1.

INTRODUCTION OF APPLE

Apple, Inc originated from the friendship and mutual interests of Steve Wozniak and Steve Jobs. The Two collaborated in the development of the Apple in the early 1970s. The Apple I was a step ahead of most computers of the time featuring a use of aTV as a display system and a cassette interface for recording programs. After obtaining financing for the development of Apple II, the Apple Computer Company was formed in 1970.As the growth of home computer use grew, Apple grew with it. In 1980 the company issued its initial public offering of investment stock. Apple next introduced the Macantosh Computer in 1983 during the Super Bowl. The computers desktop publishing features provided the foundation for future innovations that have become standard for the company. Today Apple, Inc has more than 33,000 employees and revenues exceeding 42 million dollars.

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1.2

HISTORY OF APPLE

In 1971 Steve 'Woz' Wozniak designed a device called the 'Blue Box'. It allowed -- of course illegal -- phone calls free of charge by faking the signals used by the phone companies. His friend Steve Jobs instantly realized that there must be a huge market for something that useful. He bought the parts for $40, Woz built the boxes and Jobs sold them to his fellow students at the University of California in Berkeley for $150. To demonstrate the 'product' to some students, Woz once posed as Secretary of State Henry Kissinger and called the Vatican. Allegedly he played his role so well that they told him the pope was sleeping but if he requested they would awake him. Woz got nervous and hung up.

One of Wozniaks biggest dreams was that he wanted to have his own computer. In March 1975 the first meeting of the "Amateur Computer Users Group" - better known as the "Homebrew Computer Club" - took place in a garage in Menlo Park. The number of interested computer freaks quickly increased to several hundred and they moved their meetings to the auditorium of the Stanford Linear Accelerator Center (SLAC) in Palo
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Alto. Woz and Jobs regularely attented these meetings and discussed with fellow computer nerds how to use chips and design boards and build computers. Woz, a true electronics genius, designed his own computer using a $20 MOS Technology 6502 processor. Contrary to all the other designs which circulated at this time, Woz computer had a standard QWERTY keyboard as an input device instead of eight little switches for each bit of a byte and it used a standard TV set for output instead of an expensive printer or monitor. Woz was 26 years old at that time.

Once again Steve Jobs realized the potential of Woz' computer: "Steve didn't do one circuit, design, or piece of code, but it never crossed my mind to sell computers. It was Steve who said 'Let's hold them up in the air and sell a few', Woz recalled later. Woz worked at Hewlett-Packard at that time and Jobs was employed by Atari. First they tried to sell Woz' design to HP or Atari, but both companies declined. To scrape together the money to produce the printed circuit board, Jobs sold his Volkswagen bus for $1500 and Woz sold his programmable HP calculator for $250. It turned out to be a good investment.

Contrary to common belief, Apple Computer Company had not only two founders but three: Steve Jobs, Steve Wozniak and Ronald Gerald Wayne signed the partnership contract on April 1st, 1976. Wayne was 20 years older than Jobs and Woz and worked as video game maker at Atari. He created the original Apple Computer logo which showed Isaac Newton, sitting beneath an apple tree. Ron Wayne soon realized that he "either was going bankrupt or the richest man in the cemetery", according to Owen Linzmayer's book Apple Confidential 2.0. Both Jobs and Wozniak had no money and Wayne knew that the contract imposed unlimited personal liability for any financial failure of the company. Therefore he left the company on April 12, 1976, less than two weeks after its

