1    Individual Assignment: Apple iPod                          Marketing Management and strategy                         ...
2       Individual Assignment: Apple iPod    Introduction: (Background to Apple)            Apple was first established in...
3       Individual Assignment: Apple iPod    Apples position in the market is definitely a strong one, using a PEST and SW...
4        Individual Assignment: Apple iPod                 own an Apple gismo. Be it an iPod           on the go to learni...
5        Individual Assignment: Apple iPod    SWOT analysis:                          Strength                            ...
6        Individual Assignment: Apple iPod            product ranges such as the iPod Classic           as people prefer t...
7    Individual Assignment: Apple iPod    TWOS Matrix                                                                     ...
8     Individual Assignment: Apple iPod                                                                         Maintain m...
9        Individual Assignment: Apple iPod    Key Strategic Marketing Issues (KSMI)             It is clear that Apple Inc...
10    Individual Assignment: Apple iPod         Apple need to first invest into re-freshen the iPods image, buy giving it ...
11    Individual Assignment: Apple iPod     Bibliography:     Websites:        1. Apple [http://store.apple.com/uk/] (acce...
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Apple inc

  1. 1. 1 Individual Assignment: Apple iPod Marketing Management and strategy Semester 2 Individual Assignment Seminar Leader: Anna Zacharewicz London South Bank Student ID: 2704583 Date: 23rd February 2011 eidr
  2. 2. 2 Individual Assignment: Apple iPod Introduction: (Background to Apple) Apple was first established in 1976 by Steve Jobs, Steve Wozniak and Ronald 1 Wayne . In 34 years Apple has seen a fluctuating rise and fall in sales from 2002 till 2011 (as seen in the table below). During the first quarter of 2011 Apple has yet again seen an increase in sales as seen by reports published to their investors2 with a reported record in sales for the Mac, iPad and iPhone sales growing by 76% and a total growth of 78% across the company. Initially launched as Apple Computer Inc. the company decided to change its name to Apple Inc. due to the expansion of its market into the consumer electronics market3. Since 2005 Apple has seen a peek in sales due to the launch of their various products such as the iPad, iPhone and MAC notebooks and laptop computers, within those products they also offer a wider range of various specifications to customers 4. Since then Apple has set a reputation for their products ensuring their customers the best of the best! Apple’s prime sin is cannibalising people most favoured music player, the iPod. Whilst sales for the iPad and iPhone have soared the sale of the iPod has suffered greatly. The iPod was first launched in 2001 and has now expanded into the Nano, Touch and Classic. The product most in jeopardy however is the Classic version of the iPod. Since 2010 Apple has seen a steady decline in their sales for the iPod for every quarter of sales5 even the latest figures from the first quarter of 2011 Apple has seen a drop in sales for the iPod. iPod sales chart from 2002 - 2011 (Source: Apple Inc. 20116) 1 http://extras.denverpost.com/books/chap0411h.htm 2 http://www.apple.com/pr/library/2011/01/18results.html 3 http://www.digitaljournal.com/article/88258?tp=1 4 http://store.apple.com/uk/ 5 http://www.apple.com/pr/library/2011/01/18results.html 6 http://en.wikipedia.org/wiki/File:Ipod_sales_per_quarter.svg eidr
  3. 3. 3 Individual Assignment: Apple iPod Apples position in the market is definitely a strong one, using a PEST and SWOT analysis and TWOS matrix I am going to asses exactly how strong their presence in the market is and what they can do to revive the iPod brand. PEST analysis Political Economical Market share and Monopoly, Apple’s The interest rates in the UK market volume currently stands at Income and Employment in UK are 31%7 and this by far dominates suffering9; this means less people can competitors. afford luxuries such as iPods. The recent increase in TAX and VAT Disposable income has also dropped prices8. This can have an effect as as people as left without jobs and more money will be dispensed on have many bills and basics to pay due TAX and VAT. It will also effect on to increase in living costs. As seen in customer spending as prices will the Price indices report10which has increase. been published by the government. Economic growth in UK is slow; in 2008 the UK’s economic growth suffered a great shock, and has steadily been increasing since then. In the final quarter of 2010 there was an increase of just 0.5%11. Social Technology The present attitude towards Development of smart phones has electronics, according to Must-Have meant that some older gadgets have Gadgets.com, in 2011 the latest no more uses in the market. The fact trends are to own things such as that people can have a gadget that iPads, or iPhones12 however the calls, goes in the internet at fast trend for the iPod has certainly died speeds and used as a tool for apps of. has certainly kicked of. Brand demand and people attitude Development of the