APPLES WINNING

MARKETING STRATEGY

SYNOPSIS
BUSINESS

Few companies have been able to master the art of product

innovation, a cool brand image and customer evangelism like Apple.

ENTRY

STRATEGIES

ANALYZE

Nearly collapse in mid-90s, but late Apple CEO, Steve Jobs was able
to save the company he created through product innovation, a
masterful marketing program and an entrepreneurial corporate
culture
Review Apples history and remarkable comeback with an eye
toward the marketing strategies that created the companys success.
Examine many of the challenge faced by a company that continually
pushes the boundaries of marketing practice to stay on top of the
consumer electronic and computer industries

Company

Apple Incorporation

Former CEO

Steve Jobs

New CEO

Tim Cook

Revenue

US$233.715 billion (2015)

Headquarter

California, United States

Area Served

Worldwide

Founded

1st April 1976

Founders

Steve Jobs
Steve Wozniak
Ronald Wayne

Key People

Arthur D. Levinson (Chairman)

Tim Cook (CEO)
Jonathan Ive (CDO)
Luca Maestri (CFO)
Jeff Williams (COO)

Industry

Computer hardware
Computer software
Consumer electronics
Digital distribution

Website

www.apple.com

LOGO

1976

1977

1998

2000

NOW

VISION Steve Jobs

We are committed in producing high
quality products and providing high
quality service thus setting high
industry standards for other
competitors

MISSION Steve Jobs

Apple is committed to bringing the
best personal computing experience
to students, educators, creative
professional and consumers globally
through innovative hardware,
software and internet offering

Time Line

1976 : Steve Job & Steve Wozniak founded Apple Computer Inc.
1980 : Apple converts to public ownership
1982 : Apple become first personal computer company to reach $1 million
in sales.
1985 : Steve Job was ousted
1985 : John Sculley assumes CEO role
Mid 1990 : The company was approaching bankruptcy
1997 : Steve Job is named interim CEO
1998 : The all in one iMac is released
2000 : Steve Jobs appointed as CEO
2007 : Renamed Apple Inc
2010 : Apple began take market market share away from top competitors
2011 : Apple surpassed Google to become the most valuable global brand.
2011 : Steve Jobs died & Tim Cook appointed as new CEO

VISION Tim Cook

We believe that we are on the face of the earth to make great products
and thats not changing. We are constantly focusing on innovating. We
believe in the simple not the complex. We believe that we need to own and
control the primary technologies behind the products that we make, and
participate only in markets where we can make a significant contribution.
We believe in saying no to thousands of projects, so that we can really focus
on the few that are truly important and meaningful to us. We believe in
deep collaboration and cross-pollination of our groups, which allow us to
innovate in a way that others cannot. And frankly, we dont settle for
anything less than excellence in every group in the company, and we have
the self-honesty to admit when were wrong and the courage to change.
And I think regardless of who is in what job those values are so embedded
in
this
company
that
Apple
will
do
extremely
well.

MISSION Tim Cook

Apple designs Macs, the best personal computers in the world, along with
OS X, iLife, iWork and professional software. Apple leads the digital music
revolution with its iPods and iTunes online store. Apple has reinvented the
mobile phone with its revolutionary iPhone and App store, and is defining
the future of mobile media and computing devices with iPad.

APPLEs PRODUCTS
MAC Computers

iPod & iTunes

iPhone

iMac

iPod touch

Mac Pro

iPod Nano

Mac Mini

iPod Shuffle

MacBook
Pro

iPod Classic

MacBook Air

Apple TV

1st Gen
3G
4
4G
5
5C
6
6 PLUS
6S
6S PLUS

iPad

The Apps Store

iPad Air
iPad PRO
iPad Mini

Apple Watch

Case Summary
Many companies have tried to copy Apples strategies, but none have reached the iconic status
of Apple and its product.
Some believe that Apples success stems from a combination of several factors, including the
leadership qualities of late CEO Steve Jobs, a corporate culture of enthusiasm and innovation,
and the revolutionary products has become known.

