Apple Inc.

Apple Inc.

Introduction
Steve Jobs
Road Map
Missions, Visions and Objective
PEST Analysis on Apple Inc.
Conclusion
Founders
Apple was founded by Steve Jobs, Steve Wozniak on April 1, 1976
Timeline
Introduction of the company, timeline
Company vision, mission statements, & objectives
PEST Analysis
SWOT Analysis
BCG Matrix
Ansoff Matrix
Targeting Strategies
Positioning
Stages of Product Life Cycle
Segmentation
Distribution methods and their locations
Promotional strategies used by the company
Competitor Analysis
Factors influenced for their pricing methods
Porter's five forces
Apple Inc
Rise and Fall of Apple
Apple's Comeback
iTunes, iPod, iPhone
Mission
Apple Computer is committed to protecting the environment, health and safety of our employees, customers and the global communities where we operate. We recognize that by integrating sound environmental, health and safety management practices into all aspects of our business, we can offer technologically innovative products and services while conserving and enhancing resources for future generations. Apple strives for continuous improvement in our environmental, health and safety management systems and in the environmental quality of our products, processes and services.
Vision
"Apple 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."
Objectives
To expand their sales to customers who have not yet own any Apple’s products.
To produce hassle free products that provides service and enjoyment for customers.
Become the leading business in the mobile market
PEST
Political Analysis
It is reported that more than a half of their sales of their products come from countries other than America
Economic Analysis

Social Analysis
Technological Analysis
Technology has a short lifetime. That is why Apple needs to upgrade their products more often so they will outdo their competitors easily.
Political Factors
Economic Factors
Social Factors
Technological Factors
Apple Inc manufactures a number of its parts and products from outside the US, like Czech Republic,Ireland, China, Korea.
The bad political relations between US and the other world have bad outcomes for the company
Inflation, recession and currency are three important economic factors that Apple noticed
Since Apple Inc products were viewed as luxury products, therefore customers started spending less on them.
US dollar value keeps fluctuating, however the company has purchased itself foreign currencies and thus, the economic effects on the company are minimized
As the world cannot be imagined without the gadgets, thus Apple products have marked their presence on the international market
As the purchasing power of the common has risen in various markets across the world the purchasing of luxury products have gone up
Possessing these items are considered as status symbols in many societies which have also increased the sales of Apple Inc products.
Apple Inc has invested largely in its product R&D field and this its products are at the top of the new innovative products ranking
One of the most innovative and technologically advanced products is the iPod which marked the demise of the walkman
Apple corner at Best Buy



Apple is able to charge high prices because they have built a strong brand name and since they are always introducing something new to the customer first they could charge high prices before their competitors re-engineer the features.


Pricing Mechanism

Pricing Mechanism

Porter’s Five Force Theory (Market Based Theory)

Porter’s Five Force Theory (Market Based Theory)

Therefore Apple should only enter a market and position the company if the forces are low.

1) Threat of new entrants

This is a situation created by potential competitors entering the market . A new entrant will always disturb the equilibrium of the market to obtain sales.



Porter’s Five Force Theory (Market Based Theory)


There are few concepts that has been established.

Competition and Strategy by Wilson and Gilligan.
Competitor Intelligence by Grant.
Levels of Competition by Kotler.
Response of Competition by Kotler.
Factors of Competition.


Concepts of competitor analysis

Porter’s Five Force Theory (Market Based Theory)

Porter’s Five Force Theory (Market Based Theory)

Porter’s Five Force Theory (Market Based Theory)

5) Threat of substitute

A substitute is a product which servers the same purpose of the original product.

Apple’s competitors have come up with similar products and services. A comparison would show that there are not many differences between them.

This creates a threat for Apple , they will need to come up with new ideas and try to attract and keep their customers.

4) Rivalry

Apple is in multiple industries , therefore they have multiple competitors and it’s a fierce battle.
As a company it competes largely with Google and Samsung (IOS vs Android and iPhone vs Samsung S series)
When it comes to iPads its with Amazon or Microsoft.
Furthermore iTunes is threatened by Netflix or Spotify.
The Mac surely competes with HP and Dell and Toshiba.
iCloud competes with Dropbox and Google Drive.
iWork with Office and Google Docs.

Porter’s Five Force Theory (Market Based Theory)

Porter’s Five Force Theory (Market Based Theory)

Fun Fact
Apple Has Thrice As Much Cash As The US Government.

Apple has $160 billion in hand
US Gov has only $49 billion.

3)Bargaining power of Suppliers

Apple products are of high quality , therefore they are depending on few key suppliers. This might be a disadvantage for them since suppliers can use this leverage to their benefit.

Pressure from the music labels to increase the costs on media sold through iTunes.

