Apple company market research project mkt305

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Apple company market research project mkt305

  1. 1. Apple Company Market Research Project MKT 305 By:Shivam Shah, Kimberly Sahara, Carol Medina, Candice Koh, Jaaron Holmes, TaDarrius Douglas 1
  2. 2. Table of ContentsIntroduction………………………………………………………………………………………..3Environmental Scan…………………………………………………………………………….....5 Economic Impact……………………………………………………………………….....5 Technology Trends………………………………………………………………………...6 Political-Legal Trends…………………………………………………………………......6 Socio-Cultural Trends…………………………………………………………………......7SWOT Analysis…………………………………………………………………………………...8Mission Statement………………………………………………………………………………..10Competition………………………………………………………………………………………10Target Market…………………………………………………………………………………….11Product and Positioning………………………………………………………………………….16Pricing……………………………………………………………………………………………18Distribution………………………………………………………………………………………19Promotion………………………………………………………………………………………...21Recommendations………………………………………………………………………………..23Works Cited……………………………………………………………………………………...27Appendix…………………………………………………………………………………………35 Introduction 2
  3. 3. When we think of innovative computer and cellular phone technology that is constantlyever-changing, worldwide success, and brand and customer loyalty like no other, what companyusually comes to mind? Apple Inc. Now called Apple Inc., the company began as a manufacturerof personal computers and it was first called Apple Computer, Inc. ("History of Apple Inc."). Thecompany we now know as Apple was not as internationally successful as it is today, but after afew bumps in the road and under the leadership of its founder and former CEO Steve Jobs thecompany was back on its feet. Steve Jobs managed to rebuild the company and Apple began tomake its return in 1998 with the introduction of some of its early hardware products includingiMac, iBook, and the Power Mac G4 ("History of Apple Inc."). The year 2001, however, was avery important year for the company. It was the year that Apple introduced the iPod line andApple products started to become increasingly popular worldwide. From that year forward, thecompany not only changed peoples perception of music through the introduction of the iTunesmusic store but also changed the way people communicate with one another since the release ofthe iPhone ("Technology: Changing the Way we CommunicateMediaCAST Blog | MediaCASTBlog."). The release of the iPad has helped consumers stay organized and entertained while alsooffering mobility. Furthermore, without Mac desktops and laptops there would be no "mac users"and media professionals wouldnt have the option of using a computer that is more reliable thanits competitors (Finnie). Aside from being a top technology company worldwide, Apple has also paired up withthe (RED) charity to enhance its marketing strategy. The goal of this collaboration with (RED) is"to fight for an AIDS-free generation by 2015" ("Apple - (PRODUCT) RED - Help fight AIDSin Africa."). In order to do this, Apple has created red products and every time a consumer 3
  4. 4. purchases one of the red products, the profits go to AIDS programs in Africa. The charity hascollected more than $50 million from Apple ("Apple - (PRODUCT) RED - Help fight AIDS inAfrica.). In addition to using cause marketing, the company has shown considerable interest forits effect on the environment, specifically its environmental footprint. One of Apples main goalsis to create environmentally friendly products. Apple aims to do this by designing products thatrequire less material and not only lessen carbon emissions but eliminate common toxicsubstances that are used in manufacturing products ("Apple - The Story Behind ApplesEnvironmental Footprint."). Additionally, Apple also reduces greenhouse gas emissions byrunning several of their data centers on 100% renewable energy. Apples aim has been to provide consumers, businesses, students, and educationalinstitutions with the best personal computing experience. Not only has Apple Inc. redefined howconsumers use computers at home, school, and work but has also given consumers a whole newperspective on the mobile phone and music industry all while exemplifying social responsibilityand environmental sustainability for its stakeholders. Apples worldwide success is evidence thatthe company has succeeded in accomplishing its mission in being one of the worlds topinnovative companies. Environmental Scan 4
  5. 5. Economic Impact Apple has created entirely new products and entirely new industries, by focusing oninnovation. Apple Innovations as a result have created or supported more than 500,000 jobs forU.S. workers (Apple). With the different products that Apple has available to sell, consumers buya lot of supplies which brings money into the economy. Apple products are the first thingssomeone can name as being a want. Technology is something that is always modern, andeveryone wants to stay up to date with. Apple has always comfortably beats its revenueestimates, originally when the iPhone was unveiled it was universally revered. Apple‟s release ofits products can impact US gross domestic product (GDP), Apple‟s shares have risen 50% thisyear, making Apple the most highly valued company on the American stock market. In the past11 years Apple has launched three products- the iPod, iPhone, and iPad that have created brandnew markets, fulfilling desires that consumers did not even know they had (Carmen Ballagan).Apple has proven that it is possible to earn high margins with brilliant designs and by offeringconsumers ways to access the internet effortlessly wherever they go. Apple shows that, even in aperiod of recession, consumers are willing to pay for the must-have gadgets. Innovation has beenwidely touted as the key to long term economic prosperity (Carmen Ballagan). Apple and theU.S. tech industry have successfully coordinated global value chains to develop and manufacturetheir products while focusing their own efforts on design, marketing, branding, and distribution.Innovative products such as American technology products are designed and marketed by U.S.companies; they create valuable jobs for American workers even if the products aremanufactured offshore (InformationWeek). Apple‟s tremendous success with their innovativeproducts in recent years has driven growth in U.S. employment.Technology & Industry Trends 5
