Describe about the Marketing & Management of Apple?
The marketing function has emerged as an important support function for large organizations like Apple Inc. Macs, which are designed by Apple, are considered the best computers in personal computers in the world, with OS X, iWork, iLife and professional software as the series of operating software and supporting software for the computer. Apple is also leading in the digital music revolution with iTunesonline and iPods that are consistently being upgraded as per customer requirements. Also, the mobile market was too reinvented by Apple with the revolutionary products like iPhone and AppStore (Carew, 2012). They have also been a pioneer in the mobile tablet market with its iPad.
Apple vision statement
Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings
Section 1: Understanding the concepts and process of marketing
Elements of Marketing Process
IPhone differentiates it product by combining an iPod, mobile phone and Internet communication device in a single unique product as a value proposition (Maria, 2012). Features like desktop class emails, searching, maps and web browsing are some of the features compatible both with Mac and Windows based personal computer, which is based upon Multi-Touch interface that company provides. Automatic sync is provided from user’s iTunes libraries and with the bookmarks, contacts and email accounts. iTunes stores (Carly, 2012) are provided for the user to download video and audio files in an iPhone. Also, the company allows the third party to sell their products along with their own stores exclusively selling the product.
Apple focuses on quality and fundamental parts, which is why it provides splendid features releasing not so many versions of the phone. Apple also provides its own operating system and other applications made in house.
In an industry where profit margins are low, and the industry is facing huge competition with multiple players trying to wage a price war, Apple is one of the few who offer products, which are different from the already existing products. Apple focuses on quality and fundamental parts, which is why it provides splendid features releasing not so many versions of the phone. Apple also provides its own operating system and other applications made in house.
User’s training, smart advertising, and customer instructions are some of the tools that are being used by the company for its promotional activity. Apple focuses on its relationship with the customer, using word of mouth as its main promotional activity apart from advertisements it creates to touch customer life. Apple focuses on customer retention more rather that market penetration to acquire more customers through offers, discounts, free shipping, etc.
Apple focuses on providing the right product to the right customer in required quantity and at the right place. In most of the countries, Apple stores can be found except for some third world countries like UK and Europe where the demand is less. The country list as per the Apple support bylaws is very limited and covers region like Asia Pacific as their main market with Australia and New Zealand covering most of the customer needs.
Manufacturing dominated the economy in the past need not required physical layouts to be very important for the customers as they never went inside a factory ever. But now times have changed making physical layouts more important than ever. Apple has been a pioneer in this section as well. They ensure that proper merchandising is in place, retail shops having the required product with equally trained employees to help customers understand key offerings of the company, clothing stores with Apple’s merchandise are some of the areas Apple focuses on.
Provision of customer service
Modern service industry considers customer service a key essential part with many companies now realizing its power. Better face-to-face interactions, telephonic support services have helped Apple increase the customer loyalty towards the company. The company is always ready to serve the customers who are not satisfied with Apple products. For example, Steve Jobs announced earlier that it would provide a credit of $100 to every customer in iTunes if they feel they have bought the phone at a higher price and are not happy with the product.
There are different processes associated with customer service that helps make marketing activity a success (Colin, 2013). Processes for handling orders, processes for handling customer complaints, processes for handling identifying key needs and requirements of a customer to name a few are very important. Customer law (Apple support) provides 1 year Warranty and AppleCare Protection plan benefits to every customer.
Benefits and Costs of Marketing orientation
Apple Inc. follows both Product oriented and marketing (David, 2012) oriented strategy. It is difficult to differentiate which strategy it majorly focuses on. It is considered product oriented because it focuses on the quality of the product it offers to the customers and uses innovation (Alan, 2012) as a prime tool to penetrate new market segments. Competitive advantage is the prime motive and Apple uses it to ensure that its product is offering more value proposition (Sameer, 2012) than the other competitor’s products in the market. Apple do not launch many versions of its products but ensures that the product it offer to its customer each time has valuable features and different value proposition (Son, 2015) than its competitors. It can be considered Marketing oriented because if its wide use of marketing research to ensure continuous improvement and development of its products. It also uses innovation not just to ensure better quality but also to launch new products, which may attract new customers. Apple has always been a customer-oriented company, which is why they ensure that the customer gets the best product through use of extensive innovation. There are different benefits and cost associated with this kind of strategy.