But since Apple is a well established company with a large cash reserve , they could buy their supplies from the BEST and the suppliers would want to have business with them.

Porter’s Five Force Theory (Market Based Theory)

Porter’s Five Force Theory (Market Based Theory)

2) Bargaining power of customers

The customers will demand a higher quality product if their power is high and as a result the company will suffer.
In the case of Apple they are pricing their products higher than their competitors even though they are providing a similar product/service.
But they have been able to build a strong brand where they have brand loyal customers.


Levels of Competition by Kotler

4. Generic competition
This is the competition which arise due to
focusing on the same income of the customer.

Its like Apple iPhone competing against a Safari Tour (same family income).

Since Apple use premium pricing mechanism, this would be considerable.



The following levels are identified.


1. Brand competition
2. Industry competition
3. Form competition
4. Generic competition

Levels of Competition by Kotler

Competitor Analysis
Factors influenced for their pricing methods
Porter's five forces

Apple has its own university for R&D , they invest a lot to make innovative products for their customers.

New campus that Apple is building which is scheduled to be opened in 2016.






Pricing Mechanism


There are different approaches to Pricing

Apple is using the
Price Skimming
strategy and
Premium Pricing
.
This is specially used for technology products where before competitors develop alternative solutions , high prices will be charged to recover R & D investments.



Pricing Mechanism

Apple certainly face a high rivalry.

To increase their profits they might have to differentiate their products.



Porter’s Five Force Theory (Market Based Theory)

Porter’s Five Force Theory (Market Based Theory)

Apple has a large customer base and they are recognized in the industry as a company which provides differentiated products and services , their customers will have a lower bargaining power.

However due to large number of organizations entering the market and since the switching cost for customer is low due to variety compared to 2-3 years ago , customers have a considerable bargaining power.

Porter’s Five Force Theory (Market Based Theory)

The company's founder and CEO is Lei Jun
Introduction of new smart phone Xiaomi Mi4
Held in Beijing, capital of China, July 22, 2014




For example it was recently reported that Xiaomi surpassed Samsung and Apple in number of smart phones sold in China for Q2 2014, making it the leading vendor in the region for said period, which – for a 4-year old company – is an amazing feat, no matter what.



Porter’s Five Force Theory (Market Based Theory)

This theory emphasized that strategy should be developed based on the market.
Micheal Porter indicated that , to develop strategy the organization should evaluate the forces in the market.
Therefore if the forces are high, the attractiveness of the industry will be low. Attractiveness is the ability to generate profit.



Porter’s Five Force Theory (Market Based Theory)

Michael E. Porter



Porter’s Five Force Theory

3. Form competition
This is the competition which arise due to
focusing on the same need
of the customer
irrespective of the industry.

An example would be smart phones replacing Digital Cameras.

Apple Vs Canon

Levels of Competition by Kotler

2. Industry competition
This is the competition which arise between organizations in the
same industry irrespective of size.

An example would be Apple Vs Xiaomi in Chinese Market.






Levels of Competition by Kotler

Source : Forbes

Levels of Competition by Kotler

1. Brand competition
This is the competition that arise between
similar size
organizations operating in the same industry (similar competence).

The competitive advantage has to be created through brand.

Apple is the most Valuable Brand in the year 2013. Their brand value is about $105 billion compared to the 2nd most valuable brand which is Microsoft the gap is about $50 billion.


Levels of Competition by Kotler

Former CEO of APPLE
Steve Jobs

Competition & Strategy by Wilson and Gilligan

3)Developing a competitive advantage. Apple has to clearly understand the position in the market and ensure a sustainable competitive advantage. This should focus on competence of the organization.

Steve Jobs focusing on innovation and new thinking. This has lead the organization to be the market leader in smart phone industry for several years.

Jeff Bezos
Amazon.com, CEO

Competition & Strategy by Wilson and Gilligan


2) Identify the competitive advantage and disadvantage . Apple has to clearly identify the advantage of the competitor and the disadvantage.

Amazon entering into the smart phone industry by offering their customers Premium Membership on their e-commerce website.(Amazon Fire Phone)

This would directly affect iTunes.


Competition & Strategy by Wilson and Gilligan


1) Identify the past, present and future strategy of competition. Apple could identify the threats from the competition and adjust accordingly.

Apple should evaluate the possible threats from Samsung’s new OS TIZEN .



Competition & Strategy by Wilson and Gilligan

Example :

Samsung’s success in the smart phone market directly influences Apple’s downfall.



Competitor Analysis For APPLE



Apple has to analyze the competition to survive and perform in the market , the success of the competitor indicates the failure of the organization .



Competitor Analysis For APPLE

The Ansoff Matrix also known as the Ansoff product and market growth matrix is a marketing planning tool which usually aids a business in determining its product and market growth. This is usually determined by focusing on whether the products are new or existing and whether the market is new or existing.

