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A Study on STP strategy of Apple Inc

  1. 1. Page | 1 A Study on STP Strategy of Apple Inc An overview of the Market Matching Strategy of Apple Inc. Guide- Ms. Sulagna Chakrabarti (Faculty, EIILM, Kolkata) Company Name- Apple Inc. Subhradeep Bhattacharjee Roll No- 54402 -16-241 08 April 2018
  2. 2. A Study on STP Strategy of Apple Inc Page | 2 Declaration I, Subhradeep Bhattacharjee do hereby declare that this study titled "A STUDY ON STP STRATEGY OF APPLE INC” is submitted by me for the partial fulfilment of Master of Business Administration in Vidyasagar University. This report is exclusively prepared by me and has not been submitted to any other institutions or published anywhere before. Signature March, 2018 STUDENTS NAME: Subhradeep Bhattacharjee PLACE: KOLKATA Roll No. - 16 241 Registration No. 00586 of 2016-17 MBA, 4th semester EIILM, KOLKATA
  3. 3. A Study on STP Strategy of Apple Inc Page | 3 Acknowledgements I express my sincere gratitude to Ms.. Sulagna Chakrabarti, Faculty, EIILM, Kolkata who has sincerely provided me with critical suggestions and valuable insights which enabled me to complete this study and bring out this report in the best way possible. I would take this opportunity to thank Prof. (Dr) R.P Banerjee, Director, EIILM, Kolkata and other faculty members of the institute for their cooperation and support. I am also thankful to all others person who directly or indirectly helped me to accomplish my project work. 08 April 2018 Date Signature
  4. 4. A Study on STP Strategy of Apple Inc Page | 4 Table of Contents Chapter Number Topic Page Number Declaration…………………………………………… 2 Acknowledgement………………..………………….. 3 Table of Contents…………………………………...... 4 Chapter 1 Introduction 1.1 Mass Marketing and its Disadvantage……..…...………… 1.2 Segmentation……………………………….…………….. 1.3 Targeting………………………………..………………. 1.4 Positioning………………………….…………………….. 1.5 Advantages of STP…………………….……………….. .. 5 5 6 7 7 Chapter 2 Significance of the Study…………………………….. 8 Chapter 3 Objectives ……………………………………………. 9 Chapter 4 Methodology………………………………………….. 10 Chapter 5 Analysis and Interpretation 5.1 Company Profile…………………………………………... 5.2 Segmentation strategy of Apple…………………………… 5.3 Targeting strategy of Apple………………………..……… 5.4 Positioning strategy of Apple……………………………… 5.5 Marketing Mix of Apple………………………………....... 5.6 Market share of Apple……………………………………... 5.7 Competitive Analysis of Apple at a glance……………….. 11 12 14 16 18 20 22 Chapter 6 Findings of the Study………………………...……… 26 Chapter 7 Conclusion……………………………………………. 27 Bibliography………………………………………….. 28
  5. 5. A Study on STP Strategy of Apple Inc Page | 5 Chapter 1 Evolution of STP strategy from the classic mass marketing strategy: 1.1 Mass Marketing Mass marketing is the advertising or promotion of a product, good or service to a wide variety of audiences with the expectation of appealing to as many as possible. It is a kind of marketing where there is one particular brand and one strategy for all i.e. where market is not segmented and target is not specified. Unlike marketing niche where the product is only marketed to specific target of people, mass marketing has no limit and it targets all consumers with the aim of maximizing profits. Disadvantages of Mass Marketing: 1. The difference in how it effects geographical areas 2. It is extremely expensive 3. Changes in the marketing environment are not factored in. Market Matching strategy or popularly known as STP strategy is an evolved technique of marketing where the marketer chose a particular market and decided a particular targeted audience to whom the product is been sold. The market is segmented on the basis of demographic, geographic, psychographic and behavioural factors. 1.2 Segmentation Market segmentation looks at the nature and extent of diversity of buyers’ needs and wants in a market. It offers an opportunity for an organization to focus in business capabilities on the requirements of one or more groups of buyers. The objective of segmentation is to examine differences in needs and wants and to identify the segments (sub-groups) within the product-market of interest. Each segment contains buyers with similar needs and wants for the product category of interest to management. The segments are described using the various characteristics of people, the reasons that they buy or use certain products, and their preferences for certain brands of products. Introduction:-
  6. 6. A Study on STP Strategy of Apple Inc Page | 6 Likewise, segments of industrial product-markets may be formed according to the type of industry, the uses for the product, frequency of product purchase, and various other factors. Segmentation: Identifying all segments for the product/service. To be useful, segments should be:  Measurable  Accessible (can you reach them)  Profitable  Distinct from one another 1.3 Targeting The purpose of the marketing targeting strategy is to select the people (or organizations) that management wishes to serve in the product-market. When buyers’ needs and wants vary, the market target is usually one or more segments of the product- market. Once the segments are identified and their relative importance to the firm determined, the targeting strategy is selected. The objective is to find the best match between the value requirements of each segment and the organization’s The targeting decision is the focal point of marketing strategy since targeting guides the setting of objectives and developing a positioning strategy. The options range from targeting most of the segments to targeting one or few segments in a product-market. The targeting strategy may be influenced by the market’s maturity , the diversity of buyers’ needs and preferences, the firm’s size compared to competition, corporate resources and priorities, and the volume of sales required to achieve favourable financial results. Deciding the objectives for each market target spells out the results expected by management. Examples of market target objectives are desired levels of sales, market share, customer retention, profit contribution, and customer satisfaction. Marketing objectives may also be set for the entire business unit and for specific marketing activities such as advertising.
