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1.

0 Introduction

Apple Computer Inc. was the brainchild of Steve Jobs and Steve Wozniak. In
1972 the two men met while working for the Internet engineering organization
Hewlett-Packard. They found they both imparted an enthusiasm toward
computers. In 1975 they transformed their enthusiasm into a venture and
started chip away at their first PC, the Apple I. Joint by Ron Wayne in 1976,
the organization, in particular Apple Computer Inc. was at last established
(Gogerly 2011, p. 21). Through decades' improvement under the initiative of
Steve Jobs, in 2011 Apple has surpassed oil bunch Exxon to turn into the
world's most significant organization by business promotion (guardian.co.uk
2011). Today, as the a standout amongst the most respected organizations
Apple plans and makes iPod and iTunes, Apple portable computer and
desktop machines, the OS X working framework, and the progressive iPhone
and iPad.

Apple Computers Inc. is thought to be one of the pioneers in the machine


business. It achieved distinctive progressions to the business; these
progressions are still noticeable in the present. The organization's items were
utilized as a premise by other machine organizations in planning the
determinations and physical qualities of their item. It likewise serves as a
meter of how items are planned. The organization offers different items for the
distinctive business sector it targets. The items made by the organization offer
something else.

The famous brands offered by the company to the world have been Mac
computers, iPod, iPad, and now the hot selling iPhone. Apart from hardware,
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the company has been very successful in software with the introduction of
Mac OS X operating system, and other media softwares like iTunes, iLife and
now iWork along with iOS (operating system for mobile phones). (Apple
Annual reports, 2010).

The hype on the internet has made this product a technological savior and the
company is still adding innovative features not to mention the technical issues
and challenges, which come with every product in the market. (Campbell &
LaPastina, 2010)

The paper will talk about Apple Inc. and its items, and the business sectors it
serves. The paper will examine the current market landscape how the
company drives in the marketing process within the industry. The paper will
likewise assess what further the company shall implement for further
progressions and improvement.

1.1

Apple Inc. Market Segment

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The market segment of the company is divided into 4 classes. Each class
represents a certain economic standing of people in the society. The company
makes sure that they cover all the segments in the general public they are
operating in. The company has specialized prices for the different market
segment, this will ensure that the clients will have lesser doubts about taking a
look at the companys product and the products that they can afford.

1.2

Apple Inc. Target Market

The target market of the company involves almost all sectors of the society.
They want to provide Apple Inc. to young or old, male or female. This target
market has a higher source of income. The company has different marketing
strategies that can cater to the taste and appeal of such markets. The
company makes sure that its stores and branches are located in the most
profitable places where customers can easily see the store and they can be
encouraged to visit the store and make a purchase. The company also
makes sure that competition within the targeted location they want to put up
the branch will not be too heavy.

2.0 Targeting Strategy and Positioning Strategy


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The targeting strategy of Apple Computers Inc is concentrated on


undifferentiated strategy wherein the entire market is targeted and a simple
marketing mix is used on such market. The needs of the market are nearly
similar thus this targeting strategy is used. The positioning strategy of Apple
computers Inc. is concentrated on comparing what they can do to what their
competitors can do. The information that they will acquire from the
comparison of their capabilities assist them in determining the actions they will
take in competing with their rivals and knowing their place in the market.

3.0 Apple Inc. Marketing Mix


Marketing Mix is the mixture of four components, called the 4p's (Product,
Price, Promotion and Place), that all organization has the decision of whether
to include, exclude or to generate desire marketing strategy. (Philip Kotler).
Marketing Mix is a set of marketing tools which includes, Products, Place,
Price and Promotion that study the method to produce the response the
marketer wants in its target market. (Standards of Marketing, Kotler and
Armstrong, 2012).

The four (4) key points are: product, price, promotion and place are generally
called the "four p's." Note are likewise that the client is not part of it, but
instead are the fundamental focus of the showcasing blend (Perreault, Jr. &
Mccarthy, 2009).

Although McCarthy has presented the marketing mix (4Ps) model to help the
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managers device a good marketing strategy where the benefits can be


exchanged between the pillars of marketing, this was later modified by Booms
and Bitner in 1982 (he added 3more Ps) to cater the requirements of the
service industry. Figure 1.

The elements of marketing mix are interrelated to each other. The purpose of
effective implementation and judgment of these marketing elements is to
achieve marketing objectives as set out by the senior management. In the
case of Apple, it is given in the case study that they use several mediums of
advertisements such as magazines, various online medias, posters, in order
to communicate with their identified target market.