internet, this has towards the brand, however this also been a great development as certainly has not been Apple’s fall people can now have access to the due to increase in sales overall. internet on phones and other devices However the decreases in iPod sales wherever they go. are a major brand issue. The revolution of apps and app Targeted audience and appeal, this is usages has also been a major another one of Apples forte’s as development as they have become everyone across all ages wants to the new best thing. From shopping 7 http://www.apple.com/investor/ 8 http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-changes.htm 9 http://www.statistics.gov.uk/cci/nugget.asp?id=12 10 http://www.statistics.gov.uk/downloads/theme_economy/focus-on-cpi-jan-2011.pdf 11 http://www.statistics.gov.uk/cci/nugget.asp?id=192 eidr
  4. 4. 4 Individual Assignment: Apple iPod own an Apple gismo. Be it an iPod on the go to learning a new language. nano, Mac, iPad or even and iPhone. Apple apps range from A-Z and this The use of websites such as eBay and has certainly had an effect on the Amazon mean people can buy second sale of the iPod classic as apps cannot hand items such as iPods and other be used on it. Apple products as knock of prices. Form this PEST we can see that there are various points which affect the sales of the iPod especially with regards to the economical stability of the UK. Less people can afford to buy luxuries such as iPod and a person who already owns one may not need to upgrade to a newer version providing that there is no major change in the product. The fact that people no more than ever are trying to save money they are also choosing to purchase items of auction websites or second hand websites. Also the rate of technological improvement and the development of the smart phone in particular the iPhone people don’t feel the need to have an iPhone and iPod. We can also see that Apples market position is very strong being the market leader in what it does at the moment, however this is not working in favour for the iPod classic as sales are increasing in the “latest must have” gadgets and the iPod is not one of them. 12 http://www.trendygadget.com/2010/12/13/must-have-gadgets-of-2011/ eidr
  5. 5. 5 Individual Assignment: Apple iPod SWOT analysis: Strength Opportunity The brand image and its position in As they are market leaders in the the market is a very strong one as it development of iTunes and the usage almost dominates the market with of apps they need to use this to their 31% of the market share13. Therefore advantage. it has the resources and assets in They are market leaders and not revolutionising the iPod brand. many competitors are in the same Its reputation in the market is also league as them and therefore they exceeding as Apple customers know have the resources into turning the what they are getting for their iPod into something better and money. This is also covered by their branching into a new growing excellent warranty that they provide market. their customers14. Their customer base was already big The fact that it doesn’t have a target and due to recent developments in market, but instead it target their products more people are people15, and this is why you find switching to Apple unless substitutes many people across all ages and all bring out something better and this backgrounds that own either a Apple again can be seen in their increase in gadget or more than one. market share. Its portfolio of product range is immense following current trends and needs of customers. They have 4 distinctive products and these are the Mac, iPad, iPhone and iPod16. However within these products their ranges go into a lot of depth. Across their range of products they get it right with regards to the majority of their products such as the iPhone and iPad and this reflected in their sales, however due to these developments it has made other products within their range suffer. Weakness Threats The speed of product development has The rate they are developing their caused suffering across some of their products, are putting others in the dark 13 http://www.apple.com/investor/ 14 http://www.infoworld.com/d/the-industry-standard/apple-scores-another-victory-in-customer-satisfaction- 315 15 http://gigaom.com/2010/08/26/apple-doesnt-target-markets-it-targets-people/ 16 http://store.apple.com/uk/ eidr
  6. 6. 6 Individual Assignment: Apple iPod product ranges such as the iPod Classic as people prefer to purchase other and the iPod range. As people don’t seen products to the ones that are already on then need to spend money on buying an the market. iPhone and then buying and iPod. Substitutes are latching on to the trend Market research on a couple of their of smart phones and other Apple trends products such as the iPod Classic could and this could affect Apples position in use some investing into, as this will help the market, such as the new Samsung Apple in gaining an insight into whether Galaxy or the Blackberry Torch. or not its worth upholding its production. Bad press circulating around the The powers they posses in the market company such as “the death of the iPod and people expectations are very high so Classic” as seen from the PC World unsuccessful products receive