Beruflich Dokumente
Kultur Dokumente
Project IV Report
On
STRATEGIC & MARKETING AUDIT OF
APPLE INC.
Danda Yoga Krishna
PRN- 1013
UNDER THE GUIDANCE OF
Dr. B.R. Londhe
EXECUTIVE SUMMARY
This report is a marketing audit on Apple Inc. Apple Inc., is a major
manufacturer of personal computers and other digital devices,
including the popular digital music player, the iPod, and the online
music service known as the iTunes Music Store. With headquarters in
Cupertino, California, Apple designs, produces, and sells personal
computer systems for use in business, education, government, and the
home. It also creates its own operating system software, server
software, and World Wide Web browser. In addition to these products,
Apple also makes printers, monitors, scanners, a cell phone, a digital
video system, Web services, and networking products. Apple also
operates a chain of retail outlets. The Companys customers are
primarily in the consumer, SMB, education, enterprise, government
and creative markets. Apple has no set geographic target area in
particular. By leveraging the expansive reach of the internet and
multiple distribution channels, Apple serves both domestic and
international markets. The market demographics served by Apple are:
1. Middle/Upper income people who can and are willing to pay a bit
more for a better user experience; 2. Individuals in a profession that
require high-powered computing performance and expansion
capabilities, networking functionality, and seamless integration with
complementary products, such as professionals in media and design;
3. Music enthusiasts and fans especially between the ages 12-35; 4.
People who like to have fun with technology.
Swot Analysis:
Strengths:
1. Strong Brand Equity
2. Successful business model
3. Unique Retailing Strategy
4. The Apple Halo Effect
5. Expansive opportunities due to
new focus.
Opportunities:
1. Strategic relation with Nike.
2. Less expensive new product
lines.
3. Multiple streams of revenue.
Major Competitors:
Weakness:
1. Uncertain health of Steve Jobs.
2. Weak brand in emerging markets.
3. Vulnerable to acquisition.
4. Rumours of faulty products.
5. Apple TV less promising
Threats:
1. High level of competition.
2. Substitution effect.
3. Vulnerable to leaks and law suits.
4. Cannibalization of IPod by IPhone.
As most people agree, Apple is a company leading the herd into new
realms, discovering new technologies and new civilizations, boldly
going where no company has gone before. Unfortunately, it seems not
even Apple could escape recession completely, since their cool down
has started already, despite the excellent results shown by some of the
latest sales reports. But the fact is phones and computers have
become increasingly essential to society and consumers will still buy
them if the recession turns into a depression and there are a couple of
suggestions that can be made to capitalise on these consumer needs.
Under the present situation when consumers would hesitate to shell
out premium prices, it would be a most appropriate time for Apple to
make their pricing more flexible. By marketing their products under
various promotional schemes that offer discounts as frequently as
possible Apple could capture that segment of the target market that
have always been aspiring to own the brand and its products but have
never been able to afford to do so. Apple is also notoriously famous for
its cult marketing. It is suggested that Apple could focus more on cult
marketing their products to the youth market through strategies like
sponsoring events for youth like rock concerts and sports competitions.
Getting them hooked on to the brand and making them Apple fanatics
would go a long way in enhancing Apples market leadership in the
future. In terms of product attributes, Apple is reputed for its
innovation and technological and aesthetic superiority. For ensuring the
success of Apple, this is the way it has to remain. However Apple could
channel this innovation in collaborating with other successful brands
like auto manufacturers through various strategies like co-branding for
bringing them closer to and sustaining market leadership.
TABLE OF CONTENTS
A.
STRATEGIC ANALYSIS
B.
BEST OF APPLE MARKETING
STRATEGIES
C.APPLE MARKETING AUDIT (PRODUCT
IBANGLE)
The story of Apple, Inc. begins April 1, 1976, when Steve Jobs,
Stephen Wosniak, and Ronald Wayne founded it. A mutual friend first
introduced Jobs and Wosniak in 1971. The relationship grew closer as
they both became members of the Homebrew Computer Club. As an
interest, Wosniak manufactured microcomputers that were less
expensive than other existing microcomputers. Steve Jobs recognized
Wosniaks abilities, and Jobs was able to convince Wosniak that as a
team, they could manufacture personal computers for sale. Wosniak
was the brains with his designs and natural ability while Jobs had the
ability to strategically push the computers to market (Gadchick, 2012,
p. 11). In January 1977, Jobs, Wosniak, and Mike Markula incorporated
the company as Apple Computers Inc. Mr. Markula funded
approximately $250,000 for growth. Wayne sold his ownership stake
back to Wosniak and Jobs for approximately $800 dollars.
The company first created the Apple I computer in Jobs garage.
The Apple I differed from other computers at the time by utilizing a
MOStek 6502 processor in lieu of the industry standard Intel 8080
processor. Wosniak was able to utilize the MOStek processor and create
the computer with fewer parts than industry norm, yielding a price that
was less than competition. The original market demographic for the
Apple I was to individuals who were interested in computers and
electronics. In 1977, the company grossed approximately $774,000 in
sales for the Apple I.
In late 1977, Jobs and Wosniak introduced the Apple II at the
West Coast Computer Fair in San Francisco, CA. The Apple II was
developed as a general-purpose computer. The specs for the Apple II
maintained the same MOStek 6502 processor and also included color
graphics as well as an audiocassette drive with storage capacity of 4kb
of Read Access Memory (RAM). The first three years of the launch of
in 1998. The iMac was marketed directly towards first time computer
buyers and individuals shifting to Macs from other computer platforms.
