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Apple Inc. Marketing

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Category: Business

Autor: anton 15 July 2010

Words: 3842 | Pages: 16

MARKETING FUNDAMENTAL PROJECT

Apple Products

Project Members:

Steve Chiam Tao Cheng 1001366B

Halimatus Sa'diah Bte Ariffin 1005919D

Ho Wai Leong 1000578C

Nur Fatimah Bte A Rahman 1003580F

Pamela Wong Chien Nee 1001440E

Ryan Leo Sheng Hua 1001410H

Subject Tutor: Ms Christine Ng

Submission Date: 12 July 2010 by 5pm

CONTENT PAGE

Index | Description | Page |

1. | Content Page | |

2. | Executive Summary | |

3. | Introduction | |

4. | Findings: Marketing Environment | |

5. | Findings: Target Market- Consumer Behavior | |

6. | Findings: Marketing Mix- Product | |

7. | Findings: Marketing Mix- Price | |

8. | Findings: Marketing Mix- Place | |

9. | Findings: Marketing Mix- Promotion | |

10. | Conclusion & Recommendation | |

| Index/References | |

EXECUTIVE SUMMARY

At the end of this report, you will know about our objective of doing this project and we have picked out the main points of why Apple has succeeded in their sales. You will know more about Apple product, in terms of its pricing, product features, promotion and the place of distribution. This report will also shows Apple's Target market and consumer behaviors by segmenting them in terms of Demographics, Psychographic, Geographic, Usage Rate and Product features. It explains how Apple tries to reach its target market by recognizing its problems and finding ways to solve them with the product.

On the third page, we introduced the company, product, how we derived our report and scope. We are focusing on the iphone series ranging from the first to the latest one.

We also discussed Apples competitors in terms of their pricing, features and design as shown in the perceptual map. We have also found that there are certain pricing constraints that Apple faced, for example, Demand, newer the product, single product versus product line and competitive market.

INTRODUCTION

COMPANY

Apple

PRODUCTS

iPhone, iPhone3G, iPhone3GS, iPhone4

PURPOSE

My team has been tasked to examine a brand's marketing strategy in Singapore. We are expected to research and provide findings in the following areas and critique on the alignment of these findings with the intended marketing strategy. Based on these findings, our team is required to make sine practical recommendations that can further improve or strengthen the brand's local position.

METHOD OF INVESTIGATION

Internet, Shop research

Web Reference/ source from: http://www.apple.com/about/

SCOPE

Singapore

FINDINGS: MARKETING ENVIRONMENT

The environment forces that affect Apple's ability to serve its customers are social, economic, technologic, competitive and regulatory forces.

Social forces mainly refer to the changes in society. Examples would be an overall aging population, falling birth rates, decrease in household sizes, growth in household incomes, increase in dual income factors, increasing divorce rates, more people choosing to remain single, just to name a few.

Apple has to take in mind these social forces and considerations before deciding on its target market of customers, and how best to "poach" them. For example, an increase in the aging population would mean that there would be more elderly retirees who are free to do whatever they like, but most importantly, most of them would be rather well off after working for the large part of their lives.

In this case, it gives Apple an opportunity to target these elderly retirees, as since they would be free, they might purchase Apple's gadgets and devices to keep themselves occupied and entertained. Also, these retirees would probably buy Apple products to pamper their grand children, especially if they dote on them a lot. Another example would be the growing trend of more people choosing to be single.

Being single would mean that the consumer would not have to support a family, pamper the spouses, or pay for their children's education. Therefore, most singles would therefore be rather rich and affluent, as they would probably have a lot of savings from not needing to support a family.

This is also an opportunity for Apple to target these singles, who might feel "lonely' and require entertainment gadgets or devices to "survive" their singlehood. Also, and most importantly, since these singles might be rich and willing to use their "discretionary income" to pay for luxury products, Apple can target them as potential customers, as their buying power should be very strong.

Other social forces would include the rise of the modernistic and metropolitan cities in the world, as well as the migration of the world's citizens into these modern "utopias" from their initial country side or rural areas. As more people move into the city from the country side, Apple will have more consumers to choose from, and of course to buy their products. Also, there would be many people who have their incomes increased from working in the city rather than working in the countryside; this enables more of these consumers to afford Apple products.

Culture also plays an important role in Apple deciding what its target markets of customers are. Different countries have different cultures, but Asians, especially older and more matured ones, in general prefer to use gadgets and devices from more mainstream brands, such as Samsung, LG, Sony, Panasonic, and others, Therefore, Apple could either try to convince these consumers to switch allegiances by perhaps launching extensive marketing programmes, or simply focusing on the younger generation of consumers, perhaps generation Y, who might have more open mindsets, and therefore more and willing to experiment and try new things.