Figure 1. 7Ps of iPhone (Adapted by researcher).

3.1 Product
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Armstrong and Kotler define product as anything that can be offered to a


market for the attention, acquisition or consumption that might satisfy a want
or need (Armstrong & Kotler, 2005, p. 223). Apple Inc. Company is utilizing
the iPod ecosystem to leverage the iPhone thereby supporting its online
music system. The main display of PC based websites with the same display
made this product different from one another. (Ogrady, 2007).

Many companies fail to remember what the client is really searching for. In the
words of famous marketer Jay Abraham, give them your solution or
somebody else will (Abraham, 2005).

At that point of time, the product could be found in more than 60million pages
within Internet, with the broadest screen display among all the mobile phones,
so there is touchscreen keypad as opposed to dialoging keypad in just 2
months after launch. The company decided to use OS X operating system
with the same usage as of iPod or Mac although with lot of shortcomings like
no expandable memory or replaceable battery or difficult to disable users
(OGrady, 2007). The initial version was not with 3G-network support and was
later integrated. SWOT analysis of iPhone (figure 2) helps to know the
strengths & opportunities of the product.

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Figure 2. iPhone SWOT Analysis.

The company should develop core competencies on the basis of its strength
and should focus on the opportunities which might arise in due time, which the
analysis of threats help to safe guard the product development and develop
contingency plans. Gradual innovative methods can be adopted by the firm to
convert the weakness into strength apart from best use of financial resources
(Brassington & Pettitt, 2007). The consumers do not appreciate the locked
iPhone with one network Cingular in US and by other network in Europe. Also
the cost of unlocked iPhone is quite high in compared to US market, which
might have caused reduced of sale.

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The users cant install their software, which is another software leverage
strategy of Apple, so they have to use only Apple softwares (iTunes, Mobile
Me) or QuickTime players. The company is utilizing the iPod ecosystem to
leverage the iPhone thereby supporting its online music revenue system. The
display of PC based websites with same display made this product different
from others (Ogrady, 2007). With the use of FaceTime with 2 cameras is a
new innovative idea like in 3G phones, Retina display, however the new iOS
is slow than expected by the compass and GPS is helpful when lost. Uses of
App Store help the users to get application on their phone and Apple takes
30% of that revenue (Marshal, 2010).

3.2 Price
The Apple Inc. Pricing mix in Business Analysis includes Cost, Competition,
Discounts, and geographical Area. The marketing plan must include
consideration on how Apple Inc. prices are pricing and including discounts,
(Perreault, Jr. & McCarthy, 2004).

Apple in this case adopted the best fit segment pricing strategy (skimming),
where the early adopters were targeted who are less price sensitive and want
to receive the benefits of new technology. It allows more cash flow for the
company and also conveys benefit perception to other target segments.

Apple Inc. Company started selling its product at the price of $599 (8GB),
$499 (4GB) and later it reduced the price of 8GB to $399. Still it also wanted
to target the mainstream users and cant reply on the first adopters (young
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techno savvy, professionals) for future growth. They tried skimming and
versioning strategy (Apple Annual Reports, 2010).

With the introduction of technology today, the price Apple Inc. goods are been
displayed and change by the company through Internet. The days of
unchanging prices for all customers are giving way to active pricing, where
customers are charged different prices depending on individual customers
and situations (Armstrong & Kotler, 2009). Even if all the other aspects are
perfect, with the wrong price, the customer will not buy the product.

3.3 Promotion
Apple has been most aggressive in terms of promotion on their product.
Promotion as the name implies is the fourth of the Marketing mix and not
necessarily more important than any of the marketing mix. Formally defined
by Armstrong & Kotler, promotion is concerned with telling the target market or
others in the channel of distribution about the right product (2004).

During the lunch to flaunt the innovative device (iPhone), the company started
with 4TV to which can provide the needs of entertainment and sharing of
information about the device and by focusing a new ways to advertise the
present 4TV ads in July 2010 (Chris 2010).

The press releases and blogs were posted and iPhone was in 60 million web
pages across web. The news created rumors and the Advertising Ages
Marketer award winner (2003) company was again ready to offer new
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generation product after iPod. The company made successful relations with
media firms and Steve (CEO) shares new ideas with public during occasions
as suggested in figure 3 (Williams, Mullin., 2008).

Figure 3. Strategy of promotions (Kiprin, 2009; Apple Annual Reports, 2010).