  7. 7. A Study on STP Strategy of Apple Inc Page | 7 1.4 Positioning The marketing program positioning strategy is the combination of product, value- chain, price, and promotion strategies a firm uses to position itself against its key competitors in meeting the needs and wants of the market target, the strategies and tactics used to gain a favourable position are called the marketing mix or the marketing program. In simple words positioning refers to the selection of the marketing mix the most suitable for the target customer segment. Positioning is an essential component and skill in good marketing. Perceptual maps are used to determine the position of a product, firm, person, service or idea. Positioning maps or perceptual maps can be simple, yet very effective marketing tools. One definition of Positioning Theory is: the science of perceptual strategy. It is based on a theory that strategy can only be planned in the mind of the consumer, not the marketplace. 1.5 Advantages of STP Strategy:-  Better matching of customer needs  Enhanced profits for business  Better opportunities for growth  Retain more customers  Target marketing communications  Gain share of the market segment  Less expensive to the business
  8. 8. A Study on STP Strategy of Apple Inc Page | 8 Chapter 2  The project work is entitled as “A Study on STP Strategy of Apple Inc “has its significance in broad understanding about the STP strategy by giving special emphasis on marketing strategy of Apple Inc.  This project work has a major significance in studying about the different segmentation bases chosen by Apple Inc.  This study gives an opportunity to know about the targeted segments and the way by which the brand positioned itself in the customer mind as well as in the competitive market. Significance of the Study:-
  9. 9. A Study on STP Strategy of Apple Inc Page | 9 Chapter 3 To know the different segmentation bases adopted by Apple Inc. To know how Apple Inc. segments and targets its customers and how the brand positioned itself. Objectives:-
  10. 10. A Study on STP Strategy of Apple Inc Page | 10 Chapter 4 Purpose of Study:  To analyze the importance of using a market matching strategy for Apple Inc and to find out how STP strategies help Apple.  To find out the benefits of using STP strategy for Apple customers. Type of research: A conceptual research method is used in this study. Data Type: This project is entirely based on Secondary data that are thoroughly collected from different websites, co. websites, internet and different books and journals. Data Collection Methods: The data have been collected entirely based on secondary sources. Online websites, journals, magazines, newspapers and scholar articles have been used for data collection. Methodology:-
  11. 11. A Study on STP Strategy of Apple Inc Page | 11 Chapter 5 5.1 Company Profile Apple Inc. is an American multinational technology company headquartered in Cupertino, California that designs, develops, and sells consumer electronics, computer software, and online services. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to develop and sell Wozniak's Apple I personal computer. It was incorporated as Apple Computer, Inc. in January 1977, and sales of its computers, including the Apple II, saw significant momentum and revenue growth for the company. Within a few years, Jobs and Wozniak had hired a staff of computer designers and had a production line. Apple went public in 1980 to instant financial success. As the market for personal computers increased, Apple's computers saw diminishing sales due to lower-priced products from competitors, in particular those offered with the Microsoft Windows operating system. More executive job shuffles happened at Apple until then-CEO Gil Amelio in 1997 decided to buy NeXT to bring Jobs back. Jobs regained position as CEO, and began a process to rebuild Apple's status, which included opening Apple's own retail stores in 2001, making numerous acquisitions of software companies to create a portfolio of software titles, and changing some of the hardware used in its computers. It again saw success and returned to profitability. In January 2007, Jobs announced that Apple Computer, Inc. would be renamed Apple Inc. to reflect its shifted focus toward consumer electronics. In August 2011, Jobs resigned as CEO due to health complications, and Tim Cook became the new CEO. Two months later, Jobs died, marking the end of an era for the company. Apple is the world's largest information technology company by revenue and the world's second-largest mobile phone manufacturer after Samsung. In February 2015, Apple became the first U.S. company to be valued at over US$700 billion. The company employs 123,000 full-time employees as of September 2017 and maintains 499 retail stores in 22 countries as of December 2017. It operates the iTunes Store, which is the world's largest music retailer. As of January 2016, more than one billion Apple products are actively in use worldwide. Analysis & Interpretation:-