Apple has excelled in both leadership and operations. Apple has effectively recruited, trained
and compensated employees to create loyalty.

Apple has created a highly efficient and effective supply chain with most of the production in
China.
Apple has also mastered core research and development skills that have allowed the company
to translate its technological capabilities into product that consumer want.
The capstone of Apples strategy is its retail store that have become role model for its
competitors.

BUSINESS MODEL OF APPLE

SITUATIONAL ANALYSIS Internal Factor

LEADERSHIP
Late CEO Steve Jobs visionary leadership
New CEO Tim Cook charismatic leadership

CORPORATE CULTURE
Fast-paced, innovative & collaborative towards doing thing
the right way
Flat structure, lacking the layers of bureaucracy
Does not adhere to normal work environment
Two Cultural ; 1) Debate on ideas, 2) Vision that employee
could believe in
Foster a culture of secrecy

SITUATIONAL ANALYSIS Internal Factor

OPERATIONS
Supply Chain Management manufactured in countries wit low labor
costs.
Annual Supplier Responsibility Progress Report
Most manufacturing in China
More than 200 supplier code of store worldwide

MARKETING
Pricing priced high & fixed, prestige image, convenience product,
revolutionary & pay more for value
Promotion word-of-mouth marketing, position as the technology
provider, simple-artistic-instantly advertisement, corporate evangelist
Product - consumer electronics, computer software, and online
service
Place (Distribution) 475 retail store in 17 countries, online store,
Apple Store

SITUATIONAL ANALYSIS Internal Factor

FINANCIAL
Revenue 2015 US$233.715 billion
Net Income 2015 US$53.394 billion
Total Assets 2015 US$290.479 billion
Total Equity 2015 US$119.355 billion
Value over US$700 billion

HUMAN RESOURCE
Recruiting Online, Universities, Internship, Apple Store
Leader Progam
Hiring Online application, Interview Process, Affirmative
Action
Training New technology , Career Advancement
Retaining Fun, Innovative work environment, Great benefit
115,000 number of employees

SITUATIONAL ANALYSIS External Factor

COMPETITION
A product or brand that compete in the same industry or product category
Hewlett Packard, Dell, Lenovo, Acer
Samsung, Sony, Blackberry
Microsoft Window base tablet
Alternative gadget and activities Television, Playstation, Wii, Xbox
Google Android
Amazon formidable competitors, budget friendly

TECHNOLOGY
Industry trends Tablet PC, Internet capabilities, compability
New operating System

SITUATIONAL ANALYSIS External Factor

CUSTOMERS
Volatile
Lack of perceived differentiation
Baby boomers, Gen X, Gen Y & Gen Z
Niche market

MACROECONOMY
Current economic climate
Natural disaster
Price stability Inflation
National Income per capita
Unemployment
A sustainable Growth of GDP
A more equitable distribution of Income & Wealth

SWOT ANALYSIS APPLE INC

Strength

Weakness

1. Effective marketing to improve brand

awareness and create customer demand
for product

1. Too dependent on Iphone and Ipad sales

2. Strong Distribution network

3. Healthy cash flow with strong financial
performance
4. Brand Loyalty by Customers

2. Weak distribution channel in India and

China
3. Low spending on R&D compared to their
competitor
4. OS incompatible with other softwares

Opportunities

Threats

1. IOT market capability

1.Strong competition

2.Wearable gadgets to meet peoples

lifestyle

2.Patent Infringement
3. Rising USD can affect future sales
4. Privacy Concerns

Strength: Marketing Expenditure Effectiveness

Yearly Expense by Apple and Its Competitors in USD Billions
Brand

2012

2013

2014

2015

1.1

1.2

1.8

Samsung Mobiles

4.3

3.8

3.6

N/A

Google (Android)

2.4

N/A

Apple Inc

Source : Financial Report for the Respective Brands [1] [2] [3]
Marketing and advertising are used to which improve branding and create
stronger demand for Apple .
US$1.8 billion was spent in last year (2015), from US$ 1 million in 2011. [1]
Not much spent on advertisement but compared to their competitor they are lower
than them and are able to get create a very good stream of consumer demand