With the support of 317 stores across the world (233 in USA, 84 outside USA)
which contributed around 17% of profits. The company has done strategic
partnership with Starbucks to offer free iTunes WiFi music at 600 locations,
which can later be downloaded from personal and shared computers. Even
the new iPhones 5 reveal the easiness to find people around the city, location
of friends and other features which reflect the innovation of social integration
aspect of the device (Apple Annual Reports, 2010).

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Figure 4. Apple online marketing (Kiprin, 2009; Apple Annual Reports, 2010).

The company practices various forms of advertising from traditional media to


the newly digital advertising which expended their ads impressions. The
traditional media covers from regular press-ads, to TV covering major
channels like Fox, MTV, Rolling Stones, and Maxim, huge billboards and
appearance on Macworld Expo (conventions to launch products). Instore
promotion and awareness helps in personal selling where the users can touch
and test. However, on the digital platform, Apple Inc. makes use of various
promotion codes issue to consumers from time to time to encourage higher
engagement and conversions.

Talking about digital advertising, Apple Inc. leverage on all available cross
media channels and digital medias within the Internet, especially Google
platform.

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Cross Promotions: the channel partners like Sprint, Orange, Vodafone etc.
promote iPhone packages on their websites and from printed booklets.

Search Engine promotions; the company spends money on Adwords (Google


marketing), Pay Per Click campaigns. The company purchases the keywords
like iPhones, mp3phones etc. Banners and promotions on other sites is a
regular from Apple (Sliwinska et al, 2008).

The company sends email to iPod users, carrier consumers, and uses RSS
feed of their promotions and events and blogs are done regularly. (Williams
and Mullins, 2008)

3.4 Place
Apple Inc. emulated the crossover circulation system and captivated the
telecommunication service provider's stores alongside with their online store
and own stores. With this method, customers are compelled to enter into an
agreement for 1824 months. The organization is utilizing two level channel
for circulation of their item (Jobber & Fahy, 2009).

The company has done tieups with Cingular as they have a consumer base
of 58million and out of which around18million are as of now with iPod. So its
great methodology to profit both organizations of exclusively in USA. In spite
of the fact that AT & T never needed to have high budgets on advertising, yet
they wind up using $18 billion in 2009. The products are assembled in China
(due to cheap labor) and afterward supplied to distribution centers and local
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stores. Apple Inc. is indeed wise to leverage the touch points of established
networks.

3.5 People
The company wants to be in direct touch with the consumers and when they
feel it, they will buy it strategy. With only $99, 1hour/week for 1yr help the
users to meet the experts at Genius bars for technical support and
information, conducting over 50000 sessions / week. The sales assistant is
available on appointments to find the right product for right needs at the new
gather place. This helps the company generate word of mouth marketing and
product awareness and brand building. The sales team is trained to give
awareness, rather than giving a sales pitch. Also the CEO has impressive
presence in front of media to market the brand (Ireland et al, 2009).

3.6 Process
Alain (2008) has given some insight about the process of Apple. He says
CEO, Steve Jobs is working closely with the design and development team
during the whole development process. The meeting of board management is
done every month, where the marketing proposal and other problems are
discussed.

The designers follow the pixel perfect approach where there are no fillers and
3 designs are selected out of 10 and perfected until they arrive at 1 out of total
10.

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The company conducts different type of meetings:

1. Paired design: this is done 2 times a week to discuss the features and
technical specs of the product.
2. Brainstorming: This involves discussion on any and every idea that
comes
3. Production: This involves giving a proper structure to the innovative
ideas and arranging deadlines for the same. (Alain, 2008)
The CEO doesnt frown to discard a product at the last minute. and there are
Pony Meetings every 2 weeks, where the client discuss the requirements with
designers, so they can work according to the needs of the consumers. The
sales are handled in stores (Apple and partners) by the professional team and
training sessions also help with sales promotion activities (Alain, 2008).

3.7 Physical Evidence


The Company has a good packaging strategy, which makes the product look
attractive and stylish on the shelf. The company has Apple Care service to
resolve the problems and services offered by the company, geniuses bars to
meet the direct customers and teaching them to make better users (William,
Mullin, 2008).

4.0 PESTEL Analysis


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With the help of PESTEL analysis, we are able to gain an understanding of


Apples business potential, future market situation and the direction of its
operation. The political, economic, social, technological, environmental and
legal factors are four components within the PESTEL analysis. By identifying
the factor in PEST analysis, we are then able to identify the SWOT factors.