  6. 6. Technology will always be an ever growing industry and the demand for efficient andsmart technological advancements has become more apparent. Everything is changing, consumerproducts such as phones and tablets to the way your home computer accesses the Internet. Dualcore and Quad core processors have become the norm in smart technology; as a result peopleshould expect more powerful devices, smart devices in our pockets are far more powerful thanthe desktop computers people dreamed of in the 1980s, as a result they could soon replace ourwallets as well (InformationWeek). Smartphones also bring computing power in the palm of ourhands, (NFC) or Near Field Communications, which is already part of manysmartphones.Imagine tapping your phone to a receiver at a register, instantly paying for an itemwithout fumbling for your wallet, or being able to load your transit card onto your phone, using asimple tap to deduct money for every trip on the train (CNN). All things you can do now with asmartphone would have seemed like science fiction only a decade ago.Because of Technology &Industry Trends, it has also become easier and cheaper to add Internet connectivity over a mobilenetwork than to build physical telephone lines. Cheap tablets will bring changes in education,health care, retail, automobiles.Political-Legal (laws that impact the industry) Large companies like Apple can financially support the political process in several ways.They may give direct contributions at the state and local level. Companies like Apple engage inpolitical spending indirectly by supporting trade associations. Since 2002, Apple has been amoderate political spender; the company has contributed approximately $580,000 in corporatefunds to political activities (Political Transparency and Accountability Profile). The debate over“Net Neutrality” has been an ongoing problem for large technology companies like Apple. 6
  7. 7. Congress and the FCC want to impose regulation if need be. Net Neutrality changes the way theInternet operates (Political Transparency and Accountability Profile). The push for modernization of the American healthcare system would providegovernment money for infrastructure development and implementation for health care providers.The adaptability of Apple‟s key products in innovation health centric ways could bring newsources of revenue, because Apple creates new and innovative technologies it could raise thefuture value of Apple.Social-Cultural Trends Internet and connectivity to the social world is driving a demand for access everywhere,using high-speed wireless technologies. Smartphones, and other ultra-portable connecteddevices, allow users to carry and have access to the Internet everywhere they go these are fast-growing compared to traditional personal computers (InformationWeek). Apple and othermanufacturers face a loss of relevance in the new technological landscape, driven by consumerpreference. Apple‟s substantial investment in research and development in highly populardevices, and is at the forefront of this transition. The production and shipment of Apple‟s devicesuse considerable sources of carbon emissions and pollution, which may come under scrutiny as aconsumer concern for the environment, which continues to grow (Brian Masi). Apple has alreadymade commitments to green manufacturing practices as well as implementing the use of eco-friendly components, and packaging. This proactive step can be used as a marketing tool toharvest greater respect from concerned customers. Further, the Chinese economy continues togrow despite worldwide economic contraction. The Chinese economy becomes more and moredeveloped, increased wages nationwide will increase the costs of production for Apple and its 7
  8. 8. OEM partners. The increase in quality of life and disposable income to Chinese citizens willprovide a larger customer base for Apple to tap into (InformationWeek). Strict Carbon emissionsregulations impose a considerable financial burden on the production of Apple‟s products,driving up costs and shrinking margins. Apple‟s initiative in implementing green practices setsthem apart from many competitors who will also feel the burden of regulation.SWOT ANALYSISStrengths Weaknesses-Early innovator of computer and non-computer -Price. Apple products in general are normallytechnology products such as iPod, iPhone, mac higher priced than their competitors and consumerscomputers, and apple TV ("MBA Lectures » Blog that are price sensitive tend to opt for lower pricedArchive » SWOT Analysis of Apple.") or cheaper alternatives. (Harrer)-Apple is an internationally successful company --Some of Apples products experience technical("MBA Lectures » Blog Archive » SWOT Analysis problems and consumers complain that theres aof Apple.") lack of customer care and having to purchase the AppleCare package in order to resolve any-High level of Brand loyalty among customers problems. (Crook)(Goodson) -iTunes purchased content such as eBooks, movies,-The iTunes store is a big part of Apples revenue. TV episodes and some music work only on applePeople buy music and applications conveniently for devices and computers. This Digital Rightstheir Apple devices (Hornshaw) Management protection prevents users from 8
