Marketing Management Philosophies And PEST Analysis Of Apple Inc Essay.

Question:

Discuss about the Environmental and Economic Performance of Firms.

Apple Inc is one of the consumer electronics organizations in America. The company concentrates in conception and fabrication of electronics and software products. The start of the company took place in 1976 in Cupertino, California involving the sales and support of a variety of personal computers, software and hardware accessories, mobile phones, and music players. The company operates some online shops and stores that help in the selling of its products. Apple Inc product portfolio comprises Macintosh for personal computers, iPods, iPads, and iPhones. In this industry, there is a clear distinction between mature and emerging markets. This is based relatively on the strength of Apple’s distribution channels (Masi, 2009). At the same time, it is an important factor for Apple Inc to consider incorporating factors influencing sales of their products within the American market before full consideration of the entire global market. In this case, since market positioning is critical in the determination of higher margins, it is necessary for Apple to invest massively in product brands that appeal mostly to the young people (Budikova, 2014).

According to Kotler et al., (2014), Marketing refers to the art and science of creating value for goods and services delivered to consumers for the reasons of satisfying needs at an expected profit. In this study, marketing concepts or marketing management philosophies give guidelines to the business on the application of marketing efforts. These theories are applicable in the process of identifying and fulfilling consumer needs while also benefiting the company.  Some of the marketing management philosophies include production concept, product concept, marketing concept, selling concept, and social marketing concept (Kotler et al., 2014).

On production concept, consumers of electronic products always desire to buy at affordable prices. The products should also be widely available to customers. In this case, Apple, for instance, ensures that the demand for their iPads is more than the supply according to the impression through their website. In the year at the launch of its iPads, they successfully used this concept to make significant sales. In this case, it was easy for the company to moderate their prices to suit the consumer demand. The concept also works for Apple since their market is spread all over the world (Kotler et al., 2014). The product concept focuses on quality of the product despite its high price. This philosophy assumes that customers would still purchase a high-quality product irrespective of price and availability. Apple products are of high technological quality in the market and, therefore, sell at higher prices, in fact, their objective is never to sell low-cost goods (Kotler et al., 2014).

The selling philosophy focuses on the actual sale of company products. This concept disregards the quality aspect, and consumer need rather focuses on making money. However, Apple does not use this concept so much since the company takes the issue of building relationships with customers seriously. The marketing concept focuses on providing products to consumers that fulfill their needs (Datamonitor, 2006). This enables the building of strong relationships between company and customers hence generating profits in the long-run. There is also the societal marketing philosophy that focuses on fulfilling customer needs without affecting the entire environment or rather maintaining society’s well-being. It is important for large companies such as Apple to involve corporate social responsibility as crucial part of their marketing concept (Kotler et al., 2014).

Marketing Management Philosophies

The strength of Apple is in its ability and focus on user-friendly customer experience. In this case, Apple ensures that their products appear delightful and friendly to consumers. This concept is easily provided through innovative features such as gesture touch-screen and personal assistant SIRI.  Users prove that the design of Apple devices is customer compatible in both digital and entertainment hub. This ensures that Apple has a passionate brand community of followers that take company brand values as their identity. In this case, Apple is implementing relationship and social marketing concepts to propagate their sales and market dominance (Lantos, 2015).

PEST analysis is a valuable strategic tool that enables easy identification of business status, position and growth within a defined market environment. The device is also applicable in the analysis and classification of market development and decline (Kotler and Armstrong, 2013). Considering the market’s primary characteristics, Apple Inc is one of the leading asset management company as well as Smartphone producer in the global market. Apple Inc distinct itself as one of the businesses that produce and runs together hard-wares and soft-wares. Notably, the Company allows its consumers to share contents through Apple devices by availing an exclusive platform within the media referred to as iTunes (Digital Marketing, 2011). Apple boasts of some of the unique innovations such as that of iPad that attracts significant sales, an attribute that can only be delivered by Apple (Burns, 2012). The sales of some of the products such as iPad, Mac, and iPhones have increased by a significant percentage over the years.