4.1 Political Factors


War, terrorism, geopolitical uncertainties, public health issues, and other
business interruptions have caused and could cause damage or disruption to
international trade and the global economy, and thus could have a material
adverse

impact

to

the

Company, its

suppliers,

logistics

providers,

manufacturing vendors and customers, including channel partners.

Such companies spread in different parts of world like Cork, Ireland, Korea,
China and Czech Republic. Any delay could be occurred due to political
instability and other events which may damage the Apple image in its
customers and retailers

4.2 Economic Factors


Customer purchasing depends on the worlds economic conditions. In past
yearsm oil prices went ot record high level which causes inflation is worlds
economy. Due to such economic factors, consumers purchasing power
reduced and they dont want to spend money on such products like unwilling
to busy iPod, iphone and updating personal computer or laptop. Needless to

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say, this global recession is having a great impact on Apples retail


performance.

Furthermore, currency exchange rate is seen very volatile during recession,


especially dollars rate against pound sterling and euro.

But now worlds economic ocnditions are getting better and company has
purchased itself foreign currencies, so Apple revenue has increased in the
global market. (Apple Inc. 2012).

4.3 Social Factors


Two factors always have been on the forefront of Apple product requirement
throughout Apples history, the design and the quality. The purchasing of
luxury products have gone up because the purchasing power of consumers
has risen in different market across the world and people prefer to buy iPod,
iPhones and iPads. As music industry growth has increased which is the
biggest social influence on Apple because the main essential music store is
iTunes, Therefore, Apple has gained so much from social factors because its
defining an individuals modern lifestyle.

4.4 Technology Factors


Undoubtly Apple has the advantage within the technology industry because of
its innovative and high technologies products. It is also a great advantage for
Apple to its competitors that company has full control over the entire
production procedures of personal computer and the continual innovation on
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iPod and iPhone. Now there are many products introduced in the market to
compete Apples products. So it becomes a necessary to spend more on R&D
which causes a huge spending of its capital reserve compared with its
competitors i.e. Dell uses Microsoft's operating system in all of its products
while Apple installs its own brand operating system which increase its
production cost. (Apple Inc. 2012).

4.5 Enviromental Factors


The Company likewise offers its equipment and programming items to
enterprise and government clients in each of its geographic segments. The
Company's products are deployed in these businesses of their performance,
productivity, ease of use and seamless integration into information technology
environments (Apple Inc. 2012).

4.6 Legal Factors


The Company is liable to laws and regulations affecting its domestic and
global operations in various area. These U.S. and foreign laws and
regulations affect the Companys activities including, but not limited to, areas
of labor, advertising, digital content, consumer protection, real estate, billing,
e-commerce, promotions, quality of services, telecommunications, mobile
communications and media, television, intellectual property ownership and
infringement, tax, import and export requirements, anti-corruption, foreign
exchange

controls

and

cash

repatriation

restrictions,

data

privacy

requirements, anti-competition, environmental, health, and safety (Apple Inc.


2012).
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5.0 Apple SWOT Analysis

Source: Strategic Management Insight. Apple SWOT Analysis 2013.

5.1 Strength
1. Customer loyalty oath combined with expanding closed ecosystem. While
at first Apples closed ecosystem was a weakness point for the company, it
has changed since 2001 when it has introduced its iPod mp3 player. 1st Apple
now has a full range of applications, product and software that are interlinked
and support each other. 2nd new products and supplements will be released
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very soon (ITV), hence expanding the ecosystem. 3rd, Apple has a strong
customer loyalty oath, which increases due to Apples closed ecosystem, the
combination of Apples expanding closed ecosystem and customers loyalty
oath increases the competitive advantage.

2. Apple is a leading innovator in mobile device technology. In 2012 Apple has


been chosen third time as the most innovative product in the world. The
strength of the company is producing innovative products to the market.

3. Strong financial performance ($10,000,000,000 cash, gross profit margin


43.9% and no debt). The financial performance of the Apples is one of the
best among many companies. End of 2012 Apple Inc. Holds about
$10,000,000,000 in cash, which can be used for solution of equations and
buying back company shares etc. It also has higher gross profit than its main
competitors, which is equal to 44.0%. Company has no debt and its not
directly affected by credit markets or interest rates.

4. Brand reputation. Apple has a reputation of highly innovative, well


functioning, and well-designed products and sound business performance.
According to 2012 the value of Apple brand is $76.5 billion and was the
second most successive valuable brand in the world.