Steve Jobs was officially named CEO of Apple Computers, Inc. in 2000.
He remained focused on the iMac computers and gained market share
by releasing new models of the Macs.
In 2001, Apple Computers, Inc. introduced the first version of
iTunes. iTunes, at the time, was equivalent to Microsofts Media Player
that had the ability to burn CDs for playback. A few years later, Apple
launched the iTunes Music Store which allowed customers to purchase
music and would later modify its capabilities to allow Windows users
access.
Fast forward to 2007, the company removed Computers from
the name to become Apple Inc. The change of name was to recognize
their strategic focus was no longer on personal computers. Apple
focuses on multiple facilities of electronic media; iPhone, iPad, iPod,
iTunes, iMacs, Mac Minis, Apple TV, and all platforms revolving around
the iOS operating systems.
In January 2011, Steve Jobs announced that he was taking an
indefinite leave of absence due to health issues. Tim Cook, the Chief
Operating Officer at the time, took over as interim CEO. After a long
bout with pancreatic cancer, Steve Jobs passed away in October 2011.
Tim Cook was named as the full time CEO. Under Tim Cook, the
company has released iCloud, a software platform that allows media
sharing between multiple devices, iBooks, iPhone 5, and the recently
released iPad mini. Apple has remained a publicly traded company with
most investment houses classifying the company at 4 out of 5 stars
and a strong buy.
II
In order to properly identify what industries Apple belongs and who its
competitors are, we have to look at the main products offered by the
company. There are six main products:
1 Mac which is a line of personal computers (PCs) designed,
developed, and marketed by Apple Inc.
2 iPhone line of smartphones designed and marketed by Apple
Inc.
3 iPad line of tablet computers designed and marketed by Apple
Inc.
4 iPod line of portable media players designed and marketed by
Apple Inc.
III
a cult following amongst its users and sales have increased as a result
of its pop-culture differentiation advertising schematics, such as, white
ear buds for I-products. Surprisingly, Apple has been able to buy
from and sue its direct competitors at the same time (Samsung Coo,
Oct 2011).
true for Apple. Apple has manufactured many of its component parts in
house including its own hardware and software. Apples Mac is set well
above PC industry default pricing models because Apples brand is
unique and one of a kind. Some would say that this is a problem for
Apple since most Windows based PCs are much cheaper than Mac
based alternatives. However, Apple realizes this, but it is going after a
specific target market that wants an alternative to Window user
interfaces. Apple continues to develop all of its technological upgrades
in house making it harder for buyers to dictate price and policy that
has a huge impact on Apples core business strategy. Apples core
followers see the Mac as a luxurious product like a Mercedes, BMW,
etc. are viewed in the auto industry. If the stock market indicates the
true value of a company then Apple is worth a lot right now (Kessler,
2012). If we look at other items that Apple sells in iTunes like videos
and music, then consumer buying power remains low as well.
Consumers cannot dictate media prices because the parent company
ultimately determines their prices and only uses Apple as a selling
medium for their offerings. The bottom line indicates that Apple limits
a lot of buyer power because it manufactures a lot of its own parts in
house which gives it more control. Another too Apple has added to its
arsenal is the new iPhone mapping software (Sherr and Efrati, 2012).
switch to rival PC computers that use Windows and are much cheaper
when price comparisons are made. To make up for this industrial
inequity, larger companies like Apple can buy in bulk allowing for lower
unit prices while smaller lesser known companies who cannot buy in
bulk will be charged a premium. Larger PC companies have also
formed alliances with Intel and AMD concerning R&D that create cost
synergies that ultimately leads to lower negotiated individual unit
prices. Overall, Apple is vertically integrated and possesses certain
competitive advantages when discussing supplier power. When Apple
developed the iPod, iPhone, and iPad, it integrated all three with
iTunes. The company is able control its own supplier power by not
outsourcing its media delivery software to an outside firm. In the last 35 years Apple has taken a strategic strategy risk by opting for Intel
chips which allows its Mac to branch out and expand its own market
share. This reality might increase Intels power over Apple but Apple
could make up for it with increased sales to Window loyalists that could
offset or produce additional profits over the incurred risk of increasing
chip costs to Apple respectively. In recent years Apple has decided to
work with competitors and suppliers in order to reduce operating
expenses and increase ROI margins (Carani, Sept 2012). Critics have
said that Apple needs to avoid large cross compatibility ideologies
otherwise user preferences for Mac competitors will change. Apple has
to keep a balance between expanding its market share and keeping its
industrial identity (Vascellaro, July 2012).
benefitted because it got the iPhone in 2011 when Apple was loosening
the reins on their iPhone distribution plans. Sprint shareholders
experienced a boost for dividends paid from the agreement. Foxconn is
another relevant company because it manufactures many Apple
products, and STMicroelectronics follows close behind because it
produces the Accelerometer Gyroscope for new generation iPads.
Finally, Qualcomm makes the wireless baseband chips for the iPhone 4
and 5. Apples R&D efforts to help improve the iPhone have helped it
generate more than $40 billion in profits in 2012 (Badenhausen, Oct
2012). Apple has redesigned its core products and is looking for new
venues to branch out into. It is only a matter of time before Apple
starts buying companies like Twitter in order to dominate social media
like it has the electronic industry (Ingram, 2012).
also relevant because it increased the EPS of the S&P 500 by 3% in the
fourth quarter in 2011 (Ray, April 2012). Other smaller factors include:
a solid strategic plan, large cash reserves on its balance sheet,
excellent supply chain management, relevant information systems,
and excellent retail locations/operations. Apple is looking to add VOIP
capabilities on the iPhone 6, and it must continue to use its
competitive advantages to stay ahead of its competitors (Fitchard,
April 2012).
