In this project, we will briefly introduce the history and development of Apple throughout 42 years of operation. In the technologies industry, Apple Inc. leading the competition with innovation products like Macbook, iPod, iPhone, iPad, Apple Watch, etc. Apple products are running under iOs, which is famous for its resistant to virus. Our project contains five sections which are IMC objectives, market analysis, communications strategy plans, communication schedule and budget and evaluation. We will identify the brand value and their current principle objectives and also clarify the marketing strategies and marketing mix that related to their operation. The project will focus on the Apple marketing plan and its effects on their customer target. Nowadays, Apple is facing with the sales drop due to scandal regarding Apple’s network of Chinese supplier’s factories, and the intense competition requires new innovations with affordable prices. So, new marketing strategy plan will be introduced as a way Apple can overcome their marketing and management issues to maintain their current customers and attract new ones.
Apple Inc., one of top world leaders in the technology and consumers electronics, has a headquarter located in Cupertino, more than 499 retail stores worldwide and over 123,000 employees (Zillman, 2017) In 2017, according to Fortune, Apple was the highest value brand with $184.2 billion and it was also their fifth years holding the title (Griffith, 2015) Apple Inc. is a good example of what organization should be for all young startup ventures. It all began in Steve Jobs’ garage, where he put the very first brick, that has changed the world forever. With two other friends, Steve Wozniak and Ronald Wayne, Steve found Apple Computer Company on April 1976 (Richardson, 2008)
As a young company, Apple faced tons of difficulties that were drop sales, power conflict, and unsuccessful products line, brought to the resignation of Steve and Wozniak. Following that incident, Apple Inc. had a down time from early 1990s until 1998 when Steve Jobs came back as the CEO. He rebuilt the company and released many new products that changed the world such as iOS, iMac, iPhone, iPad, etc. The consumer electronics industry holding one of the toughest competition of all, but Apple is able to create and maintain their own brand value to customers by adopting unique identity and reasonable marketing strategies. And as a result, Apple’s products such as iPhone, iPad, iOS are always considered as symbols, as leading innovations.
Demographic: Generally, Apple targeted their customers of both genders aged 14 and above but mainly focus on those aged 18-35 segment.
Existing customers: Creative professionals from musicians, artists to photographers use Apple products such as Ipod, Itunes and Video Cut Pro or GarageBand to generate ideas, make music video, etc.
New customers: Customers from all profession with average income category of middle level and above use Apple products such as Macbook, Iphone, Ipad, Apple Watch, Apple Pay for their multiple purposes.
The slogan of all Apple commercial reflects one simple point; Simplicity is key in everything. Apple understands that less is more when it comes to technology. They focus on making simple, sleek but elegant, innovative and most importantly easy to use. Because overwhelm can create a confusion in a marketing mix (Patel, 7 Key Strategies That You Must Learn from Apple’s Marketing, 2010) The first time Steve Job introduced a phone with complete touch screen function, everybody said it was a terrible idea. Now, no one can remember the time where the phone has more than one button. Most of Apple products own such beautiful design in ever-smaller packaging that do not need much instruction to work. Also, Apple always focus on improving and updating their products for better use.
One of the key marketing strategy that Apple implementing is focus on value not price. While the rest of the competitors like Samsung, Sony, etc. are on the price wars, Apple keep their premium pricing strategy (Essays UK, 2013) and pay zero attention to dropping their prices. Apple understands the fact that “you get what you pay for” is true in business. Instead of getting caught up in competing for prices, Apple does not afraid to charge customers more because they know their value is worth it. Apple unique value proposition of keeping high prices for high quality is also their competitive advantage. They make it an Apple thing that even though Apple products are expensive, customers are willing the higher the price it charges (Essays UK, 2013)
Apple opens a lot of retail stores across major cities in upscale mall and high-end shopping centers. There are around 450 Apple outlets within the US and all of them emphasize on helping customers enjoy the best experiences using Apple, not just trying to sell anything. Also, having a strong supply chain, Apple using raw materials from all over the world, mostly from China, for its manufacture. By having multiple suppliers, Apple is not only able to keep up with customer demand but also reduce the hassle of not proving materials on time.