very bad article, so many people are rethinking Reponses, and this in turn makes sales whether or not to buy the iPod. suffer. People no tend to review a lot of Cheap imitations of the brand that have products online and a lot of people no the same characteristics and are sold at read reviews about products before cheap prices are also something that making a purchase. Most press and affect Apple especially in recession reviews about the iPod lately have not been great and therefore many people have been put off as seen in this article from PC World17 From this we can see again that Apple bears a very strong position in the market with regards to some of its products. The company’s strength into what it owns and its resources are by far very good, and it is able to invest in money into revolutionising the iPod brand. However some may think is this worth it. The iPod brand has been around since 2001 and has been through a lot of adaptations with the launch of various models such as the Nano, Shuffle and Touch. It is also clear that Apple’s products are also market leaders and also trend setters as many competitors are now releasing products which are in the same league as the Apple brand. 17 http://www.pcworld.com/article/219205/ipod_classic_is_dead_rumors_are_back.html eidr
  7. 7. 7 Individual Assignment: Apple iPod TWOS Matrix Maintain market position and growth Strength Leverage brands across the range and Power in market and market shareproduct range leadership in its categoryresearch and development its leadership culture with new innovations. Build on the fact that Brand image, everyone knows who Apple are people know who Apple is and what Opportunity they are getting for their money. also Their products are known to be the best of promote that their products withhold Technological market the best their value. is growing as more Product price depreciation is technological improvements very low like other brands Develop brand positioning are being made. People are buying There products as Make people think that iPods are still shares are increasing and profits are the new best thing to have by being made developing new features or models. Although substitutes exist Apple need to focus on being the best of the best. Increase channel power Weakness Need to promote that customer get Some people may regard prices as high what they pay for even though it especially during times of current climate may be at a higher price. Leverage Competitors are making similar brand strength and play on the fact products at cheaper prices that they are market leader. Develop brand positioning Opportunity Make people think that iPods are Technological market still the new best thing to have by is growing as more developing new features or models. technological improvements Although substitutes exist Apple are being made. need to focus on being the best of People are buying There products as shares the best. are increasing and profits are being made eidr
  8. 8. 8 Individual Assignment: Apple iPod Maintain market position and growth Strength Leverage brands across the range and Power in market and market share product range its leadership culture with new leadership in its category research and development innovations. Build on the fact that Brand image, everyone knows who Apple are people know who Apple is and what Threats they are getting for their money. Also Their products are known to be the best of promote that their products withhold Consumer brands the best their value. are coming out Product price depreciation is very fast and strong low like other brands Increase channel power: There is a strong price competition Leverage brand strength and their from with regards to similar products leadership culture through promoting available cheaper their products are the best and it’s what “consumer” wants by giving the impression that this is a “must have” Increase channel power Weakness Need to promote that customer get Some people may regard prices as high what they pay for even though it especially during times of current climate may be at a higher price. Leverage brand strength and play on the fact Competitors are making similar that they are market leader Threats products at cheaper prices Increase channel power: Consumer brands are coming out Leverage brand strength and their fast and strong leadership culture through There is a strong price competition promoting their products are the from with regards to similar products best and it’s what “consumer” available cheaper wants by giving the impression that this is a “must have” eidr