  12. 12. A Study on STP Strategy of Apple Inc Page | 12 Apple's worldwide annual revenue totalled $229 billion for the 2017 fiscal year. The company enjoys a high level of brand loyalty and has been repeatedly ranked as the world's most valuable brand. Segmentation, Targeting and Positioning Strategy of Apple Apple segmentation, targeting and positioning represents the core of its marketing efforts. 5.2 Segmentation involves dividing population into groups according to certain characteristics (whereas targeting implies choosing specific groups identified as a result of segmentation to sell products). Common set of characteristics shared by Apple target customer segment include appreciating design, quality and performance of technology products and services over their prices. Apple uses mono-segment type of positioning and makes a positing appeal towards a single customer segment. The multinational technology company positions itself as a premium brand offering products and services with advanced functions and capabilities for additional costs. Accordingly, Apple target customer segment comprise well-off individuals who are willing to pay extra for technology products and services with advanced design, functions and capabilities. Sales i Phones i pods i pads i Tune and other music Services MacBooks Others 43% 7% 16% 14% Product Portfolio of Apple 14% 7%
  13. 13. A Study on STP Strategy of Apple Inc Page | 13 Apple segmentation, targeting and positioning is illustrated in the following table: Types of segmentation Segmentation Criteria Devices: iPhone, iPad, Mac, iPod etc Services:iTunes andtheiTunes Store,Mac App Store,iCloud, ApplePayetc. Operating system &software: iOS, OSX,iLife,iWork Accessories: Apple TV Apple Watch and related accessories Geographic Region US and international US and international US and international US and international Density Urban Urban Urban Urban Demographic Age 20 – 45 18 – 30 20 – 35 20 – 45 Gender Males & Females Males & Females Males & Females Males & Females Life-cycle stage Bachelor Stage Newly Married Couples Bachelor Stage Newly Married Couples Bachelor Stage Newly Married Couples Bachelor Stage Newly Married Couples Income High earners High earners High earners High earners Occupation Professionals, managers and executives, Students Professionals, managers Professionals, managers and executives Professionals, managers Behavioural Degree of loyalty ‘ Hard core loyal, Switchers Hard core loyal, Switchers Hard core loyal, Switchers Hard core loyal, Switchers Benefits Sought Sense of achievement and belonging, Self- expression, Speed of service, advanced features and capabilities Speed of service Efficiency Efficiency ,Speed of service Recreation, Self- expression Personality Determined and ambitious Determined and ambitious Determined and ambitious Determined and ambitious Apple Target Customer Segments
  14. 14. A Study on STP Strategy of Apple Inc Page | 14 [Source– ResearchMethodology, JhonDudovisky, AppleInc Report, January 2018] There are three major segments which Apple targets. It generally uses lifestyle segmentation as Apple is the most premium brand out there. The segment is usually the urban population with enough buying power for purchasing Apple products. These are people who are early adopters in life but the brand equity of Apple is such that even laggards have started adopting the products. 5.3 In the Marketing strategy of Apple, it has three Target groups 1. One is the music lovers who are targeted by the Apple ipod and itunes. 2. Another target the professionals or even teenagers who are targeted for Apple iphone, Tablets, Macbook and other such gadgets which can be used by anyone, irrespective of age. 3. And third is the crowd which can use their other products and services like Apple TV and Apple iwatch. They also use ibooks, Apple pay etc. Psychographic User status Non-users, potential users Users, Non-users, potential users Users, Non-users, potential users Non-users, potential users Social class Middle and upper classes Middle and upper classes Middle and upper classes Upper class Lifestyle Resigned Aspirer Successor Explorer Aspirer Successor Explorer Aspirer Successor Explorer Aspirer Explorer MacBook IBook IPhone IWatch Apple TV IPod ITunes IPad Data Enthusiast MusicEnthusiast TechnologyEnthusiast Luxury & Brand Enthusiast