Lastly, the individual's personal values, thinking and upbringing are all significant factors that will affect Apple's target market of consumers, but is intangible in the fact that no one can know, predict or force an individual's mindset, even a company as powerful as Apple. Apple could not possibly point a gun to the consumer's head and ask them to buy their products, all they can do is to launch extensive and intensive marketing programmes and hope that the customers take the "bait".

For economic forces, due to the economic downturn or recession, consumers in general are not as well off as they should been, when billionaires become millionaires. Therefore, the demand for Apple product is reduced as consumers have to tighten their purse strings. Since Apple products are significantly more expensive than that of their competitors, they might lose out when comes to providing more affordable gadgets.

Thus, the high pricing of Apple products can be seen as a weakness to their sales especially in times of economic downturn.

Another economic force will be on consumer income, in the form of the increase in taxes (GST). Due to the increase of taxes from 0.5% to 0.7%, therefore the consumers overall disposable income and discretionary income are significantly affected. As a result, the amount of money which the customers can afford to buy Apple products is reduced, leading to lesser sales and profit for Apple.

As for technological forces, in terms of Research and Development (R&D), Apple is a trailblazer in their field of expertise; gadgets and devices. Due to Apple's rapid technology advancement and specialized products, they are able to outshine their mass market, and therefore they are able to out-compete their rivals which are valuable strengths to Apple.

However, the applications used by Apple might not be familiar with the majority of consumers. For example, Apple uses the Mac OS X Snow Leopard, which is completely different from the usual OS used; Windows. Thus, this might be a weakness as consumers who have been using Windows would prefer to buy products from other brands which use that instead.

Furthermore, the online businesses like Ebay sell a cheaper second-hand product which might snatch away the business of Apple. Consumer who do not mind second-hand but cheaper product would then buy from these competitors instead of Apple, leading to the loss of customers.

In terms of competitive forces, most Asians in general prefer to use other brands that are more mainstream, with the iPhone as an example. Thus, Apple may lose some of these customers to their competitors who have also started producing models that have an uncanny resemblance to the iPhone from other brands i.e. Nokia, Samsung, Sony Ericson, and LG. Furthermore, other rival companies are also offering cheaper products & promotions, thus this becomes a threat to Apple.

Lastly, in terms of regulatory forces, copyrights and warranty/guarantee are implemented to protect the company and its customers. However, it also costs Apple a significant sum to obtain these seals of approval. Apple needs to modify products in the way that is not copyrighted.

Apple's iPhone's competitors are Nokia, Sony Ericson, Samsung and LG. In terms of their smart phones, Nokia, Samsung, Sony Ericson and LG have also come up with phone models that have an uncanny resemblance to iPhone which attract customers.

Nokia is a well-known brand among Asian, its phones are considered as user-friendly products and the price is always affordable. When Nokia first launched its Nokia N8, its 12 megapixels with Carl Zeiss optics and Xenon flash, HD-quality video recording, film editing software and Dolby surround sound to win over iPhone's customers.

Samsung comes up with Galaxy S Android smartphone which has a 4-inches super amoled display, 1GHZ processor, and "smart life" ecosystem integration to attract customers.

As for Sony Ericson, its Xperia X10 mini which is small and convenient, its screen size is as small as 2.6, audio jack is 3.5, 3G HSPA, 600 MHz processor and camera with 5megapixel.

LG's GW990 smart phone which utilises the capacitative touch-screen was instantly responsive to my touches and movements, certainly matching the ability of the popular Apple iPhone. The resolution is 1024 pixels by 480 pixels, with an aspect ratio of 2.13 to 1.

FINDINGS: TARGET MARKET

* CONSUMER BEHAVIOR

Apple segments its target market in terms of their demographic characteristics, geographic characteristics, psychological characteristics, usage rate and product features.

In terms of the Demographic characteristics, Apple is targeting the Generation X and Y cohort.

Generation X consists of mostly working adults, while most have already established a successful career. Therefore they are earning high and steady incomes, enabling them to afford Apple's expensive and sophisticated devices. Thus, the high income working adults of generation X would definitely be satisfied by the sophisticated and high-tech Apple products. They would also buy Apple products as these are seen as prestigious and therefore reflect their perhaps high social status, leading to more sales for the company.

Generation Y would consist of mostly teenagers and the young adults. Generally, the modern generation nowadays is becoming more and more materialistic and modernistic. The advancement of technology has attracted buyers from generation Y that are interested in the newest technology. The increased interest in customers is an opportunity for Apple, as that would mean that more customers would buy iPhone, as it is one of the most advanced phones currently, which is also very popular among teenagers and young adults. These teenagers in general want to be hip, chic and cool, and love to follow the latest trends and popular products. Therefore, they would want to own the latest "Cool" devices, perhaps used by their friends or family. They might even be influenced by peer pressure to get an Apple product as well. As societies in general become more affluent, the parents would be able to indulge their children in these expensive gadgets. The young working adults are usually not yet married and therefore do not have to support any family or children; therefore they will have a lot of discretionary income to spend on these luxurious devices. Apple would be able to target this group of customers, as in terms of income they are not financial-bounded, and do not usually have commitments like providing for a family, or paying for their children's education, as most would not be married yet. As for teenagers, although most do not work and earn a steady income, they would be able to convince their parents would earn high incomes to buy it for them, or resort to other means such as usage of "ang pow" or red packet money to buy these expensive luxuries.

