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Abstract
Apple inc. is largest Electronics Company and producing better quality
Cellphones, Computers, Software,Hardware, Music devices, IPad And fewother
Products. I have learned many more things to complete this analysisabout the
apple like as what is company do how they do that how theyworking for the
environment, culture, buyers and suppliers, SWOT, andsome other things. I have
seen some financial terms like Annual reports and B/S of the company and the
most important which kinds of StrategyCompany are adopting for their
competitors. I would like to thanks SmitaMam for giving this opportunity to do
diagnosis about the company.
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OBJECTIVE
To study the Marketing Strategy & Plan of Apple inc
To Analyse the Apples industry attractiveness on the basis of potter fiveforces
To Analyse the Apples industry attractiveness on the basis of SWOTanalysis
To determine Marketing Mix of Apple inc.
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REASERCH METHODOLOGY
In everyday life human being has to face many problems viz. social,
economical, financial problems. These problems in life call for acceptable
and effective solutions and for this purpose, research is required and a
methodology applied for the solutions can be found out.
Research was carried out on Apple inc. to analyse its performance on the
basis of marketing tools.
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DATA COLLECTION
Secondary Data:
Data was collected from books, magazines, web sites, going through the
records of the organisation, etc. It is the data which has been collected by
individual or someone else for the purpose of other than thos previously
for the analysis and the results are undertaken for the next process.
Company profile
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Apple Inc. Formerly Apple Computer, Inc. is an American multinational
corporation that designs and sells electronics, computer, and personalcom
puters. The company's best-known hardware products
arethe Macintosh line of computers, the iPod, the iphone and the iPod. Its
software includes the Mac OS X operating system; the iTunes mediabrow
ser; the life suite of multimedia and creativity software; the iWork suite
of productivity software; Aperture, a professional photographypackage;
Final Cut Studio, a suite of professional audio and film-
industrysoftware products; Logic Studio, a suite of music
production tools;the Safari web browser; and iOS, a mobile operating
system. As of July 2011, Apple has 357 retail stores in ten countries, and
an onlinestore. It is the largest publicly traded company in the world by
market capitalization, overtopping ExxonMobil by some $60 billion, as
well as thelargest technology company in the world by revenue and
profit, worthmore than Google and Microsoft combined As of September
24, 2011, thecompany had 60,400 permanent full-time employees and
2,900 temporaryfull-time employees worldwide; its worldwide annual
sales totaled $65.23billion, growing to $108.249 billion in 2011.Fortune
magazine named Apple the most admired company in the UnitedStates
in 2008, and in the world from 2008 to 2011.
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However, thecompany has received widespread criticism for its
contractors' labor, andfor its environmental and business
practices.Established on April 1, 1976 in Cupertino, California,
and incorporatedJanuary 3, 1977, the company was named Apple
Computer, Inc. for its first 30 years. The word "Computer" was
removedfromitsnameonJanuary9,2007, as its traditional focus on personal
computers shiftedtowards consumer electronics
Mission, Vision, & Strategy
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Apples mission statement emphasizes that the company made
majorinnovations in the personal computer industry in the past and
linksstrength to its present strategy. Apple ignited the personal computer
revolution in the 1970s with the appleIInd and reinvented the personal
computer in the 1980s with theMacintosh. Apple is committed to
bringing the best personal computingexperience to students, educators,
creative professionals and consumersaround the world through its
innovative hardware, software and internet offerings.The digital hub that
is what Steve jobs (founder) identified as objective for Apples strategy
in the future.
Herewith, all three sectors Apple is currentlyoperating in will get closer
and closer together and showing a highinterdependence. Where seamless
integration of all components is vital towin customers. Apple is the only
company providing a bundle of solutionswhich are perfectly adjusted
and fine tuned to complement each other to,for other companies,
unattainable degree.
By designing such high endproducts Apple is corresponding to external
and internal environment,which in the high technology sector are
changing more rapidly thananywhere else. Though out its diversification
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efforts, Apple keeps its designand innovation focused line by the equally
adapting performance and pricepositions to changes in the external
environment.
Industry analysis
The computer industry includes a wide variety of products, frommp3
Players and printers to personal computers and powerful
servers.Companies have trouble operating within the computer industry,
namely due to the dynamic nature
of technology. Moore's law, formulated byGordon Moore in 1965, states
that the numbers of transistors per squareinch on integrated circuits will
double every 18 months, and prices will bereduced. This means even the
largest firms must stay on their toes, as theindustry is constantly
changing and redefining its Parameters. AppleComputer Inc. has recently
made headlines by breaking into the portablemusic market with its
introduction of the Apple iPod and iTunes software. Apple also carries a
long line of computer products including personalComputers, computer
accessories, servers, networking solutions, andsoftware
packages. Currently capturing a market share of 65% among theportable
music market, and holding a profitable 2% of the personalcomputer
market, Apple has consistently kept his name in the industry. Apple has
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stayed afloat in the industry by keeping an eye for aestheticsand
creativity, coupled with user friendly and innovative products.