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founding. He couldn't know at this time that he 'walked away from half a billion dollars'. The Apple I turned out to be a smash hit. In 1977 the Apple II was introduced and the Apple I was discontinued about half a year later. The Apple II was another masterpiece of Steve Wozniak and a tremendous success for Apple. Woz and Jobs and a few other people involved with Apple became very rich in a very short time. Woz bought a turbocharged single engine Beechcraft Bonanza A36TC for $250,000 and got a Private Pilots Licence. With only 50 hours flight experience Woz crashed the plane due to a pilot error and was seriously injured as well as three of his friends which were on board. This scared him so much that he took an extensive leave of absence from Apple and did other things like e.g. organizing two rock music festivals on which he lost about $20 million but nevertheless considered them as very successful: "It's amazing that we were able to pull those festivals off and great fun was had by virtually all. I run into more people that thank me for those festivals than thank me for Apple. You had to be there to know how wonderful it turned out." When you read about Woz you'll get the impression of an amiable, generous and probably a little bit naive guy who just enjoyed electronics and having fun and never really was interessted in becoming rich. "A person like him shouldn't have that much money," said his father after finding $250,000 of uncashed checks lying around in his sons Porsche (which by the way had the licence plate 'APPLE II'). Following the Apple II a computer model named 'Lisa' was introduced, which was a disaster as it was way to expensive. It was an amazing machine, equipped with an operating system with windows and pull down menues and everything else Microsoft eventually copied from Apple. To be fair one has to mentioned that Apple also was 'inspired' by a machine named 'Xerox Alto', designed at Xerox Corporations Palo Alto Research Center (Xerox PARC). If you're interested in this story I would like to recommend Owen Linzmayer's exellent book Apple Confidential 2.0 to you.

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After Lisa failed, many people at Apple realized that they need a computer with all the user-friendliness and the neat features of Lisa at a much much lower price. This eventually led to the Macintosh. One can often hear that the Mac was Steve Jobs idea. This is not true. In the beginning Jobs even tried to kill the Mac project. The real father of the Apple Macintosh is Jef Raskin. If you are interested in his version of the creation of the Mac, please read this article. From Jobs point of view the Mac was a threat for his baby 'Lisa' (pun inteded, Jobs actually named the computer model after his first daugther Lisa!). "Lisa is going to be increcibly great", Jobs said, "It will sell twelve thousand units in the first six months and fifty thousand in the first year. We're prepared to live with Lisa for the next ten years." But it didn't work out. In total only 60,000 units were sold and Lisa had a live span of only two years. Jobs was furious. "You guys really fucked up. I'm going to have to lay a lot of you off", he said to the Lisa developers at Apple. Soon he realized that the Mac project, which he was opposing so far, could indeed become the success he had hoped Lisa would become, so he tried to take over the Mac group. The Mac was basically Jef Raskins idea who was working with a small group on its design. Jef Raskin remembers: "[Jobs] would try to push himself into everything. No matter what you were doing, he had to have something to do with it. Nobody at Apple wanted him involved with their projects. I had started the Macintosh team and we didn't want him either. The standard way [Jobs] operated was picking your brain. He would immediately poo-poo the idea, then a week later, he'd come back and say, 'Hey, I've got a great idea!' The idea that he gave back to you was your own. We called him the Reality Distortion Field." The product name "Macintosh" was invented by Raskin. He intentionally misspelled the name of his favourite Apple variety 'McIntosh'. When Steve Jobs asked venture capitalist Ben Rosen about his opinion concerning the product name 'Macintosh' he answered: "Throw $30 million of advertising at it and it will sound great".

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MARKETING MIX

According to Philip Kotler Marketing Mix is the set of controllable variables that the firm can use to influence the buyers response. The controllable variables in this context refer to the 4 Ps [product, price, place (distribution) and promotion]. Each firm strives to build up such a composition of 4Ps, which can create highest level of consumer satisfaction and at the same time meet its organizational objectives. Thus, this mix is assembled keeping in mind the needs of target customers, and it varies from one organization to another depending upon its available resources and marketing objectives. Let us now have a brief idea about the four components of marketing mix.

Product
Product refers to the goods and services offered by the organisation. A pair of shoes, a plate of dahi-vada, a lipstick, all are products. All these are purchased because they satisfy one or more of our needs. We are paying not for the tangible product but for the benefit it will provide. So, in simple words, product can be described as a bundle of benefits which a marketeer offers to the consumer for a price. While buying a pair of shoes, we are actually buying comfort for our feet, while buying a lipstick we are actually paying for beauty because lipstick is likely to make us look good. Product can also take the form of a service like an air travel, telecommunication, etc. Thus, the term product refers to goods and services offered by the organisation for sale.