  15. 15. A Study on STP Strategy of Apple Inc Page | 15 APPLE INC.'S TARGET MARKET TEENAGERS Teenagers are considered one of Apple Inc.'s target markets. Teenagers use iPods for many reasons. Some of these reasons are to socialize with friends, listen to music and go on Face book, MSN, twitter etc. There are also many gaming apps that appeal to them. IPods have become quite a trend with teenagers. COLLEGE AND UNIVERSITY STUDENTS College and university students are also targeted by Apple Inc. These students use Apple Inc. products such as iPads, MacBook’s, iPhones etc to quickly record notes. These notes are kept organized in their devices. Also these products are light which makes carrying devices to and from school much easier. BUSINESS PEOPLE Business people are very intrigued by Apple products. All Apple devices (iPhone's, iPad's, MacBook's etc.) have a business quality that is very useful. These devices are used to finish work efficiently and to communicate with clients easily. In addition, sending documents is easy and organized. ADULTS Adults are also one of Apple Inc.'s target markets. IPhone’s are useful to adults for their everyday needs such as phone calls, map directions, internet connection, documents and cameras. Carrying these small devices makes adults lives much easier for communicating daily. In three different target methods 1. One Supplier targeting a single segment with a single product 2. One Supplier with one product targeting all segments 3. One Supplier with several brands and targeting different segments for each brand Apple Inc has been using the second approach of being one supplier that is targeting many segments. According to Matt Asay (2010), Apple mainly targets people, as it focuses on users and lets them to decide how and where they will use their product.
  16. 16. A Study on STP Strategy of Apple Inc Page | 16 5.4 Apple being the world’s number one brand has the topmost mind Positioning and there is no doubt that when someone talks about Smart phones or Laptop or Tablets, Apple is the first brand that comes to mind maximum number of times. Apple has positioned itself to be a lifestyle product for wealthy people, innovators and people with good jobs. Apple has become a desired product but not easily affordable. This premium positioning helps Apple in the long term. With inflation in wages, affordability, more people can afford Apple products in future, thus increasing sales by reaching out to a larger audience with time, and when people can afford to buy Apple products they do not haggle about price, price would be secondary and the image of having an Apple product is more important. Ten years ago, very few people could afford an iPhone in India, but today the situation has changed, iPhone is becoming part of mainstream market as affordability has increased. Adults Corporate People Teenagers Snobs Apple Inc. One Supplier with one product targeting all segments Segments
  17. 17. A Study on STP Strategy of Apple Inc Page | 17 POSITIONINGSTRATEGYOF APPLE INC . Positioning by Product Characteristics Apple product has various characteristics which can be used in the positioning process by the company. Many of the product features of Apple are unique in nature and thus it creates a different position in consumer mind than other similar products of different brand exist in the market. Positioning by Use or application Usage of the product leaves to different form of segment altogether which is the behavioural segmentation. Naturally, the products of Apple can be positioned by their use or Application as well. Positioning by product class Apple is positioned as a premium brand in the mind of the customer that demand and earns a price premium. Apple has positioned them to target a less price sensitive customer, thus which has created a culture and set of activities through which Apple differentiate itself from its competitors. Positioning by competitors If Apple considers Samsung, BlackBerry and Nokia as its competitors then Apple must be in the premium class as well. Thus, Apple can position itself on the basis of which companies it target as its competitors. Apple is in White hot zone. White hot centre is a market position where the entire customer's attention is on. It’s essentially the prime spot of customer attention, and everyone is watching every step the seller makes. Today, Apple is at the white hot centre selling its iPhones, iPads, Mac computer, Apple TV, iTunes, etc., and people are surrounding Apple store in millions, and making all the big noise, and then put yourself in another store at a corner of the market, trying to attract customers for your products. And that's where Apple's competitors are today.
