has dominated the market with its innovative line of products like iPod, iPhone and iPad. Steve Jobs and Steve Wozniak started Apple in 1976, and in the 34 years until the launch of the iPod, the company had many difficulties. In 1980, Apple was leading the market with its Macintosh that was worth $1B annually. Their product stood alone at the top in a primitive early marketplace. While Apple benefited financially from the creation or rejuvenation of many products essential to our concept of modern life, they also experienced their fair share of lean times and struggles over the years. SWOT Analysis: Strengths
Steve Jobs innovative founder, CEO of Apple and Pixar was an asset to the organization Strong brand, rapid growth and high profits Apple’s initial product Macintosh line was profitable for the company Mac resulted in loyal and satisfied group of customers for Apple Apple offered a complete desktop solution of “plug and play” Innovative line of products iMac, iPod, iPhone, iPad that captured multiple target markets Designed Mac Classic to compete with low priced IBM clones Self-proprietary designs and they refuse to license its hardware to third parties Revamping Apple’s distribution from smaller outlets to national chains Apple launched website for direct sales in 1997 Greenest lineup of notebooks that are energy efficient and use recyclable materials. Situation Analysis: The top PC vendors HP, Dell, Acer and Lenovo accounted for 55% of worldwide shipments between years 2006-2009. There are two categories of major suppliers in the PC market. The first category provided highly competitive prices since there were many sources available to sell parts like memory chips, disk drives and keyboards.
The second category namely microprocessors and operating systems made by few sources like Intel, Advanced Micro Devices and VIA technologies, which made it difficult to negotiate for lower prices. Apple had to rely on Microsoft for its Internet Explorer until Apple built its own Safari for internet browsing. Apple increased the Macintosh capability by using Intel Microprocessor chips in 2006, now its Macintosh can run Windows applications too. With its premium price differentiation strategy, Apple tends to have higher profit margins, which arises a need of continuous innovation for their product lines that can raise them to the top against their competitors and sustain them through their rough times. Weaknesses
Allotted 3% of sales for R&D to keep flow of innovations in the market Products with premium price sometimes giving an overprice appearance Failure of software outcomes of Taligent and Kalieda with the alliance of IBM cost the company $500 million Faced loss, instability and dissatisfactory outcomes with different direction in company’s approach under 3 different CEO’s leadership from 1990 to mid-1997 Revenue growth failed to keep up with volume growth because of gradual decrease in average selling price Opportunities Cooperative project with Novell Network and Intel to redesign Mac OS to run on Intel chips for faster speed Investment of $150 million from Microsoft in developing Microsoft Office for Apple’s Macintosh Hired Taiwanese contract assemblers to manufacture Macintosh products Threats IBM PC’s faster than some Mac versions before Mac used Intel’s processor MARKETING APRIL 28, 2012 BY: GROUP C
Windows operating system developed by Microsoft “Wintel” dominated the industry Prices of the key components like (CPU, memory and hard disk) dropped HP, Dell, Acer, Lenovo and Toshiba accounted for more than 55% of worldwide market share Acquisition of Gateway and Packard-Bell by Acer Steve Jobs health is a concern to the company. Recommended Solution: Our recommended solution is that Apple, Inc. focus on improving their Macintosh sales in the PC market, specifically as it pertains to personal/home use desktops and portables. One facet of this recommendation is to focus on lowering the pricing of their Macintosh, thereby make it more attractive and affordable to price conscious consumers, and competitive with that segment of the market. Apple is a well known brand, so the quality of their products speaks for itself, but they must recognize that consumers seeking personal/home use PCs value pricing above all.
Another facet of this recommendation is to improve on their product offerings for the Macintosh PC line, by providing greater options in their software applications (including educational use, small business use and recreational use). Key Issue: Apple’s market share for its PC manufacturing dropped from 3. 5 % to 1. 9% from year 2000 to 2004. By 2006 to 2009, Apple’s market share for its PC manufacturing increased from 2. 3% to 4. 2%. Currently, Apple owns a significantly small portion of the market for its PC’s which is about 4% compared to the top three competitors like Dell who owns 13%, HP owns 20%, and Acer 13% in the PC manufacturing market by 2009. The key issue is how can Apple increase its market share for their Macintosh products?
They should expand their market by entering educational mediums nationally and internationally focusing on colleges emphasizing on good future prospects for students well versed with Mac environment and schools emphasizing on introduction to curriculums through Mac for the students. Consider lowering the pricing on their personal computers in an effort to increase sales in this arena, by making PCs that are affordable, while leveraging their brand recognition. They should focus more on advertising and displaying Mac’s capabilities. Send brochures having different choices of Mac products to Small Businesses and Residential areas. They should offer more advertisement to get people to visit the local Apple stores to see their products and have hands on experience to visualize the difference and get a good Apple customer experience. Capitalize on their success as Apple, Inc.
, which is currently gaining ground as “a mobile device company”, by breathing new life back into their PC products, while focusing on their innovative advantages of years past through an increased focus on cost effective research and development strategies. Developing a strong succession plan that will keep the company moving forward, should it become necessary to implement leadership changes in the future. Impact on Marketing Mix: Product: Apple, Inc. provides top of the line Macintosh PC line that exceeds industry standards. With its reputation and considered a luxury to own, Apple, Inc. can easily increase its market share by maintaining the same quality Macintosh at a lower cost where revenue growth keeps in pace with volume growth.
Price: Apple should utilize its Taiwanese contract to reduce the cost of its Macintosh PC line to lower the current price structure in order to compete within industry levels to gain market shares without affecting its Macintosh profit margin. Place: Continue to distribute through the same channels: directly to customers through the website and the Apple store which provides an apple experience for those who are new to Mac. Expand to new markets such China, the Middle East and potentially Europe. Promotions: In reducing the price structure of its Macintosh, it can promote as it currently advertises in purchasing a high-quality computer at a lower cost for all levels of income. For new regions, minimal ads can be spent such as billboards, magazines and television ads.