The PEST analysis is a necessary tool that is crucial in this case for the reasons of gaining an understanding of the Apple’s business potential. The tool is also vital since it helps the company identify the direction of its operations including the knowledge of the future market environment. There are major problems that companies are unable to control that involves political instabilities, global health issues and other uncertainties that eventually affects the sale of Apple products within the global market (Anon, n.d). Apple Inc reduces operating costs by outsourcing their productions in different countries in Scandinavia region, China, and Korea. In the case of any political instability within these countries, there is a delay in manufacturing processes that eventually affect Apple’s appealing nature in the face of consumers and various dealers (Burns, 2012).

On the economic front, the purchasing power of any region depends on its financial abilities. The increase in the rate of unemployment within the global platform has negatively affected the sale of Apple products (DeWitt, 2012). Moreover, the increase in world oil prices resulted in inflation of the world’s economy that eventually affected sales of Apple products in different regions owing to its perceived high prices. This reduced the purchasing power of the consumers, therefore, negatively impacting sales. However, the recent times have shown immense recovery to the world’s economy, therefore, making Apple purchase foreign currencies making Apple increase its revenue within the global market (Apple Inc, 2012).

PEST Analysis of Apple Inc

On the Social front, Apple Inc has always utilized two factors to affirm the quality of their products; this is the design and quality. The majority prefers to purchase luxury products since they can afford. In this case, the iPhones and iPads experience a significant increase in purchase across different market segments globally. The growth in the music industry has improved and this accounts for the biggest social influence on Apple since the major essential music store used by the majority is iTunes. The use of iTunes and other Apple products defines the modern lifestyle, therefore, making the company benefit from the social aspect (McGrath, 2012).

Concerning the technological factors, Apple is renowned for its innovative abilities and high-grade technology products. The company invests heavily in research and development making it be at the top of new innovative productions. The aspect of their products that makes them user-friendly is admirable across consumer networks.

Apple Inc is one of the big brand names in the Consumer Electronics Industry globally.  The industry has fierce competition from key players such as Google, RIM, Nokia, Hewlett-Packard, and Samsung. The nature of competition within this industry can best be analyzed through Porter’s five competitive forces.

There is intense competition within the industry from potential companies such as Samsung and Google (Reisinger, 2012).  However, Apple Inc focuses significantly on building technical support and creation of loyalty amongst customers including the production of quality products. This aspect has given Apple an upper hand, therefore, making its products not to go on sale.  Their productivity levels have been maintained without marking down products while generating superiority through Android phones, tablets as well as e-Readers at affordable prices (Loma, 2012).

The aspect of the bargaining power of vendors has the potential of downing the profits of the company through high supply prices. Apple Inc is still growing, therefore, requires new suppliers of their raw materials. They utilize their online website to register new suppliers, hence, reduces the bargaining power of vendors by making the registration open. In this case, a large number of suppliers are attracted, which reduces their bargaining power through competition amongst the large number of vendors (Apple, 2010).

In pursuit of a significant market share, there is a need for Apple to meet the expectations of customers. This is achievable by focusing on different segments divided based on educational level, age as well as income. The aspect on differential makes buyers switch quickly to other products driven by price sensitivity. Google provides high competition on smartphone and tablet markets due to the fall of Blackberry that was once a leader in Smartphone production within American market (Travlon, 2012). However, Apple Inc still holds a significant market share that amounts close to 75% of industry’s profit. This narrows the chances of Apple’s customers to switch brands since their loyalty to Apple brand is very strong.

In this industry, the need of consumers is almost the same making the aspect on substitution difficult. This makes the threat of substitute to operate on price and performance that influences consumers to switch products. Apple reduces the threat of substitute through its large base of loyal customers. The company has created an ‘ecosystem’ that enables users to buy iPhones for standard as well as other products based on stability and ease to upgrade. Such attributes grant the customer the ability to transfer knowledge as well as apps amongst devices (Segan, 2012).

Impact of Political and Economic Factors on Apple Inc

Whenever an industry experiences entrance of more companies in the market, the possibility is that the existing companies experience decreasing market share. However, Apple maintains the market share through differentiation of its product brands and ensuring the existence of valuable marketing strategies (Kurtz et al., 2007). The high brand image of Apple makes it overcome any form of competition; this also includes its innovativeness and excellent customer services.