  9. 9. moving iTunes content to other devices that are not- Apple products are reliable, and it is a well-known apple devices.(Aimonetti)company globally. -Users would have to get used to the formatting of-Apple is financially solid, no debt, and $13 billion their Apple products, and has a weak integrationnet income in Dec 2011 quarter. between windows software and their apple software.Opportunities Threats-Apple could think about possibly expanding its -Competitors such as Dell, HP, and LenovoiTunes store into China which counts for a major offering cheaper personal computer alternatives forpart of its revenue. (AP) students on a tight budget (Smith, “The 5 Cheapest High-Quality”)-Apples collaboration with Bodhi to create anexclusive handbag for Apple targeted for apple -Samsung will be releasing its Samsung galaxyenthusiasts with a fashion sense. This will generate note 2 which is a direct competitor to the iPhone 5.extra revenue/income for the company. ("Samsung Galaxy Note II vs. Apple iPhone 5)(PRNewswire-iReach) -Critics say that Android Jellybean is better than-Apple can think about committing to be a iOS 6 overall. Which will have consumers optingcompany that uses 100% renewable for android jelly bean phones. (Smith, “Androidenergy.(Joshua) Jellybean vs. iOS 6”)-Increase their advertising through new possible -Windows 7, and Google operating systems. 9
  10. 10. avenues, ex: the fashion industry, film industry.Mission Statement Apple designs Macs, the best personal computers in the world, along with OS X, iLife,iWork and professional software. Apple leads the digital music revolution with its iPods andiTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone andApp Store, and is defining the future of mobile media and computing devices with iPad (Apple). Apple is committed to bringing the best personal computing experience to students,educators, creative professionals and consumers around the world through its innovativehardware, software and Internet offerings.Competition Apple creates computers, phones, tablets, music players, operating systems, televisionset- top boxes, lifestyle, productivity software, professional media software, wireless routers, andalso sells movies and music. Products created by Apple are intuitive and easy to understand andlearn. Apple offers great customer service and in- store service experiences. Further, Apple staysat least two years ahead of its competitors, having geniuses in design, software, and retail; Applehas the cash to invent components, and manufacturing processes (Brian Masi). Apple‟s direct competitors are Google, Samsung, HP, and RIMM. Apple by forging themodern smartphone layout first and patenting its screen-centric design, Apple now finds itself inthe position of being able to force competitors to tread warily in their layout of smartphoneelements (Raymond Meyers). Apple has perfected the precision and responsiveness of screens,the iPhone showed the potential of new screens by increasing their size, given the screens a hard 10
  11. 11. glass surface that responded to light finger gestures (The Economist). Majority of othertechnology companies have fewer design patents than Apple, design has become an advantage inconsumer choice as weak design patents will have to catch up. Competitors have fewer designpatents because they are less driven by design, unlike Apple much of the industry has producedpredictable standard computer boxes, laptops, and phones and make a minimal investment indesign (TechPinions). Apple ignored the competition and remained convinced that the originaliPhone‟s 3.5 inch screen was sufficient and stuck with it, however when Apple finally embrace alarger screen size with the iPhone 5, it did not follow directly in its competitors‟ footsteps, ratherit implemented the new phone‟s larger screen in a way that clung to the original iPhone‟s designgoal of being usable with one hand. When Apple unveiled the iPad, competitors releasedknockoff tablets with different screen sizes. Apple responded to the iPad‟s competitors byreleasing the iPad mini which is $329, while the Kindle Fire costs $159 and the Google Nexus 7starts at $199.Target Market Apple‟s products and software target numerous markets as each offers an assortment offeatures specifically catering to the needs of each individual. Apple targets users who aretypically between ages 14 and 55 plus. Apples computers all target home users, schools, andmedia and design professionals. The newest iMac computer that will be released in Novembergives home users the option of conveniently having an all-in-one desktop with fasterperformance capabilities and a new storage option called fusion drive. This form of storage helpsto manage files in order to expand performance ("Apple - Press Info - All-New iMac FeaturesStunning Design, Brilliant Display & Faster Performance"). iMac computers are aimed towards 11
