THE APPLE STORE

(The Apple Store at 59th Street and Fifth Avenue, New York City. The store is actually underground, accessed through stairs or an elevator in the glass box.)

Prithvi GhagRoll – 35T.Y B.Com (H)

“Inside Apple Stores, a Certain Aura Enchants the Faithful”

-Katie Hefner (The New York Times)

Apple Inc., an American multinational corporation designing consumer electronics and closely related software products, is popular for its well known products and its mass power in the market. Apple Company uses unique methods in its physical stores around the world to attract more customers as well as tourists, which originates 20% of the companies overall revenue.

Apple has a total of 394 stores in a total of 14 countries.

Flagship stores have opened in Amsterdam, Barcelona, Beijing, Boston, Cardiff, Chicago, Frankfurt, Hamburg, Hong Kong, Houston, London, Montreal, Munich, New York, Osaka, Paris, Perth, San Francisco, Shanghai, Sydney and Tokyo. The largest Apple Store in the world is in Amsterdam, on the Leidseplein.

Situation analysis

Current organizational mission -

"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."

Current ownership and management alternatives – Apple is a multi-national corporation incorporated in 1977 with a market capitalization of 621 billion dollars , currently in the leadership of CEO Tim Cook.

Current goods/services category - Its best-known hardware products are the Mac line of computers, the iPod, the iPhone and the iPad. Its software includes the OS X and iOS operating systems, the iTunes media browser, and the iLife and iWork creativity and production suites.

SWOT analysis

Strengths –

1) Excellent locations with flagship stores at some of the best addresses in the World.

2) A feel good factor once you enter the store which makes it as much as a tourist destination as a retail store.

3) Bright lights and glass architecture that attracts people because of the serenity.

4) Modern architectural designs in line with the ideology of the Apple products.

5) All products at display which gives consumers ample time to touch and feel and make the purchase decision.

6) Well-trained and passionate staff that signifies Apple’s passion for its products.

7) The highest footfall of all electronic stores in the World.

8) Excellent pricing tie-ups with the leading telecom companies such as AT&T, Verizon.

Weakness -

1) Very expensive model with need for huge retail spaces , high street addresses and state of the art architecture.

2) Huge costs of display.

3) Tough recruitment for store staff as passionate staff is one of their essential condition.

4) The number of products is limited so it leads to dis-economies of scale.

5) Huge competition from online Apple store.

6) Apple merchandise also available at all the other big retailers and electronic stores.

7) Apple does not open a franchisee model so it becomes tough to get apple stores in countries where FDI in retail is restricted.

Opportunities-

1) Apple can leverage its huge cash reserves to open more and more stores across the globe that become a symbol of the most valued brand in the world.

2) Many of the economies like India are opening to FDI in single-brand retail, Apple can take advantage of the fact and can get into many more countries (presently it is restricted mostly to USA and Europe),

3) Though the model is very expensive but the per unit sale of Apple has astonished everybody by achieving the highest per unit sale amongst electronic retailers.

4) Due the popularity of the brand applicants for job at Apple are numerous with many young person applying.

5) As Apple becomes the most valued brand in the World it really becomes easy for the Apple stores to grow and dominate.

Threats

1) As the range of products sold is very small there is fear of losing sale if the company fails to continuously innovate and these products lose popularity.

2) Huge competition from the online Apple store.

3) If the economy is poor and the sales go down the overhead cost of keeping the store alive is very high.

4) Increasing competition in the smartphone and computer markets.

5) Patent violations in many countries are a serious threat.

Objectives

To maintain the elegant appeal of Apple products by making awe-inspiring stores.

To help improve the brand value of Apple by showcasing the products to the World in the best manner possible.

To achieve very high per unit sales by charging premium on the products.

To help Apple to become the first ever trillion dollar company.

To expand to as many countries as possible and take the brand visibility to the highest level.

Identification of Customers

The customer segment of Apple is very well defined (high-end technology), so it is essentially into concentrated market but the brand has become so big that this concentrated group of customers has become very huge and thus it gives it some tactics of mass marketing. But the products are never generalized and are essentially very specific. Apple has a very loyal group of customers who can go to any extent in order to get hands on the Apple products.

So the Apple stores have a very good footfall and are able to achieve an astonishing per-unit sale. The stores itself are a marketing strategy for the company providing a glorious gateway into the magical World of Apple.

Overall Strategy

Controllable variables –

1) Goods/services strategy: - the strategy is to make simple and revolutionary products that make it impossible for the user to resist. The products are the first of its kind in the market and in addition to the functionality are also high in aesthetic value.

2) Location strategy: - The strategy is to take as many high street addresses in the World in order to increase the brand visibility and make the stores as valuable as the products to the customers.

3) Pricing strategy: - Apple has always been charging a high premium on its products as they have a very loyal and passionate consumer customer base, they charge a premium for their innovativeness and passion.

4) Promotion strategy: - Apple has always advertised on a very large scale with very creative adds, they are never into any discounts and offers. In their mind the product would lose respect if they started discounting, the products are made with passion and everybody should respect that.

Uncontrollable variables –

1) Consumer environment: - the consumers of Apple products are very loyal and Apple holds a World Wide developer’s conference every year to interact with various developers and the consumers. The support and commitment they get from their consumers is tremendous.

2) Competitive market: - the competition is huge both in the smartphone market from likes of Samsung and nokia and in the pc market from Microsoft and other companies.

3) Legal environment: - the legal environment is fierce with patent wars all over (as we had seen the big ruckus between Apple and Samsung), Such continuous interruptions effect business a lot and are taken into consideration while developing the overall strategy.

4) Technological environment: - The technological environment has been the most important factor for Apple as it has been the leading innovator and always created problems for other players in the industry, thus making it its strong point.

5) Economic environment: - The economic environment plays an important role as there is a lot of money spent in innovation so production has to be done at the least possible cost , so production is spread across the globe as are the markets. So it becomes very important to analyze on a continuous the various economies of the World.

Specific Activities

Genius bar- All Apple Stores feature a Genius Bar, where customers can receive technical advice or set up service and repair for their products. The Genius Bar provides software support for Mac OS X and hardware service on products that are not classified vintage or obsolete.

Genius training manual - Every Apple Store employee is provided with a training manual that teaches him or her marketing and manipulation techniques. The basic tenet is that "Everyone in the Apple Store is in the business of selling".

Recommendations

Apple today is the world’s most valuable brand , though apple’s awesome stores are present across the globe but they have continuously ignored many developing countries and focused mostly on the developed countries. There is a very big market they are not properly exploiting of which Samsung is taking advantage. If there are legal problems to get into many countries they can go for a franchisee model as they have started doing in India. Surely some more focus towards the emerging markets will not hurt them.