IV
Since the iPhone hit the scene 5-6 years ago, one of the main
political roadblocks for the iPhone has been so called grey markets.
This occurs when store owners import products from a foreign country
at a discounted price and resell them in their own store fronts at a
lower price compared to authorized retailers. Grey markets exist in
countries where a product like the iPhone is not currently or readily
available for purchase. Grey markets fill this void. The iPhone is readily
available in most western countries but not in countries like Brazil,
India etc. where grey markets are perfectly legal. Thus, the iPhone
market in these countries is opened up prematurely without Apples
consent. Apple will lose potential new sales before it can enter the
untapped market places. As a result, bootleggers will get a head start
on questionable iPhone distribution business dealings that would be
illegal in the U.S. Another political force involves China joining the
World Trade Organization. Chinas joining means lower
investment/market barriers for Apple to exploit lower labor costs and
gaining new iPhone market share from new cash flow sources. A legal
issue facing Apple continues to be Digital Rights Management (DRM)
protections/DRM hacking concerns. This battle involves copyright
infringement barriers that Apple must carefully abide by. Apple has
avoided potential lawsuits by striking deals with Media company owner
licensing and royalty distribution agreements that have kept Apple on
the right side of the law. Apple wants to avoid fates similar to those
suffered by Napster and other companies that have employees illegally
downloading files. Apple has accomplished this by integrating iTunes
into its strategic strategy. Another political barrier for the firm has been
pressure from EU companies for the iPod/iTunes combo to be
compatible with rival music products. This is the same fate Microsoft
suffered with Windows source code because rival software/third party
software was not compatible either in many cases. Microsoft was
forced to open up its source code to the industry. Apple was one of the
first companies to introduce its own format for music sold through
iTunes in their own AAC music format. Apple tried to protect its market
video file format for its video downloads, making the iTunes software
for loading its media products exclusively, making software
compatibility barriers for its Macintosh computers, etc., and has
created headaches for new and existing Apple/PC users alike. Another
problem for the firm is that it sometimes tries to be too innovative with
its products. A recent example involved the firm making a
technological change to the iPhone 5 aka mapping software and the
backlash it received from its core fan base users. Another example
occurred in Nov. 2012 when it abandoned its message beta for its OS X
Lion software. Apple realizes that the best way to remain ahead of its
competitors is to hire the best and brightest talent pool and create a
popular company to work for. Apple is currently trying to design set top
boxes like its Apple TV for enhanced internet TV viewing experiences.
This is one area that Apple has not been able to dominate and it is
trying learn from product market failures in order to design a new set
top box with features that consumers expect. Apples new iPad Mini is
expected to rival Amazon Kindle Fire which is a whole new niche
market where Apple is trying to conqueror significant market share
comparable to how the original iPod did a few years earlier.
companies for more efficient parts. Another opportunity for the firm
involves the development of new supply chains in developing countries
where untapped market potential can bring about new realities for
improved strategic direction. Apple should develop relationships with
middlemen in order to better understand foreign markets and use this
knowledge combined with its current market experiences to grab new
customers and build brand loyalty. This is true for the Chinese market
place where natural resources are used for Apple products and positive
organizational alliances/commitments will ensure the rapid growth of
Apples three main products (iPod, iPhone and iPad). By doing this,
Apple can use its trend setting strategy to achieve a cult following
internationally to expand its end user base in developing countries.
Apples stock is expected to increase exponentially if and when it
expands into third world markets that have yet to be developed and
transformed for developed technologies (Lessin, Oct 2012). One of the
most obvious threats to Apple has been created as a result of its own
successes in the market place that can be referred to as cocky
comfortableness. Basically it means that Apple gets too confident by
thinking its products will remain industry leaders without innovative
strategic planning. Such an attitude will allow a competitor to develop
a product under the radar and steal significant market share from
Apples big three i-products. In other words, Apple should not let
their foot off the gas when it comes to strategic innovation. Another
threat has to do with the tablet PC industry that Apple defined early on
with the introduction of the iPad. It includes an increase in market
competitors that can develop into direct competitors if Apple does not
continue its innovative strategy. Amazon is a great example because it
is a company that no one thought would revolutionize the tablet PC
market further with its development of the 7 inch Kindle Fire. Apple
missed this potential market completely and Amazon became a direct
competitor that Apple had to respond to with the iPad Mini creation.
Another potential threat has to do with the ongoing recession that
could impact Apples pricing models for all of its products. Hidden
inflation can appear out of know where and can force companies like
Apple to raise the prices of their products. The increased cost is passed
onto consumers, or could force the firm to discontinue products with
limited ROI future potential. Apple has to watch products that have
dominated the market place a long time and are in the latter stages of
the product life cycle. One such product involves the iPod because
there have been many different versions. Its earning ceiling has
dropped over the years because of the vast array of mp3 and video
players in the market today. Music playing features are being
incorporated into other everyday products like cell phones and have
reduced the need for iPods even further. The iPod is integrated into the
iPhone/iPad respectively. Apple has to realize that some of its newer
products could be indirect competition for its older products as
Leverage
Leverage is another field of measurement that Apples financial
reports indicate they are performing well. Leverage indicates how a
company is using borrowed funds in its operations. Ratios such as
debt-to-asset, debt-to-equity, and long-term debt-to-equity can be
used to measure leverage. The higher these ratios are for a company,
the higher the risk involved with the investment can be for investors.