Strength: Strong Distribution Network

Apple Distributes their product through online, Concept Stores, Network Providers.
Their concept shops are placing their products in a way consumers can shop and
play to experience the product themselves
The U.S. is the second largest smartphone market in the world and the leading highend smartphone market followed by China. The U.S. is also the largest market in the
world for almost any other high-end device.[6]

Strength: Strong Distribution Network

Figure 2. Market share of smartphone shipments worldwide in 2015 (forecast), by country

The U.S. is also the most important single market for the company, generating earnings
of US$81.732 billion or 34.97% of total Apple sales in 2015.[1]
This is achieved by over 283 retail shops in the US alone combined with Mobile
Provider, online shops and 3rd Party Distribution[1]

Strength: Healthy Cash Flow

Apple has a good cash flow and USD 205.6 Billion in reserves and USD 56 Billion
long term debt in 2015[1]
This gives them a good edge to invest in R&D, Innovation, marketing etc without
worrying about financial situation.
Can take good risk and cash draining activities

Strength: Brand Loyalty

Source: Boy Genius Report [7]

Weakness: Over Dependence on Iphone and

Ipad Sales
Year
Model
Net sales ( In USD Billions)
% Of Apple Sales
Model
Net Sales ( In USD Billions)
% Of Apple Sales

2013
91.279
53%
31.98
19%

2014
Iphone
101.991
56%
Ipad
30.283
17%

2015
155.04
66%
23.227
10%

Source: Apple Financial Report [1]

This makes Apple very vulnerable to changes in the smartphone and the
tablet markets, including slowing growth in developed countries
Other smartphone manufacturers are targeting the same customer group of
Apple aggressively in a saturated market
The Ipad is already experiencing this
Overdependence on iPhone and iPad sales weakens the company as shifts in
technology, component prices or consumer tastes may severely decrease
Apple revenue.

Weakness: Weak Distribution Channel in China

And India

Apple revenue comes from developed countries where most of its device is sold
Income from China 25%
It is not just the purchasing power undermining the the companies performance but
also the access to Apple Retail and Online Stores
The weakness is direct distribution [9]
Once Apple Doubled its Stores in China, Its Sales in the region also Doubled.
The Lack of Physical Stores is the reason for Poor Sales in China [8]

Weakness: Low Investment in R&D, Less Patent for

the Next Wave of New Products
R&D spending by Apple and its largest competitors (in US$ billions)

Utility patents granted to Apple and its competitors

Source: Strategy and Business [10]& US Patent Office [11],[12],[13]

Weakness: Incompatibility of Apple OS Preventing

Those from Other Platform to Move to Apple

Apple OS is not same as the Windows and Android OS

Users used to Windows and Android will find it inconvenient to move to Apple due
to the different OS
Google play Apps may not be available in Play Store.
For Industries this may mean high transition cost.
An advantage of this is Apple can retain its existing customers. Disadvantage is
getting new customers used to other OS to migrate

Opportunity: IOT Market

The Internet of Things (IoT) is the network of physical objectsdevices, vehicles,

buildings and other itemsembedded with electronics, software, sensors, and network
connectivity that enables these objects to collect and exchange data[15]

Currently, more than 20 billion devices are connected to the Internet and this number is
expectedto grow by 50% to 30 billion by 2020.[21] International Data Corporation (IDC)
forecasts that the worldwide market for the IoT will grow from US$655.8 billion in 2014
to US$1.7 trillion by 2020[14].

Apple has its own platform for the IOT which includes wearable gadgets tablets,
computers and many other hardware products that can be integrated into one
ecosystem and controlled via an Internet connection

Opportunity: Wearable Gadgets for Lifestyle

In April 2015, Apple introduced its first smartwatch called Apple Watch[16]
According to analysts from Business Intelligence (BI), in 2019 shipments of
wearable. gadgets will reach 148 million, of which 70% or 103 million units will be
smartwatches. BI analysts also forecast that the Apple Watch should be the
dominant gadget taking a 47% share of the smartwatch market. With the US$349
price tag, the Apple Watch would bring the company at least [17]
US$14 billion in additional revenue by 2019.
Smartwatches not the only opportunity for Apple in the wearable gadgets market.
There is a trend toward health-related wearable gadgets.