  12. 12. education institutions. Apple offers iMacs to schools at a discounted price (Choi). Graphic designers, television, movie professionals are also a target of Mac computers.Graphic designers tend to use mac computers for several reasons: Mac OSX is open sourcefriendly, mac computers typically come with built in tools made with designers in mind, andApple builds their computers with all media professional consumers in mind (Nutter). Eventhough you cant really customize Mac OSX like you can in windows, Apple picks the rightsoftware making the computers easier to use. Programs built in mac computers are targeteddirectly at television and movie professionals called Final Cut Pro. The program is used mainlyfor video and audio editing (Arvidson). Apples iPhoto software is available on mac computerswhich lets those who are photo enthusiasts browse, edit and share photos ("Apple - iPhoto - Newfull-screen views, emailing photos, and more."). College, High School students and faculty and staff of K-12 and higher educationinstitutions are another group targeted by Apples Education store. College, High School studentsand faculty can receive discounts if the Apple devices are purchased through the institution("Apple Education Pricing."). College students are also a major target because universities arenow working with wireless carriers in order to make these phones more accessible and affordablefor students. Small to large sized businesses are now providing their employees with iPhone‟s inorder for them to be mobile and stay in contact with the company. The iPhone attracts teenagers,high school students and college students by its sleek design and availability of applications.Their peers all have the advantage of being owners of the device so having one is a way of"fitting in" with the crowd ("iPhone:Target Audience."). The phone also has a stylish design and 12
  13. 13. it targets those who want to make it a fashion statement. Loyal iPhone users are known forstaying up to date with the latest technology so the device also targets those who are tech-savvy. Through the integration of iTunes in Mac computers, iPod devices, iPad devices, iPhone,and Apple TV, Apple targets music enthusiasts. The iPod line in general targets music, video, andphoto enthusiasts. Consumers can store their collection of music and photos into certain iPoddevices ("Apple - iPod classic - Features - 160GB. 40,000 songs. And more"). In addition,depending on the amount of storage available on the specific iPod, the device can store a certainnumber of hours of video. The iPod shuffle targets consumers on a tight budget because of itsaffordable cost. The iPod Nano specifically targets athletes because of its Nike plus integration.Athletes are now able to track the distance they have ran and can use wireless headphones whenworking out ("The All New iPod Nano Includes Built-in Nike+ and Bluetooth"). Oldergenerations are now being targeted more by Apple because the devices are not difficult to use.Students can purchase keyboard docks for their iPad devices conveniently in order to take notesduring class. Instead of having to carry a heavy laptop around, travelers can view movies on iPaddevices during their flights (Marshall). Consumers who are avid users of iTunes, Netflix, HuluPlus, and YouTube are the main target for the Apple TV device. The Apple TV device allowsusers to seamlessly connect to these streaming services. Consumers must own a widescreenHDTV to use the Apple TV device ("Apple TV - Buy the New Apple TV"). Apple incorporates the use of geographic, demographic, psychographic, and productrelated-segmentation into its marketing strategies. Geographically, Apples retail stores arelocated in highly populated cities around the world. Specifically, retail stores are located in large 13
  14. 14. shopping centers and highly populated streets in these major cities ("Apple Store."). Apple usesdemographic segmentation widely when marketing its various products. Apple devices are mostcommonly segmented by consumer and business income levels and resources as most of itsproducts are priced significantly above its competitors. They are also segmented by age levels.Its age levels vary from teenagers to adults ages 55 and older. Certain iPod models offered by thecompany could be segmented by gender as they come in a variety of colors. There are bothmasculine and feminine colors available for consumers to choose from. Apples household targetseems to be mainly middle to upper class households who have that extra income to spend onthese "luxury" products although about 28 percent of households earning $30,000 a year or lessare the exception (Kingsley-Hughes). In addition to middle and upper class households, Applenow targets teenagers as parents are now finding the need to purchase family plans throughwireless carriers which allows the teens to own an iPhone. The touch model of the iPod productline also conveniently allows teenagers to have almost the full power of the iPhone withouthaving to spend a monthly cost to own it. Apple doesn‟t specifically say that it targets itsproducts for business professionals or media professionals but the products are segmenteddemographically according to occupation. Apple is a "lifestyle" brand ("Marketing Minds - Apples Branding Strategy."). Whetheryoure a teenager or college student who is fashionable and likes to stay on top of school, abusiness professional who wants a device that conveniently satisfies your organization needs, orjust a consumer ages 14 to 55+ trying to fulfill that entertainment and convenience need, Appledevices will suit a variety of different lifestyles. The company offers an assortment of software toconsumers which target specific audiences and their various needs. Students can work on papers 14