Over the past three years, Apple has managed to slightly decrease its
debt-to-asset and debt-to-equity. Long-term debt-to-equity has held
constant at zero due to Apples zero balance in long-term debt during
2010, 2011, and 2012. One approach Apple can use to improve their
debt-to-asset and debt-to-equity is by lowering the accounts payable
balance.
Research in Motion Limited and Microsoft managed to decrease
their debt-to-asset, debt-to-equity, and long-term debt-to-equity in
their latest reported fiscal years, Google held these three fields
relatively constant, and Hewlett-Packard Co. increased all three
measures.
An important leverage measurement tool for current or potential
shareholders is debt-to-equity as it indicates the level of funds being
used from creditors associated to that of shareholders. Compared to
competitors, Apple ranks in the middle. Apple has lowered this rate,
but they are still higher than Research in Motion Limited and Google.
As aforementioned, one method Apple can use to lower this rate is to
lower the accounts payable balance.
Liquidity
Liquidity measures a companys ability to cover its short-term
debts. The most common measures include, the current ratio, quick
ratio, and working capital. Apple has experienced a decrease in the
current and quick ratio. This indicates that Apple has decreased its
ability to pay short-term debt obligations. Apples current assets and
current liabilities have both increased from 2010 to 2012; however, the
current liabilities have increase at a greater rate. It appears the
accounts payable are the main factor for the increased current
liabilities. Apples current and quick ratio has dropped from
approximately 2.0 to 1.5 over the three-year period. Working capital at
Apple dropped from in 2011 from 2010s reported $21 billion but
picked back up in 2012 to $19 billion (2012 Yahoo!, Apple Inc. (AAPL)).
Apples competitors except for Hewlett-Packard Co. enjoy a
current ratio greater than 2.0. Microsoft and Google have quick ratios
of, respectively, 2.57 and 5.92. Googles high quick ratio is due to their
reporting of zero inventories. Working capital of Apples competitors
ranges from $579 million to $52 billion.
Apples current ratio and quick ratio performance is only better
than Hewlett-Packard Co. who has not had the greatest success story
during recent years. Apples figures are not alarming; nonetheless, it is
something that should not be overlooked. Their working capital ranged
in the middle of its immediate competition. Apple could lower current
liabilities or increase current assets at a greater rate than current
liabilities to combat the recent decrease of the current and quick ratios
(2012 Yahoo!, Apple Inc. (AAPL); 2012 Yahoo!, Google Inc. (GOOG);
2012 Yahoo!, Hewlett-Packard Company (HPQ); 2012 Yahoo!, Microsoft
Corporation (MSFT); 2012 Yahoo!, Research In Motion Limited (RIMM)).
Financial Analysis Measurements
APPLE, INC.
29-Sep-12
Stock Price
24-Sep-11 25-Sep-10
$664.07
$400.74
$289.75
Current Ratio
1.50
1.61
2.01
Quick Ratio
1.48
1.58
1.96
Asset Turnover
0.89
0.93
0.87
8.19
6.36
3.11
Debt-to-Asset
0.24
0.22
0.19
Debt-to-equity
0.49
0.52
0.57
Long-Term Debt-toEq
uit
y
0.00
0.00
0.00
Sales to Working
Ca
pit
al
0.44
0.40
0.39
Return on Assets
0.32
0.29
0.25
Return on Equity
0.35
0.34
0.29
Return on Sales
0.36
0.32
0.28
Google
30-Dec-11
Stock Price
30-Dec-1030-Dec-09
$645.90
$598.86
$622.73
Current Ratio
5.92
4.16
10.62
Quick Ratio
5.92
4.16
10.62
Asset Turnover
0.52
0.51
0.58
0.00
0.00
0.00
Debt-to-Asset
0.20
0.20
0.11
Debt-to-equity
0.25
0.25
0.12
Long-Term Debt-toEq
uit
y
0.05
0.00
0.00
0.65
0.64
0.63
Return on Assets
0.17
0.19
0.21
Return on Equity
0.17
0.18
0.18
Return on Sales
0.33
0.37
0.35
Sales to Working
Ca
pit
al
30-Oct-10 30-Oct-09
$27.31
$40.58
$45.50
Current Ratio
1.01
1.10
1.22
Quick Ratio
0.86
0.97
1.08
Asset Turnover
0.98
1.01
1.00
0.00
0.00
0.00
Debt-to-Asset
0.70
0.68
0.65
Debt-to-equity
2.35
2.08
1.83
Long-Term Debt-toEq
uit
y
0.58
0.38
0.35
0.23
0.24
0.24
Return on Assets
0.07
0.09
0.08
Return on Equity
0.18
0.22
0.19
Return on Sales
0.07
0.09
0.08
Sales to Working
Ca
pit
al
$30.14
29-Jun-11 29-Jun-10
$24.57
$21.83
Current Ratio
2.60
2.60
2.13
Quick Ratio
2.57
2.56
2.10
Asset Turnover
0.61
0.64
0.73
0.00
0.00
0.00
Debt-to-Asset
0.45
0.47
0.46
Debt-to-equity
0.83
0.90
0.86
Long-Term Debt-toEq
uit
y
0.16
0.21
0.11
0.76
0.78
0.80
Return on Assets
0.18
0.26
0.29
Return on Equity
0.26
0.41
0.41
Return on Sales
0.30
0.40
0.40
Sales to Working
Ca
pit
al
25-Feb-11 26-Feb-10
$13.79
$65.99
$70.88
Current Ratio
2.08
2.06
2.39
Quick Ratio
1.78
1.89
2.12
Asset Turnover
1.34
1.55
1.47
Sales to Working
Ca
pit
al
0.00
0.00
0.00
Debt-to-Asset
0.26
0.31
0.25
Debt-to-equity
0.36
0.44
0.34
Long-Term Debt-toEq
uit
y
0.00
0.00
0.00
0.36
0.44
0.44
Return on Assets
0.11
0.36
0.32
Return on Equity
0.12
0.38
0.32
Return on Sales
0.08
0.23
0.22
VI
begins the overall mission or the statement they live by and that is
where apple is unique. However, their official mission statement is,
Apple designs Macs, the best personal computers in the world, along
with OS X, Life iWork and professional software Apple leads the digital
music revolution with its iPods and iTunes online store. Apple has
reinvented the mobile phone with its revolutionary iPhone and App
Store, and has recently introduced iPad which is defining the future of
mobile media and computing devices. This does not sound much like
a mission statement more of a list of accomplishments. Although there
is a statement used often that sound much more like a mission
statement is, Apple is committed to bringing the best personal
computing to students, educators, creative professionals, and
consumers around the world though its innovative hardware, software
and internet offerings. This statement is all about inspiration and
setting goals to stand out in the world by creating products that are
superior to the competition. In their statement, safety is also a concern
as well, but it is also expressed how apple is always looking towards
the future. A successful company is always looking towards the future
and getting ahead of the curve such as Apple, whose fourth quarter
earnings were almost two billion dollars which comfortably puts them
in the top five of fortune 500 companies.