  18. 18. A Study on STP Strategy of Apple Inc Page | 18 5.5 Now Here is the Marketing Mix (4 Ps) of Apple without which our study will be incomplete. Marketing Mix of Apple analyses the brand/company which covers 4Ps (Product, Price, Place, Promotion) and explains the Apple marketing strategy. Let us start the Apple Marketing Mix: Product: Apple Inc is known for its innovation in the world. It has always come up with new products that amazed the whole world. Some of its popular products in the marketing mix of Apple explain its product strategy as below:- 1. Mac: Macintosh – generally branded as Mac, one of the premier products of Apple Inc and the utmost reason for the existence of the company. It was introduced by Steve job in Jan 1984. It was the first personal computer made for mass that had mouse and graphical user interface. It has come up with newer versions which are still famous among the people of United States of America. Some of the models that are currently present in the market are: Mac Pro, iMac, MacBook Air, MacBook Pro, and MacBook. 2. Iphone: Apple Inc was the first company to introduce smart phones that had multiple touch i.e. iphone. It was basically a combination of a smart phone and ipod. It has many version with the latest one as iphone 7 and iphone 7 plus. 3. IPad: A tablet of Apple with all its unique smart features. 4. IPod: A unique kind of portable digital music player. Various variations have come up in the market as iPod Nano, iPod touch, iPod shuffle and many more. 5. Apple watch: Watch where you can keep a track of your fitness schedules. 6. Apple TV: One of the biggest failures for apple is the introduction of apple TV. 7. Software and Services Price: Apple Inc products are premium products and they do not target all the sections of the society. Being a market leader in its segment, the marketing mix pricing strategy of Apple is that of a market leader. However, competition also influences its pricing. Apple is always known for its innovation and innovation comes up with cost. So, they follow premium pricing policy in order to delight their customers. Most of its products such as Mac book, iphone, iPad are all comes under premium products category.
  19. 19. A Study on STP Strategy of Apple Inc Page | 19 Apple products are costly and are also considered as a status symbol. It is always argued that why these products are so costly. One of the reasons for it is the technology that is being used in the products. Once you get addicted with these products, you won’t think about other brands. Place: Apple adopts an aggressive strategy in reaching out to premium customers. There are various channels that are being used by Apple Inc to target the end consumers. Apple came up with the idea of opening its own outlets i.e. Apple stores where it could sell its products. They also brought the concept of trade partners. They collaborate with such trade partners to maintain the distribution channel. They have firm believe that keeping lesser number of trade partners can increase the efficiency of distribution channel. These products are then sending to authorized retailers for apple products. These are premium retailers who are given targets as set by the company. Another channel of selling is through online portals. Most e-commerce portals have apple products and it is one biggest point of sale for apple. One of the differentiator factors for apple is that they have lots of staff in the apple stores because of its complexity. Staffs are there to make you understand well about the products. Promotion: Apple Inc targets specific segment of people. So during promotional activities, its main focus is on its products and the differentiating factors that make its unique from the competitors. The promotional strategy in the marketing mix of Apple focuses on aggressive advertising using various channels like TV, print media, online ads, billboards etc. If we closely see the ads that Apple has come up with, it has always tried to focus on how different it is from the competitors. It has always believed that ads should be simple and gets connected to the heart of the people. These ads are to the point and no irrelevant information. These ads will came during any one of the product launch and will run for a very long time. Apple Inc hardly comes with any sales offers or gives discounts to any other people except students. Hence, this summarizes the marketing mix of Apple.
