangelism, Apple created a “Mac cult” – loyal customers eager to share their enthusiasm about the company with others. Apple’s Impact on Marketing Apple’s corporate culture of innovation and loyalty has created a company that massively impacts the marketing strategies of other companies. For some, this impact has been largely negative. Apple’s iPhone increased competition in the cellular and smartphone industries, and its iPads compete with electronic readers like Amazon’s Kindle. Apple has also taken market share away from competitors such as Research In Motion (RIM). Many RIM BlackBerry users are opting to exchange their BlackBerries for iPhones or Android devices. On the other hand, many companies are seizing upon the opportunity to learn from Apple. One industry in which Apple has made great changes is retail. Apple stores differentiate themselves significantly from other retailers. Apple took the concept of retail in an entirely new direction. Everything in the Apple store is carefully planned to align with the company’s image, from the glass-and-steel design reminiscent of the company’s technology to the stations where customers can try out Apple products. Apples stores are a place where customers can both shop and play. Customer service is also important to the Apple store image. Employees are expected to speak with customers within two minutes of them entering the store. Each employee has received extensive training and often receives greater compensation than those at other retail stores so as to encourage better customer service. Apple executives constantly look for ways to improve stores, enhance customer service and increase the time that customers spend in-store. In 2011, the company began to install iPad stations within its stores. The iPads feature a customer service app designed to answer customer questions. If the customer requires additional assistance, he or she can press a help button on the app. The app changes the customer service experience because the representatives come straight to the customer without the customer actively seeking out the sales representative. Due to the immense success of Apple stores, other companies are attempting to imitate its retail model. Microsoft and Sony opened some of their own stores, and others use Apple products to enhance their businesses. For instance, some pharmaceutical and car salespeople have adopted the iPad to help in business transactions, and some restaurants even use the iPad to show menu items. Department of Business Page 3 of 8 Apple Going Forward The death of Steve Jobs concerned some people about the future of Apple. To many customers, Jobs appeared to be a saviour who brought the company back from near bankruptcy and who was the driving force behind its innovative products. In the past, whenever rumours of Job’s health reached the public, Apple’s share process dropped. Competitors such as Sony, HTC, Amazon and Microsoft have also strengthened their innovations by launching new products that can sufficiently compete with Apple in terms of design and features. Apple has also in the recent past been accused of paying “slave wages” to its suppliers particularly those that assemble its products in China. It has also been accused of overcharging with hefty prices for its products and there is even the story of a man selling his kidneys to buy an iPhone. There is also the issue of “fake Apple products” coming into the market which can impact upon its brands reputation. Today, Apple products can be found all over the world and as the firm expands and grows its international presence, it will also face numerous challenges. However, the company remains optimistic. Although Apple must fill its leadership gap and continue innovating to deliver on its promise of quality, the loyalty that fans feel for Apple remains high. Task 1 A. Using appropriate theories, review changing perspective in marketing planning. Evaluate Apple’s ability for planning its future marketing activity. B. Examine techniques for organisational auditing and for analysing external factors that affect marketing planning. Use one of these techniques to carry out organisational auditing and analysis of external factors that affect marketing planning in Apple. you will have applied an effective approach to study and research the marketing planning process at Apple Task 2 Using appropriate theories, assess the main barriers to marketing planning and examine how Apple may overcome these barriers. Task 3 A. Based on your analysis in Task 1, write a marketing plan for the launch of a new product for Apple. B. Explain why marketing planning is essential in the strategic planning process for Apple. C. Using Apple, examine techniques for new product development. Justify recommendations for pricing policy, distribution and communication mix for the new product. D. You are required to explain how factors affecting effective implementation of the marketing plan have been taken into account. Task 4 A. Using Apple, explain how ethical issues influence marketing planning and analyse examples of how organisations respond to ethical issues. B. Analyse examples of consumer ethics and their effect on marketing planning in Apple.