Throughout the years, Apple has had a vision in terms of selling
their product and reaching their quota of customer satisfaction. For
them, they do not want to be limited to one group of individuals; their
vision consists of making computers and electronic products for
everyone including professors, corporate America, and students. Their
diversity does not end with computers, their iPods, iPads, and other
accessories have shown how this company has increased their
popularity over the years with the public. Starting from the creation,
apple has always maintained their vision of diversity and consists of
making products and advancing those products to better adapt to
other companies and the growing trend of new products.
The foundation of this company lies within their core values and
how they believe business should be ran. On manuelcorpas.com,
apples guidelines are displayed and it is written as a promise. For
example, a few of their promises are We believe that were on the
face of the Earth to make great products, We believe in the simple, not
the complex, We believe that we need to own and control the primary
technologies behind the products we make. For Apple, it is all about
gaining a personal relationship with the consumers and to show them
that first and foremost, their main goal is to make sure their product
are the best. Overseeing the day to day operations and the overall
company can be a difficult job to say the least. From their website
apple.com, The governance structure of the Corporation is designed
to be a working structure for principled actions, effective decisionmaking and appropriate monitoring of both compliance and
performance. To Apple, the structure itself is based on having the
company run smoothly and effectively and to make sure no position
has too much power because with a company of this size, a system of
checks and balances is a necessity. Further examination of the
document shows that each position of major power has been displayed
and a description of what they do on a day to day basis is shown.
To Apple, their core competency consists of two things:
innovative design and technology and this goes directly with their
Think Different campaign. Apple wants to wow their consumers
and provide a product that will amaze and satisfy the world. They also
want to buy different because they want to set the standard and
provide a different experience involving such amenities as workshops
and rewarding their customers for loyalty. Another part of their core
that is not talked about is how they focus on lower-priced products.
Fool.com talks about apple and their ideologies: The real innovation of
Apple's business model exposed itself when the company focused its
core competencies on lower-priced products. Introductory Apple
products like the iPod series have had great mass-market appeal,
which directly addressed the perception that Apple only catered to
high-end markets. Instead of cannibalizing its high-end products with
lower-cost product offerings, Apple is capitalizing on an inverse effect.
This is another part of Apples diversity, that they recognize that they
cannot always go after high end markets because that is not always
the best situation and a lot of times smaller markets are what make a
company strong. The uniqueness with this plan is that Apple seems to
be a company that adapts on the fly and understands what needs to
be done in order to adequately be prepared for the future and in some
cases, set the trend.
In order for Apple to maintain their success and continue to
dominate the market, they must have goals for their short and long
term future. For Apple, they want to continue to improve their product
every year and keep consumers coming back for more. This is part of
the reason why they annually make iPhones and other products, this
seems to be a statement that we are here to make you happy and to
keep you excited for the future. This also includes making all products
compatible with each other, with todays society it is all about
simplicity, presentation, and features. A couple of their short term
goals include: Apple Inc. plans to keep creating and releasing
computers and consumer electronics that are more user-friendly.
Secondly, Apple Inc. will focus more opening more stores even on
international locations to help increase sales.
VII
Strengths
Established brand name
Customers loyalty
Cultural, fashion identity
Proprietary technology
Strong research and
development capabilities
Strong international presence,
Apple operates in 114 countries
Diversified company, not
dependent on only one industry
Strong financial position
Strong product lines in Mac,
iPod, iPhone, iPad
Opportunities
Apple can develop good
relationship other companies
for joint ventures
Diversification into related and
unrelated business
Expand horizons of operations
with new countries and
industries
Production of computer antiviruses, which are increasing
on PCs
Weaknesses
Dependence on third party
provider
Apples market share is far
behind from major competitor
Microsoft
Companys products are
expensive compared to
competitors
Higher research and
development costs
Higher channel costs compared
to major competitors like Dell
Weak presence in corporate
segment
Apples technological products
have short lifecycles
Threats
Powerful competitor Google
with their Android OS
Many similar substitute
products
Competitive products are
mostly Windows-base which
has a larger customer base
Media piracy: iPod users
illegally downloading music for
free instead buying at iTunes
Very high speed of technology
development
Apple products are more
expensive than those of
competitors, thus Apple misses
a significant share of market
2010
2011
2012
$15.15
$27.68
$44.15
29.32%
33.83%
35.3%
18.64%
22.28%
23.7%
Current Ratio
(Current
2.01
1.61
1.5
Assets/Current
Liabilities)
Quick Ratio
((Current Assets1.96
1.58
1.48
Inventories)/Curren
t Liabilities)
Debt/Equity
0.57
0.52
0.49
(Note. Constructed by the author using the data of Apple Inc. Three
Year Financial History and Wikinvest. Year 2012 is based on three
quarters of 2012.)