Competitors
Apple has become a major digital asset management company. It
hascreated an OS and UI that makes it very easy for users to
manage,aggregate, distribute and even share personal content throughout
an Apple-designed digital ecosystem.
Because of that, I asserted that Apple isunstoppable: When it comes to
providing a complete solution for theconsumer, Apple has created a
position for itself that makes it nearlyimpossible for other companies to
compete head on. Apple is first company who introduce digital media
library the name wasITunes.There are some competitor came in the
market.1.
Blackberry2.
Google (Android)3.
Nokia4.
Samsung5.
Sony6.
IBM7.
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Microsoft Some player also exists in the E-market like
HTC
Out comes
The final outcomes came in after these processes.IMacIPodIphoneITunesI cloud
IPhones IPads IPods Mac ITv
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I Phone
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Literature Review
The Five Competitive Forces
The Five Competitive Forces are typically described as follows:
Bargaining Power of Suppliers
The term 'suppliers' comprises all sources for inputs that are needed in order to
provide goods or services.
Supplier bargaining power is likely to be high when:
The market is dominated by a few large suppliers rather than a
fragmented source of supply,
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There are no substitutes for the particular input,
The suppliers customers are fragmented, so their bargaining power
is low,
The switching costs from one supplier to another are high,
There is the possibility of the supplier integrating forwards in order
to obtain higher prices and margins. This threat is especially high
when
The buying industry has a higher profitability than the supplying
industry,
Forward integration provides economies of scale for the supplier,
The buying industry hinders the supplying industry in their
development (e.g. reluctance to accept new releases of products),
The buying industry has low barriers to entry.
In such situations, the buying industry often faces a high pressure on margins
from their suppliers. The relationship to powerful suppliers can potentially reduce
strategic options for the organization.
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Bargaining Power of Customers
Similarly, the bargaining power of customers determines how much customers can
impose pressure on margins and volumes.
Customers bargaining power is likely to be high when
They buy large volumes, there is a concentration of buyers,
The supplying industry comprises a large number of small operators
The supplying industry operates with high fixed costs,
The product is undifferentiated and can be replaces by substitutes,
Switching to an alternative product is relatively simple and is not
related to high costs,
Customers have low margins and are price-sensitive,
Customers could produce the product themselves,
The product is not of strategical importance for the customer,
The customer knows about the production costs of the product
There is the possibility for the customer integrating backwards.
Threat of New Entrants
The competition in an industry will be the higher, the easier it is for other
companies to enter this industry. In such a situation, new entrants could change
major determinants of the market environment (e.g. market shares, prices,
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customer loyalty) at any time. There is always a latent pressure for reaction and
adjustment for existing players in this industry.
The threat of new entries will depend on the extent to which there are barriers to
entry. These are typically
Economies of scale (minimum size requirements for profitable
operations),
High initial investments and fixed costs,
Cost advantages of existing players due to experience curve effects of
operation with fully depreciated assets,
Brand loyalty of customers
Protected intellectual property like patents, licenses etc,
Scarcity of important resources, e.g. qualified expert staff
Access to raw materials is controlled by existing players,
Distribution channels are controlled by existing players,
Existing players have close customer relations, e.g. from long-term
service contracts,
High switching costs for customers
Legislation and government action
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Threat of Substitutes
A threat from substitutes exists if there are alternative products with lower prices
of better performance parameters for the same purpose. They could potentially
attract a significant proportion of market volume and hence reduce the potential
sales volume for existing players. This category also relates to complementary
products.
Similarly to the threat of new entrants, the treat of substitutes is determined by
factors like
Brand loyalty of customers,
Close customer relationships,
Switching costs for customers,
The relative price for performance of substitutes,
Current trends.
Competitive Rivalry between Existing Players
This force describes the intensity of competition between existing players
(companies) in an industry. High competitive pressure results in pressure on
prices, margins, and hence, on profitability for every single company in the
industry.
Competition between existing players is likely to be high when
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There are many players of about the same size,
Players have similar strategies
There is not much differentiation between players and their
products, hence, there is much price competition
Low market growth rates (growth of a particular company is possible
only at the expense of a competitor),
Barriers for exit are high (e.g. expensive and highly specialized
equipment).