5. Retail stores. Apples stores are the most profitable stores in terms of sales.
Apples retail stores ensure high quality customer experience, give direct
contact with knowledgeable staff and increase the awareness of brands.
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6. Strong marketing and advertising teams. Strong Marketing is one of the


main functions in success of Apple brands. It can sell expensive products,
build superior stores and advertise their products in a compelling manner.

5.2 Weaknesses
1. Highly price. Apples products cost much more than its competitors devices.
The price of the product is not justified. Apple products price becomes a
weakens point because consumers can easily buy a similar quality product
but in lower price.

2. Incompatibility with different OS. The OS and iOS X are quite different from
each other OS and uses software that is unlike the software used in Microsoft
OS. Due to such differences, both in hardware and software, users often
choose to stay with their accustomed software and hardware (Microsoft OS
and Intel hardware).

3. Decreasing market share. The lower market share Apple has, the lower it
can influence its potential customers and persuade to jump them into using
Apples closed ecosystem products.

4. Patent infringements. The firm is often accused of infringing other brands


patents and has even lost some trials. This damages the Apple brand and its
financial situation.
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5. Further changes in management. Tim Cook becomes the new CEO in 2012
after loss of Steve jobs. Scott For stall and John Browett (chief of retail) left
the company too and this will have a bad impact on companys management.

6. Defects of new products. This is not recent Apple weakness but one that
jumps out time to time. Some of Apples iPhone and iPod releases had clear
faults and which disturbed sales of the products.

7. Longterm gross margin decline. Apples current gross margin is one of the
highest in the electronic industry but analysts fear that due to increasing other
component prices and competition current margins will not be retained.

5.3 Opportunities
1. High demand of iPad mini and iPhone 5. iPad mini and iPhone sales will
increase Apples market share in the tablet market and, will strengthen firms
competitive advantage.

2. iTV launch. iTV launch will support Apple T.V sales and the products
ecosystem. It will increase sales in TV market.

3. Emergence of the new provider of application processors. Samsung, is the


main Apples competitor, is also the only provider brand of application
processors for Apples products. Apple has to find a new way for the
component but could not find yet. Nonetheless, new manufacturers with
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superior engineering capabilities are shining and its just a matter of time,
when Apple will grab hold upon the opportunity of being less dependent on its
competitors.

4. Growth of tablet and Smartphone markets. Growth of tablet and


Smartphone markets is provide a good opportunity to expand firms share in
these markets.

5. Obtaining patents through acquisitions. Apple brand lacks of some patents


to retain its growth and the best way to acquire those patents is to acquire or
merge with the firms holding them. In addition, Apple could also develop new
skills and competencies in coming years.

6. Damages from patent infringements. Its competitors often infringe Apple


patents. Thus, collecting the damages from the competitors that are viable
opportunities to not only increase the money reserves but to damage the
competitors reputation and market growth as well.

7. Strong growth of mobile advertising market. Apple has developed iPad


advertising platform, which allows advertising on Apple, iPod, iPad and
iPhone touch. The growth of mobile advertising market is an opportunity,
which could be further seized upon.

8. Increasing demand for cloud based services. Apple could expand its range
of software and iCloud services as the demand for cloudbased services is
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expanding.

5.4 Threats
1. Rapid technological change. One of the most severe threats Apple and its
competitors are facing is rapidly changing technological. Companies are
under pressure to release new products quickly. This is especially hard when
a business wants to introduce something fresh, innovative and successful.
Apple was able to launch very innovative products to the market but at the
moment, even Apple hasn't launched any new products (except iTV).

2. 2013 tax increases. In 2013 Tax increase negatively effect on Apple Inc.

3. Rising pay levels for Foxconn workers. Foxen is the manufacturer of Apple
brands. Pay levels for Foxconns workers already grow 3 times from 2010 to
2012.

4. Breached IP rights. The companies that breach Apple patents not be


discovered soon and may benefit from it, while weakening Apple product at
the same time.

5. Price pressure from Samsung and some other over key components.
Samsung has already asked Apple to pay higher payment for its application
processors; this is just because of intense competition and no viable
substitutes.

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6. Strong dollar. Apple earned more than half of its revenues from outside the
US. Dollar appreciation against other currencies reduces potential profits from
other countries.

7. Android OS growth. Android OS is the key competitor for iOS in mobile


device market. The dominance of Android decreases the power iOS over
influencing consumers to join Apple.

8. Competitors move in online music market. Online music stores, such as


WalMart,
Amazon and online music companies or also faces threat for Apple.

6.0 Strategic Failure


Despite the strong marketing & strategy success of Apple Inc. most of its
region, in some other parts of the world tells a different story of the company.