  15. 15. and presentations for school using Microsoft office Mac for students and Musicians can createand edit compositions and record themselves and their band using Apples Logic Studio software("Logic Studio - Apple Store (U.S.)."), just to name a few. Students also have the option ofstaying on top of school through apps such as blackboard and the advantage of checking schoolemail with an iPhone or iPod touch device, professionals can suit their business needs efficientlybecause the Apple iPhone integrates features that allow individuals to connect to MicrosoftExchange and read corporate email, and everyday consumers ages 14 to 55 plus can readily useapple devices that fit their personal needs on the go ("Apple - iPhone in Business - Integration."). Product related segmentation is another major marketing strategy used extensively by thecompany. Every Apple device is targeted specifically to different groups of consumers andbusinesses and features in the products are built around their needs (Sigal). A few examplesinclude Apples just released iPod Nano which includes the Nike plus software targeted directlytowards athletes and with its dual-core A5 chip gamers can enjoy faster and more realisticgraphics on the touch model of the iPod line ("Apple - iPod touch - Features."). Apple ispopularly known for its integration of video editing software in its mac computers. This isanother area the company excels in. Apple not only integrates its mac computers with the iMoviesoftware but also offers a variety of editing software targeted mainly at Media Professionals(Andrei). Besides coming up with products that meet specific consumer needs, Apple uses arange of methods to create and build their reputable customer loyalty. Apples retail stores arededicated to serving the needs of all new and existing customers and are considered "friendly"places where consumers can look at and test out the companys products (CRM Editors). Thestaff in these retail locations that are well educated on these products and are there to assist 15
  16. 16. customers with whatever need they have (CRM Editors). By selling products to new consumersthat are on their lower end on price range, they effectively promote their higher end productsbecause consumers who become satisfied with their iPod or iPhone, for example, will most likelybuy a mac computer in the future. The company focuses mainly on "building" that customerloyalty by using these and other strategies (Peiguss). Apple doesnt really offer loyal customersany discounts or rewards. Sometimes offering loyal customers rewards for being loyal is notreally necessary if you are a company who is known for having top quality products that standout above the rest (Peiguss). Customers will generally be loyal if there are only a fewcompetitors out there offering the same product and your product offers better quality overall.These are just a few examples of what the company does in order to segment their products.Product and Positioning Apple is a computer company that specializes in the production of personal computersand computer accessories. Apple has produced many different types of products and is primarilyknown for the advancement of multimedia personal computers. Most people that are involvedwith video, music, pictures, and sound use Apple computers for their projects because of thequality of the equipment that Apple uses. "The Groups principal activities are to design,manufacture and market personal computers and related software, peripherals and personalcomputing and communicating solutions" (Winthrop Corporation, 2006). Apple has manydifferent products other than the personal computer. It is widely recognized that Apple is a premium brand that demands and earns a pricepremium. This price premium spans the entire Apple product lineup encompassing theMacintosh, iPod, iPhone, software, and accessories. Apples positioning is aligned with targetinga less price sensitive customer. As a result, Apples culture and internal activities are structured 16
  17. 17. to meet the needs of these customers; strategists call this needs-based positioning. Apple hascreated a culture and a set of activities to differentiate itself from rivals in order to meet the needsof their target customers. If Apple were to attempt to compete for all customer segments, it would have to lowerproduct prices. The danger with such an approach is that it would not only undermine and erodethe companys premium brand image but it would also undermine the companys culture andinternal activities. So what has Apple done in recent history to the Macintosh product line todemonstrate this premium positioning? Each new Mac revision has either maintained or beensubjected to modest price increase while Apple has simultaneously improved product features. Afew examples include the introduction of the unibody MacBook and MacBook Pro, largerdisplays on the iMac, and the replacement of the $499 Mac mini with a higher priced model.The motive is clear; protect the brand position via a tradeoff. The criticism to reduce prices hasbeen ignored by Apple. Why hasnt Apple lowered Mac prices? In strategic terms, Apple hasconducted a trade-off. Continue to appeal to customers that have a willingness to pay (WTP)instead of appealing to a wide range of customer segments that have varying price sensitivities.A larger customer base would not only undermine the companys strategic position but it wouldalso be misaligned with the companys internal activities. At a basic level of analysis, a pricereduction will set a precedent that will not be easily reversed. More damaging however is thepotential for brand erosion and customer confusion about the brand. Apples positioning, brand image, and loyal following have created an entry barrier thatPC vendors must cross in order to enter the premium computer market, a market that theMacintosh has exploited for years. Customer loyalty, advertising, lower price sensitivity oftarget customers (relatively inelastic demand), sunk costs, patents and innovation speak to this 17