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SWOT Analysis
SWOT Analysis is the most renowned tool for audit and analysis of the overall
strategic position of the business and its environment. Its key purpose is to
identify the strategies that will create a firm specific business model that will best
align an organizations resources and capabilities to the requirements of the
environment in which the firm operates. In other words, it is the foundation for
evaluating the internal potential and limitations and the probable/likely
opportunities and threats from the external environment. It views all positive and
negative factors inside and outside the firm that affect the success. A consistent
study of the environment in which the firm operates helps in
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forecasting/predicting the changing trends and also helps in including them in the
decision-making process of the organization.
An overview of the four factors (Strengths, Weaknesses, Opportunities and
Threats) is given below-
Strengths
Strengths are the qualities that enable us to accomplish the organizations
mission. These are the basis on which continued success can be made and
continued/sustained. Strengths can be either tangible or intangible. These are
what you are well-versed in or what you have expertise in, the traits and qualities
your employees possess (individually and as a team) and the distinct features that
give your organization its consistency. Strengths are the beneficial aspects of the
organization or the capabilities of an organization, which includes human
competencies, process capabilities, financial resources, products and services,
customer goodwill and brand loyalty. Examples of organizational strengths are
huge financial resources, broad product line, no debt, committed employees, etc.
Weakness
Weaknesses are the qualities that prevent us from accomplishing our mission and
achieving our full potential. These weaknesses deteriorate influences on the
organizational success and growth. Weaknesses are the factors which do not meet
the standards we feel they should meet. Weaknesses in an organization may be
depreciating machinery, insufficient research and development facilities, narrow
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product range, poor decision-making, etc. Weaknesses are controllable. They must
be minimized and eliminated. For instance - to overcome obsolete machinery, new
machinery can be purchased. Other examples of organizational weaknesses are
huge debts, high employee turnover, complex decision making process, narrow
product range, large wastage of raw materials, etc.
Opportunities
Opportunities are presented by the environment within which our organization
operates. These arise when an organization can take benefit of conditions in its
environment to plan and execute strategies that enable it to become more
profitable. Organizations can gain competitive advantage by making use of
opportunities. Organization should be careful and recognize the opportunities and
grasp them whenever they arise. Selecting the targets that will best serve the
clients while getting desired results is a difficult task. Opportunities may arise
from market, competition, industry/government and technology. Increasing
demand for telecommunications accompanied by deregulation is a great
opportunity for new firms to enter telecom sector and compete with existing firms
for revenue.
Threats
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Threats arise when conditions in external environment jeopardize the reliability
and profitability of the organizations business. They compound the vulnerability
when they relate to the weaknesses. Threats are uncontrollable. When a threat
comes, the stability and survival can be at stake. Examples of threats are - unrest
among employees; ever changing technology; increasing competition leading to
excess capacity, price wars and reducing industry profits; etc
Advantages of SWOT Analysis
SWOT Analysis is instrumental in strategy formulation and selection. It is a strong
tool, but it involves a great subjective element. It is best when used as a guide, and
not as a prescription. Successful businesses build on their strengths, correct their
weakness and protect against internal weaknesses and external threats. They also
keep a watch on their overall business environment and recognize and exploit new
opportunities faster than its competitors.
SWOT Analysis helps in strategic planning in following manner-
a. It is a source of information for strategic planning.
b.
Builds organizations strengths.
c. Reverse its weaknesses.d. Maximize its response to opportunities.e. Overcome organizations threats.f. It helps in identifying core competencies of the firm.g. It helps in setting of objectives for strategic planning.
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h. It helps in knowing past, present and future so that by using past andcurrent data, future plans can be chalked out.
SWOT Analysis provide information that helps in synchronizing the firms
resources and capabilities with the competitive environment in which the firm
operates.
Limitations of SWOT Analysis
SWOT Analysis is not free from its limitations. It may cause organizations to view
circumstances as very simple because of which the organizations might overlook
certain key strategic contact which may occur. Moreover, categorizing aspects as
strengths, weaknesses, opportunities and threats might be very subjective as there
is great degree of uncertainty in market. SWOT Analysis does stress upon the
significance of these four aspects, but it does not tell how an organization can
identify these aspects for itself.
There are certain limitations of SWOT Analysis which are not in control of
management. These include-
a.
Price increase;
b. Inputs/raw materials;c. Government legislation;d. Economic environment;e. Searching a new market for the product which is not having overseas
market due to import restrictions; etc.
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Marketing mix
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The marketing mix is one of the most famous marketing terms. The
marketing mix is the tactical or operational part of a marketing plan. The
marketing mix is also called the 4Ps and the 7Ps. The 4Ps
areprice,place,product andpromotion. Theservices marketing mix is
also called the 7Ps and includes the addition
ofprocess,people andphysical evidence.
The concept is simple. Think about another common mix - a cake mix. All
cakes contain eggs, milk, flour, and sugar. However, you can alter the
final cake by altering the amounts of mix elements contained in it. So for
a sweet cake add more sugar!