Apple has always keep their marketing advertising as simple as their products. They make it so elegant in their ads. They normally introduce products in plain white background with simple words to clarify a clear massage (Bhasin, 2018) They do not show how much is the price or how to buy the product or where to buy it. The whole ads and other marketing massages are involved mainly in the product itself (Kulkarni, 2016) That’s it. Because Apple understands the fact that too much information is too mainstream and not appreciated by most people (DeMers, 2014)
SWOT analysis is one of the strategic components that use to evaluate a firm’s strengths and weaknesses or listing new opportunities and threats in the marketplace. The function of SWOT analysis is to help a firm define their objectives, strategies or visions and missions. Moreover, it provides valuable information that helps a firm to use internal strengthens efficiently or eliminate weaknesses. Also, a firm can capitalize many growth opportunities or prepare for business threats that may affect a firm’s future.
a. The advertising budget
The Apple’s annual advertising budget accounts for $1.8 billion in 2015 which compares to $1 billion in 2011. Even though these budgets are not larger than their biggest competitor-Samsung, but the company uses it more effectively (Jurevicius, 2016).
The effective advertising capabilities will help to increase brand awareness and demand for Apple’s products. Furthermore, it will help the company strengthen the reputation by delivering the important strategic messages to the customers. In addition, it will enhance the product proposition and bolster the relationship with their loyal customers.
Source: (Jurevicius, 2016).
b. Customer Loyalty
The binding between Apple Company and their customers especially in the technology market is really impressive. The company can favor many sustainable benefits such as easily adding new features in the product lines without facing the cost of switching brands from customers. This crucial relationship is a significant factor that helps the company gain more competitive advantages over their opponents. On the other hands, loyal buyers will become a best potential resource to expand to new markets by Word-Of-Mouth strategy. Apparently, people are usually influenced by friends or families. As a result, it will enlarge the consumer segments and increase revenue. The next benefit that the company can have is free valuable feedbacks which are critical in any business (Jurevicius, 2016). Last, the company does not need to put efforts on marketing loyal customers because they will automatically repurchase products.
a. Overdependence on iPhone sales
In 2015, iPhone sales are accounted for 66% of the company’s total sales. As a result, Apple will need to focus on continuous growing revenues for the next few years in the smartphone market in order to keep the sustainability of the company (Jurevicius, 2016). This is also a weakness of Apple because what if there are changes in technology, consumer tastes or competitor prices. The possible changes in the market will affect the revenue negatively not only for the iPhone market but also the whole company.
b. Less spending on research and development
Even though the Apple’s products are still very popular in the world, the company cannot introduce any completely new to the market. The buyers still see the old iPhones, iPad or iMac with little changes of the exterior and hardware. Moreover, some people can predict the changes of the new iPhone before the release date. Low expenditure on research and development will lead to fewer innovations and new products. R&D spending is surely one of the crucial factors that help the company generate the revenue and the expansion into new product markets (Jurevicius, 2016).
a. Mobile payments
In 2015, the mobile payments are worth $8.7 billion in the United States and it will reach $27 billion in the next year with 210% growth. In the same year, Apple introduces the Apple pay for iPhone and Apple Watch users so that they can pay any transactions using near field communication technology (NFC). Even though 10% of 12 million terminals cannot be connected to NFC, this new market is still the potential opportunity that benefits for the company in the future (Dudovskiy, 2018).
b. Healthy lifestyles with wearable gadgets
With a modern lifestyle of young generations and people in society, they are more concentrating on keeping their body fit. In 2015, Apple introduces Apple Watch which can help users to follow their current health conditions. Moreover, it can operate as a heart machine so people in the gym can set up the suitable workout schedule for different individuals.
a. Intense competition
As the growing of many competitors especially in the smartphone and laptop markets, Apple is going to face a lot of threats. For example, 47.5% of the market shares are using Androids while only 42% is from iOS (Dudovskiy, 2018). Additionally, in the laptop market, as the strongly raising of young generations, buyers likely will move to gaming laptop brands such as Dell, Lenovo or MSI. Hence, Apple may lose a lot of revenues and shares in the market.
b. The increase of manufacturing costs
In the future, there may be a change in manufacturing costs because the labor costs will increase in some countries. Apple will need to consider adjusting or reallocate the resources in order to balance between the manufacturing costs and the final prices (Dudovskiy, 2018). It is very important to keep the prices stable especially in the aggressive markets where the opponents will do anything to have the most competitive prices.
