Discuss about the Marketing & Management for Consumer Electronics.
Apple Inc., also known as Apple, is an American based multinational company that designs, manufactures and sells hardware, software and consumer electronics. Apple is famous throughout the world for its vast variety of flagship line-ups, such as iPhone, iPad, iPod, MacBook, Apple watch, etc. The company was founded by Steve Jobs, Steve Woznaik and Ronald Wayne on April 1, 1976 and became the first American company to be valued over US$ 700 Billion as of February 2015. Apple has almost 498 retail stores throughout the world and had a workforce comprising of 116,000 employees during 2016 (Rawlinson, 2017).
The company has been able to establish a strong reputation in the worldwide market and also amongst the gadget enthusiasts because of its high quality and unique products. Even though Apple products are priced higher than most of the competitive products, the brand still enjoys a large pool of loyal customers (Dougherty, 2010)
Apple is not just a leader in the industry when it comes to sales but is also a company that wants to capture the market itself. The products and services designed by Apple are paving the way for future devices, services and hardware. The company invests extensively in gathering customer information from different sources and also in its marketing activities so that it can experience a greater market reach and penetration. The company understands its customers and is able to implement effective market strategies that can appeal to them.
5C analysis is a strategic tool that helps in analysing the situation of a business or a company, in order to identify problems for the purpose of research. It also helps in understanding the internal and external environment of a firm. The five points covered in a situation analysis are Company, Customers, Competitors, Collaborators and Climate (SMstudy, 2016). A situation analysis of Apple is given below:
Company à Apple is the worldwide market leader when it comes to information technology products and services. The company has been able to distinguish itself from its competitors on the basis of quality, design and price as well. The reason that Apple products are considered to be a status symbol can also be attributed to the fact that the products are easily distinguishable and because of the high brand value that the customers attach to Apple.
Customers à The company enjoys a large pool of loyal customers throughout the world. Products designed and manufactured by Apple are famous throughout the world and the entire global population is a potential customer for Apple. The loyalty of the customers towards the company can be judged from the fact that they are willing to pay any amount for Apple products even if a competitive product with the exact same features are available at half the price. The huge product line up offered by the company keeps the customers engaged and the company experiences continuous sales throughout the year, which gradually rises during the festive seasons.
Competitors à In the past few years, the global market has been experiencing entry of a number of new brands, which are definitely posing a considerable threat to Apple. Companies like Samsung, Micromax, Lenovo, Lava, Vivo, etc. are coming up with innovative technology solutions and products that have a lot of potential and are also attracting the customers. In developing countries, where the demand for smartphones is relatively high, these companies are introducing competitive products at a price that is almost three times lesser than the price of flagship products being offered by Apple (Investopedia, 2017). As a result, the sales of Apple is suffering a great deal because of new market entrants and also because of its pricing strategy.
Collaborators àApple is a company that enjoys high brand value in the global market and as a result, a lot of companies look to collaborate with Apple to gain market recognition and a greater customer base. Apple has been teaming up with a number of companies in the global market so that it can expand its business. Telecommunication companies like AT&T, Vodafone, Verizon, Orange, etc. have been associated with Apple since a long time and have helped the company in increasing its sales and reaching out to a greater customer base. Furthermore, Apple has also collaborated with a number of other companies, such as Intel, TPK Holdings, Foxconn Technology Group, Samsung, etc. (CNBC, 2011) These companies are market leaders in their own industries and are providing a number of products and services to Apple.
Climate à As Apple operates in the global electronics industry, it is vulnerable to a number of internal and external environment factors, such as legal, environmental, social, political, technological, etc. Its global presence makes the company vulnerable to the rules and regulations set up by the governments of different countries, such as India and China, as it outsources most of its manufacturing processes from these countries. Further, the labour laws of these countries can also have an impact on Apple. Apple is also dependent on the global technology environment (|, 2015). Due to presence of a lot of competitors, there are new inventions taking place on a daily basis and Apple introduces its new product line-ups only once in a year. Thus, Apple has to design such products that can sustain in the market for an entire year and can compete with the competitive products in the longer run.
Apple invests a lot of its resources in advertising and marketing research, which helps it in collecting information about its customers, rival products, competitors and much more. First of all, Apple conducts a monthly survey in which it tries to gain knowledge about the attributes that is driving the customers to buy Apple products. The survey reveals country-by-country data and is also conducted for each product separately. Using such surveys, the company is able to gain knowledge about the features the the customers use the most in Apple devices, demographic data about their customers and also about the level of customer satisfaction with Apple products (Heisler, 2012).
Steve Jobs, one of the founder trio, in an interview, told the media that Apple has a greater focus on developing products instead of focusing on market research. He was of the view that the customer need to research the market for what they want and what is being offered and their duty was just to offer innovative products and services. Later on, the myth has been busted by a number of media sources (Spillers, 2012). It has also been discovered that Apple uses ethnographic research methods and tried to identify consumer behaviour when they visit Apple stores and interact with the staff (Flory, n.d.). Using ethnographic research methods, the company is able to identify customer behaviour, buying patterns, preferences, usage patterns, etc., which ultimately helps them in gaining information about the market and also about the customers.
Apple is a company that has gained worldwide market success because of its effective strategies in all fields. The company makes heavy investments in advertising and marketing of its various products and is definitely a company that can be looked upon for marketing ideas. From product mix to pricing strategy and distribution channels, Apple has put in a lot of thought and has been outperforming its competitors on the basis of its ability to device powerful strategies (Yeung, 2017).