Threat: Fierce Competition in the Market

Apple has always faced strong competition from Microsoft, IBM, HP and Dell in the
personal computing sector
since the launch of the iPhone and iPad, that competition has increased by going
head on with Samsung and google both well-funded and experienced
Developed market is saturated thus the need to venture in China and India
This new markets may compare price and performance based purchases and Apple
having a premium pricetag may not be able to compete in them
Android may have a better advantage due to cheaper cost

Threat: Weakening of the Other Foreign Currency to

the US Dollar

In 2015, the company earned US$151.983 billion or 65% of its revenue outside of
the U.S. [1]
This means that Apple currently receives large share of its profits in currencies
other than the U.S. dollar. [1]
To make profit Apple may need to increase international pricing and potentially
reduce the demand for the product

Threat: Lawsuits Over Patent Infringement

Figure Shows the Most Litigated Companies in 2015

Source: Unified Patents[18]

Apple not pumping out much patents as Samsung.

Less patents to protect themselves and recover damage cost if infringement happens
According to Unified Patents Apple is most targeted company for infringement [18]

Threats: Apple Privacy Concerns

Apple collects and stores customer, employee and business partners information
which can identify a person (eg.: credit card, phone, ID Numbers etc)[19]
Apple recognizes this and identifies it in their financial report
Apple is in the high risk group due to their high profile and the huge quantity of
personal data it manages[19]
Identity theft can cause great losses to a company like Apple

TOWS ANALYSIS

Opportunities
1. IOT market capability
2.Wearable gadgets to meet peoples
lifestyle
Threats
1.Strong competition
2.Patent Infringement
3. Rising USD can affect future sales
4. Privacy Concerns

Strength
1. Effective marketing to improve brand
awareness and create customer demand
for product
2. Strong Distribution network
3. Healthy cash flow with strong
financial performance
4. Brand Loyalty by Customers

1. Too dependent on Iphone and Ipad

sales
2. Weak distribution channel in India
and China
3. Low spending on R&D compared to
their competitor
4. OS incompatible with other softwares

Introduce wearable gadgets to existing

Iphone users with new scheme like
Purchase with Purchase
Take risk to invest strong cashflow in IOT
market

R&D for new product for different price

groups

Healthy cash flow therefore Iphone may

be able to absorb the rising USD effect
and ensure demand is there
Invest in Patents to block competitors
development
Meet competition with the next top
product
Apple should pledge to the public and
assure them All data is confidential to
build customer trust. Also invest in high
level data encryption to deter
unauthorized access

Break competitors grasp on the market

with new product line up

Penetrate Android market with wearable

gadgets compatible with android

Set up physical store for china and india

Threat of substitutes

Bargaining power of
suppliers

Rivalry among existing

competitors

Threat of new entrants

Bargaining power of
buyers

Rivalry Among Existing Competitors

High aggressiveness of other suppliers
Rapid and continuous innovation
Powerful ads
More imitations STRONG
FORCES

STRONG
FORCE

Lower switching cost

Now easier to switch brands

MODERATE
FORCE

Bargaining Powers of Buyers

Lower switching cost

MODERATE
FORCE

Now easier to change brands

Tim Cook noted that 30% of all new iPhone purchases
now come from Android switchers.

