Marketing Assignment: Proposing A Revised Offerings For Apple.inc
Task: For this marketing assignment task, students need to propose a new or revised marketing offering for a chosen company. Students can choose any company, international or local.
Marketing is one of the most crucial business functions; it enables business firms to create and deliver services and products that add some value to customers' lives. The primary objective of this marketing assignmentis to evaluate the current offerings of the American tech giant Apple. incagainst the external environmental forces. Depending on the results of the environmental analysis some changes to the current marketing strategies will be suggested. The marketing strategy of the brand Apple will be presented using the 7Ps marketing mix framework.
Apple: Company Overview
Figure 1: Apple’s Global Presence
(Source: statista.com, 2021)
Apple is a US-based technology firm that began its journey in 1976. This publicly-traded company operates globally; however, the above image shows that Apple mostly targets economically developed countries such as the US, the UK, Australia, France, Germany, Canada etc. and the US is its major market. Apple is known for its wide and innovative product profile and high-quality services. Apple manufactures and sells products such as iPhone, Mac, iPad, Apple Watch, TV, Accessories, various internet services (e.g. iTunes, Apple Store, iCloud, Apple Books etc.). Apple's products are highly-priced and it targets quality-oriented customers only. iPhone is the major product of this company as it has been consistently generating the maximum amount of revenue for Apple; in 2020 it solely made $137,781million out of Apple’s net sales of $274,515million (Pratap, 2020). Thus, the primary focus of this discussion will remain on this product category.
Figure 2: Apple’s Revenue by Product Category
(Source: Pratap, 2020)
Apple's main USP is its innovativeness and it has a loyal customer base that considers Apple’s as a prestige brand. A Forbes report published in June 2019 claims that Apple products are no longer innovative; it is becoming hard to distinguish them from other brands and they have been increasing their product price without introducing any significant innovation. The sales of Apple products are being affected due to these issues (Petro, 2019). A recent report published by CNBC shows that Chinese smartphone manufacturer Xiaomi has replaced Apple. In June, Xiaomi’s sales increased by 26% and its current market share is 17%. While Samsung sold 15.3% and Apple sold 14.3% of the total smartphones purchased in June. From April to June, Xiaomi held the position of most popular smartphone company in the developed countries of the European region. Samsung’s sales problem is probably due to the production crisis they are currently facing in Vietnam(Roy Choudhury, 2021).Apple Inc. needs to consider all of these factors and make production-related decisions.
Apple 7Ps Marketing Strategy
Product: Apple believes in product differentiation strategy, they create products that look stylish and have an easy user interface. Apple always focuses on being innovative and different from its competitors. In order to resolve compatibility issues, Apple sells accessories (TV, cases, storage, headphones, displays etc.) and products (iTunes, iBook store, App Store etc.) that are compatible with Mac and iOS. Currently, it also sells a line of old models of its products to serve customers that are price-sensitive. Apple does not only sell products, it tries to develop an emotional connection with its customers so that a loyal customer base can be formed(Krisnawan, & Jatra, 2021). Price:Apple follows the premium pricing strategy; it sets a high price for its products which is also a sign of high quality. This company believes that people readily pay a high price when they are provided with useful and extraordinary products. Thereby Apple always emphasises the quality and unique features of its products.Price skimming is another strategy that Apple uses; they set a high price for their products initially and slowly reduce the price when their competitors bring similar kinds of products to the market(Tien, Long, & Chi, 2019).Apple’s main market is the US market and the price of its products change depending on the location.
Place: Apple sells its products through multiple channels. They have over 500 physical stores all over the world. At the same time, Apple connects with their customers through its online stores. Apple also forms partnerships with third party retailers and wholesalers (e.g. Curry’s PC World, BT, Virgin etc.) to distribute its offerings. Apple has placed its retail stores in urban shopping centres and malls to reach its targeted customers (high-income people). they design their stores creatively and provide proper assistance to their customers (Marrero, 2018). Promotion: Apple follows a unique promotional strategy; its primary goal is to create an irresistible desire for the products in customers' minds. Apple does not overwhelm people by giving an excessive amount of information; they keep things simple and focus on the innovative features of their products. Apple knows its products are highly-priced, thus they always focus on other issues such as convenience and quality. They rely on commercial as well as print adverts to reach their customers (LI, 2019). However, Apple Inc does not believe in spending much on advertising, the quality and consistency of their products are the actual adverts they rely on(Li, 2020).
Physical Evidence:it includes what customers can visualise such as packaging, store ambience, brand logo etc. Apple uses its physical evidence to create a strong brand image; its retail stores are minimalistic yet elegant. Customers feel invited when they visit stores and receive personalised services. Apple also packs its products in a visually appealing manner. Apple’s logo itself has become a mark of premium quality in customers’ minds (Lockhart-Smith, & Dowd, 2020).
People: Apple depends on its staff to deliver a consistent experience to its customers. It recruits employees that can proficiently communicate with customers and also provide those employees with relevant technical knowledge. each employee focuses on particular products and departments. Employees at Apple stores focus on enriching others' lives; their customer service strategy closely resembles that of luxury hotels (Cohen, 2015). Process: customers these days do not buy products or services only; instead they look for an extraordinary experience. Therefore, having an appropriate process is essential for satisfying customers in the long run. Apple tests its products properly to avoid delivering faulty products to customers. Their physical, as well as online stores, are easy to navigate and interact with (Lockhart-Smith, & Dowd, 2020). Apple Support is always there to resolve customers’ queries.