Even though the company has been receiving success since a long time and is still an industry leader in the worldwide market, the entry of new companies into the market poses a great threat to its position. As a result, Apple should start implementing new marketing strategies that would allow it to retain its position in the market and outperform the competitors. Some marketing strategies or a new marketing mix, which can help Apple in retaining its market position and brand value are discussed below:
Product à Apple already has a huge product portfolio, which includes smartphones, tablets, personal computers, laptops, music players, smartwatches, accessories, etc. but all of them are costly products that are not easily affordable for the general public. On the other hand, the rivals of Apple are offering a diverse range of products in all price segments. As a result, they are able to achieve higher sales as compared to Apple. Apple should start introducing new models in all its product segments so that it can offer a greater portfolio of products to all types of customers and not just limit itself to those customers who have higher purchasing power.
Place à The success of Apple in the worldwide market can also be attributed to the fact that it had very effective distribution channels throughout the world. Of late, the company has been suffering because of the expansion of its distribution channels. The products manufactured by Apple are available on every retail counter as well as on online websites, which are posing a tough competition to each other in terms of prices (Rodrigo, 2012). The competition between the two is having an impact on the prices of Apple products as the online retailers offer heavy discounts just to compete with retail counters. Due to reduction in prices, Apple products are losing their credibility as well as brand value. Thus, Apple needs to rethink about its distribution channels and limit them to authorised Apple Retail Stores alone.
Price à From the very beginning, Apple has priced its products higher than the rival products as a strategy to create brand value and a better image in the market. Recently, the strategy has done more damage to the company than providing any actual competitive edge. The aggressive pricing strategy of the company has been criticised by the customers in the past few years as the prices of Apple products are way higher than the prices of rival products that are offering more features than any Apple features. The latest flagship smartphone introduced by Apple i.e. iPhone X has been priced at 89,000 INR whereas Galaxy Note 8, the rival flagship smartphone introduced by Samsung, is priced at 67,000 INR (Cipriani, 2017). Therefore, Apple urgently needs to reconsider its pricing strategy and introduce the smartphones at a competitive approach because a lot of Apple’s loyal customers have started switching to other devices because of irrational pricing strategies of the company. Furthermore, frequent price drops is not helping Apple in retaining its brand image in the market.
Promotion à Apple is a company that has been able to promote its products in the best possible way even when they did not invest much into promotion and advertising. Apple has been able to establish effective relations with a lot of media partners and telecommunication partners, who are eager to spread the word about Apple’s new products and about their own association with a company like Apple. Thus, the strategy to promote its products through its collaborators if an effective and resource saving strategy and the company should continue to implement it in the future as well (Yeung, 2017).
Conclusion
Apple is one of the most successful business organizations in the world and has been setting examples for the new market entrants. The company has been able to achieve higher profits every year even when there were reductions in its operating costs. Further, the marketing and advertising strategies of the company has also helped it in establishing a strong brand image in the market but tough times call for tough decisions and the changing market trends are having an impact on the market position of the company. Therefore, the company needs to redesign its marketing mix and take necessary measures that would allow it to remain competitive and retain its position in the market.
References
Dougherty, M., 2010. The History of Apple, Inc.. [Online] Available at: https://www.brighthub.com/computing/mac-platform/articles/65346.aspx[Accessed 23 September 2017].
Rawlinson, N., 2017. History of Apple: The story of Steve Jobs and the company he founded. [Online] Available at: https://www.macworld.co.uk/feature/apple/history-of-apple-steve-jobs-mac-3606104/[Accessed 23 September 2017].
SMstudy, 2016. 5C Analysis. [Online] Available at: https://www.smstudy.com/article/5c-analysis[Accessed 23 September 2017].
CNBC, 2011. 10 Significant Apple Business Partners. [Online] Available at: https://www.cnbc.com/2011/08/25/10-Significant-Apple-Business-Partners.html?slide=12
[Accessed 23 September 2017].
Investopedia, 2017. Who are Apple’s (AAPL) Main Competitors in the Tech Industry? (HPQ). [Online] Available at: https://www.investopedia.com/ask/answers/120314/who-are-apples-aapl-main-competitors.asp[Accessed 23 September 2017].
|, J. M., 2015. Analyzing Porter’s Five Forces on Apple (AAPL). [Online] Available at: https://www.investopedia.com/articles/investing/111015/analyzing-porters-five-forces-apple.asp[Accessed 23 September 2017].
Heisler, Y., 2012. How Apple conducts Market Research and keeps iOS source code locked down. [Online] Available at: https://www.networkworld.com/article/2222892/wireless/how-apple-conducts-market-research-and-keeps-ios-source-code-locked-down.html[Accessed 24 September 2017].
Spillers, F., 2012. Busting the myth that Apple doesn’t do User Research. [Online]
Available at: https://www.experiencedynamics.com/blog/2014/09/busting-myth-apple-doesnt-do-user-research[Accessed 23 September 2017].
Flory, M. M., n.d. Does Apple Use Market Research?: Industry Strategists Weigh In. [Online]Available at: https://www.ama.org/publications/eNewsletters/MarketingInsightsNewsletter/Pages/apple_market_research.aspx[Accessed 23 September 2017].
Yeung, N., 2017. The marketing strategy of Apple: A concise analysis. [Online]
Available at: https://www.versiondaily.com/the-marketing-strategy-of-apple-a-concise-analysis/[Accessed 24 September 2017].
Cipriani, J., 2017. Apple iPhone vs Samsung Galaxy models: Specs, prices, and features compared. [Online] Available at: https://www.zdnet.com/article/spec-showdown-apples-iphone-lineup-vs-samsungs-galaxy-lineup/[Accessed 23 September 2017].
Rodrigo, 2012. Marketing Analysis of Apple Inc. [Online] Available at: https://writepass.com/journal/2012/11/marketing-analysis-of-apple-inc/[Accessed 24 September 2017].
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