Building customer Value (Albajes, 2012)
Through market-oriented approach customer loyalty can be increased thus helping the company to increase repeat sales from the existing customers. Also, the threat from customers is also reduced as the customer is satisfied with the quality and value company’s (Billy, 2013) products offer.
Responding to Demands
Using extensive use of marketing research Apple in the past has successful understood the requirements of the customer, which is why they have been successful in cutting down cost by eliminating products, which have less or no demand and incur a loss to the firm? This helps the company to reduce guessing and forecasting trends and patterns about customer requirement and work on only those features that the customer wants.
Increasing value (Steve, 2012) increasing cost
Increasing the value of the product also increases the costs that are to be incurred by the company to make that product. For example, by giving warranties and support as per the customer demand can increase the cost of maintenance staff and training to be provided to the support staff. These are some of the many costs that are to be incurred by the company.
Extensive and Expensive Research
For a successful (Roger, 2014) marketing oriented strategy, extensive research is required which needs a lot of resources to be deployed. This eventually helps the company to know the requirements of the customers but also increases the hiring cost for these market research activities. The costs of the research rely on the fact that how much of in-depth research is required by the company.
Section 2: Understanding and using the concepts of Segmentation, targeting and positioning
Macro and Micro Environmental Factors
Micro environmental factors are the factors that affect the internal environment of the company directly or indirectly having both positive and negative effects on the key operations (Baldwin, 2015) of the company. Following is the SWOT analysis of Apple that clearly tells about the micro environmental factor of the company.
Macro-environmental factors are the factors that affect the external environment of the company directly or indirectly having both positive and negative effects on the brand reputation of the company.
• Brand Reputation
• Customer Loyalty
• Innovation in the market
• Financial Performance
• Strong marketing and advertising team
• Product Recalls
• Relatively higher price
• Patent infringements/ patent series
• Market share growth in Asia/Pacific region
• High end accessories and support software to service-oriented countries like BRICS
• Gross margin pressure
• Google entering the market with NEXUS
Political influence is a very crucial part to measure macro-environmental factor of Apple as 52% (Sultan, 2012) of the products sold by Apple in 2010 were outside United States due to political crisis between the USA and other countries.
The global economic crisis seems to be one of the most crucial problems that has in past affected the sales and revenues of the company. Currency fluctuation due to global turmoil has greatly affected the company’s sales.
Apple has always considered customers as their most important asset and has always developed their products as per customer’s social cultural activities. Designs are developed as per the global needs and requirements with Apple focusing upon key services like iCloud and iTunes.
Innovation and R&D have always been key processes that are always in line with the customer requirements. Apple has always been regarded as one of the most innovative technology (Juliana, 2013) gathering company, which can be seen in its key offering it provides to its customers.
Segmentation for any company can mainly be divided into following variables.
- Demographic variables such as Age, Religion, Family Size, Race, Education, Occupation, Ethnicity, Gender, Income, Family life cycle and Social Class
- Geographic Variables such as Population, City, Density, Urban, Region, Size, Suburban, Market, Climate and rural
- Psychographic Variables such a Motives, Personality attributes and Lifestyles
- Behavioristic Variables such as End-use, Volume usage, Brand loyalty, Benefit expectations and Price sensitivity
Apple iPhone majorly targets the people within the age group of 18 to 40 years with a major focus on people who are interested in buying new technology. Apple also tries to target more males than females due to their high interest in games; applications and features such as The Internet enabled devices, which are mostly being used by the male population as compared to the female one. Students belonging to a high class or higher middle class are the ones buying Apple products due to the prices of the product and high-end features the product provides. The products of Apple are firstly sold in the USA, Some parts of Europe and UK because of the competition and better infrastructure they give to the company. Apple always says that products it makes are more of an experience than an electronic device.
Apple is a company, which primarily targets the customers who are concerned with design, style, and simplicity of the product. Innovation is one of the key operations at Apple through which the company can target these people. All Apple products have an interactive user interface with both style and ease of use. Apple uses many segments and targets them for successful selling of their products. Matt Asay says that Apple offers its customer to decide how and where they want to use their products. Apple targets Teenagers, business professionals, college students, young children and kids and adults for marketing their product. Forbes considers Apple one of the unique marketers. Apple has invested a lot in observing different patterns and had worked extensively on market research to understand the requirements of the customers.