Marketing Environment Analysis
Economic: the global economy is undergoing an economic crisis due to Covid19; it is not only a matter of public health crisis, but it also has long terms economic impacts due to supply chain disruption, production interruption, slowing down of economic growth and changes in the consumption pattern of customers (McKibbin, & Fernando, 2020). Due to the sudden increase in demand for digital services and products, Apple also experienced an upsurge in the sales of Mac and iPad. However, currently, it is facing a shortage of semiconductors that have affected its iPhone production (Gurman, 2021). Besides people’s personal consumption rate decreased by 10.1% due to job losses. Under such circumstances, people focus on investing in necessary goods mostly (Deloitte Insights, 2020). The popularity of Xiaomi smartphones in the European region can be a challenging factor for Apple in the near future as European countries are important markets for Apple. Social Factors: Socio-cultural trends are important factors for smartphone manufacturers like Apple. People's rising dependence on the internet and digital services is a great opportunity for Apple. However, Apple is a prestige brand and popular for being different. Apple these days is lacking innovativeness. A Forbes report claims that iPhone 13 is not as efficient as iPhone 12 in terms of drawing revenuedue to a lack of innovativeness (Jones, 2021).If fails to innovate interesting products, people would lose interest in this brand.
Technological Factors: technology is never stagnant, it is evolving fast. The competitors of Apple such as Samsung and Xiaomi are also innovating new features and offering them at a comparatively lower price. As per a survey, Samsung is one of the top ten innovative companies along with Apple (Kolawole, 2021). Therefore, Apple’s position is never secured. Besides, Apple does not support the older versions of their products for long (7 years) which are intended to serve price-sensitive customers. Unlike android, many third-party applications and products are not compatible with iPhones which creates problems for the users sometimes. All of these issues can affect Apple’s business negatively in future. Environmental Factors: in the modern era ethical behaviour is a crucial success factor for business firms. Apple’s ethical position has always been questioned by people.in 2019 apple scored 46% in the Corporate Accountability Index (Strange, 2019).In the same year, Apple was legally challenged by human rights advocates for allegedly being responsible for the deaths of minors who were working in a cobalt mine which was a part of Apple's supply chain (Kelly, 2019).Apple also uses potentially hazardous ingredients such as BFR, PVC, phthalates to manufacture its products. According to de Castro Almeida (2018), Apple is one of those brands that faces a strong ‘negative consumer brand perception’. In 2018 along with Samsung Apple was fined 10 million pounds by the Italian government for being ‘planned obsolescence’ and encouraging unethical consumerism. This company has also been charged for enjoying monopolistic advantages. Apple is not only a premium brand, it also relies heavily on people’s emotional attachment to the products. This kind of negative publicity can affect its consumer severely.
Suggested Market Offering
Based on the environmental analysis it can be said that Apple needs to introduce certain changes to its current offerings. Changes are primarily required in its product, price and promotional strategies. The recommended changes are Extension of the Product Profile: the current economic environment can become a great threat to Apple's business in the near future. Thus, Apple needs to widen its target. Since Apple is primarily known for its premium quality products, it should not change that, instead, it should focus on providing better and longer services for their older models that price-sensitive customers purchase. Such an approach will reduce the pressure of innovation that Apple constantly faces and a new customer base will get developed for this brand which will help it compete with companies like Samsung and Xiaomi that sells quality products at a cheaper price.
Significant Innovation: Apple’s USP is its innovative products. However, due to lack of innovation, Apple is losing its competitive advantages and people are leaning towards android phones that are useful, innovative and affordable. Thereby, Apple needs to invest a lot in Research and Development field so that they can maintain the image of innovative brands. They need to make sure that each of their new product is significantly different from its previous products to create the desire in customers’ minds.
Changes in the Pricing Strategy: Apple’s business heavily depends on the developed countries, especially the US. The European market however is changing slowly; under such circumstances, Apple should focus on strengthening its position in developing countries with a huge population such as India. In order to do so, Apple needs to modify its pricing strategy; being a premium brand they should not go for the cost leadership strategy (offering the lowest price); instead, they should adopt the value-based pricing technique (taking consumers’ perception of the brand or products into consideration while setting price) at least for the older models (Garner, Rintoul, & Hill, 2018). Effective PR: Apple does not focus much on promotion. However, consumers brand perception can get negatively affected by the negative information publicly available about the brand. Thereby, Apple should adopt a strong Public Relation Strategy. PR strategy enables brands to communicate with their target audience effectively and maintain brand image. PR increases brand credibility as unlike adverts (paid media) PR is earned media(Bezpalov, Tsvetkova, Shilina, Golovina, & Avtonomova, 2020).
Apple is one of the world's most successful brands. Its marketing mix strategy is extremely efficient in generating profit. However, the business environment is ever-changing, global economic crisis, uninterrupted technological developments, ethical challenges and changing social trends are posing serious threats in front of Apple. Thus, it is suggested that Apple focuses on widening its customer segment and focus on introducing significantly innovative products so that it stands out. It should also reconsider its current pricing strategy in order to reduce its dependence on the US market.
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