STEPHANIE ZAUWENWAN (SOPHIE) YANG

YI JU (GRACE) CHENDARENA TULANONT

Apple Inc.

Written Analysis of a

Case

Apple’s 4 C’s

Customers Competition

•Product based:• iPod (young adults,

students)• iPhone (AT&T's, largest

phone service provider's customers, wealthy)

• Mac (wealthy, innovators, good jobs, trendy lifestyles)

•High end customer base•Dependent on loyalty of customers•Will demand quality, service and dependability when buying products•Expects innovative products•Tech-savvy

•Microsoft (compete in an OS area)•Acer & Lenovo (big competitor if Apple decides to go internationally)•HP (strong presence in retail channels, focus on design and marketing strategies)•Dell (direct sales and build-to-order manufacturing --> cost saving)•Samsung, Sony, Creative (iPod) •Napster, Rhapsody, Walmart.com, Zune Market place, Amazon.com  (iTunes

Apple’s 4 C’s

Company Collaboraters

•Innovation•Strong relationship with customer (love affairs)•Vertically integrated company•Oversees all of their product•Premium and innovative brand•Strongly emphasizes quality control•Continuously expanding, updating and creating product lines

•Intel supplies microprocessors•Microsoft for OS (initially)•Toshiba•Samsung

Apple’s 4 Ps

Product

•Trendy and stylish•Durability•High quality•Personality•Universal products•Reliable•“Cool to own”•“Icons of the digital industry”•Plug –and-play products

•Wide Range—different product lines (iPod, iPhone, iPad, Mac etc.)•iPod – “foot in the door” to brand•Strong “Apple” Trademark Company brand name with individual product (sub-brands)

Apple’s 4 P’s

Promotion

•The surprise factor and incurred curiosity regarding product (secretive in rolling out new products, creating hype, “Buzz”)•Iconic silhouette (poster and commercial)•Commercial—people listening to iPod and dancing•“Think Different” video featuring Albert Einstein •AT&T contract (iPhone priced down due to contract)•Illustrate product portability and user friendly•It’s all about YOU (the “i” factor)

Apple 4 P’s

Place Price

•Apple Retail Store—unique retail store experience•Large retails (Best Buy, AT&T)•Distributions channels which allow them to have more control over their products•Online store

•Depends on the product line:• iPod (Affordable)

• iPod shuffle iPod Touch• iPad (Expensive)• iPhone (High)• Mac (High to Expensive)

• High relative to market price

Value PropositionTo create innovative, trendy and high quality products that are user friendly as well as to provide all consumers with excellent customer service.

STP

Segmentation Targeting Positioning

Younger generation and students 

On the constant look-out for "cool" gadgetsLarge pool of Word of Mouth (to parents and friends)Seeks user-friendlinessVolume

Product as a symbol of "coolness"Trendy, High price

Wealthy, trendy, status seeking people

Large marginsRaises prestige of product brand

Product that represents customer's wealthTrendy, High price Exclusivity

STP

Segmentation Positioning Targeting

Home buyers (average Joe consumers)

Looking for quality and reliabilityPrice reduction - low margins

Reliable, moderately priced

Corporate Long-term contract (Upgrades)Low MarginsVolumeWants reliability and performance

Reliable, moderately priced

Government Quality and ease of useSecure settingsSpecialized functions

Reliable, high performance

Perception Map

Problems with Apple is Facing

How to constantly maintain innovation Apple needs to keep up with its brand image 

 How to expand PC's share of market (SOM) Mac fails to rise above 3% for worldwide PC market

 How to deal with products substitutes  There are more choice for consumers in this fast-

growing industry How to acquire new customers

Apple's major buyers are the loyalty consumers

SWOT Analysis

Strengths•Brand Name•Customer Loyalty•Reputation•Service •Quality•Unique Retail Experience•Innovative Product Lines•Unique Marketing and Advertising Strategy

Weaknesses•Copycat Competition•Bringing in new customers•Maintaining an innovative momentum•Cannibalization •High Priced

Opportunities•International Expansion•Product Improvements•Increase demand of products•Increase universality of products

Threats•Great Competition•Low prices of comparable products•Imitation or substitute products

Potential Solutions

Outsource Control Over Productions

Maintain Control Over Productions

Transform Apple into a Mainstream Brand

Maintain the High and Premium Brand

Image

Expand Global Market Focus on US Target Market

Outsource Control Over Productions

Implementation•Utilize skills of other companies to contribute to the manufacturing of Apple products