The purpose of segmentation is to divide the population into groups which have different characteristics. On the other hands, targeting will help the company to identify a specific group of people in order to sell the products more effectively. For example, the region in the geographic segmentation that Apple likely focuses on is in the domestic and international markets. Another example is that in the demographic segmentation, Apple will target the high-income people with the age of 18 to 45 (Dudovskyi, 2018). The occupation in the same segmentation will be students, professionals or managers. Last but not least, for the psychographic segmentation, the company aims for middle and upper classes for selling their products.
The positioning is the use of promotion, price, place, and product in order to make the customers move from the information of a product to their purchases. A good positioning will help the company easily builds an effective marketing strategy. For many years, Apple has delivered a good image of their products to customers. The company delivering an exceptional experience in new technologies and high-fashion designs. The core competence of Apple is to focus on the emotions, lifestyles, imaginations, and innovation of the customers through technology (Apple’s ‘Creative’ Brand Position, 2017).
Apple Company is still working on developing new technologies for their products. Even though the company has already had a lot of products on the market such as iPhones, Apple Watch, iPad or iMac, the total sales are still dependent on the sales of the smartphone market. The limited services are also an obstacle that Apple needs to overcome it. Apple Pay and iTunes are two main services that Apple is offering. On the other hands, the company is offering iCloud, iLife or iWork but they are not well-known (Apple Products, n.d.).
The customer profile is somehow similar to the segmentation and targeting. At this moment, Apple is still focusing on the middle and upper-income people. For example, the group of professionals, managers or students will likely choose Apple products because of the prices. Additionally, Apple is drawing their attention to the international markets especially in Asian countries because of the growth of sales in this region (Dudovskyi, 2018).
Apple is spending a lot of marketing on domestic and international markets in order to attract more potential customers and expand their brand awareness. Also, they will aim to increase the budget for online and retail sales because they want to bring their products to go everywhere in the world. Moreover, the third-parties and partners are playing an important role in Apple’s sales especially iPhones. For example, Best Buy, Verizon, and AT&T are the main sources of Apple’s sales (Tjosep, 2015).
Since its foundation more than fourty years ago Apple has been using print and media advertising extensively to promote the brand in general and new products in particular. Apple also uses celebrity endorsements in print and media advertising. Every year, there are a list of celebrities who endorse for Apple to promote the brand and particular products, such as Taylor Swift, Drake and Neil Patrick Harris, etc.
Social media marketing is one of the fastest growing types of marketing out there currently. It has more of an effect on the market than advertisements on television. The reason why it thrives so much more is because there are usually endorsements behind it. For example, if a public figure is seen using this product on their social media account and they recommend it, the followers are convinced that the product is actually beneficial to their lifestyle, therefore they will be more inclined to buy. What the target market doesn’t understand is that social media marketing via Facebook, Yelp, Pinterest, Twitter, Instagram and Snapchat is paid advertisement. Public figures or influencer are paid according to the number of followers they have to promote products. For companies it’s a cost-effective way of promoting their brands.
However, Apple uses very little social media to market their products. In fact, they only have a twitter account for customers to ask questions on and they recently joined Instagram. Apart from their website that lists their products and services, there is no emphasis on marketing their products via social media. Subsequently, major brands should not use the same approach as Apple’s approach may not work for every brand company out there trying to market themselves (Kapko, 2015)
Apple has repeatedly shunned the status quo and routinely defied the odds of success throughout its nearly 40-year history. If there’s one thing Apple proves time and again it’s that it doesn’t have to — nor does it want to — follow the unwritten rules of business, technology or marketing. While Apple generally distances itself from social media on a corporate level, the company’s CEO Tim Cook and many of its flagship services, including the App Store, Apple Music and Beats1, take a more active and meaningful approach to the medium. The pervasive strength of Apple’s brand means it can break rules other marketers must follow on Twitter, Facebook and other networks without consequence.