Apple has been called the most admirable company in the world. Indeed,
they are very innovative, cool, personality-oriented and always new. But while
Apple has achieved landmarks success in the United States and redefined the
smart phone category, it has so far struggled in two of the worlds largest
population market; China and India.

Apple Inc. has not been success in these markets that the company has
expected in various reasons. The launch of iPhone in 2008 has been
considering the biggest failure of this top-notch brand. Two months after its
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official launch in India, a subsequent wave of disappointment has been hitting


the company. What actually went wrong wit iPhone in India when the rest of
the world is growing fast with it?

1. Technology Issue
In India market, iPhone has compatibility issues. The company was reportedly
communicating with carriers in China and India to overcome its compability
issue. Whether as to Apple shall develop another iPhone that comes with
CDMA technology which compatible to both India and China telecom
standards. Apart from this, the internet penetration in India is 14.2% as of
March 2013 which was 10.9% last year (Considering every form of internet
2G Dial-up etc). However, considering the time when Facebook and Google
were being built in USA, in India people were having power-cut because of
energy shortage.

2. Pricing Issue
At its introduction price of iPhone at USD$700, Apple did the same in Indian
market. However, many potential customers reasoned with the price of 3
iPhone, they could probably get a Nano car in India. Also with the consumer
purchasing power in the country, Apple may have gotten the price wrong and
may have ignore how these people in this country spend. With the proverty
level within the country and education level of the Indians, how can they afford
to get this innovated gadget?

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3. Locked iPhone
With the first introduction of locked iPhones indeed put a disappointment on
the consumer market.

6.1 Justification of the Issue


Apples market share in India in the doldrums, mainly due to the distribution
model and the price point. According to research firm IDC Inc., in the AprilJune quarter of 2012, Apples share of handset sales in India was only 1.2%.
During the same period, South Koreas Samsung Electronics Co. Ltd., the
market leader, more than doubled its market share to 51%, IDC says. Talking
about the India Smartphone market, it grew by 229% YoY in the third quarter
of 2013, according to IDC. Apple has a business in India, which is growing,
but due to the multi-layer distribution, the profits take a hit.
Hence, till now Apple has only focused on the Tier1 cities. Apple has only
recently taken to a aggressive marketing mix to push the iPhone sales.
Businesses are finally shifting to the iPhone as most find the iPhone now
relevant for professional work. The stage cannot be more apt for Apple to
foray into India and grab the premium smartphone market from the market
leader, Samsung.

6.2 Review of the Issue


Premium pricing (also called image pricing or prestige pricing) is the practice
of keeping the price of a product or service artificially high in order to
encourage favorable perceptions among buyers, based solely on the price.
The practice is intended to exploit the (not necessarily justifiable) tendency for
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buyers to assume that expensive items enjoy an exceptional reputation or


represent exceptional quality and distinction. A premium pricing strategy
involves setting the price of a product higher than similar products. This
strategy is sometimes also called skim pricing because it is an attempt to
skim the cream off the top of the market. It is used to maximize profit in
areas where customers are happy to pay more, where there are no
substitutes for 3the product, where there are barriers to entering the market or
when the seller cannot save on costs by producing at a high volume.
Luxury has a psychological association with premium pricing. The implication
for marketing is that consumers are willing to pay more for certain goods and
not for others. To the marketer, it means creating a brand equity or value for
which the consumer is willing to pay extra. Marketers view luxury as the main
factor differentiating a brand in a product category. Some brands can continue
to charge a premium price because their entire brand image is based around
luxury. According to John Quelch, of Harvard Business School, it is very
challenging for companies to maintain a premium-priced brand while trading
as a public company. Luxury brands, such as Prada, often chose to remain
private businesses, so they can stay small and exclusive, and continue to use
premium pricing.
Unique products usually have the best chance of commanding premium
prices. This is one reason why Apple has always priced the iPhone high. It
has followed the price skimming strategy with iPhone.
But price skimming comes with its own flaws. While the profits are very high,
the revenue is low. As in Exhibit 1, Apple is behind the market leader by a

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good 48% and doesnt even makes it to the top 5 smart phone manufacturers
list in terms of Market share.

Conclusion
It has been observed that the company has maintained strong sales and
developing new markets and also adding the value of the brand with more
features and third party softwares available for the users. Although with lot of
technical limitations the company has experienced good sales with the help of
strategic partners and intensive advertising. The company is spending lot of
money on all the channels of promotional mix, however the company should
give more emphasis on website advertising to reduce the costs.

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