How buyer behavior affects marketing situation in different buying situation
Understanding buyer behavior has become indeed one of the most important things for any company whether it is a local technology company or multinational technology company like Apple. Tools such as questionnaires and other market research tools help the company understand different buyer behavior and act accordingly. Two different situations in which buyer behavior affects marketing situation are-
Social Media Campaigns: This platform has become one of the most influential methods for marketing campaigns and to know the acceptance of the product to be launched. Launching a new product and a great response to the product online can help the company understand the acceptance of the product and also in the marketing of the product.
Pricing: Offering special discounts or promotional offers to bring loyal customers to the store and even some new customer to try company’s products. By analyzing how much money customers are happy to spend, how often customer spend and the type of product they are willing to buy help the company in better pricing of the product.
Positioning as per Kotler can be defined as “perspective of a consumer mind on what he thinks about the brand”. Apple positions its products in the mind of people as high premium products having a high degree of innovation through extensive use of research and development and targets people having good lifestyle buying luxury items. Apple’s products are premium products with high price and exclusive features at the same time over other competitor’s products. Apple’s image and reputation has enabled the company to quote products at such prices and users buying the products without any query. Apple has changed the way people look at electronic items being used daily. Apple helps user experience the product through exclusive features it provides through innovation. Apple has ensured that no one can copy its products through many patents it has for every unique feature it provides to its customer for which it quotes such high prices.
Section 3: Understanding the individual items of the extended marketing mix
Apple products are developed to sustain competitive advantage to compete in such dynamic and low-profit margin industry in which most companies are facing problems. Apple over years has ensured that customers using Apple can easily differentiate the product and wide variety of features that are provided to the customers. The competitive advantage that the product provides to the customers is.
Protective ecosystem: Unlike other companies, Apple has its own operating system named iOS which has helped the company differentiate its products from those who are using a common platform like Android, Windows etc. During a survey done in the USA by Simonlycontracts.co.uk, it was found that 78% of the iPhone users thought that they couldn’t imagine using any other phone and 59% said that they do not want to change because of the brand loyalty they have. Other companies have to compete with each other as Android is open source and anyone can make their own devices as per there requirements and sell at a lower price.
Brand Appeal: Apple is one of the few technology brands, which are considered a luxury brand. During a survey done by Hurun Research Institute, it was reported that Apple is considered most luxury brand in China in 2014 beating brands like Prada, Louis Vuitton, etc.
ITunes and Digital Asset Management: Apple is not just an electronic company but also a digital asset management company through extensive control over iTunes. Apple through use of this manages credit card information of almost 100 million customers, which shows the extent of loyalty, and trust customers have over the company.
Distribution providing customer convenience
Distribution channel related decisions should be based upon the expectation regarding where the customers are most likely to buy the product. The aim of any business is to reduce the overall distribution cost keeping them at low as possible. This would include inventory, storage, and transportation. Marketing management is used to decide the intensive, exclusive or selective network of distribution, depending upon the kind of product to be sold. Right choice regarding these factors along with appropriate wholesaler or dealer helps create competitive leverage, which Apple has successfully achieved. Apple has created a brand image of the luxury item for which people don’t mind visiting places far off to visit exclusive stores of the company.
In an interview, Tim Cook once said that company’s objective was never to sell a low cost phone but to sell a great phone that enables the user to have a great experience. They just do it while figuring it out at a lower price than its competitors.
Four pillars upon which Steve Jobs strategized the company’s objectives are (1) focusing on the higher end (2) offering a small number of products (3) making people starve for company products by creating a halo effect (4) giving priority to profit share over market share.
Apple focuses on four pillars stated above to offer product, which is best in class and provides user interactive features, which enables the user to do things which other company’s product do not.
Apple has always worked to achieve better high end products enabling it to be the best out in the market. User’s training, smart advertising, and customer instructions are some of the tools that are being used by the company for its promotional activity. Apple focuses on its relationship with the customer, using word of mouth as its main promotional activity apart from advertisements it creates to touch customer life. Apple focuses on customer retention more rather that market penetration to acquire more customers through offers, discounts, free shipping, etc. This helps the company to insure that company’s objectives are in line with the promotional activities that are being done by the company to focus upon the current customers and new potential ones.