But before you market your product or service to people it is important to remember that features are good, but it’s the differentiators that matter.


So you have an awesome product, a great product that will change how people do things. It’s time to get the word out with a well-executed marketing plan. You’re thinking of all possible channels like newspapers, popular blogs, social media and press releases. 

In 1968 the best known portfolio planning method was developed by Bruce Henderson in Boston Consulting Group (BCG) to help organizations with the task of analyzing their product line or portfolio.


The BCG MATICX FOR
APPLE


The Ansoff Matrix has four alternatives of marketing strategies;

Market Penetration

Product development

Market development

Diversification.


The model was invented by H. Igor Ansoff. Ansoff was primarily a mathematician with an expert insight into business management. It is believed that the concept of strategic management is widely attributed to the great man.


Ansoff’s Growth Strategy Matrix

SWOT Analysis for Apple Company

A SWOT analysis of you and your competitors help you identify these differentiators. It will help you to say the right thing to different people and help you to answer those very important questions,   what makes you different and Why Should I Choose You?


SWOT ANALYSIS FOR
APPLE

DOG




The big multi-part desktop is fading away to dog-dom. Hard drive based iPods peaked a
while ago.


CASH COW




The MacBooks are the portables of choice right now. The all-in-one iMac is in that cash cow place. They make a lot of them, but computing is quickly shifting to portable and mobile.

PROBLEM CHILD




Apple TV makes a bit of money, but it’s not reaching its potential. If Apple can solve a few ecosystem problems, they could really own the TV space. There are tons of rumors of an Apple TV product that might just maybe dominate like the iPod/iPhone/iPad.

The BCG Matrix


Enter a new market with a completely new offering. Doing this entails significant costs and risk, but can be extremely rewarding.
When Apple first launched iTunes & the iPod, it targeted a very large, very different group of customers from their existing customer base of computer enthusiasts. It entered the music industry in a risky, and ultimately very profitable, move.



Diversification

Introduce your existing product or service to a completely new market or segment. This could include a new region, country, or demographic group.
Apple’s iPod Touch is a replica of the iPhone except that it can’t make calls, making it an ideal product for international markets that do not have the cell phone carriers that control the iPhone.




Market Development


Develop a new product for customers already loyal to your brand. This entails additional product development costs, but eliminates the cost of acquiring new customers.
Apple released the iPod Shuffle for its existing iPod customers as an option for a device that will “go anywhere.” Small, wearable, and rugged for the times when you don’t want your larger, more fragile iPod or iPhone.



Product Development


ANSOFF MATRIX FOR
APPLE

Importance Of SWOT Analysis In Your Marketing Plan

Albert Humphrey is credited with first introducing SWOT analysis in the 1960’s using data from fortune 500 companies. Since then it’s used by many businesses around the world to asses various projects and business ventures.

What is a SWOT analysis?

SWOT stands for :
Strengths
Weaknesses
Opportunities
Threats


SWOT Analysis


STAR



The iPhone and iPad are stars. They can’t make enough of them. These products are so successful that their growth potential is really unknown.


The BCG Matrix for Apple Company



Sell more of your product to existing customers of that product. Attract customers from your competitors with new and improved features, a lower price, or increase in service.
 
Apple releases a new and upgraded version of the iPhone nearly every 12 months. Better camera, bigger and sharper screen, faster processor, faster internet connections, etc.



Penetration

Promotional strategies used by the company

Apple Distribution methods and their locations


Apple segmentation strategy

The company uses two primary methods of promotional strategies towards its public.

It uses its advertising
Apple uses extensively its personal selling

Promotional strategies used by the company

Locations

Needs coherence
Database management is crucial
Cooperative corporate culture








Challenges

Multichannel shoppers are more valuable
Multichannel shoppers are more loyal
Multichannel strategy strengths the brand

Advantage

Channel Overview

1974
1985
1996
1998
2001
2002

2007
Idea for Apple was Born
Present
Levels of Competition by Kotler

Positioning Strategies of Apple Inc.

APPLE INC.'S TARGET MARKET


Kids and Young Children:
Apple products are also useful for toddlers and children.
The reason for this is that devices like ipods and ipads are easy to use because of its touch screen quality is good for children.
Parents can download applications of learning games on pple devices to teach young children and kids.

APPLE INC.'S TARGET MARKET


College and University Students:
College and university students are also the target of apple inc.
These students use apple inc. products such as the ipad, macbook etc from iphone to record notes quickly.
These notes stay organized on their devices.
Also these products are light which makes carrying devices to school much easier.