  20. 20. A Study on STP Strategy of Apple Inc Page | 20 5.6 Market Share of Apple:  Overwhelming percentage of Apple's revenues comes from iPhone sales, 64% in 2016.  Declining 2016-2017 year-over-year iPhone sales have been extremely negative to Apple's bottom line, but you wouldn't know it by looking at the stock price.  2017 Q1 sales rebounded, yet this was partly due to Samsung's misfortunes as a consequence of its exploding battery debacle.  Apple's declining Smartphone market share problem could force the company to lower prices further to attempt to sustain share.  The takeaway, how to capitalize, and what an attractive stock price for Apple may be. Apple accounted for only 800,000 of the 30.7 million Smartphones shipped to India in the second quarter 2017, Strategy Analytics reported. That represented a 33% drop from a year earlier for Apple even as the overall market increased 19%. [Source –Statistia, 2018, IDC] 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% Q1 '08 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q4 '17 Market Share of Apple Shipments
  21. 21. A Study on STP Strategy of Apple Inc Page | 21 ComparisonbetweenApple and Its Competitors Incorporating Their Market Share and MarketShipments for their Computer devices (Desktops/Laptops): Apple kept the fourth position, keeping shipments roughly flat with growth of 0.3% year over year. (Units are in thousands ofunits) Companies 3Q17 Shipments 3Q17 Market Share 3Q16 Shipments 3Q16 Market Share 3Q17/3Q16 Growth HP Inc 15,295 22.8% 14,427 21.4% 6.0% Lenovo 14,506 21.6% 14,497 21.5% 0.1% Dell Inc 10,836 16.1% 10,751 15.9% 0.8% Apple 4,901 7.3% 4,887 7.2% 0.3% ASUS 4,189 6.2% 4,907 7.3% -14.6% Others 17,457 26.0% 18,029 26.7% -3.2% Total 67,185 100.0% 67,498 100.0% -0.5% [Source- IDC Worldwide QuarterlyPersonal Computing Device Tracker,October10, 2017] ComparisonbetweenApple and Its Competitors Incorporating Their Market Share for their Smartphones: [Source- IDC Quarterly Mobile Phone Tracker, FinalHistorical 2017 Q4]
  22. 22. A Study on STP Strategy of Apple Inc Page | 22 5.7 Competitive Analysis of Apple at a glance: In the previous sections the absolute market share and the comparisonof it with other competitors have been shown with the help of a table and diagram. Now the competitive analysis of Apple with other competitors is shown in the table below. Apple Competitors Matrix Product Category Competitor Weight Rating Score Smartphones (iPhone) Samsung 0.63 4 2.52 Huawei 0.63 3 1.89 OPPO 0.63 2 1.26 Vivo 0.63 2 1.26 LG Electronics 0.63 2 1.26 Google 0.63 3 1.89 Tablets (iPad) Samsung 0.10 3 0.30 0.10 4 0.40 Lenovo 0.10 2 0.20 Huawei 0.10 2 0.20 Personal Computers (Mac) Lenovo 0.11 4 0.44 HP 0.11 3 0.33 Dell 0.11 3 0.33 Asus 0.11 3 0.33 Services (Internet Services, Apple Pay, Apple Care) Google 0.11 4 0.44 Microsoft 0.11 3 0.33 Samsung 0.11 2 0.22 0.11 3 0.33 Spotify 0.11 1 0.11 Netflix 0.11 1 0.11 Other Products (Smart watches, Apple TV, Accessories) Samsung 0.05 4 0.20 Garmin 0.05 2 0.10 Lenovo 0.05 2 0.10 0.05 1 0.05 [Source-OvidijusJurevicius, January 27, 2017] As expected, Samsung Electronics got the highest score of 3.24. The company is the main Apple’s rival in the Smartphones, tablets and smart watches industries. Google follows in the second place with 2.33 points.
  23. 23. A Study on STP Strategy of Apple Inc Page | 23 Google has a rating of 3 in the Smartphones category, because of its Android OS, which isn’t the huge money earner, but its success significantly helps every other Smartphone manufacturer to compete with Apple and its iOS. Huawei became the 3rd highest scorer with 2.09 points mainly due to its high-end Smartphones success, especially in the U.S. market. OPPO, Vivo and LG Electronics share 4-6 places with 1.26 points each due to their considerable market share in the Smartphones’ market. Amazon (0.78 points) threatens Apple’s tablet sales and its revenue from ‘Services’ as well as Apple TV sales. Lenovo (0.74) is a serious rival in the tablets, personal computers and smart watches markets. Apple’s main competitor in the Smartphone category is Samsung with its Galaxy S Smartphones. Other direct Apple rivals are Huawei, HTC, Google and LG. The rest of the rivals are either too small or target different consumer segments and do not pose an immediate threat to the iPhone’s market share or its margins. Even though the tablet market is declining, Apple is still an absolute leader in it with over 20% market share, according to IDC. Again, Samsung’s Galaxy Tabs are the main direct rivals to Apple’s iPads, with over 15% market share. was the only of the top 5 tablet makers, which was able to grow its market share significantly, threatening Apple’s and other tablet vendors’ positions. Apple’s position in the personal computer (PC) market isn’t as strong as in the Smartphones or the tablets markets. The company only captured 7.1% market share in the second quarter of 2016. Every PC vendor has a few offerings that directly compete with the premium quality Apple’s Mac PCs and usually offer better hardware or the lower price. After a tremendous success in the first year, Apple Watch sales have declined by 70% in the 3Q 2016 when compared to the same quarter in 2015. Nonetheless, Apple Watch is still a leader in the smart watch market with over 40% market share. Garmin and Samsung, the two closest rivals, are challenging Apple Watch by growing their market share in the declining smart watch market. Nearly every PC, except Apple’s Mac computers, is sold with preinstalled Microsoft Windows OS. According to the net market share nearly 90% of computer run Windows OS and only about 6% PCs use MacOS, revealing that Apple’s major competitor in PC OS market is Windows.
