Marketing (Apple)

Introduction

This assignment seeks to take an in depth look at the company known as “Apple” the leading manufacturer of products such as the “iPhone”, the “iPad” and the Macbook Pro. The name “Apple” was given to the company by co-founder Steve Jobs after he had spent some time at a local apple orchid, and decided the name would be perfect for the company as he felt that the word “Apple” was not one that caused customers to be frightened, threatened or alarmed and it did not make the company seem like all the other big corporations that were around at the time. It gave the customer a welcoming non-aggressive touch.

The company which now goes by the name “Apple Inc.” Was once formerly known as “Apple Computer Inc”, the late Steve Jobs and Steve Wozniak established it in 1976. In the beginning the two Steve’s came together to manufacture personal computers that had the model name of “Apple 1”. They managed to sell of their computers, that they made with parts that were ordered in on credit terms, all this was done without loosing a single share or any bit of ownership.

This product lacked a lot of all the basic features that one may find on today’s modern Pc’s. They were both college dropouts at the time when “Apple” was starting up, and their vision was to create a user-friendly computer, and create a new market for a small amount of people; they were trying to create a niche, but more so than offering a computer they were offering a new lifestyle, traditionally owners of apple products have usually been those that felt they were able to disband themselves with the everyday PC that ran the Microsoft OS (operating system)

“In terms of the span of the Apple brand, it was also able to go global wherein it allows consumers from at least 42 countries including, to name a few, Australia, Brazil, Germany and Taiwan to purchase its products. As of now, Apple Inc. operates more than 170 retail stores in the United States, Canada, Japan, Australia and United Kingdom. Most of its products go into these big markets and has been showing a steady increase in revenues and sales.”

Promotional Mix

A promotional mix is refers to the different ways in which a company will market their brand and products

Product

Portable Computers – Includes Macbook pro’s, imac’s and Macbook Air iPods - including iPod Shuffle, iPod Nano, ipod Classic

Price

Apple is known as a high end product and brand; it doesn’t really try and compete with most companies where price is concerned. They usually reduce prices months after the product has been launched.

Place

Apple has over 200 company outlets worldwide, which solely distribute apple products. Some countries include, America, United Kingdom, China and Canada.

Promotion

Apple has some back-to-school offers; some of these promotions are aimed at college students. Their online store also offers free shipping to purchases over $50

ORGANISATIONAL OBJECTIVES

Before we take a look at Apple’s organisational objectives let us take a look at what organisational objectives are.

Organisational objectives are long-range objectives that a company uses in the same way an ordinary person would use goals. For companies such information is usually found in their quarterly plans or 5 year plans. This helps the company’s employees with their work in the office as they have a clear sense of direction as to what they are working towards and not just working for the sake of producing results.

It also allows for better results as everything that anyone in the company takes part in will be orientated around this objective, or these objectives, these objectives are usually influenced by stakeholders and also the nature of the business environment. Of course different stakeholder groups will have different objectives to suit their interests, for example.

Corporate objectives: These are objectives that affect the company as a whole and concern everyone employed by the company.

Departmental objectives: These are objectives that are for specific areas or departments within the business

Individual objectives: These are objectives used by companies to or rather employers to assess their working staff.

Organisational objectives may also be categorised into short run and long run. The common way of thinking is to assume that every company seeks to make a profit in the long run, however for this to be achieved there are certain objectives a company has to fulfil before getting to this stage. Depending on the market the short term objectives will vary, but I imagine for any business in a competitive market the number one objective is survival, if they can achieve this then they are half way there.

Now to take a closer look at the organisational objectives of the Apple Inc. organisation.

Corporate Mission Statement:

“Apple Inc. is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings” – (Apple.com 2011)

This brief and narrow mission statement is reflective of Apples “secretive” nature, as a leader in a very competitive market stealth is key and is often the difference between being an innovator and being a follower.

Corporate Goals:

“1. Apple Inc. plans to keep creating and releasing computers and consumer electronics that are user-friendlier.

2. Apple Inc. will focus more opening more stores even on international locations to help increase in sales.” (Apple.com 2011)

By taking a look at this, we can see that Apple from day one have been perfectly clear of their intentions, and this simplistic statement that to some, may seem just like another corporate slogan companies use to disguise their true intentions, is actually everything Apple have done for the Pc world in the last 10 years.

Brand Portforlio

“Some companies have multiple products and services, each of which may have its own brand (trademark, service mark), or form part of a "family of brands." They may be common law marks, or registered under statutes in various countries and states. The total collection of these rights is called the "brand portfolio."