Advantages1) Producing and manufacturing

the products will not cost as much

2) Will be able to lower to price of their products

3) Larger target market because it is more affordable

Disadvantages1) Decrease Apple’s control over

their products2) More likelihood that products

will let slip• Other companies can find

out and copy the product3) Will not have as much quality

control• May take away from the

brand equity

Maintain Control Over Productions

Implementation•Maintain the current structure of the company—vertically integrated•Apple will be developing and producing their products, keeping control

Advantages1) Will be able to have more

quality control2) Less likely other companies

will find out about their new products

3) Can feed off of the dramatic reveal and hype of products to attract customers

4) Will be able to turn out products faster than other companies

5) Will reach the expectation of producing innovative, quality products

Disadvantages1) Cost of the products will still

be high2) Target market will stay the

same because still not as affordable as other products

Transform Apple into a Mainstream Brand

Implementation•Make products available in more distribution channels—not only primarily in Apple retail stores•Make the MAC Operating System compatible to all computers•Lower profit margins

Advantages1) Customers will be willing to

buy their product2) Will cater to the customer’s

needs rather than giving a bundle package with excess features

3) Will be able to sell more units of each product

4) Larger target market

Disadvantages1) Will retract from the brand

equity2) Brand will be less desirable

because not as “exclusive”

Maintain the High, Premium Brand Image

Implementation•Increase Research and Development costs to maintain the innovative momentum•Maintain the high prices of the product•Limit distribution channels—primarily sell products in Apple retail stores

Advantages1) Products will be valuable and

more desirable2) Loyal Apple fans are seen to be

in an “exclusive” group• People will want to buy

more apple products so that they can be in this elite group

Disadvantages1) Only relying on loyal

customers base to continue buying products

2) Not as affordable

http://woorkup.com/2010/02/13/apple-sales-by-operating-segment-and-products-chart/

Expand Internationally

Implementation•Change marketing strategy to cater to the country’s situation•Emphasize an aspect of the brand that is valued in that society, addressing the consumer’s need•Must convince the consumer that they need this product•Example: Asia• Status is a very important aspect in an Asian society• Can position the Apple brand as being a high status symbol

• Seen as the “Louis Vuitton” of purses

Advantages1) Will expand their market2) Will sell more units and

generate more profit

Disadvantages1) Will be competing with an

entirely different market2) Must completely change

marketing strategies to convince consumers they should purchase the Apple product over competitor products

Focus on US Target Market

Implementation•Focus on consumer needs of the US Target Market•Follow the trends of what is desired•Improve off of feedback from consumers

Advantages1) Will be able to focus attention

most important target market2) Will be able to more effectively

cater the product to the needs of US consumers

Disadvantages1) Large international target

market will be disregarded2) Opportunity to sell more

products will be lost

1) Expand Internationally

2) Target Specific Markets with Different Strategies

Opening retail stores on other countries

Rationale: secure significant market share in emerging markets such as Asia

Diversify risk by investing in multiple markets

Build image as a prestige global brand

Different strategies for different target markets

For instance, in Asia, people have lower standards of living, so only target the well-off people who have the purchasing power and who value innovation

Different regions react differently to the same marketing campaigns

Recommendations

3) Maintain Control over Productions

4) Maintain Brand Image and Prestige

Outsourcing will hurt the brand equity because there will not be as much quality control

Maintaining control will allow Apple to continue to meet consumer expectations of an innovative, high end product

Apple’s values are built on innovation and prestige

Drastically reducing price may tarnish brand image while driving out existing, loyal customers

Retain the same price range and the trendiness

Recommendations

5) Increase R&D Incrementally

6) Establish Corporate Culture

Keep the innovative edge by investing more and more on R&D annually

Being a technology leader in the industry means being the price leader

Maintain brand image*See R&D Exhibit

Implement a corporate culture that values innovation and technology

Set up a reward system and a training system to foster birth of both transformational and transactional leaders

Promote the value of innovation at all cost to increase the return ratio on R&D cost and R&D output

Recommendations

R&D Exhibit

Comparison of R&D Expenses of Major Companies

http://gizmodo.com/5486798/research-and-development-apple-vs-microsoft-vs-sony

Apple Learnings and Takeaways

1) Different markets need different product positioning to serve a particular segment.

2) Maintaining the innovation edge is crucial to Apple’s success.

3) Company needs to maintain brand image when they have established a strong positioning

4) Maintaining good relationships with collaborators and channels is vital to the company’s market strategy as well as their product execution.

5) If there is a strong brand association between products lines, the halo effect will have a strong influence on the overall brand image.