Apple Inc uses differentiation strategy to distinct its products from other competitors within the market. The design of its products seem outstanding and of high quality whereby Apple Inc considers easiness of use from beginners to prominent users within the market (Masi, 2009). The company invests in value creation by focus as well as cost leadership whereby it outsources its production to reduce costs. Apple ensures such outsourcing to third parties is through massive economies of scale. The companies from whom Apple Inc outsource acts like the Original Equipment Manufacturer (OEM) with Apple focusing on user interface and industrial design. This ensures that they maintain highly innovative and user-friendly devices that are stylish. These highly personalized and people friendly devices ensures that Apple remains distinctive even in their product prices in the market (Laudon and Traver, 2016).

Apple Inc proves to be the master of teaser campaign mechanism whereby they cultivate and drag the suspense on their product development processes. Before the release of any product, the company advertises over social media creating a cliffhanger as consumers speculate on the outcome. Such marketing principle generates massive consumer interest for free, which they eventually convert into sales volume. The essence is that Apple ensures that they build relationships with the leading influencers in the industry; the media and bloggers (Webber, 2013). From the perspective of relationship marketing, the best way for a company to promote its products is to involve others and allow them to propagate the rest on behalf of the Company. The use of such third-party experts ensures the success of teaser campaigns that eventually results into a full-blown marketing campaign that builds interest and momentum over time (Apple, 2010). 

The other aspect that Apple Inc uses involves the creation of an illusion of scarcity on their products for the ultimate purpose of increasing demand. The point on poverty ensures that the Apple products remain more desirable and in demand within the market.  In this case, the aspect on scarcity propels the trendy consumers besides the value of the product and all the procrastinators to anxiously buy the products (Tontini et al., 2014). For instance, on the launch of iPhone 5 in September 2012, the Apple website reported that they had massive demand that necessitated a delay in delivery of the product. Such illusion on scarcity created an impression amongst the consumers that they could only pre-order the phone for delivery to take place. This made the iPhone 5 to set record sales on day one, due to the impression on prolonged difficulty of owning one (Brondoni, 2014).

In their quest to deliver value, Apple Inc also focuses on providing friendly customer experiences. In this case, their products are portrayed as having different, friendly, and delightful designs (Morschett et al., 2015). In this case, the core driver of Apple products involves ease of use experiences with innovative features such as a touchscreen that senses gestures for zooming and scrolling as well as personal assistants. Design and packaging also add value to their products, Apple Inc is known to package their products brilliantly. This acts as an important technological product differentiator. All Apple products convey the company’s brand personality especially the unified visual identity alongside distinctive appearance (Apple, 2016).

Moreover, Apple Inc has evolved a brand culture that is friendly and upmarket, which have attracted massive passionate following identifying themselves with brand innovativeness. It is important for such companies to define the meaning behind their brands before zeroing in on the types of consumers that share the same values. This value enables Apple Inc in the creation of digital communities for easy connection between fans and the company and amongst the fans themselves (Stone and Woodcock, 2014). 

The issue concerning rivalry amongst firms is best countered through brand positioning; this calls for the need of focusing on the quality of the designed products.  The case on branding Apple Inc through globally recognized names makes the identity appealing amongst the consumers (Cornelissen, 2014). The other unique process adopted by Apple is the idea of presenting company branded products in easy to read, understandable, and friendly language. Apple utilizes the art of brand positioning to solve problems that surround marketability in some regions. Such marketing strategy is appropriate in cases where consumers demand unique characteristics on the product such as easiness to use. Moreover, for the reasons of penetrating some emerging market segments, it is advisable that the company acquire a local-based strong brand.  Reinforcing the brand image requires the inclusion of meaningful ideas through naming, color as well as a symbol (Hopwood, 2005).

The major strength of Apple is in its market position and consumer trustworthiness that increases its competitive advantage. The company boasts of variety of software and apps that are interlinked to maintain each other. Further, the company has a large capital base and operates on profits, not debts which are an advantage over its competitors. They provide customers with high-quality experiences in their retail stores and also invest heavily on brand awareness (Strategic Management Insight, 2013).

Apple Inc has weaknesses on its great pricing mechanism, whereby most of its products are highly priced as compared to competitors. In such a case, consumers can easily obtain similar products of the same function at a lower price from the competitors (Strategic Management Insight, 2013). The other aspect concerns the rows within the management team, especially after the death of Steve Jobs (Kahn, 2012).