Price
Price is the amount charged for a product or service. It is the second most important element in the marketing mix. Fixing the price of the product is a tricky job. Many factors like demand for a product, cost involved, consumers ability to pay, prices charged by competitors for similar products, government restrictions etc. have to be
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kept in mind while fixing the price. In fact, pricing is a very crucial decision area as it has its effect on demand for the product and also on the profitability of the firm.

Place
Goods are produced to be sold to the consumers. They must be made available to the consumers at a place where they can conveniently make purchase. Woollens are manufactured on a large scale in Ludhiana and you purchase them at a store from the nearby market in your town. So, it is necessary that the product is available at shops in your town. This involves a chain of individuals and institutions like distributors, wholesalers and retailers who constitute firms distribution network (also called a channel of distribution). The organisation has to decide whether to sell directly to the retailer or through the distributors/wholesaler etc. It can even plan to sell it directly to consumers. The choice is guided by a host of factors about which you will learn later in this chapter.

Promotion
If the product is manufactured keeping the consumer needs in mind, is rightly priced and made available at outlets convenient to them but the consumer is not made aware about its price, features, availability etc, its marketing effort may not be successful. Therefore promotion is an important ingredient of marketing mix as it refers to a process of informing, persuading and influencing a consumer to make choice of the product to be bought. Promotion is done through means of personal selling, advertising, publicity and sales promotion. It is done mainly with a view to provide information to prospective consumers about the availability, characteristics and uses of a product. It arouses potential consumers interest in the product, compare it with competitors product and make his choice. The proliferation of print and electronic media has immensely helped the process of promotion.

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2.1

MARKETING MIX OF THE APPLE

2.1.1 PRODUCT MIX OF THE APPLE

Portable Computers including Mac products such as Mac Book Pro, iMac, MacBook Air, Mac Mini, Xserve Servers including Xserve, Xsan, MacOS X Ser, MobleMe. Accessories including MagicMouse, Keyboard, Led Cinema Display. Wi-fi Based Stations - including Airport Express, Airport Extreme, Time Capsule. Developer including Developer Connection, Mac Program, iPhone Program. iPod including iPod Shuffle, iPod Nano, ipod Classic. iPhone including iPhone3GS, iPhone3G, iPad. iTunes including movies, TV shows, audio books, games. Periphal products including Printers, Storage devices, digital videos and cameras

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

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

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2.1.2 PRICE MIX OF THE APPLE

Apple is a premium brand computer that does not attempt to compete on price. The company has reduced prices after some initial product launches. It uses skimming and preimuim pricing strategies.

The AppleiPad is priced at a minimum of $499. The Apple iPhone costs begin at $99. The Apple iPod Classic is priced starting at $249. The Apple iPod Nano costs $149. The Apple Mac Book costs $999. The Apple MacBook Pro is priced at $1199 The Apple Quicktime Pro for Windows costs $29.99 Apples iPad pricing strategy includes the flexibility to lower the prices if consumer response dictates such action. This would be consistent with a similar $200 price cut on the iPhone in 2007.

In 2009 Apple announced a reduced cost pricing structure for iTunes - songs will cost 69 cents, 99 cents or $1.29. He said the "vast majority" of the songs will cost 69 cents. Changes are said to be a response to a slower pace of music downloads.

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

Apple uses demand-oriented pricing approach which weighs factors involving underlying expected customer tastes and preferences more heavily than factors like cost, profit, and competition when selecting a price level. Thus, Apple utilises the process of price skimming to price their goods. It is by setting the highest initial price that customer really desiring the products and is willing to pay. Skimming pricing is an effective strategy as Apple has enough customers who are willing to buy. Furthermore,

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the high initial price will not attract competitors and customers interpret high price as high quality of products.

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

They perform marketing analysis, segmentation, targeting, and positioning. They also define their products, distributions, and promotional tactics. Understand how quantity demanded varies with price. Evaluate likely competitor's actions, understand legal constraints.