  24. 24. A Study on STP Strategy of Apple Inc Page | 24 The same goes with mobile OS market. Android is being installed in every Smartphone, except Apple’s iPhones and some models of Nokia’s and BlackBerry’s Smartphones. Android controls over 80% of the mobile OS market and seriously threatens to erode the major Apple’s advantage – Apple’s proprietary iOS and its ecosystem. Apple’s services accounted for over US$24 billion in revenue in 2016 alone. The competition for each service is fierce because switching between the services is, in most cases, very easy. Apple is being rivalled by huge corporations such as Google, Microsoft and as well as smaller, but no less competitive companies. Android Pay and Samsung Pay are the main Apple Pay competitors in the mobile payment market. Apple Pay enjoys wider adoption of its mobile payment system, than its rivals and has some advantages, such as huge database of credit/debit card information. [Source – IDC] [Source – IDC]
  25. 25. A Study on STP Strategy of Apple Inc Page | 25 [Source – IDC]
  26. 26. A Study on STP Strategy of Apple Inc Page | 26 Chapter 6 Most of the Apple users are brand conscious who perceived that branded products are better than regular products. Apple has set high prices on their products. It may attract a particular segment of the market who love price premium products but it loses a big portion of students and youth who want to grab new technologically updated electronic devices and online apps but they do not want to pay price premium for their products due to availability of similar kind of competitor’s products existing in the market. Apple has problems in distribution of their products. They have firm believe that keeping lesser number of trade partners can increase the efficiency of distribution channel. These products are then sending to authorized retailers to sell. But it rather decreases their reach to consumers. The complete STP strategy of Apple tends to achieve distinct identity but less attentive or motivated to sales volume. Apple spends 4,142 million USD for a particular section reflected in their balance sheet is goodwill. Apple has a strong presence (positioning) in the corporate and education segments, with a strong brand name known globally. Apple has most brand loyal customers i.e. Apples behavioural segmentation is so strong that Apple’s brand loyal customers buy their products for quality, regardless of the high price. Such powerful loyalty of customers means that Apple has a strong positioning of their brands and that they not only create new customers but retain them. Findings of the study:-
  27. 27. A Study on STP Strategy of Apple Inc Page | 27 Chapter 7 The main aim of this dissertation is to conducta study on the STP strategy of Apple Inc. The study helps to find out more about segmentation, targeting, positioning strategies and marketing mix strategies. Furthermore a competitive analysis is done to recognize the real completion of Apple with other competitors. The analysis helps to identify the major projection of STP strategy in market by Apple and the loopholes present in that strategy. Findings of the study are made to find if the STP strategies of Apple are proving to be effective. The study is conducted on the basis of secondary data and helps to understand the potential of STP for Apple products. Apple should well differentiate themselves from others in terms of product quality because the availability of similar products of rival companies are increasing in the market so Apple’s target markets are insecure now. Technology market is highly competitive; it’s very easy for competitors to clone your products. Therefore it has become important to keep making constant innovation in design, features and specifications in order to differentiate your product from competitive brands. Apple should improve their promotional policies against Apple TV, MacBook, iPad and their new launching product (in 2019) Airpods by giving TV commercials and online media. And it can enhance the targeting policy of Apple. Lastly in concluding statement I like to mention that once Apple used a tagline that “Think different” now it’s time for Apple to think more and more different in terms of value addition, promotions, distribution network and innovations to maintain this type of STP framework in their business. Conclusion:-
  28. 28. A Study on STP Strategy of Apple Inc Page | 28 Bibliography Printed Media Economic Times articles, 2017-18. Daily News, Biz News, 10th Jan, 2007. Business Economics magazinearticles. Business Standardsarticles 2017-18. Online Media A study on the marketing strategies of Apple Inc Apple Positioning Strategy positioning.html The Segmentation, Targetingand Positioning model targeting/segmentation-targeting-and-positioning/ Full Analysis of Apple Competitors competitors.html *IDC stands for International Data Corporation