It is the same with the marketing mix. The offer you make to your
customer can be altered by varying the mix elements. So for a high
profilebrand, increase the focus on promotion and desensitize the
weight given to price.
Another way to think about the marketing mix is to use the image of an
artist's palette. The marketer mixes the prime colours (mix elements) in
different quantities to deliver a particular final colour. Every hand
painted picture is original in some way, as is every marketing mix. Lets
look at the elements of the marketing mix in more detail. Click on the
links to go to the lesson on each element.
http://www.marketingteacher.com/lesson-store/lesson-pricing.htmlhttp://www.marketingteacher.com/lesson-store/lesson-place.htmlhttp://www.marketingteacher.com/lesson-store/lesson-three-levels-of-a-product.htmlhttp://www.marketingteacher.com/lesson-store/lesson-promotion.htmlhttp://www.marketingteacher.com/lesson-store/lesson-services-marketing-mix.htmlhttp://www.marketingteacher.com/lesson-store/lesson-process.htmlhttp://www.marketingteacher.com/lesson-store/lesson-people.htmlhttp://www.marketingteacher.com/lesson-store/lesson-physical-evidence.htmlhttp://www.marketingteacher.com/lesson-store/lesson-brand.htmlhttp://www.marketingteacher.com/lesson-store/lesson-brand.htmlhttp://www.marketingteacher.com/lesson-store/lesson-physical-evidence.htmlhttp://www.marketingteacher.com/lesson-store/lesson-people.htmlhttp://www.marketingteacher.com/lesson-store/lesson-process.htmlhttp://www.marketingteacher.com/lesson-store/lesson-services-marketing-mix.htmlhttp://www.marketingteacher.com/lesson-store/lesson-promotion.htmlhttp://www.marketingteacher.com/lesson-store/lesson-three-levels-of-a-product.htmlhttp://www.marketingteacher.com/lesson-store/lesson-place.htmlhttp://www.marketingteacher.com/lesson-store/lesson-pricing.html -
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Price
Price is the amount the consumer must exchange to receive the offering
The companys goal in terms of price is really to reduce costs through
improving manufacturing and efficiency, and most importantly the
marketer needs to increase the perceived value of the benefits of its
products and services to the buyer or consumer.
There are many ways to price a product. Let's have a look at some of them
and try to understand the best policy/strategy in various situations.
Place
Place includes company activities that make the product available to target
consumers.
Place is also known as channel, distribution, or intermediary. It is the
mechanism through which goods and/or services are moved from the
manufacturer/ service provider to the user or consumer.
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Product
Product means the goods-and-services combination the company offers to the
target market.
For many a product is simply the tangible, physical item that we buy or
sell. You can also think of the product as intangible i.e. a service.
In order to actively explore the nature of a product further, lets consider
it as three different products - the CORE product, the ACTUAL product,
and finally the AUGMENTED product.
The Product Life Cycle (PLC) is based upon the biological life cycle. For
example, a seed is planted (introduction); it begins to sprout (growth); it
shoots out leaves and puts down roots as it becomes an adult (maturity);
after a long period as an adult the plant begins to shrink and die out
(decline).
The Customer Life Cycle (CLC) has obvious similarities with the Product
Life Cycle (PLC). However, CLC focuses upon the creation and delivery
of lifetime value to the customer i.e. looks at the products or services that
customers NEED throughout their lives.
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Promotion
Promotion includes all of the activities marketers undertake to inform consumers
about their products and to encourage potential customers to buy these product
Promotion includes all of the tools available to the marketer for
marketing communication. As with Neil H. Borden's marketing mix,
marketing communications has its own promotions mix. Whilst there is
no absolute agreement on the specific content of a marketing
communications mix, there are many promotions elements that are often
included such as sales, advertising, sales promotion, public relations,
direct marketing, online communications and personal selling.
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DATA ANALYSIS
MARKETS AND COMPETITION
PORTERS FIVE FORCES
Viewed through Michael Porters strategic framework, Apple is a company with
several advantages that will enable it to continue along its trajectory of high
performance, strong growth and healthy profitability. The five forces framework
reinforces our investment recommendation on Apple, but also highlights areas
where investors should be mindful. In this section, we provide both hindsight and
forward looking analyses examining the advantages that the company has
successfully developed as well as scenarios under which those advantages could
be eroded.
Degree of Rivalry
Several factors make the technology industry extremely competitive. Rapid
technological advancement, sudden shifts in consumer preferences, savvy
competitors, and a fragmented global supply chain all impact the ability of firms
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in the technology industry to capture market share. Apple has outmaneuvered its
rivals by focusing on the user experience. Instead of emphasizing features and
tech specs, Apple concentrated on making its products easy to use. The comfort
that users feel toward Apples products is responsible for the companys high
brand loyalty and distinctive brand image. Rivals have found it very difficult to
garner the same level of devotion amongst their users. Even Samsung, Apples
most successful rival in the tablet market, captured 17% of the tablet market by the
end of 2010 compared to 73% for Apple23. Consequently, we feel that Apple, more
than any other company, is best positioned to thrive in the cutthroat consumer
electronics industry.