Such constraints are in terms of its demand. Usually, the higher the demand for a product, the higher the price it can be charged. This becomes an advantage to Apple as they can earn as much as they can. In addition, the newer the product, the higher price it can be charged making it the second constraint. The third constraint will be single product versus a product line. As for Apple, they have a product line for their pricing. Thus, they do not need to just focusing on one product like iphone, they can also have laptop, mp3...etc. Therefore, with a wide range of products, the price of individual items must be consistent with the others based on features provided, and meaningful price differentials must communicate value to consumers. The external constraint will be the type of competitive market Apple need to face. In terms of pure competition, Apple's competitor for an example from China, had followed the features of an original iphone but not with the same quality and also had priced it about the same as the market price of the original iphone. Apple can also have a pure monopoly as it started to be the only seller that comes out with the iphone and also who had set the price for that unique product.

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2.1.3 PLACE MIX OF THE APPLE

Apple, Inc Headquarters are located at is located at 1 Infinite Loop, Cupertino, California. The Apple Consultants Network includes independent professional service providers and technology consulting firms that specialize in Apple and thirdparty solutions. Certified on Apple technologies, these providers deliver on-site technology services and support to home users and businesses of all sizes.

Apple service providers are certified technicians, who complete regular Apple training and assessments, and offer repair services, and exclusive access to genuine Apple parts.

They are located in Asia/Pacific, Africa, the Middle East Europe and Latin America. Apple has over 200 retail stores worldwide including the US, UK and Canada. Apple recently opened a new retail store in Shanghai China

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

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

2.1.4 PROMOTION MIX OF THE APPLE

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Apple, Inc offers special discounts on refurbished MacIntosh computers, iPod Nanos, and the 8GB iPod Touch. In each case a 1 year warranty is included on the all products.

Apple, Inc authorized Training Centers are located throughout the U.S. each provides instruction in Mac systems, Mac OS X, and Apples professional applications. A wide range of certification exams and courses offer innovative learning opportunities for IT and creative professionals, educators, and service techniciansdelivered exclusively by Apple Certified Trainers.

The Apple Consultants Network website provides a search tool allowing visitors to locate nearby certified Mac product consultants in the U.S, Canada, and a number of international locations.

The online Apple Store offers free shipping for orders over $50. The online Apple store offers iTunes gift cards. Apple provides a $100 rebate when you purchase a Mac or specific printers from the online store. Apple has packaged back-to-school offers, including some aimed at college students.

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STP ANALYSIS

Segmentation

Market segmentation is the process of dividing the total market into relatively distinct homogeneous sub-groups of consumers with similar needs or characteristics that lead them to respond in similar ways to a particular marketing programme. A market segment is a portion of a larger market in which the individuals, groups, or organisations share one or more characteristics that cause them to have relatively similar product needs.

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Segmentation Variables

Targeting
Instead of aiming a single product and marketing programme at the mass market, most companies identify relatively homogeneous segments and accordingly develop suitable products and marketing programmes matching the wants and preferences of each segment.

Positioning
Product positioning is a decision reached by a marketer to try to achieve a defined brand image relative to competition within a market segment. Product positioning decisions are strategic decisions and have an impact on long-term success of the brand. Common bases used for positioning include:

Features Benefits Usage Parentage Manufacturing process Country or geographic area Comparison Price/quality Product class Endorsements
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3.1

STP ANALYSIS OF THE APPLE

Apple segments its target market in terms of their demographic characteristics, geographic characteristics, psychological characteristics, usage rate and product features. In terms of the Demographic characteristics, Apple is targeting the Generation X and Y cohort. Generation X consists of mostly working adults, while most have already established a successful career. Therefore they are earning high and steady incomes, enabling them to afford Apple's expensive and sophisticated devices. Thus, the high income working adults of generation X would definitely be satisfied by the sophisticated and high-tech Apple products. They would also buy Apple products as these are seen as prestigious and therefore reflect their perhaps high social status, leading to more sales for the company. Generation Y would consist of mostly teenagers and the young adults. Generally, the modern generation nowadays is becoming more and more materialistic and modernistic. The advancement of technology has attracted buyers from generation Y that are interested in the newest technology. The increased interest in customers is an opportunity for Apple, as that would mean that more customers would buy iPhone, as it is one of the most advanced phones currently, which is also very popular among teenagers and young adults. These teenagers in general want to be hip, chic and cool, and love to follow the latest trends and popular products. Therefore, they would want to own the latest "Cool" devices, perhaps used by their friends or family. They might even be influenced by peer pressure to get an Apple product as well. As societies in general become more affluent, the parents would be able to indulge their children in these expensive gadgets. The young working adults are usually not yet married and therefore do not have to support any family or children; therefore they will have a lot of discretionary income to spend on these luxurious devices. Apple would be able to target this group of customers, as in terms of income they are not financial-bounded, and do not usually have commitments like providing for a family, or paying for their children's education, as most would not be married yet. As for teenagers, although most do not work and earn a steady income, they would be able to convince their parents would earn