MODERATE
FORCES
Individual buying power

WEAK FORCE

Lost of 1 customer not affecting revenue so much

Collective buying power

Massive customer deflection

STRONG
FORCE

Threat of New Entrants

New manufacturer

WEAK FORCE

High cost to establish new company

High R&D cost to keep up with latest technology &
innovation

MODERATE
Branding recognitionFORCES

WEAK FORCE

High cost to establish new brand name among existing

strong names

Capacity of potential

STRONG
FORCE

High potential by large companies to compete

Bargaining Powers of Suppliers

High number of potential suppliers
Apple have a very wide selection of choice
WEAK FORCE
Switching cost low
WEAK
FORCES

Major customer of most parts

Suppliers reluctant to lose business

Strengthen Apple position to negotiate
WEAK FORCE

Threat of Substitutes
High availability of substitutes
Camera : Digital cameras, DV recorders
Browsing/IM : Tablets, Web based IM
Calls : Landline
WEAK
FORCES

MODERATE
FORCE

Low performance / portability

Camera : Hassle of bringing many items at once
Browsing/IM : lack of features
WEAK FORCE
Calls : Not portable

Nor a major
consideration

WEAK
Threat of substitutes

Not a major
consideration

WEAK
Bargaining power of
suppliers

Maintain competitive
advantage through
innovation and building
brand loyalty

STRONG
Rivalry among existing
competitors

Threat of new entrants

MODERATE

Keep innovation and

develop new and
unique product to
strengthen market
share position

MODERATE
Bargaining power of
buyers

Keep innovation and

develop new and
unique product to
increase brand loyalty

Political
Environment

- Instability in
manufacturer's
countries

- Disposal of older
technology
- Increase
regulation

Ethic
- value profit than
employee welfare

Legal
- Vulnerable to the
infringement and
litigation

PESTLEE
Analysis on
Apple's
Marketing
Strategy

Technology
-Rival cathing up
- Less demand for
personal computer
- Android OS's
product lunch
faster

Economy
- Labors cost
increase
- Increase
exchange rate in
US dollar

Social
-Trends
- Close relationship
may offend some
potentiall customer

Politics
v Depending on China manufacturer and markets makes Apple exposed to
political unrest in that country.

Economy
v Apple's product components are manufactured in countries with low labor
costs. The biggest China manufacturer is FAXCONN. It has manufacturing in
Asia, Europe, Brazil an Maxico.
v Rising the cost of labors in China could reduce the cost advantage of some
Apple products.
v The price for Apple's products can become higher if Apple have to find
alternative to China manufacturing.
v Increase exchange rate in US dollar making it more expensive for Apple to do
business in key markets like Europe and China.
-

Social
vMobile access becoming more popular nowadays is an opportunity for
Apple to continue providing easy-to-use mobile devices.
vClose relationship between Apples and China could offend some potential
customers in other regions, particularly if tensions with China rise.

Technology
vEventhough Apple's leading many of the area, rivals such as Amazon and
Google are striving to catch up. Amazon's Kindle Fire, offer full array of apps,
e-book, music, movie, cloud services and more budget friendly.
vThe use of smartphones and tablets is rising will reduce the demand for
Apples popular personal computers.
vAndroid operating system is more open approach that allows manufacturer
(Samsung, HTC) to lunch new devices much faster than Apple's product.

Legal
v Apple is vulnerable to the infringement and litigation by another company
although Apple's products covered by Intellectual Property Law.
v Location service: Apple has continue to collect location information even
after users had disable the feature. Government considering passing
legislation on mobile privacy, actions could have profound effects on Apple
and it's competition.
Environment
v As Apple annually releases upgraded products, this could result in older
technology being disposed and lead to environmental problem. This may
lead to the increased regulation and higher manufacturing costs at some
point in the future.

Ethic
vIssue with Apple's supply chain may indicate that Apple's value
profit than employee welfare.
vEthical concerns about Apples manufacturing in China could
limit its products appeal among socially-conscious consumers.
vJanuary 2010 over1305 workers ill due to poisonous chemical
usage to clean-up iPhone screens.
vYear 2011, aluminum dust and improper ventilation cause two
explosions, killed 4 people and 77 injured.

Politics
Apple could open the "closed door" policy by offering another
countries besides China to set up factories by providing the
return on investment (ROI) and obey the laws and rules
practicing in the country.
This step is essential to maintain the continues productions of
the Apple's products, to generate more job prospects, and as an
option comparing to only depending on one country.

