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Marketing Management
Apple Inc. Case Study
Table of Content
Introduction 2
Conclusion... 17
Recommendation 18
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Marketing Management
Apple Inc. Case Study
Introduction
The phone starts ringing, we're going to pick it up and when we touch it,
the ringer volume smartly goes down! Yes! Today a company like HTC could
make this kind of cellphone.
Since the launch of the IBM Simon in 1993, smartphone technology has
reached levels that until recent times had only been dreamed about.
Features such as wireless sharing, HD video recording and mobile internet
are now commonplace and todays average smartphone has more
processing power than computers used by NASA to land a man on the moon.
All over the world, the smartphone experience is being shared by more and
more people every day. (Belic, 2012)
The interest is understandable. Today more than 1.3 billion mobile phone
handsets are being sold annually, and in 2010 smartphones made up almost
20% of that total (Gartner, 2010; Ahonen, 2010). Sales of smartphones are
increasing almost 100% per year, and total global sales volume is expected
to surpass that of PCs by 2012 (Gartner, 2010). By collapsing the boundaries
between previously distinct devices, smartphones are subsuming sales of
mobile phones entirely and, increasingly, netbook and notebook PCs. To
complicate the landscape, the smartphone is not the only device at stake,
tablets and ebook readers are emerging as key components of the mobile
universe. Across all devices, total mobile revenues - including advertising,
subscriptions, handsets, applications, and so on - are forecast to surpass $1
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trillion by 2014 (Gartner, 2010). Given the rate at which smartphone are
penetrating the market and component prices are declining by 2015 there
will be, at least, 2 billion smart mobile devices in use globally. (Kenney,
2011)
Apple is a big company with several products and services that provide
along with products. Each product has its own market. It is possible to use
multiple factors and combine related statistics for analyzing a company with
different product. But in this case we are required to analyze smartphone
industry only. I use recent figures (2010 to 2013) for analyses. For brands
comparisons I consider Apple, Samsung, HTC, ZTE, and RIM (BlackBerry).
For set goals and making the reports objectives we should specify what
we want.
For market share and growth analysis Growth-share matrix (BCG matrix)
will be used. This method indicates a product strength using its sales cash
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market share: Android went from having 48.7% of the market in 2011 to a
whopping 70.1% in Q4 2012. Apple's iOS has also grown slightly, capturing
22% of the market share by the end of the same period. How much is there
left for everyone else? As of Q4 2012, a meager 7.9%.
The success of the iPhone, Pre, and Blackberry shows the strength of
consumer demand for an intelligent, multifunctional device. The appeal of
the smartphone will create significant new revenue streams for carriers and
developers, who should strive to create new service bundles that build off
this mobile platform with converged video, voice, and data applications.
(Cellular-news.com)
More startling, smartphone sales will exceed 1.5 billion units per year by
2016. This compares to about 350 million PCs and 1.7 billion mobile
handsets sold globally last year.
This will obviously have a huge impact on the mobile Internet economy,
which is already exploding from the growth of smartphone penetration in the
past few years.
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These forecasts are much higher than those of other industry analysts,
who generally expect smartphone unit sales to hit about 1 billion a year by
2015. (Gobry, 2012)
Apple designs Macs, the best personal computers in the world, along with
OS X, iLife, 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 is defining
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the future of mobile media and computing devices with iPad. (Investor
Relation: Apple.com)
Apple Background
On December 2012 The Economist reported that Apple became the
most valuable company ever (in nominal terms), beating the record that
Microsoft hit in December 1999. Apples share price peaked at $705 before
entering bear territory and falling by 25%, to $510; at the start of 2012 it
had been $410. (News: The Economist, 2012)
Apple Inc. was founded on April 1, 1976 in a garage by Steve Jobs and
Steve Wozniak. The young entrepreneurs brought different strength to their
fledgling company: Jobs had a flair for conceptualizing products, while
Wozniak had the technical know-how to make them happen (Washington
Post Economy, 2012).
Apple I was the first product that Apple Inc. produced. It was a personal
computer (PC) with a MOS 6502 cpu clocked at 1 MHz and 4Kb memory. In
1977, Apple introduced Apple II which became a very successful device.
After that the company began to produce Apple II series. The Apple II was
followed by Apple II plus, Apple IIe, Apple IIc, Apple IIGS, Apple IIc Plus and
Apple IIe Card.
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By 1985, however Jobs and Scully began to disagree over the direction
they wanted the company to take. After Jobs' attempt to remove Scully
failed, Jobs left Apple in May to start his own new business, NeXT
Computers. (Chapman & Haskisson)
In December 1996, Apple acquired NeXT, with the plan of using its
technology as the basis for a new operating system. After being gone for
more than a decade, Jobs returned to the company he had originally
cofounded with Wozniak. (Chapman & Haskisson).
Apple ventured into the market of legal downloads with the introduction of
its iTunes Music Store in 2001. iTunes offers downloads at a specified price
without requiring subscription or monthly fees. iTunes offers its users a
selection of more than 6 million songs, with new songs continually added.