Concerning opportunities, Apple products such as iPad and iPad mini have the opportunity of increasing market share due to the high demand from consumers. At the same time, the launch of the iTV increases the sales margin including the experienced growth in the smart-phone and tablet markets. The increasing trend in mobile advertising presents an opportunity for Apple since it allows advertisements on iPads and iPhones through its Ad advertising platform (Strategic Management Insight, 2013). From the perspective of Doole and Lowe (2008), the overall structure of the industry provides abundant opportunities for innovativeness. However, the desirable structural attributes within Apple’s areas of operation gives the company the needed capability that is necessary to capture a significant market share.

The rapid changes in technology present one of the biggest threats to Apple and its competitors. This is since the current lifestyle is more technology loving, therefore, demands innovations within the shortest time possible (Chen et al.,  2016). In this case, there is a lot of pressure facing companies due to the high nature of competition from rivalry firms. At the same time, regional economic wave affects the growth of the enterprise such as an increase in tax in the United States of America. Apple Inc has Samsung as the sole provider of application processors; therefore, chances are high of them to charge high prices on Apple Inc due to the absence of feasible substitute company that can supply application processors (Jung, 2012). Further, Apple faces stiff competition from Android OS which serves as the main competitor for its iOS and can quickly overtake them in the market.

Conclusion

The strength of Apple Inc is in its product portfolio that includes many electronic products such as cell phones, personal computers, iTunes alongside other related services and also networking solutions. Apple’s market position is measurable through its operating performance that impresses investors and stakeholders. However, the company’s profitability can be affected by fierce competition from rivals in the same market (Data monitor, 2006).

The demand on the market is dynamic and crucial since they focus on quality that satisfies curiosity. For instance, in the process of unveiling innovations, the consumers should be assured on the advancement of new qualities capable of addressing important individual desires. This is since consumers can at times be wrongly enticed through false assurances that eventually lead to disappointments and consequently loss of trust with the consumers. In this case, the management should take time ostensibly in managing organizational sustainability through the management of performance in financial assets, the health of employees and intellectual property. At the same time, the management should presume their compliance with international ethical standards and laws.

Apple should be careful concerning the legal and political areas within its areas of operation. This is mainly because Apple Inc outsources its services to different countries to reduce operating costs. The company has to identify an alternative supplier of processors to reduce risk since it purchases application processors from Samsung which is a direct threat to its operations.

Consequently, Apple Inc should reinforce its presence in the emerging markets within regions like middle-East and Africa. This is since the existing economic trends in the wider European market are changing progressively. Such trends largely influence business activities, therefore, encouraging the formation of alliances as well as partnerships between related companies (Raza-Ullah et al., 2014). However, joining such alliances will demand that Apple and its accomplice supplies products that are capable of attaining competitive advantage in relation to the standards within the target market. In this case, Apple Inc will have to restructure various marketing strategies and activities that involve supply concepts as well as practices that have the capability of addressing complexities within the market. However, the company will also have to strategize on how to overcome the issue on integration across supply chains within specified markets. Regarding the distribution channels, Apple should try to add to the number of stores currently existing and also such joint venture with identified organizations will help the company to expand its business venture.

Also one of the best remedies that can easily deal with rivalry in competition involves purchasing of highly rated brands within specified regions. This presents a probable solution to markets such as the Scandinavian and Asia. The initial step of maintaining balance and stability within the management structure provides the advantage on strategic moves. In this case, the Apple Inc should profoundly influence the use of aggressive promotional techniques contrary to that of their competitors.  A good example is a  of creating awareness on the company’s product portfolio through their website and social media (Wagner et al., 2001).

The company should also invent different promotional techniques that ensure the creation of influence and stability. On technical fronts, Apple should make sure that every touch point between the business products and consumers conveys a strong brand personality with a unified visual identity that sets the company apart from other competitors. This strategy requires that Apple also involves the use of in-person meet-ups that easily connects to business fans. There is also need for creating more digital communities through applications such as WhatsApp.   There is also the aspect of identifying and making a detailed analysis of the impact of other companies within different target markets. This involves analysis of the most preferable and applicable product promotion techniques for electronic consumers, especially in home markets.

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