Figure 02: Example – Apple’s iPhone Life Cycle

Product Life Cycle of Apple Inc

Product Life Cycle of Apple Inc

Source: http://www.strategosinc.com

In Apple corporation, it is the introduction and maturity stages where Apple’s marketing ability really shows.
Apple has considerably distorted the usual curve.
Apple's products are typically introduced with great fanfare and sales immediately skyrocket, level off and abruptly decline as the next model is introduced in about a year.
This is a marvelous approach for companies that can attain the status of a fashion icon. 

Figure 01: General Product Life Cycle

Product Life Cycle of Apple Inc

PRODUCT LIFE CYCLE of Apple Inc.

APPLE INC.'S MARKET POSITIONING

Packaging:
Apple is a leader in advertising
Apple's advertisements have always stood apart from the competition.
Apple do not give discounts to promote its product, instead it uses shortage as a promotion technique.
Example: They say only 100 pieces are available & that makes people eagerly wait to get their hands on Apple's products.
So when the product becomes available, people are readily exchanging their money to get their iMac/iPad/iPhone


APPLE INC.'S MARKET POSITIONING

Distribution:
Apple have set up exclusive retail outlets, when its competitors closed retail outlets and moved to Internet based sales.

Apple has been very selective in choosing the retail partners.

They make big demands on how Apple products must be placed and displayed in stores if retail partners are selected.

Company owned retail outlets are designed as a boutique store and aimed at giving the best customer experience.

Apple stores are often located in prime retail places.

APPLE INC.'S MARKET POSITIONING

Service:
Apple’s hardware may cost more but you are also getting more from a software standpoint.
Consistency in OS updates, app updates, and more is now free.
Not to mention best in class customer support. This can not be overlooked or underestimated.
Apple is telling customers that they are committed to bringing them quality software as a service to their quality hardware.

MARKET POSITIONING

Market Positioning comprises of 5 main elements.

Pricing
Quality
Service
Distribution
Packaging

APPLE INC.'S TARGET MARKET


Adults:
Adults are also one of the target markets .. Apple Inc iphone are useful to adults for their daily needs, such as phone calls, map addresses, internet, documents and cameras.
Carry these small devices makes adults live much easier for daily communication

APPLE INC.'S TARGET MARKET


Business People:
Business people are very intrigued by the products of apple. devices (allapple iphone, ipad, macbook etc) have a quality business which is very useful.
These devices are used to finish the job efficiently and to communicate easily with customers.
Furthermore, shipping document is easy and organized.

teenagers
Teenagers are considered one of the target markets of apple inc ..
Teens use ipods for many reasons.
Some of these reasons are for socializing with friends, listen to music and go to facebook, msn, twitter, etc. there are also many applications of games that appeal to them. ipods have become quite a trend among teens

APPLE INC.'S TARGET MARKET


Source : Forbes


Apple’s Way of Targeting in Apple’s Words…

Apple has been selected as the winner or co-winner for five consecutive years

Targeting Strategies of Apple Inc.

Product Life Cycle of Apple Inc

Apple recognizes that decline is inevitable

Example: iPod, iPhone

APPLE INC.'S MARKET POSITIONING

Quality:
Apple always wants to sell the best product in the class.
They do not compromise in quality or performance.
Apple had its share of manufacturing mistakes
Examples: Antennagate, iPod scratches, etc. But every time such problem was identified, Apple moved swiftly to solve it completely.
Apple will delay shipments to get quality products out, rather than compromise on quality and get more products out to customers.
Apple's positioning on quality has helped build trust & confidence of the market.
As long as Apple maintains its product quality, they can continue demanding premium prices and people will line up to buy Apple products.



Source : http://arunkottolli.blogspot.com/



APPLE INC.'S MARKET POSITIONING

Pricing:

Apple in general is positioned as a premium product.
To strengthen its premium pricing, Apple does not do any discounting on its products.
Apple products are generally priced higher than competition.
This position has helped Apple a lot as it avoids getting into price war.
Instead of competing on price, Apple can now compete on innovation and unique value propositions.
This is a key element to be in the white hot center.


Source : Forbes


Apple’s investor Mike Markkula, brought together a 3-point marketing philosophy in 1977.

Empathy 
Focus 
Impute


Apple’s Way of Targeting

Adults

Young Children & Kids

Business People

College & University Students

Teenagers

APPLE INC.'S TARGET MARKET


Organization

Target Market

Marketing
Mix

Apple’s Way of Targeting

Empathy – We will truly understand their [customer] needs better than any other company.

Focus – In order to do a good job of the things we decide to do, we must eliminate all of the unimportant opportunities.

Impute – People DO judge a book by its cover. We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities.


Mishal Chowdhury
Buddhika Dayawansha
Yashoman Wickramasinghe
Sivathmihan Vel
Nuwan Gunaratne
Presented By :
Apple Computers Initiated
1976