One word captures the threat Apple faces: convergence. Once iconic companies
have been knocked on their heels as a result of convergence. Convergence has
dealt serious blows to once proud industry leaders. Kodak suffered when solid
state drives rather than film became the standard for storing pictures. Kodak has
also been harmed by phones with built in camera capabilities.
Apples iPod faced the same problem. Aware that the smartphones could
potentially make the iPod obsolete, Apples move into mobile phones was a
strategic imperative. By successfully creating and marketing mobile phones,
Apple was able to strengthen its balance sheet and protect its position as a
distributor of content.
R&D Spending of Leading Tech Companies
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Source: SiliconAlley Insider
Convergence has ratcheted up the pressure on Apple. Apple has gone from
competing against niche electronics companies like Rio and Sandisk, to competing
against established companies such as Sony and Samsung. The convergence of
entertainment, ecommerce and productivity into smartphones and tablets means
that Apple now competes not only against electronics and computer companies
(Samsung, Sony, HTC, Hewlett Packard, Dell, Huawei), but also against
internet/software companies(Amazon, Google). Apple, like any company, could
stumble, but its track record of anticipating threats points to a future in which
Apple continues to extend its reach.
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Supplier Power
The popularity of Apples products gives it an enviable bargaining position vis --
vis suppliers. In commodity semiconductors, for example, Apple has virtually
unparalleled pricing power. iPads and iPhones consume a large share of mobile
DRAM and Apple alone is responsible for 30 percent of worldwide NAND flash
demand24. LG is the leading supplier of Apples LCD touchscreens, but Apple has
at times employed the threat of defecting to Samsung in order to keep LG in
check.
Tactical purchasing sharpens the companys pricing edge. Apple uses its cash
hoard to place large components orders and gives its suppliers as little notice as
possible, forcing them to quickly ramp up production in order to fulfill the
order25. This gives competitors very little time to re spond to Apples moves and
creates pricing volatility for competitors. The size and timing of Apples
component purchases has a tendency to force sudden price jumps, leaving
competitors little recourse but to pay exorbitant prices for essential components.
Tim Cook, in his role as chief operations officer, led Apples negotiations with
suppliers. In his current role as CEO, we feel that Apples bargaining power is
strengthened.
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Buyer Power
Consumers have a wide array of choices. In all four markets in which Apple
competes, Apple faces several savvy and very aggressive companies. Whats more,
in terms of features and application, there are very few differentiating factors. The
screen resolution, disk space, and CPU clock rate of leading smartphones is more
or less uniform. Twitter, Facebook, email and Google search, are accessible on all
smartphones and function the same regardless of platform. Capabilities being
uniform, consumers can easily switch brands. Looking only at technical features,
Apple should have very little power relative to consumers.
Apples brand cachet persuades consumers to buy Apples products. Among
consumer electronics companies, only Apple has succeeded in making its products
into status symbols. Second, Apple goes beyond entering markets: it defines them.
Apples iPod became synonymous with mp3 players to the extent that rival
products were left with little recourse but to compete on price. iPads make up
68.3% of all tablet sales and have also become status symbols. For this reason, we
see Apple as better able to command higher prices and to influence buying
decisions than its competitors.
Threat of Substitutes
In terms of tech specs, little separates Apples products from its competitors.
Apples superiority in software, not hardware, gives its products an edge.
Consumers choose to buy Apple hardware because they know they will have
access to the latest and coolest apps.
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Apple faces a tough dilemma. The popularity of Googles Android software has
made it more difficult for Apple to claim it has an edge in apps. Although iPhone
apps outnumber Android apps, Android has more free apps. Around 66% of
Android apps are free versus 34% for iPhone apps26. Moreover, several of the
most popular apps and games are available on both mobile operating systems.
The popularity of Googles operating system also makes competitors products
more viable. Before the advent of Android, Apples competitors used to write their
own smartphone operating systems. Lacking experience in writing graphical
software, Apples competitors wrote system software that was often buggy,
cumbersome and difficult to use. Apples lawsuits against Androids partners
prove that Apple is taking the Android threat seriously. Apples software is still
the best in the industry, but it will need to find ways to lock consumers into its
ecosystem if it wants to tip the balance of power in its favor.