Considering key performance indicators we can see that Apple
significant improvements in their performance during last three years.
For example, earnings per share increased almost three times if
comparing 2012 and 2010. Return on equity and return on assets also
improved, on average by 5%. Apple shows a steady improvement in
debt/equity ratio, which confirms the right direction. In addition to
improvements, Apple had slight decline in current and quick ratio, of
course the changes are not very significant, but it does not show a
good trend.
work together for a common goal and that is the problem with some
companies, the structure itself makes it impossible for them to realize
the full potential of the company because too many people have
power. The financial strategy is to make money but do it in a way
where they dont lose as much money trying new ideas. They feel that
they can make that money in the having the best and highest priced
electronics. In order to make money, you must invest and in situations
you lose money and this also fits into appealing to the customers
because they want to make money by designing cutting edge
technology. Apple focuses on long term employees wanting to create a
consistent company as a result most of their management team was
promoted from within. Internal hires produce better long term returns
for investors. Apples management avoids the spot light and instead
stays focused on the company.
There a few reasons that Apple runs so smoothly and for years,
the question has arisen: How do they do it? The answer can be
complicated and simple all in one. A story written in cnn.com tries to
decipher the secret to this giant of a company and one major reason is
the fact that Steve Jobs ran everything, of course there is a board that
can make decisions as well, but in the end he ran everything. Another
positive is that One of Apple's greatest strengths is its ability to focus
on just a few things at a time, an entrepreneurial trait difficult to
imagine at a corporation with a market value of $320 billion. Saying no
at Apple is as important as saying yes. "Over and over Steve talks
about the power of picking the things you don't do," says one recently
departed executive. Obvious? Perhaps. Yet few companies Apple's size
-- and very few of any size -- are able to focus so well and for so long.
A downfall of a lot of companies is that they tend to focus on too many
projects and do not pay attention to the details and that can cause
within the structure of the company itself.
Apple has developed the iPhone, iPad, Mac, and iPod products
over the years and continuously update and improve these products.
R&D and marketing for new and improved products has proven to be a
success for Apple year after year. Apple has strategically developed
software and services for these products and has focused on being the
only company that offers these services. These services include iTunes,
App Store, iBookstore, and Mac App store (Apple, Inc., 2012). These
services have been a success over the years that Apple intends to
keep increasing along with their product line.
Despite Apples continuous success, they have recognized a growing
competition due to the increasing amount of technological
advancements. Apple cannot completely depend on the product to sell
itself anymore. Apple feels that a high-quality buying experience with
knowledgeable salespersons is the key to attract and retain
consumers (Apple, Inc., 2012). Focus has been turned to building sales
through retail stores and reseller programs. Retail stores are generally
located in high traffic areas. The intent of the high traffic locations is to
align the location with the selling experience. Apple feels that this
choice of locations will better position their salespeople to offer a highquality shopping and service experience. This is also an effort to allow
salespeople to put the products in hands of new and returning
consumers, and effectively show them the full capabilities of the
products (Apple, Inc., 2012).
Apple has also entered the education and enterprise and
Government markets. Apple launched iTunes U to offer mobile learning
products, services, and programs. This program is geared towards
teachers and students. Apple offers hardware and software to
enterprise and government consumers as well.
These initiatives require investments beyond R&D and
marketing. Apple has identified the need to retain valuable employees.
They are aware of the demands for highly skilled individuals in the
industry, and they intend to keep experienced and knowledgeable
employees working for Apple and out of the hands of competitors
(Apple, Inc., 2012).
Employees are not the only asset that Apple has to keep from
competitors. Patenting and copyrighting their technology, products,
and services is a high concern. Competition in the industry is
increasing aggressively, and Apple has to protect their technology,
products, and services. Apple admits that they file applications for
patents to protect products and services regularly (Apple, Inc., 2012). It
is important that Apple protect the investments poured in to R&D via
patents and copyrights. Due to the inclusion of third-party intellectual
have been hired in the past and will need to be hired in the future for
the company to remain successful.
Finally, Apple must overwhelm friends while dominating foes.
Lashinsky (2012) describes a story about Steve Jobs and the release of
the first edition of the iPhone. Originally, a company that was acquired
by Cisco trademarked iPhone. A senior executive from Cisco fielded a
phone call from Steve Jobs where Jobs stated he wanted to use iPhone
for his product. The senior executive has stated that Jobs was tactful
while being extremely considerate. There were no negotiations or offer,
just that Mr. Jobs wanted the name. Shortly afterwards, the Apple legal
team filed suit saying that Cisco had abandoned the brand and could
not defend its intellectual property. Apple went forward and released
the iPhone while Cisco filed suit. As soon as Cisco and Apple came to
an understanding regarding the name, all correspondence from Jobs
stopped cold. What this story illustrates is Jobs ability to overwhelm
his competition. His strategy of consideration while being tactful led to
the success of his iPhone campaign.