Consumer incomes is a very important factor that Apple has to consider when identifying its target markets, they should target consumers of specific income groups, especially the high income consumers like the matured working adults of generation X. Their tastes and expectations would also be of a higher caliber, which would be where Apple steps in, as the company provides these high tech and sophisticated gadgets, with various uses, functions, services and revolutionary applications to suit and satisfy the consumer's needs. The more affluent working adults would also be able to pamper their children with the latest Apple products, as since they have a high standard of life; they would want their children to enjoy these luxuries as well.

In terms of the Geographic characteristics, Apple is targeting on consumers living in mordernised, metropolitan and overall urban areas as citizens living there usually have fixed, steady and maybe high incomes, therefore they have a higher purchasing power, compared to those living in rural areas, would might not have the fixed, steady and incomes enjoyed by their city counterparts.

In terms of psychographic characteristics, Apple targets consumer with the needs & wants for entertainment. IPhone is built to be the ultimate gadget, which can not only function as a phone, but also a miniature and portable entertainment device as well. This results in customers buying Apple products such as the iPhone for convenience sake.

With the increase in consumers who are constantly in need of entertainment, the iPhone's versatile product features, functions and applications are their best choice. With the increasing trend of consumers who are into the newest technologies and products, the iPhone and other Apple products are the solution for their needs, to suit these tech-savvy consumers.

In terms of the usage rate, Apple is also targeting the heavy and medium users, consumers like businessman, teenagers and working adults, as they require convenient mobile devices, which allow them to call, message and entertainment themselves at the simple touch of a button.

Apple products are for consumers who are looking to find their own niche in terms of the products they desire. Since Apple products are highly specialized and have lots of useful functions and applications, it will suit the high-tech and tech-savvy consumer. Under consumer behaviour, there is the Maslow Hierarchy of needs to consider. These needs consist of the consumer's physiological needs, safety needs, social needs, personal needs and self-actualisation needs, which are important to the individuals well being.

Physiological needs consist of the individual's needs for resources essential for life such as food, water, shelter and oxygen. In this case, since Apple does not produce any of these as they are naturally occurring, that factor does not affect consumer behavior and demand for Apple products.

Safety needs consist of the individual's need to be free from harm and financial security as well. In this case, Apple is does not directly affect these factors to a large extent, only minimally such as regarding the overall safety of their products and the customers not over spending to purchase their products.

Social needs consist of the individual's needs of friendship, belonging, love and companionship. In this case, the consumer might be influenced to purchase Apple products in order to have a "Sense of belonging" and to perhaps feel more wanted and accepted by their friends, and not being the odd one out if all of the person's friends use apple products.

Personal needs consist of status, respect and prestige, and is the main influencing factor which Apple uses to convince its customers to buy their product. Consumers who are affluent and wealthy will want to purchase Apples expensive and "Elite" products, which they consider as status symbols, to show how affluent or powerful they are, and perhaps command more respect from others. Apple products are also seen as prestigious, therefore affluent consumers would buy these to be seen as more prestigious, while others aspiring to be prestigious and wealthy would consider getting the company's products as well.

Lastly, self-actualisation needs consist of self-fulfillment needs, such as an individual's dreams, aspirations and personal agendas. In this case, the consumer would be influenced by their own self-actualistion needs and thus purchase Apple products in order to fulfill them or otherwise.

Market Positioning Map

MARKETING MIX

* PRODUCT

Classify the product/brand into actual/core/augmented product & convenience/ shopping/ specialty/ unsought product.

Justify your choice by applying relevant theories in the topic. Describe the product mix of the brand if applicable.

Describe the product life cycle theory, explain the stage that is applicable for the brand.

IPhone is introduced as the core product in the mass market as compared to other smartphones when it first launched. The brand of the iPhone, Apple, is often a threat to its mass market and its competitors. Reviewers in all corners of the electronic device world hail iPhone as setting a benchmark for sleek and innovative design, as well as its integrated cell phone and MP3/video player (iTunes). It is only sold in tandem with AT&T service and other selective shops. Thus, customers can only get iPhone from limited places such as the epicenter in Singapore. Most consumers of iPhone are loyal supporters of Apple, they will not accept substitutes as the quality of Apple products is usually incomparable. As for the unexampled consumers who make the infrequent purchases, they would need extensive search and longer decision time in pursuing iPhone. Thus, iPhone is classified under specialty goods.