Threat of Entrants and Disruptive Innovation
It is not difficult to enter the tablet PC or smartphone space. Smartphone
components are commodities and high quality operating system software, such as
Googles Android, is free. Several of the apps that compel users to upgrade from
feature phones to smartphones, such as Angry Birds and Bejewelled, are
available across all major cellphone platforms meaning that there is little to
differentiate one phone from another content-wise.
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But while its easy to enter the tablet and PC space, its not very easy to stay.
Without scale, a new entrantsproducts cannot compete effectively with
incumbents products. To survive, a new entrant would have to enter the market
with a blockbuster product, a feat that even incumbents have found difficult to
achieve. Compounding the difficulty is cost. Apples profit margins are driven by
costs too low for competitors to match. Acer had admitted to losing money on
tablets and the rumored Amazon tablet is speculated to be a loss leader for the
company. The current business model of the tablet industry provides Apple with a
decisive advantage.
Innovation, at least as it is conceived in the smartphone space, usually conjures
images of faster chips, sharper screens, bigger hard-drives, and better internet
connections. All of these features are important, but do not help companies stand
apart. To stand apart, companies have to consistently improve the user experience.
Since mobile and tablet screens are small, users have to adjust to using email,
social apps, GPS, and other features. If a phones software makes navigating
between Facebook, Gmail, or iTunes cumbersome, then users will switch to a
competing product. Moreover, users now demand phones whose apps and features
can talk to each other. The newest phones, for example, have high resolution
cameras integrated with Facebook and YouTube so that users can instantly upload
photos onto Facebook profiles and YouTube accounts. Another feature that is
popular is contact synching. Synching enables a phone to access a users email and
social media in order to build a comprehensive and easily accessible list of a users
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friends and coworkers contact information. Although controversial, location
based apps are also popular. We feel that since mobile software is still in its
nascent stages, that there are still many opportunities for phone companies to
innovate and differentiate themselves from their competitors.
We believe Apples position of leadership in the mobile computing space is well
hedged. One area of weakness for Apple is ITunes. iTunes close integration with
the Apple ecosystem as well as its site security, made it the go-to-destination for
music lovers, despite competition from sites that offered music at a cheaper price.
Yet, the mobile internet has changed the way people access music. Downloading
music onto devices dedicated only to playing music and videos made sense when
phones only made phones calls and when the mobile internet was slow and
expensive. Downloading music will still appeal to many consumers, but to
compete, Apple will need to recognize that streaming music will probably eclipse
downloaded songs as the preferred method of listening to music. Instead of
downloading music from iTunes, a smartphone owner can stream music over the
internet through Pandora or Yahoo music. Whats more, these services have apps
specially tailored forproducts cannot compete effectively with incumbents
products. To survive, a new entrant would have to enter the market with a
blockbuster product, a feat that even incumbents have found difficult to achieve.
Compounding the difficulty is cost. Apples profit margins are driven by costs too
low for competitors to match. Acer had admitted to losing money on tablets and
the rumored Amazon tablet is speculated to be a loss leader for the company. The
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current business model of the tablet industry provides Apple with a decisive
advantage.
Innovation, at least as it is conceived in the smartphone space, usually conjures
images of faster chips, sharper screens, bigger hard-drives, and better internet
connections. All of these features are important, but do not help companies stand
apart. To stand apart, companies have to consistently improve the user experience.
Since mobile and tablet screens are small, users have to adjust to using email,
social apps, GPS, and other features. If a phones software makes navigating
between Facebook, Gmail, or iTunes cumbersome, then users will switch to a
competing product. Moreover, users now demand phones whose apps and features
can talk to each other. The newest phones, for example, have high resolution
cameras integrated with Facebook and YouTube so that users can instantly upload
photos onto Facebook profiles and YouTube accounts. Another feature that is
popular is contact synching. Synching enables a phone to access a users email and
social media in order to build a comprehensive and easily accessib le list of a users
friends and coworkers contact information. Although controversial, location
based apps are also popular. We feel that since mobile software is still in its
nascent stages, that there are still many opportunities for phone companies to
innovate and differentiate themselves from their competitors.
We believe Apples position of leadership in the mobile computing space is well
hedged. One area of weakness for Apple is ITunes. iTunes close integration with
the Apple ecosystem as well as its site security, made it the go-to-destination for
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music lovers, despite competition from sites that offered music at a cheaper price.
Yet, the mobile internet has changed the way people access music. Downloading
music onto devices dedicated only to playing music and videos made sense when
phones only made phones calls and when the mobile internet was slow and
expensive. Downloading music will still appeal to many consumers, but to
compete, Apple will need to recognize that streaming music will probably eclipse
downloaded songs as the preferred method of listening to music. Instead of
downloading music from iTunes, a smartphone owner can stream music over the
internet through Pandora or Yahoo music. Whats more, these services have apps
specially tailored for smartphones, meaning that iTunes close integration with the
Apple ecosystem is no longer as much of an advantage. We see Apples fiercest
competition coming from Netflix, Pandora and Amazon.com. As mobile speeds
accelerate, we see new entrants gaining enough market share and user attention to
pose a direct threat to Apples content business. A new entrant to the market,
Stockholm based Spotify, is gaining media attention and market share.