  18. 18. point. Apple products appeal to buyers who are not price conscience and therefore, priceelasticity is not a major concern.Pricing The different types of pricing strategies Apple uses is that they set their products andoffers different price ranges for each product based on the amount of storage (gigabytes) theproduct offers. Apple‟s strategic pricing of their products has helped the company succeed,because whenever a new Apple product comes out, many customers are already waiting in anever ending line to buy this hot new product. After a quarter or so, Apple lowers the price ofthe product for example, when the original iPhone was released one quarter later, “Apple cut theretail price by $200 each (gave $100 rebate coupon to all of the earlier buyers” (Seeking Alpha). David Bui CEO and Founder of Saleschase.com said “The most potent weapon inApple‟s pricing strategy is differentiation. Differentiation is what allows Apple to price itsproducts at a premium and compel customers to compare Apple products with other Appleproducts, rather than with lower-priced products from other reputed marketers. Apple productslook, feel and seem very different from competitors‟ products” (Saleschase.com). This showsthat Apple is a stronger competitor in comparison with some of the other technologicalcompanies who are companies out there. The similarities of the iPod, iPhone, iPad, iPod Touch, iMac, is that for each product onecan purchase a product with the capacity varying from as little as 2G, to as much as 64GB fromall of the different models and products Apple offers. In fact, they all have versions that you canpurchase with more capacity capability. It is interesting because people want to pay that extra 18
  19. 19. money to get the best features on their product, whereas the oldest versions would just be lessextravagant and less “cool” than the hottest version out. Recently Apple released the iPhone 5 that everyone has been raving about. The price thatis set based on the capacity of the phones is 16GB for $199, 32GB for $299, and 64GB for $399(Apple). Due to the iPhone 5, Apple lowered the prices for both the iPhone 4S and the iPhone 4models. Both phones are significantly lower priced than when they have first come out, theiPhone 4S now stands at $99 for the 16GB, and the iPhone 4 is now free for the 8GB (Apple).Based on Apple‟s quality of their products and exemplary customer service it is easy to say thatthey are pricing their products at reasonable prices, because of their well-known products allover the world, Apple‟s profit margin does not cease to continue to rise each year. The extent ofApple‟s products is that an average person would be able to purchase at least one of theirproducts if not more.Promotion An average customer would most likely find out about the firm‟s products throughfriends and just the people around them. Due to high demand for their products, there is a vastmajority of people who own and prefer their products over companies‟ products, therefore this isone of the ways Apple is able to advertise their products which is through consumers. As seen insome of Apple‟s advertisements in the back of our packet; since the iPod had come out therehave not been a vast amount of advertising done in the media to promote their products. In all ofthe examples that we provided for each of the individual Apple products, their advertisingmethod always displays simplicity and uniqueness 19
  20. 20. When it comes to Apple‟s Promotions, they offer many different promotions that allowmany people to purchase their products. The largest promotion is that each year before theschool year starts Apple offers a “Back to school” promotion in which a student or a teacherdecides to purchase an iMac or MacBook (desktop or laptop), they would get a $100 forapplications along with their purchase. They also offer students and teachers the option ofbuying an iPad and get $50 for applications. Apple also has an “Apple Educational Discount”where throughout the year students and teachers are also able to save up to $200 on a new Mac.A few years ago Apple had the same promotion but offered students only to give a free iPodTouch when a MacBook laptop was purchased. But that offer no longer stands. Some of the other promotions that Apple also offers year round is for their iPad mini, if itis bought online then customers will be able to get free shipping and receive a free engraving aswell. When it comes to ordering online from Apple they offer free shipping on $50 or more,which is almost every single product from Apple product, unless someone were to buy a iPhonecase or something small like so. Many “high end” companies often offer the option of havingthe product shipped to one‟s house, or buying it online and picking it up in the store, Apple offersthis to their customers. Apple despite having such a vast amount of products at different price ranges from aslittle as $20 iPhone cases, to the iMac for $1,299, Apple is still able to lower existing productsand continue to offer reasonable prices to their customers based on each version and the capacityof the product. When it comes to advertising, Apple used to do a lot of advertising for theiriPod‟s when they were first introduced. Recently, Apple has almost been doing no advertising ontheir products. But even though almost no advertising is done anymore, the Apple store is almostalways consistently packed on a daily basis. Most of all their advertising is done through their 20