Apple thrives on iTunes users and their purchases made by clients. Every time someone buys an iPhone they have access to a new or their current iTunes account. They can use this account to buy music, apps and make purchases on normal day to day products. One-way APPLE uses the internet to market their products is by setting up free trials and placing the option to download apps so that users are not always using the Internet web browser.
As more people live in the Apple ecosystem, with their phone, computer, and watch all tied together with Apple services, there’s even more of a need for the company to communicate with its customers. People might pay for an iPhone every two or three years, but they live with Apple every day.
Most of the direct marketing done by Apple is done on their website. When a potential customer or a returning customer visits their website they are intrigued with the overwhelming amount of information they receive on the different types of products they are interested in purchasing. This information includes a full description of the product, the functionality and price.
Sales promotions represent short-term incentives to commit to the purchase and Apple uses some forms of sales promotions marketing technique are that Apple Stores are designed in an attractive format, where people have a chance to use Apple products.
Interestingly, unlike the majority of premium brands, Apple doesn’t have a formal customer loyalty program. It has been noted that “the reason Apple doesn’t have a loyalty program has nothing to do with the potential difficulty of starting a loyalty program for their brand. As one of the wealthiest companies in the world, they can more than afford an effective retention strategy that rewards their best customers for their brand loyalty. No, the reason Apple doesn’t have a loyalty program is because they already have a retention strategy.
Apple’s Public Relations strategy is quite unique. Each and every time a product is about to be launched the media is notified about it. The technology behind the product is so intriguing that buyers cannot wait to purchase. From the time the buzz is created until the time the product is sellable it is usually on back order making it difficult for everyone to be able to purchase it. The increased demand for the product will make the price of the product justifiable and will ultimately hurt the competition.
|Marketing Events of Apple in 2016 and Launch Dates|
|1st Quarter||Jan||Apple Watch Sport Limited supply for China||Feb||Mar||Apple Special Event Check out our live event and watch the introduction of the stunning 9.7-inch iPad Pro, beautiful new bands for Apple Watch, and iPhone SE — the most powerful 4inch phone ever.|
|2nd Quarter||Apr||Advertising video “40 Years in 40 Seconds”||May||Jun||Apple Special Event Get a first look at iOS 10, with new features for Messages, Maps, and more. Learn about macOS Sierra, the updated tvOS, and what’s next for watchOS and Apple Pay.|
|3rd Quarter||Jul||Aug||Sept||Apple Special Event Watch the live event and check out the iPhone 7 and 7 Plus, the Apple Watch Series 2, and the wireless AirPods.|
|4th Quarter||Oct||Apple Special Event Take a look at our latest announcements, including the all-new MacBook Pro and the TV App for Apple TV.||Nov||Dec|
|Marketing Events of Apple in 2017 and Launch Dates|
|2nd Quarter||Apr||May||Apple Special Event Check out the full event with announcements including a new size for iPad Pro, performance boosts across the Mac family, and a breakthrough speaker with HomePod.||Jun|
|3rd Quarter||Jul||Aug||Sept||Apple Special Event in Apple Park|
|4th Quarter||Oct||Nov||Released iPhone X||Dec||Apple Special Event Announcements included a new generation of iPhone, Apple Watch with cellular connectivity, Apple TV 4K, and much more.|
|Marketing Events of Apple in 2018 and Launch Dates|
|1st Quarter||Jan||Feb||“Meu Bloco na Rua” Advertisement of highlighting the iPhone 7 Plus. Advertising video”3 minutes”||Mar||Apple Special Event in a high school of Chicago launched on March 27, 2018.Released a new iPad supported by Apple Pencil.|
|2nd Quarter||Apr||May||Jun||The next Apple Event: WWDC June 4-8 2018|
|3rd Quarter||Jul||Aug||Sept||iPhone event|
We collected big events of apple of 3 years, we can see that every year from May to October, Apple will always host releasing events by their CEO and introduce new technology and products to public (Apple Inc, 2018)
Apple marketing communications mix illustrates that the company’s stance towards individual elements of the marketing communication mix, involving print and media advertising, sales promotions, events and experiences, public relations, direct marketing. Apple is effective in using those approaches for accomplishing the marketing communication goal in an integrated manner to ensure accurate marketing message delivering.