Subscribers to Spotify pay a flat monthly fee ($5 per month for unlimited, $15 per
month for unlimited +mobile) and gain complete access to Spotifys library of
more than 15 million songs. Spotifys large library and relatively cheap monthly
fee make the service an attractive alternative to iTunes.
To remain the gold standard of online content, we believe that Apple will need to
redefine iTunes. Since iTunes is now a direct competitor to Pandora, iTunes might
need to co-opt some of Pandoras features. On Pandora, customers can create
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customized playlists based on their favorite songs, artists, or genres. While
listening to the customized radio station, users are often introduced to new songs
and artists, which, in turn, helps users create even more customized radio stations.
The icloud service, which will enable users to access music online through any
device, is a good product and a step in the right direction, yet we feel that Apple
will need combine iCloud with a method of allowing users to listen to music for
free.
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SWOT ANALYSIS OF APPLE INC
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Strengths
Well recognized amongst most consumers
4th largest player in the global mobile phone market
Strong brand image provides an edge over competitors
Robust financial performance strengthens investors confidence and
provides capital for future growth avenues
Focused R&D driving innovation & consolidating its market position
Holds 5% market share in mobile phone market
18.5% market share of global smartphone market
Provides unique design and development of operating systems,
hardware, application software and service to its customers
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Weaknesses
Patent infringement lawsuit may affect financial condition and operating
results -January 2010, Nokia filed law suit for patent infringement with US ITC
Product recalls may harm Apples reputation and ass significant warranty
and other expenses- 2010, antennae problems in iPhone 4- replacements free of
charge
Product defects harm Apples reputationa nd add significant warranty and
other expenses
Opportunities
Strong growth in smartphone and tablet markets to boost Apples
revenues
Robust outlook for mobile advertising market provides growth
opportunity
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Shipment of smartphones expected to be 850 million by the end of 2013
iPhone business continues to increase (2009-2010 93.2% increase in
sales)
Strongest player in mobile apps market (350,000 apps)
Mobile advertising market is forecast to reach approximately $25 billion by
2015
Threats
Rising popularity of Google Android may affect its market share - 350,000
Android smartphones are activated daily, 150,000 iPhone activated
daily
Steve Jobs death impact high growth sustenance levels - Steve Jobs
was innovative and a visionary for Apple. His death may hinder further
developments in Apple
Dependence on specific suppliers may affect to operations
Intense competition may affect revenues and profitability
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Marketing Mix
During research marketers need to identify the consumer in order to
know with certainty what kind of product offer. The buyer is exposed to
stimuli that are also known as the marketing mix and can be identified
with the four Ps: product, price, place and promotion (Blythe 2008).
Apple Inc. is an example of a successful marketing mix, this company has
a positive feedback by the consumers because they know how to deal
with them, Apple Inc. knows exactly what the consumer wants and its
success is given by a powerful research.
Product
The first thing to take into account about the marketing mix is the
product. Basically the product is anything tangible or not, may be a
service, a physical good, a place, a product is anything that satisfies a
need (Blythe 2008). Apple gives to their customers a wide range of
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products that covers many field in technology for example they have
different kinds of laptop with different size and power, also they
invented the iPod which now is not only an mp3 player but is a status
symbol of our era (MarketingTeacher.com), in addition in the last four
years they have created a brand-new market for smart-phones and
tablet-pc, this is called by the Apples CEO Steve Jobs the post-pc era
(Jobs 2011). According to Apples product portfolio (OnlineMba.com
2010, see appendix) most of the profits come from iPhone and in less than
a year iPad has generated revenues almost as high as those from laptops.
Price
The price is the amount of money the consumer pays for the product or
service. The price in our modern market should be competitive, this
means that it should not be so high but there are exceptions (Blythe 2008).
The price of Apples products is not low compared to other brands but
there is a reason for this. Apple is a premium brand, it dominates the
market and this company knows that even though the price in some
countries is quite high they will have customers anyway
(MarketingTeacher.com). Generally their products are a union between
technology and liberal arts so they do not just sell products but they sell
art
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Place
The place is the location where consumers purchases the product and
where they can receive support, it is also called distribution channel
(Blythe 2008). As the Apples CEO said during the last keynote held in
San Francisco in 2011 one of the reason of this success is the powerful
network of retail they have around the world (Jobs 2011). Apples retails
are everywhere, the major cities in the world usually have at least three
big stores where they can receive customers and, most important,
customers can test the product before the purchase and receive support.