  21. 21. customers and their well -known products; Apple‟s image is also branded based on their sleek,most trendy items in the technology world. When Apple announced that they would finally be coming out with the long anticipatediPhone 5, just by hosting just one conference to introduce the iPhone 5, thousands of people linedup to purchase the iPhone , on the opening day to purchase their new iPhone 5, many peopleeven pre-ordered their phones. Because Apple products are sold worldwide and Apple is such awell-known brand, it is easy to publicize their products though their store fronts and theircustomers only.Distribution Apple spends certain resources to expand its stores so that it can get its prospectsundivided attention. Apple‟s 372 stores collectively generated $4.1 billion in revenue. That‟s avast sum, and one that might lead you to believe that Apple sells most of its gear through its ownstores. But that‟s not the case, according to a new study by Consumer Intelligence ResearchPartners (CIRP). Between December of 2011 and August of 2012, CIRP surveyed 1,227 U.S. consumerswho purchased an iPhone, iPad, or Mac, and found that while Apple Stores sold by far the mostMacs and iPads during the period, they didn‟t sell nearly as many iPhones as the company‟sretail partners. In the U.S., Apple‟s retail stores, along with the company‟s online storefront, sold 47percent of the Macs and 40 percent of the iPads purchased by the survey sample duringDecember 2011 and August 2012. But they only sold 21 percent of the iPhones. AT&T andVerizon stores both sold more than Apple, with 28 percent and 26 percent shares of sales, 21
  22. 22. respectively. And Best Buy and Amazon (via fulfillments) together sold nearly as many iPads asApple itself. Apple has around 250 stores in the U.S., while Best Buy and Best Buy Mobile total1,300, and AT&T, Sprint, and Verizon have over 5,000 combined,” CIRP partner Mike Levin told“AllThingsD. Clearly, the Apple stores are much more productive on a per-unit basis, but theirrelatively low store count keeps them reliant on the carriers and Best Buy, not to mentionWalmart, Target and others, for the vast majority of their retail sales Ultimately, Apple‟s retail partners are as critical to the company‟s success as its ownstores. Sure, the typical Apple Store might cater to 17,000 visitors per week, but that foot traffictranslates to a smaller-than-expected share of the company‟s overall business. As CIRP co-founder Josh Lowitz told AllThingsD, “Everyone who lives in an Apple Store city thinks that iswhere everything happens, but you can‟t sell 40 million plus iPhones in a year through just 250stores.” Recommendations Apple is an innovative company that does not mean that everything done by the companyis perfect. Every company has room for improvement and Apple‟s future of innovations isdefinitely one of them. Implementing some, or even all, of the following recommendations,Apple could greatly increase it sales worldwide, and become an even better company than itcurrently is. 22
  23. 23. There are several ways Apple can promote their products yet they go by simple strategiessuch as personal selling, “word-of-mouth,” and product differentiation. The late co-founder ofApple, Steve Jobs, was greatly known for his speeches and how he promoted Apple withoutusing a lot of their marketing budget, through public relations. Though these are all great ways topromote Apple, there are still many ways they can improve or work on to attract new customersor gain the customers of their competitors. Although Apple is considered a shopping product, where people plan to buy it afterconsidering competitors‟ prices, it is priced as a prestigious product in the technology industry.They are considered the “technology industry‟s „high price‟ leader,” which simply means theysell their products at a higher end value, knowing that their loyal customers will pay this price.They should market to sell their products at a slightly lower price, to still make profit but also tosynchronize with customer satisfaction. It is known that once Apple comes up with a newproduct, or expands the depths of their products, they lower the prices of the least up-to-dateproduct. There are consumers who appreciate this because they do not need the new, big thing,but Apple has customers who like to keep up-to-date, especially with Apple‟s innovativeproducts. Apple‟s loyal customer base is one of the largest in the industry and strategizing in away that makes them feel they are an exclusive member might make them happy to spend more.Ways that Apple can do this is by starting an Apple Loyalty membership. If they are a member inthis Loyalty program, they get perks that do not apply to non-members. For example, if themember spends a certain amount, $500, annually, (not including a laptop that already costs athousand dollars), they can get a product in store for free, or for a lesser price than valued, suchas head phones or an iPhone case. It is easy to buy a laptop cover, or phone case elsewhere, 23