Apple has adopted such advertisement for about 40 years since it was founded in 1976, through which extensively promoting the brand in general and new products in particular. There are so many memorable advertisements of Apple that attracts a lot of people. For example, “Misunderstood”, a Christmas ad of 2013 won Emmy Award for the year’s most “Outstanding Commercial”; “40 Years in 40 Seconds”, a simple but addictive advertising video that records 40 years of the company in 40 seconds.
Figure 1 (O’Reilly, 2016)
From the column diagram above, we can sum up that from 2008 to 2015, the cost on advertisement was increasing steadily with a increment of about $1.3 billion. From 2014 to 2015, there is a dramatic increase in its advertising spending by 50% to a record $1.8 billion. While in 2016, Apple announced that they will never ever make a publicity on its advertising cost in their annual reports. The most fundamental reason for apple’s cancellation of its advertising spending maybe due to its fallen margins, which is to their lowest level since 2009. From the diagram, we are clear that although advertising spending is increasing continuously, percentage of total revenue fallen obviously.
2. Sales Promotions
Apparently, Apple is not focusing a great deal on sales promotion. Perhaps that is because excessive promotion, particularly in terms of pricing discount may affect the brand name adversely in the long term. There are nearly 2 main kind of sale promotions as followed. Firstly, product bundling is to corporate with certain telos companies to provide an iPhone at great discount within a specified time period. Secondly, Apple try to offer free gifts as a part of its marketing strategy by running 12 Days of Free Gifts giveaway during Christmas period since 2008 from its App Store, but it seemed to bring little effect, the company ceased this practice in 2014.
To build strong public relations with whole market is crucial and Apple is such an outstanding company that can make good use of publicity powerfully to contact intimately with their consumers. In these years there are a lot of continuous news coverage about their products, particularly about iPhone from iPhone4 to iPhone X, which has already produced a halo effects on the whole market of smart phone. People may feel miserable and disappointed for not having an iPhone. Contact with customers online is quite a good channel to promote their main products. Like Facebook, Twitter even YouTube to post their corporate videos.
In Apple Stores, the store layouts are very open and there is lot of floor space for the customers to browse around and look at the products. It is a fixed cost with no extra spending. it can be seen that many people are playing with the touch screen of Apple.it is in this way that allows Apple to have an intimate contact with their customers. Apple will be considered as successful when the customers enjoy the visiting and entertain the touch screen.
We all know that Apple has an excellent Customer Relationship Management program. If you are a customer of iPad or iPod, in their information base you are also the target customer of its other new products. Whenever new launches or new models are released, they will send you an email to inform you that they have updated products. This is essentially the direct email marketing techniques used by Apple, to get in touch with the previous customers. Indeed, it always works. It may deliver a sense of belonging and customers may feel satisfied about such involving, which can increasingly enhance their brand loyalty. Except the cost of developing program, it’s all free.
In general, Apple put almost their full part of advertising expenses in print and media advertisement, together with other free alternatives. From figure 2, we can see that Apple put least money into advertisement compared to other companies, but still the most influential company in the world, the money seems to be well spent.
Despite all the struggle that Apple is currently facing, they are still the strongest company in the technological industry. The previous management’s heritage that has passed to the next generation in Apple, was a strong foundation to build up. They have built a large number of loyal customers, as well as a reputable brand name. Those heritage need to be persevered and developed. In the next decade, it will be expected as a challenge one since there are many powerful competitors worldwide who are not only good at technology but also receive a huge support from local government. Apple’s position is threatened by those companies. This competition may be the most intensive one that Apple have to deal with. The customers now have so many choices while the products are very similar to each other from functions to design. Apple need to depend on its marketing plan to maintain and attract more customers. There are many industries that Apple haven’t involved yet such as auto industry and smart home appliance. These new industries would create a huge profit. Apple is without a doubt one of the most important company in American. They have created thousands of jobs and paid million in taxes annually. Besides, their contribution into education and community is notable. Although, there were several mistakes, we should give them an opportunity, so they prove that they deserve to be one of the most powerful company in the U.S.
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