  9. 9. 9 Individual Assignment: Apple iPod Key Strategic Marketing Issues (KSMI) It is clear that Apple Inc. has strong appeal in the market with regards to the majority of its products however; the iPod brand has suffered in recent years. There has been many articles such as PC World, and many other gadget shops that are warning customers that a “death upon the iPod” is near. This is because many outlets are now showing limited stock availability of the iPod. Also the pattern in consumer spending has been diverting to new gadgets such as the iPad and iPhone, as there has been a large increase in sales across the years and in the last quarter it was up 76%18. Many people also feel that Apple need to re- develop the iPod as all other product ranges have received a “fresh look” where as there is nothing being done to the iPod19. It is clear that people are demanding a new revelation of the iPod. The iPod has not been given a new image since 200920. People also doubt as to what Apple can change with the iPod as many feel that it had developed to its potential as the only way it can get better is by increasing memory size. Or is a brand new direction what Apple need? There have also been talks and discussion amongst papers that Apple may be doing this on purpose in order to test consumers and see where they would spend their money if the iPod Classic was to be taken of the market21. As the iTouch is now Apples biggest seller from the iPod range there has also been insights that the company should maybe focus on developing this further 22. 1. So how would Apple communicate to people that iPod is still a must have? 2. How would Apple do this? 3. Why should consumers new and existing pick Apple over other retailers? Due to apples high profile in the industry they already have a major brand name that people know ad are aware of. Apple knows its gadgets such as the iPhone, iPad and Mac are a nations must have, however this was achieved through hardcode marketing and advertising. For example Apples advertising campaign for the new iPhone 4 were “This changes everything. Again” this alone drew customers in as they new that Apple have yet again launched a must have product even though they may own something similar. However on the other hand with the iPod nothing as such has occurred, instead Apple have only focused on the fact that it fits 40’000 songs, this fact is not something that would make people want to buy the iPod Classic, as there are may other products on the market that can do the same. 18 http://www.apple.com/pr/library/2011/01/18results.html 19 http://www.prefixmag.com/news/is-apple-thinking-of-killing-off-the-ipod-classic/49227/ 20 http://www.prefixmag.com/news/is-apple-thinking-of-killing-off-the-ipod-classic/49227/ 21 http://www.pcworld.com/article/219205/ipod_classic_is_dead_rumors_are_back.html 22 http://www.prefixmag.com/news/is-apple-thinking-of-killing-off-the-ipod-classic/49227/ eidr
  10. 10. 10 Individual Assignment: Apple iPod Apple need to first invest into re-freshen the iPods image, buy giving it a new look and offering customers more, be it various colour range like they do with the Nano range. Another thing they need to consider is a major advertising campaign as clever as the iPhone and iPad’s making consumer feel that this a gadget they cannot live without. It’s called the iPod Classic for a reason, so they need to focus on the fact that it used to be and still the nations favourite music device, after all it is what got Apple to where it is now. Although their market share is increasing and profits are going up year on year, Apple need to focus on promoting to customers the importance of returning again and purchasing new products by promoting their value for money, not as in cheap for crap quality, but the fact that you get what you pay for. They need to promote that their products are the best of the best and that their quality is sure to last longer than the rest. This can be seen with the way Apple’s products do not depreciate in price immediately such as other products. eidr
  11. 11. 11 Individual Assignment: Apple iPod Bibliography: Websites: 1. Apple [http://store.apple.com/uk/] (accessed on 18th February 2011) 2. Apple [http://www.apple.com/pr/library/2011/01/18results.html] (accessed on 18th February 2011) 3. Apple [http://www.apple.com/investor/] (accessed on 19th February 2011) 4. Buzzle [http://www.buzzle.com/articles/economic-factors-affecting-business.html] (accessed on 20th February 2011) 5. Gigaom [http://gigaom.com/2010/08/26/apple-doesnt-target-markets-it-targets- people/] (accessed on 20th February 2011) 6. Guardian [http://www.guardian.co.uk/business/2010/aug/29/apple-ipod-apps- music-industry] (accessed on 19th February 2011) 7. HMRC [http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-changes.htm] (accessed on 19th February 2011) 8. InfoWorld [http://www.infoworld.com/d/the-industry-standard/apple-scores- another-victory-in-customer-satisfaction-315] (accessed on 20th February 2011) 9. Marketing Teacher [http://marketingteacher.com/lesson-store/lesson-pest.html] (accessed on 20th February 2011) 10. PC World [http://www.pcworld.com/article/219205/ipod_classic_is_dead_rumors_are_back.h tml] (accessed on 19th February 2011) 11. Prefix Mag [http://www.prefixmag.com/news/is-apple-thinking-of-killing-off-the- ipod-classic/49227/] (accessed on 19th February 2011) 12. Statistics Government [http://www.statistics.gov.uk/cci/nugget.asp?id=12] (accessed on 20th February 2011) 13. Statistic Government [http://www.statistics.gov.uk/downloads/theme_economy/focus-on-cpi-jan- 2011.pdf] (accessed on 20th February 2011) 14. Statistic Government [http://www.statistics.gov.uk/cci/nugget.asp?id=192] (accessed on 20th February 2011) 15. Trendy Gadget [http://www.trendygadget.com/2010/12/13/must-have-gadgets-of- 2011/] (accessed on 20th February 2011) eidr

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