As Apple has been rough and overwhelming to partners, Apple
also has a reputation of being outright mean with their enemies. ExApple employees have stated that when visiting suppliers, the only
right way is Apples way. Meaning, Apple would instruct their suppliers
what they needed, how it is to be manufactured, and the cost Apple
will pay for it, an overbearing attitude to those trying to help. In
addition, Apple launched an advertising campaign belittling PC users
and showing how a PC is more virus prone and while Mac is not. The
campaign struck directly at Microsoft and proved to be successful due
to the failure of Microsofts Vista operating system. The ad attack is
proof that Apple is willing to play hard to get its message out.
Expected results in terms of short-term profitability and survival
are strong. Apple has been a performing company in the eyes of Wall
Street. In addition, Wall Street has bought into Tim Cooks abilities and
experience he has under the guidance of Steve Jobs. As far as the longterm profitability, the company should remain focused on the four
factors for future competitiveness and successes (embrace secrecy,
focus obsessively, hire disciples, and overwhelm friends while
dominating foes). In addition, the company should remain committed
to innovations, beating competitors to new ideas in technology while
keeping things simple, not complex.
Success by design
Apples product strategy is simple. It incorporates superior design in all
its products so that these stand out from its competitors products.
Apples design philosophy is based on minimalism. It removes clutter
both from its products outward appearance as well as from their user
interface. It is no coincidence that Apple users rave about the
exceptional user interface of their iPads, iPods or iPhones. In addition,
Apple tries to exert control over the users experience with its
products. So, apart from the hardware, the company also develops the
software so that the user has the best possible experience.
Pricing
Apple is usually referred to as the technology industrys high-price
leader. However, of late, the company has been offering its products at
lower price points in a clear effort to expand its market. Even so, Apple,
at the launch of its products, targets early adopters with higher-thancompetition prices. It initially adopts skimming strategy and later
launches lower-price versions with fewer features (for instance, for the
iPod) or launches a newer version while continuing to sell older
versions at lower price points (for example, iPhone).
Distribution
Apple eschews big-box retailers. Apple spends considerable resources
to expand its stores so that it can get its prospects undivided
attention. Also, it allows the company to exercise control over the sales
process. According to Yukari I. Kane and Ian Sherr in Secrets from
Apples Genius Bar: Full Loyalty, No Negativity, the staff at these full
service stores are in fact trained not to sell. They are asked to provide
solutions to customers pain points. The company has more than 300
Apple retail stores worldwide, with the majority of the stores in the U.S.
In California alone, the company has more than 50 stores.
The hype
Apples promotion strategy is centered around creating hype. The late
Steve Jobs, founder of Apple, was known for hyping up. His theatrical
style and panache were successful in creating excitement before the
launch of Apple products. These efforts have succeeded in making
Apple products aspirational.
Product Description
SITUATION ANALYSIS
INDUSTRY ANALYSIS
A) Usage
Apple Inc. has sold 22.1 million iPods during 2008 holiday season compared
to 4580 unit in 2005. The sale of 21.0 million units in Q1 of 2007 also shows
50% higher than Q1 of 2006. This shows steady growth of iPod since 2005.
Moreover, it increased about 383% from 2005. This projects strong value of
brand position in the customers. Therefore, we strongly believe that iBangle
can penetrate the usage trend since this is a variant of iPod.
Chart 1: iPod Unit Sales
B)
Trends
The market trend is expected to show prolonged growth and future products
of portable players that have sophisticated design, features and benefits like
iBangle can gain customer interest as well as market demand
MARKETING OBJECTIVE
The marketing objectives of iBangle for Apple Inc as follows:-
TARGET MARKET
Segment Identification
iBangle is a version of MP3 player that can be worn on wrist to be
launched within the portable music player (PMP) sector in U.S.
Segment Needs
iBangle will be a device that accommodate social needs of customer
such as it will be perceived as one of tools of digital lifestyle, fun and
cool device and sense of belonging within peer group, brand that need
to be owned, cultural lifestyle and others needs. It also cater personal
needs such as for customers that want to experience music without
tangled with wires when they performing the daily activities, luxurious
activities such as exercise, jogging, surfing and others activities.
Segment Trends
The current trend shows transcend from wired and bulky PMP to light,
easy, compact in size, more capacity, less wired or wireless and
multifunction players like MP3 players. The trends also change
towards wireless player, brand conscious and digital lifestyle.
Therefore, market opportunity for iBangle is far vaster due to trend
transformations.
Segment Growth Potential
According to statistic report, the segment growth can be projected
increase of 18.3% over next 5 years (2015) for 21 years and above
subsets. Meanwhile, the segment for 14-17 years old, anticipated
growth is 0.93% and 19-24 years old is about 10.52%.
Size of Segment (Population)
According to statistics report of CIA, the size of segment 15-64 years
old consists of 102,665,043 male and 103,129,321 female.
POSITIONING STRATEGY
Apple has been enable to create and revolutionised the portal music
player sector by adapting to visceral design, and manufacture creative,
innovative, and cool products such as iPods. Moreover, iPod managed
to became measurement against any portal music players since its
penetration into the market. Therefore, iBangle player will be adapting
strategy by being the ultimate must have mp3 player in the
perception of customers. The organisation will be adapting strategy of
product differentiation in marketing iBangle in the market. Moreover,
Apple also will be providing quality and excellent customer service for
iBangle customers.