Additional elements of extended marketing mix
Manufacturing dominated the economy in the past need not required physical layouts to be very important for the customers as they never went inside a factory ever. But now times have changed making physical layouts more important than ever. Apple has been a pioneer in this section as well. They ensure that proper merchandising is in place, retail shops having the required product with equally trained employees to help customers understand key offerings of the company, clothing stores with Apple’s merchandise are some of the areas Apple focuses on. Modern service industry considers customer service a key essential part with many companies now realizing its power. Better face-to-face interactions, telephonic support services have helped Apple increase the customer loyalty towards the company. The company is always ready to serve the customers who are not satisfied with Apple products. For example, Steve Jobs announced earlier that it would provide a credit of $100 to every customer in iTunes if they feel they have bought the phone at a higher price and are not happy with the product. There are different processes associated with customer service that helps make marketing activity a success. Processes for handling orders, processes for handling customer complaints, processes for handling identifying key needs and requirements of customers to name a few are very important. Customer law (Apple support) provides one-year Warranty, and AppleCare Protection Plan benefits to every customer.
Section 4: Understand and use marketing mix in different context
Marketing mixes for two different segment in consumer market
In context of Apple, marketing mix should be extensively planned so as to ensure future success and remain one of the market leaders in the industry they play in. They have to ensure continuous work on the four key market mix such as Product, Place, Promotion, and Price.
Product: - Mac, Apple TV, iPhone, iPad, iPod, Apple Watch and software’s are main products that Apple is continuously working upon to dominate in consumer (Galmarinia, 2013) electronic section. But to ensure continuous growth, Apple need to continuously develop new products like Apple Smart vehicle like Google just launched as its product development intensive growth strategy.
Promotion: - Premium image and quality of the product are the two things that are continuously focused upon by the company’s advertising team. Marketing mix of Apple includes Advertising, Public Relations, Sales Promotion and Personal Selling. Apple has mastered this element of marketing mix very well and needed to ensure that it holds it till the end.
Place: - Apple’s distribution strategy is very well constructed. It plans well to provide the right product to the right segment of customer at right place. Right choice regarding these factors along with appropriate wholesaler or dealer helps create competitive leverage, which Apple has successfully achieved. Apple has created a brand image of luxury item for which people don’t mind visiting places far off to visit exclusive stores of the company.
Price: - Apple focuses on four pillars stated below to offer product, which is best in class and provides user interactive features, which enables the user to do things, which other company’s product do not. Four pillars upon which Steve Jobs strategized the company’s objectives are (1) focusing on the higher end (2) offering a small number of products (3) making people starve for company products by creating a halo effect (4) giving priority to profit share over market share.
Difference in marketing product and services to businesses rather than consumer market
In today’s market one needs to understand the particular market they are serving to be successful. Markets can be either of the two – Consumer market or business market. Using two questions one can understand which market one is serving. Why is one purchasing? And who is buying the goods? Are the two questions? Sales and purchases to different businesses, market intermediaries and government by the company of either goods or services are considered a business market. On the other hand when sales and purchase are done to consumers for their own use of either goods or services is called consumer market. Marketing strategies for both the market are different by needs, wants, and behavioral patterns. In the business market, more than one decision maker is present with different people handling different aspects of buying decision. One can be an engineer; one can be purchasing manager and more.
Difference of international market from domestic market
Marketing can be considered an effective and efficient management of the key resources at hand and their utilization to meet the customer demands and company’s objectives. It should have successful planning, conceptualizing, execution, promotion, pricing, and distribution of products.
When company’s products are being sold within a local financial market, it is called domestic marketing. Only one set of competition is dealt with here making it a more convenient choice. No language barriers or cultural constraints exist and understanding the consumer pattern is much easier. Thus, it helps the decision making and help developing strategies.
When one sells company’s products and services to different countries, it is called international marketing. It is a much more complex as compared to domestic marketing and requires huge capital investment. Also, laws and regulations are to be adhered to which adds different restrictions to the business. Many languages are there and different cultures are there because of which decision-making becomes very difficult.
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