Promotion
The promotion is the set of rules for advertising a product, for example a
product can be advertised by PR, personal selling, also different kinds of
advertising are used such as digital marketing adverts, television,
billboards and so on (Blythe 2008). Of course for Apple this is very
important, in the last six years the brand-awareness has significantly
increased because they are able to create powerful and funny adverts
where they explain how their product works. Also they offer different
kinds of discounts for students and professionals .
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Factors affecting the consumer buying process
The process of purchase is influenced by other aspects related to the
customer in a more closely way, these are : cultural, social, personal and
psychological. The culture in which the consumer lives and grows is the
starting point from where the needs arise and will also shape the
behaviour. It is also necessary to take into account demographic factors
such as sub-cultures and groups of people. Then, the marketer must be
able to identify changes in the consumer culture in order to keep updated
on new needs and behaviours. With regard to social factors can be
referred to social groups to which the consumer belongs, an important
social group is the family of the consumer (Kotler et al. 1999). In this
environment is outlined the DNA of the potential buyer. Other social
factors are the role and status held by the consumer in the society, in fact
in the purchase of a product is often influenced by the groups to which it
belongs. With regard to personal factors is indispensable to consider
characteristics such as age, job, economic circumstances, life-style and the
personality of the buyer. Finally, a more difficult issue to study and
understand is the psychological aspect of the purchase. Marketers must
identify the reason for this purchase, the marketer asks why consumers
should buy a particular product and of course you ask why he should
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buy his own (Kotler et al. 1999).
The consumer buying process can be analysed by following five stages
which are: problem/need recognition, information search, evaluation of
alternatives, purchase decision, post-purchase behaviour.
Problem/needrecognition
In this stage the consumer is trying to find a solution to a problem or a
need. Marketers work is to identify which is this problem and try to find
a solution with their product.
Information search
Before the purchase the consumer does research about the product. He or
she can have information from friends, neighbours but also from
commercials. Obviously the mass media plays an important role in
giving information about a product (LearnMarketing.net).
Evaluating of alternatives
After the research the consumer has different solution to satisfy its needs.
He or she is now in the position to evaluate alternatives products to
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purchase. The consumer, in this stage, face the decision of which is the
best solution to the problem. This is an important step because is when
the consumer makes the choice about the product to buy
(LearnMarketing.net).
Purchase decision and post-purchase behaviour
This is the stage where the consumer actually buy the product, he or she
evaluates the brand which likes the most. Also the consumer calculate the
risk of the purchase and this could lead to change his/her mind about it.
In the post-purchase stage the buyer might think if its purchase is good,
this feeling could be avoided by marketers by convincing the consumer
that what he/she purchased is the best product on the market .
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Findings
I think that Apple is be bringing back the mass marketing approach, they
don't really concentrate their advertisements on certain groups of people,
they try to include everybody. You can see all the ads that are meant to
resemble you, see if you can find a silhouette that fits you. Apple is
becoming a cult brand that has gained to respect of world wide users who
share one thing in common, their love for Apple's innovation. And I say
that Apple is going back to mass marketing because when you go in to an
Apple retailer you can see people of all ages, cultures, social classes, and
colors; like a small scale ethnic melting pot. The iPod has become a symbol
of our modern digital music culture, and the iTunes store is now the 2nd
largest music retailer in the U.S. Steve Jobs says that "if you make
something great than anybody will want to use it", and that model has
worked for them because they've never really invented anything but they
made what some considered the best technology available; thus eliminating
the need for an specific target market, because their products appeal to
everyone.
Apple offers amazing products that include hardware and software that
just draw all different kinds of people into the market.( Their major
hardware products are displayed in the page.) Software like the iLife '11
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which allows you to manage your music, movies, and pictures, the Final
Cut in case you want to make a whole length film, or the iWork, make you
look at Apple products as essential to your life. Benefit segmentation works
in 2 ways, first, it helps you segment your market and second, it advertises
your product which makes people want to buy it; and s that's the point
right? Apple in one of the most successful firms in the technology industry
so however it is that they are segmenting the market , they are doing it
right.
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Conclusion
Apple is more than just a brand, its a lifestyle, part of growing culture of
consumers who are artist, musicians, writers, photographers, and most of
all innovators. The firm has positioned itself as a high end brand that offers
beautiful hardware designs and also an amazing users experience. Apple
targets a market that consist of people from their teens to their 40's that are
interested in doing more with their technology than just the usual boring
old stuff that other companies offer. Their product lines offer similar
products that offer different benefits in order to prevent cannibalization.
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Bibliography
WWW.Google.Com
www.wikipedia.com
www.marketing teacher.com
www.slideshare.com
www.scridb.com
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