Apple will be developing unique selling proposition (USP) for
iBangle by differencing iBangle from other mp3 player through its
designs, features, and benefits that shown below:
MARKETING STRATEGY
Product Strategy
The core
iBangle is mp3 player that worn at wrist equipped with wireless ear
headphones to listen to music.
The actual product
The design of mp3 player is unique and innovative by Apple and be
worn wrist. It also can function as hand accessory. As for banding,
Apple logo is embedded on the bangle and the colour for iBangle is
silver to cater for unisex customer as well as to establish as stylish
bangle.
The trade name is iBangle, an Apple product. The brand personality
adapted for this product consist of stylish, cool, trendy, originality and
think different. The iBangle also equipped with 1 year warranty and
customer service.
Based on life product life cycle, iBangle is new product to the market
and
currently
comprehensive
no
imitation
marketing
products.
campaign
Therefore,
can
enable
proactive
iBangle
to
and
be
13
The other factors that create differentiation for iBangle is the Apple
managed to create emotional benefits for its users. Therefore,
iBangle also can provide emotional benefit to customers in form of
maintaining simplicity, stylish design, easy to use and constructive
customer service.
The iBangle also considered green product since the main component
to manufacture iBangle is aluminium. Aluminium is one of the most
recyclable materials. This enable iBangle to gain status as eco-friendly
product and infiltrate environmental concern oriented customers.
demand among customers due to its unique design and features. The
skimming price strategy will be adapted to market iBangle to the
customers. The price will be set at USD 399.00 at introduction stage
and price will be reviewed at later stage of product lifecycle.
The organisation also has advantages such there is no substitute
or imitation product like iBangle that available currently on the
market. However, potential substitutes produced by competitors is
possible, therefore Apple have to establish as market leader for
iBangle. This can create market demand for iBangle since it has unique
characteristics.
One of the examples of successful pricing strategy can be seen in sales
of iPod in the market and it shown in Chart 2.
Promotion Strategy
Objectives
Place Strategy
Other than that, the company will be choosing distribution channels
such as
online stores
retail stores
direct sales
One of the most established distribution channels is Apple retails
stores. Therefore, iBangle will be launched and marketed at all Apple
retails stores across the country for the success of iBangle. Apple
managed to gain USD 1.45 billion from 208 stores in 2008 ensure that
retail store is one of the most successful distribution channels.
Moreover, online stores also another important distribution channel
that can aid the sales of iBangle and will be able to penetrate geoclustering segment more proficiently.
Average-Cost Pricing
A. Calculation
of Planned ProfitPROJECTION & EVALUATION
B. Calculation of Actual Profit if
1.0
FINANCIAL
if
10,000
Only
items Are Sold
Calculation of Costs:
Calculation of Costs:
$200,000
700,000
Total costs
$900,000
"Planned" profit
3,000,000
$3,900,00
0
900,000
$3,090,00
0
Profit (loss)
Calculation of "reasonable"
price:
Expected total costs and
$3,900,000
$200,000
700,000
$900,000
planned profit
10,000
10,000
$390.00
$3,900,000
900,000
$3,000,000
Components
Total
cost
Variable
$180,00
0
$180,00
0
$0
Direct supervision
50,000
50,000
Social Security
20,000
150,000
110,000
110,000
85,000
$360,00
0
$490,00
0
$85,000
Advertising
$35,000
$0
$35,000
Promotion
20,000
20,000
Field sales
15,000
15,000
Product management
15,000
15,000
Marketing
management
20,000
20,000
Product development
50,000
50,000
Marketing research
20,000
20,000
Customer service
70,000
50,000
20,000
Testing
50,000
50,000
30,000
Fixed
Operating expenses
Direct labor
Materials
Operations overhead
Subtotal
Non operating
expenses
General &
administrative
Subtotal
$295,00
0
$50,000
$275,00
0
Total
$655,00
0
$540,00
0
$360,00
0
Based on Table 3 and Table 4, the price of iBangle for introduction stage will
be USD 390.00 will margin profit of 35%.
TABLE 5: Contribution Margin Statement for iBangle
Product: iBangle
Income Statement
31-Dec-10
$3,900,000
Variable costs
Direct labor
Direct supervision/clerical
$180,000
50,000
Social Security
150,000
100,000
Customer service
Materials
Operations overhead (plant, etc.)
70,000
110,000
75,000
$735,000
30%
$1,170,000
Fixed costs
Operations overhead
$10,000
Advertising
35,000
Promotion
20,000
Field sales
15,000
Product management
50,000
Marketing management
20,000
Product development
15,000
Marketing research
20,000
Based
on Table
of Ibangle
Customer
service5, projection profit contribution
50,000
Based on break even analysis projection, the sales force need to sale
minimum 1071 units of iBangle and gain break even at USD 417,85
INCOME STATEMENT
IMPLEMENTATION PLAN
constructively
according
to
projection
especially
in
sales
and
penetrating targeted market. The suggested apparatus had been designed to aid
the department to evaluate the effectiveness of iBangle marketing plan and
objectives are shown below:a. Constant market survey and research such as questionnaire
method, observation on consumer behaviourism will be
implemented in order to evaluate the acceptance of iBangle
among its customers.
b. Quality Control mechanism also will be introduced in order to
monitor the quality of iBangle since this is the debut to the
market. This will enable the team to capture any defects, faulty
parts that can occur after the customer purchase and use the
product.
c. Customer Service and technical support team will be
established to aid the customers regarding any problems,
defects, technical problems and others. This can ensure the
quality of iBangle will not be compromised.
d. The
department
also
will
generate
and
implement
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