  24. 24. especially at a lower price than Apple sells it for, but if Apple had this incentive; consumersmight have more initiative to buy from them. Apple can or should also promote their iTunes Application by providing customers in theLoyalty Program ten dollars‟ worth of iTunes services for every $250 they spend. This type ofCRM (Customer Relationship Management) would definitely increase customer satisfactionwhile promoting Apple‟s products (Contemporary 321). They should also organize little eventsthat only Loyalty members are invited to, where they can explore new technologies or let themembers be the first to know of the new products they are working on. This would be a greatway to keep the customers on their toes, excited about the upcoming products but also makingthem feel special and important to the company. Apple is a leader in the technology industry because they are unique in what they do andthey stick to their originality. Whether it be product differentiating, where all their products,inside and out, are cluster free, or if it is the way they advertise their products, which is not veryoften. You might sometimes see an ad for the iPod and a girl or boy dancing to it, or differentcolored backgrounds with the Apple brand mark centered in white. Apple recently came out witha commercial that introduced the new Apple headphones, a never before seen headphones whichare shaped to fit your ear hole, instead of the custom round earpiece. Apple would also do greatin product placement, as many celebrities already use their products. But if it were seen on moretelevision shows or movies, it would be attract more consumers and other target markets. Thesesimple strategies are a great way for Apple to save money on their budget but they shoulddefinitely consider making more advertising through the television. As an innovator oftechnology, maybe they can find a way to use their new feature, holographic, through thetelevision to promote such a neat service. 24
  25. 25. When deciding what other promotions Apple can undergo, we automatically thought ofguerilla marketing as that is a fast and easy way to go viral, especially for Apple, which isalready the topic of conversations. We researched and found that there was not much guerillamarketing that Apple already used so that type of promotion would definitely be one to consider.We did, however, find one way they managed to have marketed seamlessly through theirconsumers. With each product bought from Apple, they provide you with a sticker with theirbrand mark, and people would stick that on in their house, computers, cars, backpacks,notebooks or anywhere they pleased (Vertigo). Regardless where it was stuck, it was easyadvertising for Apple to have come up with, that other competitors have not yet achieved. Moretactics like these would be beneficial for Apple to remain the leader in innovation and intechnology, in remembrance of the greatest guerilla marketer and innovator himself, Steve Jobs.It is easy to buy a laptop cover, or phone case elsewhere, especially at a lower price than Applesells it for, but if Apple had this incentive; consumers might have more initiative to buy fromthem. This would also help stabilize sales throughout the year, and not just during the beginningof a school year. One way to create product diversification is to create a "phablet" to compete withSamsung‟s note II. The tablet will be smaller than the iPad mini but bigger than the iPhone.Specifically a 6 inch tablet with the availability of a phone. This will also add product length toApples tablet line which includes the iPad and iPad mini. Creating this "phablet" will allowApple to target a whole new market which would include consumers that want a mobile devicelarger than a smartphone but smaller than an actual tablet like the iPad or iPad mini ("Phablet.").With the creation of this "phablet" device, price should be a big concern. Apple should try a newpricing strategy and maybe make the price of their product lower than its competitors but still 25
  26. 26. higher than what it costs the company to make the product in order to make a profit. In order tolower its product cost; however, apple must reduce production costs. This can be done byincreasing its use of recycling in its products and cutting down energy costs. Energy can be cutdown by using energy efficient computers, lighting, and machinery (Ellyn). Another example of product diversification is if Apple creates a music streaming servicesimilar to other streaming services such as Spotify and Rdio. The new streaming service wouldallow users who do not want to buy music on the iTunes store a chance to listen to musicunlimitedly without downloading it. Users would be able to listen to whole albums and even newreleases would be available the same day albums come out. The service would be relativelycomparable to other streaming services such as Spotify and Rdio but instead of offering it forfree to consumers, Apple could charge a fee but one that is less than competitors. For example,Rdio allows unlimited web streaming of music for $5 a month, Apple could charge users $1.99per month on a monthly basis to use their service or $25 on a yearly basis ("Rdio - Pricing.").This would allow Apple to target a whole new market while also generating some extra revenuewithout overcharging consumers that just want the option of listening to music without having todownload it. Work Cited"Apple - (PRODUCT) RED - Help fight AIDS in Africa." Apple. Apple Inc., 2012. Web. 4 Nov.2012."Apple - IMac." Apple.com. N.p., 2012. Web. 05 Nov. 2012. <http://www.apple.com/imac/>. 26
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  34. 34. Appendix 34
  35. 35. Advertisements 35
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