Apple being a diverse company has managed to portray this in their choice of products, ranging from the iphone to the Apple TV. The iphone was a revolutionary Product that changed the way users interact with their handheld devices, and is considered by many as one of Steve Jobs greatest inventions.

Below is an extract/image from “edibleapple.com”, which was published in 2009 with a list of all Apples products dating from 1976 to 2009.

Pricing Strategy

In order to fully understand Apples pricing strategy we have to take a look at their customer base, Apple has one of the strongest customer base in any industry, and they have high levels of customer loyalty, much of which is to do with the fact that their products seem to function as they are meant to, their products are durable and have a means of creating a personal bond with the customer.

As many apple users view themselves as tech savvy or more tech savvy than the average PC user, they are almost attracted to the high prices that come with apple products, apple products have a Giffen good effect and the higher their prices the more their loyal customers seem to want to buy them, as they feel that they are unique and are setting themselves apart from the rest of the crowd.

PRICE SKIMMING

Skimming is referred to as selling a product at a high price; basically companies sacrificing sales to gain high profits. This is employed by companies in order to reimburse their cost of investment put into the original research of the product. This strategy is often used to target early users of a product/service because they are relatively less price sensitive than others.

Early users are targeted either because their need for the product is more than others or they understand the value of the product better than others. As apple users view themselves as more “technically sophisticated” than others. This can be seen in the following extract (below) of a survey taken on how iphone users view their technical sophistication

(Rubicon, 2008 iphone survey “The Apple iphone: Successes and Challenges for the Mobile Industry.” A study of iphone users. http://rubiconconsulting.com/downloads/whitepapers/Rubiconphone_User_Survey.pdf)

Versioning (Price Discrimination)

“Pricing discrimination is a pricing strategy that charges customers difference prices for the same product or service. In pure price discrimination, the seller will charge each customer the maximum price that he or she is willing to pay. Most often the seller places customers in groups based on certain attributes and charges each groups a different price.”

“Apparently, price discrimination is only feasible under certain conditions: 1) Companies have short run market power; 2) consumers can be segmented either directly or indirectly, 3) arbitrage across differently priced goods is infeasible (Stole, 2003). Given the fact that these conditions are fulfilled; companies typically have an incentive to practice price discrimination. However, the form of the price discrimination may also depend on the nature of the market power. Jagmohagn Raju (2007) highlights that Apple’s price cut is an example of a strategy known as “temporal price discrimination” where it charges people different prices depending on the their desire or ability to pay.

Companies such as Apple may practice this strategy for two reasons. First, they gain wide profit margins from those willing to pay a premium price. Second, they benefit from high volume by building a wider customer base for the product later. It’s important to note that price discrimination can also be structured across geographies, seasons and by adding or eliminating features.”

(Köehler H. D. (1996). “Pricing Considerations for Electronic Products in a Network and Requirements for a Billing System.” VCH Publishing Group; Weinheim/Germany.)

Distribution Strategies

This is the means that Apple uses to get their products out into the market. Apple being the company they are decided to take a different approach and instead of using normal PC retail outlets, they opened their own Apple Store’s in over 280 countries worldwide. By doing this they decided to cut out the middleman and maximise on the profits, meaning they do not incur any extra costs, or risks that come from using retail outlets. Apple felt as though the retailers were killing the relationship that Apple had with it’s customers, of course this decision to introduce their own store’s would come under a lot of scrutiny from “experts”

David Goldstein, president of Channel Marketing Corp. told MacWorld Magazine, "It makes absolutely no sense whatsoever for them to open retail stores. Apple will turn the lights off within two years and will have a very bad and expensive experience."

Conclusion

“With its iPhone, Apple has tried to bind users to AT&T in the US, Orange in France, T-Mobile in Germany and O2 in the UK. However, low sales rates in European countries have shown that iPhone prices were in fact too high in comparison to similar smartphone’s issued by its competitors on the phone market. In order to respond to this challenge, Apple has used its best arm - innovation and will soon issue a new version of the iPhone, which is expected to re-launch iPhone sales.”

(International Herald Tribune, July 5, 2007)

Given the untimely death of one of the world’s most renowned innovators, the future of Apple and it’s products has fallen under a huge grey cloud of uncertainty, as many viewed Steve Jobs as the brains behind Apple, having said this, it is also rumoured that the company has been left behind several new products and ideas by the late Mr Jobs and has plans to put these ideas into act. Though the death of Mr jobs was an unfortunate event, Apple has managed to further grow it’s brand and product range, the company still boasts high revenue and high profit margins.