(Chapman & Haskisson)
For music lovers, the iPod is the greatest invention since the Walkman.
With up to 160 GB of storage, it allows users to carry up to 40,000 songs or
200 hours of video wherever they go. There are currently four different iPod
styles: the iPod shuffle, iPod classic, iPod nano, and iPod touch (Chapman &
Haskisson). Apple earned 5,615 million just from iPod in 2012 (APPLE INC.,
2012).
Brief Chronology:
1976 With $1,300, Steve Jobs and Steve Wozniak found Apple
Computer, Inc.
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1985 John Scully assumes the helm after a management shakeup that
causes the departure of Jobs and several other Apple executives.
2001 The iPod is released; Apple opens its first retail store in Virginia.
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software as well. The iPhone allows for 8 hours of talk time. Apple sold
1million iPhone less than three month after this product was available to
customers. Apple expects this trend to continue during 2008 and to reach
sales of 10 million iPhones, stealing 1 percent of the mobile phone market
share. (Chapman & Haskisson).
One year following the untimely death of Steve Jobs, the company he co-
founded and led for most of his adult life appears to be thriving and lacking
any serious obstacles to its break-neck growth in a rapidly changing
technology market. (Gallagher, 2012)
That said, Apple Inc. still has plenty of challenges ahead. Some of those
stem simply from the nature of the fast-paced, hyper-competitive consumer
technology business the company currently competes in and largely
dominates. (Gallagher, 2012)
Other challenges may be more unique to Apple and its singular focus on a
relatively narrow line of products. And long-term, the company may still feel
the loss of a leader who possessed an uncanny ability to see around corners,
and bend other strong personalities to his will. (Gallagher, 2012)
The guy who could literally pull rabbits out of his hat no longer exists,
said independent technology analyst Roger Kay. (Gallagher, 2012)
Apples had a phenomenally strong year since Jobs death from cancer last
October, which left the company permanently in the hands of the senior
management team he spent years cultivating, led by CEO Tim Cook. Its also
had some stumbles along the way. (Gallagher, 2012)
Some missteps with features such as Siri the infamous personal digital
assistant first embedded into last years iPhone 4S and the Apple Maps
tool in the latest iPhone 5 have caused some level of embarrassment. The
company under Jobs direction was not free of slip-ups either, and some
issues have spanned both periods, such as growing concerns about the
treatment of workers in the massive Chinese factories that produce the
companys popular products. (Gallagher, 2012)
But if proof is in the numbers, investors may find it hard to argue against
the crew running Apple now. The company is conservatively projected to
report a 44% revenue gain for its just-ended fiscal year with earnings
expected to post a gain of more than 60% from the previous year.
(Gallagher, 2012)
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Apples stock is up more than 70% from the day Jobs passed away,
despite the stated concerns at the time of many investors and analysts
about how well the company could keep its pace of innovation without its
chief visionary at the helm. (Gallagher, 2012)
The key challenge for Apples management team will be in keeping the
companys strongest profit engines humming. And this will involve the right
mix of technological innovation and deal making. (Gallagher, 2012)
The iPhone is the most crucial element. First launched in 2007, the
smartphone accounted for nearly 55% of Apples total revenue in the first
nine months of the just-ended fiscal year. While the company does not
disclosed profitability data on its product lines, analysts believe the iPhone is
the major driver of operating profits, with a gross margin of well over 50%
on the devices. (Gallagher, 2012)
Apple can command those high subsidies because of the strong consumer
demand for the iPhone. But competitors are pushing hard into the
smartphone space. Samsung has already outpaced Apple in global
shipments thanks to its use of Googles Android operating system and its
wide line of phones that appeal to a broader array of markets and
consumers. (Gallagher, 2012)
Investors will continue to watch closely for signs that Apples current team
can not only push forward its existing product line, but add to them with new
categories and innovations. Though the iPhone 5 launched a year following
his death, a report by Bloomberg BusinessWeek cited unnamed sources as
saying that the device received detailed input from Jobs prior to his death.
(Gallagher, 2012)
Despite Apples strong run of success, its narrow product line and strong
reliance on the iPhone makes it vulnerable to competitors who may come up
with better ideas. (Gallagher, 2012)
Apples future success will likely hinge on its ability to maintain that
posture no matter whos in charge. (Gallagher, 2012)
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Strengths Weaknesses
Universally accredited and well- Apple is a Big name in the
known brand which also began kind technology world. It brings so much
of revolution in smartphone responsibility and kind of obligation
industry for company and its product. New
iPhone map application problem
and customer frustration would be a
good example.
From the anti-capitalism point of
Brand loyalty is incredible. People view devices like iPhone counts as
will line up in the freezing cold luxuries. They think this kind of
overnight just to be one of the first huge prices could be spend
to get their hands on the new
somewhere more vital.
iPhone! (Guenette, 2012)
Employ high technologies. This Utilize high technology along with
offers unique features for at least high quality hardware component
two purposes. turn Apple iPhone into very costly
One, First degree price merchandise. Probably many people
discrimination and two, luxury cannot afford the price.
customer satisfactions
Ease of use. Apple utilizes user iPhone is equipped with own Apple
friendly design elements for both closed operating system, iOS. And
hardware and software parts of apps which work with iOS can only
iPhone. 3.5 mm audio jack would be be downloaded from App Store.
a good example! Other rivals like Android have more
distribution channels.