Economy
Other than depending with the one and only factory that own
the intelligence, the controversial FOXCONN who is persistent in
labor violating, Apple may find several ways to share the
intelligence with selected manufacturer to produce & distribute
to the market. By providing more alternative, Apple could control
the costs & profit in the market.

Social
Although Apple has offer the simple yet elegant devices &
operating system to the market, Android is more approachable &
easy to use to users.
Technology

Legal
Apple has to be transparent in collecting the required data
from users / clients by confirming the data shall be study to
improve better technologies in future to be offer in market.
Apple doesn't have the power to control the devices/
application similarities , yet to overcome the situation, Apple
could improvise the patent and applications before launch since
they do it annually compared to competitor.

Environment
Apple developed products that last longer and recycles
responsibly devices. To encourage recycling, they created the
in-store recycling program: customers can trade in old
products and received various discounts to purchase a new
device.

Ethic
The government would take an action due to countless of
labor negligence in China, and probably, apple has to shut
down the factories if the negligence continuously. Although
consumer more interested on "what's next" product, Apple
has to improved the Supplier Responsibility Progress Report
the results of it's audits and corrective actions the company
will take against factories where violations have occurred.

STP (Segmentation, Targeting, Positioning)

Segmentation - market is divided into subgroup, market segments in order

to create product differentiation strategies and to exploit these segments to
the firms own use.
Geographic Segmentation: It is when the market is segmented on the
basis of city, state, region, or country
Geographic Segmentation : Apples retail stores are located in highly populated
cities around the world. Global presence, with online presence/official website in
88 countries.
Apple retail stores 475 in 17 countries

Demographic Segmentation : It is when the market is segmented on the basis

of age, gender, education, income, occupation, etc.
Demographic Segmentation : Apple segments based on target group from
youth to senior adults (14 - 65) and business professionals

-- A higher percentage of customers who buy the iPhone, Macbook

Air, Macbook Pro, and Apple TV are between the ages of 25 and 34.
-- Seniors 65 and older, and people between 35 and 44, are the
biggest of iPad customers.
-- And those who are 35 to 44 made up the highest percentage of
Apple Watch sales.
-- The largest percentage of Apple Music customers are 25- to 34years-old.
-- Households with an income level between $35,000 and $50,000
spent the least.
-- But, amazingly, households with an income level under $15,000
spent about as much as households with an income level between
$125,000 and $150,000.

Source : http://money.cnn.com/2015/10/29/technology/apple-customers/

Psychographic Segmentation : It is when the market is segmented on the basis

of life style, social class, behaviour, opinions, values ethics etc.

Apple typically appeal to those who are middle to high class who do not
mind spending a little extra cash for the best quality in the product being
purchase and those who are in the profession of media and design.

The use of Demographic Segmentation illustrate the concentration of

Apple retail stores around the United States. New York and California are
the main area where Apple position their retail stores. Apple targets those
two area because they appeal to the lifestyles of those living at the
locations.

Targeting : It is the second stage of STP process. After the market has been
separated into its segments, the marketer will select a segment to target at,
and then resources and efforts will be targeted at the segment
Apple designs and manufactures consumer electronics and
relative software products. Their main target markets are college
student, professionals, artists and computer followers as well as
big companies. However, Apple doesn't seem to target market in
the way other companies do. Even though their main target are
professional users, they target people.
Apple lets users decide how and where they'll use its products. Most
importantly Apple target to the most creative and liberal people that
love innovative, high-tech new products. Their main idea of their
products is to engage consumers to be creative, have imagination,
and modern with the speed of tech.