IPhone is currently at its introduction stage but moving on to its growth stage as there is change from sales grow slowly to a rapid increase in sales. At its introductory stage of the product life cycle, Apple's marketing objective is to create consumer awareness and stimulate trial. Thus, during that period, advertising and promotion expenditures are made to stimulate primary demand. As more competitors introduce their smart phones into the market, iPhone moves along its life cycle. Apple will then focus on creating selective demand, the preference for a specific brand. IPhone uses the skimming strategy during its introduction stage and thus the price of iPhone is kept high during this period of time.

In terms of Apple's product line, it has many different product lines such as iPod, Macs, iPhone and iPad.

MARKETING MIX

* PRICE

Describe the pricing strategy adopted by the brand.

Explain the internal and external factors that affect the pricing strategy for the brand.

Pricing

Since iPhone is a specialty good, the price is usually very expensive. Apple uses skimming pricing strategy to price its products as their products are considered as undifferentiated/ specialty good.

Apple uses demand-oriented pricing approach which weighs factors involving underlying expected customer tastes and preferences more heavily than factors like cost, profit, and competition when selecting a price level. Thus, Apple utilises the process of price skimming to price their goods. It is by setting the highest initial price that customer really desiring the products and is willing to pay. Skimming pricing is an effective strategy as Apple has enough customers who are willing to buy. Furthermore, the high initial price will not attract competitors and customers interpret high price as high quality of products.

Their pricing strategies are developing marketing strategy, make marketing mix decisions, estimate the demand curve and understand environmental factors.

They perform marketing analysis, segmentation, targeting, and positioning.

They also define their products, distributions, and promotional tactics.

Understand how quantity demanded varies with price.

Evaluate likely competitor's actions, understand legal constraints.

Such constraints are in terms of its demand. Usually, the higher the demand for a product, the higher the price it can be charged. This becomes an advantage to Apple as they can earn as much as they can. In addition, the newer the product, the higher price it can be charged making it the second constraint.

The third constraint will be single product versus a product line. As for Apple, they have a product line for their pricing. Thus, they do not need to just focusing on one product like iphone, they can also have laptop, mp3...etc. Therefore, with a wide range of products, the price of individual items must be consistent with the others based on features provided, and meaningful price differentials must communicate value to consumers.

The external constraint will be the type of competitive market Apple need to face. In terms of pure competition, Apple's competitor for an example from China, had followed the features of an original iphone but not with the same quality and also had priced it about the same as the market price of the original iphone. Apple can also have a pure monopoly as it started to be the only seller that comes out with the iphone and also who had set the price for that unique product.

MARKETING MIX

* PLACES

Describe the distribution channels of the brand and comment on the appropriateness of the distribution strategy.

There are only a few selective shops in Singapore which sell Apple products. Their products are distributed all over the world such as Australia, Singapore, United Kingdom, and Brazil…etc

These are some of the distribution channels we used are advertisement, TV commercial/sponsored…etc

Apple uses indirect mean of distribution. Apple distributes its iphone to local communication service provider such as Singtel and Starhub to sell to its comsumers. Apple also set up its own shop in Singapore to sell its products such as the iphone to the customers. Apple also distributes its iphone to small firms and individual selective shops to increase its sales and area of distribution. Consumers are also able to purchase Apple iphone through online purchasing. By visiting Apple's website, customers are able to order iphones without going down to Epicenter or local communication service providers.

In Epicenter, Apple is able to satisfy all buyers' requirements. Large amount of information is given on broachers and there are sales staffs around to entertain all enquiries. Epicenter is located in most shopping malls where customers are able to visit conveniently. With large variety of iphone applications available that is meant for many different occasions and functions, Apple is able to attract a large amount of techno perusing customers. Customers are also able to order iphones from the internet, this allow Apple to have a larger target market, thus increasing its sales and revenue.

MARKETING MIX

* PROMOTION

Explain the difference promotional mix tools used in the marketing activities for the brand.

Uniqueness of brand and status stressed

Inform, educate

CONCLUSION & RECOMMENDATION

Provide a summary of key points in your report and your own conclusions of the brand. Include several recommendations to improve the brand equity of the brand. Be imaginative but realistic.

Apple uses "Blue Ocean" Strategy instead of the "Red Ocean" Strategy to outshine in the mass market. Their products are always viewed as unique in the industry and are always classified under undifferentiated goods. IPhone has been expertly manufactured with the consumer's needs in mind, providing necessary and up-to-date function, new features and application to suit their daily life.

However, IPhone's Bluetooth device can only used to transmit to other iPhones, and therefore it would be better if it can transfer files from an iPhone to phones from other brands. Thus, we would like to recommend for the iPhone to be more user-friendly.

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