Former CEO, Steve Jobs role in Steve Jobs died on Oct 2011. We
developing iPhone and leading can still see his works and ideas in
Apple to the market incredibly. Apple iPhone. His lost can be an
excessive damage to the company.
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Environme The Company also sells its hardware and software products to
ntal factors enterprise and government customers in each of its geographic
segments. The Companys products are deployed in these
markets because of their performance, productivity, ease of use
and seamless integration into information technology
environments. The Companys products are compatible with
thousands of third-party business applications and services, and
its tools enable the development and secure deployment of
custom applications as well as remote device administration.
(APPLE INC., 2012)
Legal The Company is subject to laws and regulations affecting its domestic
Factors and international operations in a number of areas. 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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Bargaining Bargaining
power of power of
suppliers customers
Six years to the month after Steve Jobs unveiled the first iPhone, the
smartphone industrys go-go years are officially over. Cautious comments
from Samsung Electronics on Friday underlined the message conveyed by
the latest quarterly results from Apple earlier in the week: even as it scales
new heights, the smartphone market is entering a phase in which vaulting
growth rates and high profit margins will be much harder to come by.
(Waters, 2013)
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Despite selling 47.8m iPhones 29 per cent more than in its previous
record quarter a year before Apple failed to live up to Wall Streets high
hopes, leading some analysts to predict the years of super-charged growth
that began with the iPod were behind it. (Waters, 2013)
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Threat of substitutes:
in this conpect we do not look for
other brands similar products. In
fact we should find totally different
product s for this section of analysis.
with the all capabilities that a
smartphone could have , there most
be another revolution or kind of
invention for substitute product.
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According to this chart Apple iPhone share market is 15% of the overall
market for 3rd quarter, 2012. And it takes second place after Samsung with
31.3% share market. Black Berry (Research in motion), ZTE, HTC are 4.3%,
4.2% and 4% respectively. For developing the BCG matrix we need relative
market share. It means we should compute one brand's share to its largest
competitor: (Wikipedia)
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For market growth rate current sales figures are used in comparison the
same last year.
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For Market growth rate I used the table above and derive the table below:
20.0%
ZTE
0.0% Market Share
35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0
-20.0%
Stars may generate cash, but because the market is growing rapidly they
require investment to maintain their lead. (Quick MBA)
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Market Product
Existing Markets Penetration development
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Inc. Form 10-K which helps us to understand iPhone's furious growth over 5
years and its revenue making role.
Net sales by
2012 change 2011 change 2010
operating segment
Americas net sales $ 50% $ 56% $
57,512 38,315 24,498
Europe net sales 36,323 31% 27,778 49% 18,692
Japan net sales 10,571 94% 5,437 37% 3,981
Asia-Pacific net 33,274 47% 22,592 174% 8,256
sales
Retail net sales 18,828 33% 14,127 44% 9,798
For market penetration I can refer to table 4 figures. iPhone had some
decline between 2011 and 2012. Maybe it was because of Samsung and
unexpected success. However, still it is a furious growth for apple in all over
the world.
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Conclusion
In this report, I used marketing tools for analyzing Apple iPhone's market
position and growth situation. We all know Apple is a big company with
worldwide reputation. People willing to line up for new products and mostly
they are satisfied with results. Nevertheless Apple has problems too.
Technology is a very competitive market. And day by day companies do
more R&D to make products better than others.
We reviewed Apple strength and weaknesses, all the good things like
brand loyalty, unique technology especially in iPhone, matchless interface
and applications, strategic agreements with big companies like AT&T and
Weaknesses like expensiveness, retailers controlling problems, vigorous
competitor like Samsung and RIM. Apple is on top from so many points now,
no doubt. But with PESTEL summary that I discussed earlier we know there
is no certainty in these days market. Brands devour fame and income and
willing to do their best.
Both Ansoff and BCG matrix are fine for iPhone, Samsung running so fast
but Apple still dominates US and aside recession points, figures show Apple
knows the business.
Recommendations
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Regarding all the analysis is made; there are some suggestions and
strategies for Apple which can be useful in educationally scale.
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Bibliogaphy
News: Marketing Magazine. (2005, 4 6). Retrieved from Marketing Magazine:
http://www.marketingmagazine.co.uk/news/469532/Mark-Ritson-branding-
Three-telltale-signs-agencys-ineptitude/?DCMP=ILC-SEARCH
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Chapman, R., & Haskisson, R. e. (n.d.). Case 14: Apple computer Inc.
Glance, D. (2012, Oct 8). Smart Devices: Technology Spectator. Retrieved from
http://www.technologyspectator.com.au/apple-after-steve-jobs
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