Positioning Positioning is the third and final part of STP process. Positioning is
one of the simplest and most useful tools for marketers.
Apple is a premium brand that demands and earns a price premium.
>> This price premium spans the entire Apple product line-up. Apple's
positioning is aligned with targeting a less price sensitive customer.
>> As a result, Apple's culture and internal activities are structured to meet the
needs of these customers, strategists call this needs-based positioning.
>> Apple has created a culture and a set of activities to differentiate itself from
rivals in order to meet the needs of their target customers

The strategic trade-off

>> Continue to appeal to customers that have a willingness to pay (WTP)
instead of appealing to a wide range of customer segments that have
varying price sensitivities.
>> Price reduction will set a precedent that will not be easily
reversed. More damaging however is the potential for brand erosion
and customer confusion about the brand.
>> Trade-off protects Apple's unique position. Competitors have two
main ways to imitate . A competitor can
(1) reposition itself, or
(2) straddle
>> By maintaining its price premium at the expense of unit volume,
Apple has created an imitation barrier that competitors cannot easily
cross. Competitors cannot realistically enter Apple's space by
transforming themselves into a premium brand without pricing out
existing customers. If a competitor decided to reposition or straddle
it would have to compete with Apple's decades long premium brand
equity.

Entry barriers analysis

>> Apple's positioning, brand image, and loyal following have created an entry
barrier that competitors must cross in order to enter the premium market
>> Customer loyalty, advertising, lower price sensitivity of target customer
(relatively inelastic demand), sunk cost, patents and innovation speak to
this point
>> If competitors wanted to enter Apples market segment, it would have to
overcome the barriers that Apple and the market has constructed
>> Apple s competitive advantage is their end-to-end value proposition that
drives innovation and results in a superior user experience for customers.

Conclusion and Recommendations

1. Conduct more aggressive promotion
>> Apple should start creating TV commercials in such a way that educate the
customers about the latest technology product.
2. Make maximum innovation
>> Making constant innovations in design, features and specifications in order
to differentiate Apples products from competitors and to be able to
dominate the market
3. Offer price reduction offers from time to time
>> Price reductions, customer reward programme, free gifts, voucher, VIP cards,
etc can be made for a limited period of time

4. Employ market Expansion

>> Emerging markets using retails stores strategy

Blue ocean strategy (Value Innovation)

Customer orientation- establishing new
market space by targeting dissatisfied
customer and non customers, the potential
customers for new venture. Largely concerned
with modifying a product / service
Gives you a path to find and implement a
winning formula

Blue ocean strategy (Value Innovation)

Current
Market

Tier 1
Soon to be

Tier 2
Refusing

Tier 3
Unexplored

Four actions framework for Apple

Eliminate

Raise

Difficulty in text messaging-use

keyboard instead

User interface & improve navigation

Applications-games,money
management, news, etc.
Wireless internet on phone

Reduce

Create

Carrying seoarate devices: phone

mp3,PDA
Requirement to always hook up to pc
Difficult user interface make touch
screen

Device to download music directly

Simple user interface no user manual
required
Sleek design

iPOD

Targeted non-customer: the over 34 years old

Great capacity of hard drive players(5GB=1,000 songs)
Profitability and ease use of flash memeory
Simplified user interfacew with one wheel & four buttons
iTunes software application
i. Simple to use software to transfer music from CD to player
ii. Automatic & fast synchronization with ipod
iii. Automatic battery charge from the computer
iv. Easy to manage digitical musiq collection
Fub to use
Sleek design unlike convential elotronic devices

iTunes musiq store

Instead of trading up/down between the subcription-based on music

service and the free file sharing network.Apple looked across these two
strategic group
Apple saw untapped demand for the legal channels of digital music with
wide selection at a price that appeals to the mass of potential buyers.
Eliminate
Privacy concern
Complex pricing method

Raise
Musiq quality
Musiq selection
Simplicity & Ease to use

Reduce
Restrictions in using purchased
musiq

Create
Pay per song
30 seconds free sampling
Automatic sync with iTunes(easy
file management & transfer to
mp3 player

iPhone
Eliminate
Variety of models

Raise
Mobile internet
Style & entertainment
Ease to use & simplicity

Reduce
Pc-Like performance(through higher
operating system)

Create
Freedom to customize through apple App
store

Recommendations

Product assurance cycle

Increase release cycle (12 to 15 months)
Fair labour association (govt regulations)
Cutting obsolete product lines

BROAD TARGET

LOW COST

DIFFERENTIATION

COST LEADERSHIP

DIFFERENTIATION

FOCUS (LOW COST)

FOCUS DIFFERENTIATION

(WIDE
INDUSTRY)

NARROW
TARGET
(MARKET
SEGMENT)

Differentiation

Apple CEO Tim

Cook said Apple has
the ability to innovate
like crazy and cause
magic. People are
trying desperately to
catch up, and they are
finding it is not so easy
to do.