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high incomes to buy it for them, or resort to other means such as usage of "ang pow" or red packet money to buy these expensive luxuries. Consumer incomes is a very important factor that Apple has to consider when identifying its target markets, they should target consumers of specific income groups, especially the high income consumers like the matured working adults of generation X. Their tastes and expectations would also be of a higher caliber, which would be where Apple steps in, as the company provides these high tech and sophisticated gadgets, with various uses, functions, services and revolutionary applications to suit and satisfy the consumer's needs. The more affluent working adults would also be able to pamper their children with the latest Apple products, as since they have a high standard of life; they would want their children to enjoy these luxuries as well. In terms of the Geographic characteristics, Apple is targeting on consumers living in mordernised, metropolitan and overall urban areas as citizens living there usually have fixed, steady and maybe high incomes, therefore they have a higher purchasing power, compared to those living in rural areas, would might not have the fixed, steady and incomes enjoyed by their city counterparts. In terms of psychographic characteristics, Apple targets consumer with the needs & wants for entertainment. IPhone is built to be the ultimate gadget, which can not only function as a phone, but also a miniature and portable entertainment device as well. This results in customers buying Apple products such as the iPhone for convenience sake. With the increase in consumers who are constantly in need of entertainment, the iPhone's versatile product features, functions and applications are their best choice. With the increasing trend of consumers who are into the newest technologies and products, the iPhone and other Apple products are the solution for their needs, to suit these tech-savvy consumers. In terms of the usage rate, Apple is also targeting the heavy and medium users, consumers like businessman, teenagers and working adults, as they require convenient mobile devices, which allow them to call, message and entertainment themselves at the simple touch of a button. Apple products are for consumers who are looking to find their own niche in terms of the products they desire. Since Apple products are highly specialized and have lots of useful functions and applications, it will suit the high-tech and tech-savvy consumer. Under consumer behaviour, there is the Maslow Hierarchy of needs to consider. These needs consist of the consumer's physiological needs, safety needs, social needs,
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personal needs and self-actualisation needs, which are important to the individuals well being. Physiological needs consist of the individual's needs for resources essential for life such as food, water, shelter and oxygen. In this case, since Apple does not produce any of these as they are naturally occurring, that factor does not affect consumer behavior and demand for Apple products. Safety needs consist of the individual's need to be free from harm and financial security as well. In this case, Apple is does not directly affect these factors to a large extent, only minimally such as regarding the overall safety of their products and the customers not over spending to purchase their products. Social needs consist of the individual's needs of friendship, belonging, love and companionship. In this case, the consumer might be influenced to purchase Apple products in order to have a "Sense of belonging" and to perhaps feel more wanted and accepted by their friends, and not being the odd one out if all of the person's friends use apple products. Personal needs consist of status, respect and prestige, and is the main influencing factor which Apple uses to convince its customers to buy their product. Consumers who are affluent and wealthy will want to purchase Apples expensive and "Elite" products, which they consider as status symbols, to show how affluent or powerful they are, and perhaps command more respect from others. Apple products are also seen as prestigious, therefore affluent consumers would buy these to be seen as more prestigious, while others aspiring to be prestigious and wealthy would consider getting the company's products as well. Lastly, self-actualisation needs consist of self-fulfillment needs, such as an individual's dreams, aspirations and personal agendas. In this case, the consumer would be influenced by their own self-actualistion needs and thus purchase Apple products in order to fulfill them or otherwise.

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