Example:
For Apple product
differentiation,
Innovative advertising,
ensured brand loyalty,
and hype around the
launch of new
products.

They targeted a
certain segment of
the market by
producing high
quality products
which are
potentially durable
and unique.

FOCUS DIFFERENTIATION
Innovative products tailored towards certain customer segments

Mac ProBusiness
Users

iMac
Education
Users

Mac MiniGeneral
Consumer

Tablets
Higher
income
market

QUESTION FOR DISCUSSION

1. How has Apple developed extreme loyalty
among consumers that has resulted in an
almost cult-like following?
2. Describe the role of Apple store as an
important part of its marketing strategy?
3. What will Apple need to do to maintain
product innovation and customer loyalty?

How has Apple developed extreme loyalty among

consumers that has resulted in an almost cult-like
following?
Designed Products
from the users
point of view

Responds to
customer needs

Prestige Pricing

Mobile Marketing

Changing
Technology

User friendly

Self Concept &

Image

The App Store

*2012 25 billion
downloads

Apple Stores &

Service

Describe the role of Apple store as an important

part of its marketing strategy?
Apple stores have enhanced the brand and
change Apples distribution strategies
The Apple Store model was a huge success
and grew faster
Concept of retail in an entirely new direction
The style of the stores are designed to reflect
the company image. The interior design is
modern composed of materials such as wood,
glass, and stainless steel providing customers
a warm and welcoming feeling
Apples products are out on display for
customers to use and try out prior to
purchasing. Being able to view and test the
products capability provides customer value
and creates a greater want for the product
Employees to speak with customers within 2
minutes of them entering store.
Communicate with customers to create
magical experiences. Tell the benefit not
features

Corporate
Identity

Shop &
Play

Unique
Customer
Service

360 location worldwide

What will Apple need to do to maintain product

innovation and customer loyalty?

Continue strategic path of

innovation, quality &
superior customer service

Releases new versions &

product modifications on a
yearly

Continue to helping
appeal to different market
& create new product
versions with first to
market capabilities

STRATEGY ALTERNATIVES FOR CUSTOMER LOYALTY

1. EXPANDING SALES EDUCATION
WORLDWIDE: By selling its products to schools
and universities, Apple turns classrooms into
showrooms. If students go through school
using Apple products, they become
comfortable with the interface and familiar
with the superior performance the brand
offers. By creating this early exposure, Apple
captures customers before they even know
that they are customers

2. VARIED PRODUCTS: Many consumers may

not be ready to buy an Apple computer, but
they're willing to give gadgets like the iPod or
iPhone a try. By selling products with lower
entry costs, it creates an opportunity for new
users to be introduced to Apple. If these users
enjoy their gadgets, they're more likely to
consider buying an Apple computer in the
future.

3. INNOVATE SOFTWARE & APPS

What really excites consumers and entices them to buy the
products are what the products do for them, and that is software.
Apple needs to refocus on the software and the experience, and
release fewer hardware choices.
a. work with Microsoft Office so no one has a reason to switch to a
Microsoft Surface.
b. Maps. Maps are critically important to users, so get them right
too. And the benefits of a great Map App extend to revenue
sources of advertising and search.
c. Enhance iMessage, iCloud, Siri

Recommendations
Continuous innovation
Develop more wearable devices (IOT)
Water-proofing

Improve brand loyalty

Customer loyalty program

Reduce production cost

Shifting production to newly emerging countries
like Vietnam, etc.
Search for alternative supplier of intelligence
which not abiding the labor law

Recommendations (contd)
Increase varied ranges of product
Educational enhancement devices

More aggressive promotion

TV & movies marketing
Sponsorship (golf, tennis, music festival)

Expand market
Explore middle income market
Explore children market

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