Apple

Case Study of the World’s Most Valuable Brand

Group 9 : Section A


APPLE : CASE STUDY OF A BRAND 1

 Contents

Apple 1
Case Study of the World’s Most Valuable Brand 1

Contents 2

Introduction 3

Apple : A Brand History 4

Brand Equity 9

Marketing Strategy 12

Market Scenario & Financials 15

References 18

APPLE : CASE STUDY OF A BRAND 2

 Introduction

According to Forbes’ List of World’s Most Valuable Brands 2016, Apple stands atop
as the most valuable brand with a brand valuation of $154.1 billion, and is nearly equal to
the next 2 combined.

It is the sixth straight time Apple has finished first since Forbes began valuing the
richest brands in 2010.

“Brands get their value from how customers perceive them,” says David Reibstein, a
professor of marketing and branding expert at the University of Pennsylvania’s Wharton
School. “What makes it valuable from a company perspective is that customers are willing
to pay a higher price or are more likely to buy.”

The Apple brand hits a home run on both fronts. Apple-philes will cry blasphemy,
but Apple phones are not that distinct from the latest Samsung gadget, hence why the two
companies are always suing each other. Yet, Apple commands a premium price and
accounts for nearly half the smartphones sold in the U.S., along with 75 million sold
globally during the December holiday quarter.

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 Apple : A Brand History

Two dropouts, with the same first name decided to start their own venture. Later
this business would go on to become the most valuable company in the world, and the
names of Steve Jobs and Steve Wozniak would inspire future business leaders. Jobs sold
his van to get $1,300 start-up cash and in April 1976, Apple was born in Jobs' garage.

Apple I

Apple I, handmade by Wozniak was the first product from Apple. Jobs found Paul
Terell, the owner of The Byte Shop and managed to sign a purchase agreement for 50
Apple I computers. The very first Apple I computers were sold to this shop, that would
become the first retail computer store chain in the world.

Apple IPO

Apple had some of the best consumer advertisements in the industry. It was the
second-largest manufacturer of small computers, after Radio Shack of the Tandy company.
On December 12, 1980 Apple had its IPO. This IPO was historical in many ways. Apple
raised the highest amount of money ever than any IPO since Ford in 1956, and instantly
created more millionaires than any company in history.

Signature Products

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Apple II

Prior to Apple's moves in the computer market, the sale of computers were limited
to commercial buyers and hobbyists/enthusiasts. But with the launch of Apple II, the gold
standard for Personal Computers was set. Apple had tapped into a previously untapped
market of the casual home-PC user. BYTE magazine dubbed the Apple II as the world's rst
'appliance computer'. Initial sales were sluggish as Apple sold only 600 machines in 1977,
mostly due to the high price compared to the PET and TRS-80. However, with the
addition of the fast and relatively inexpensive Disk II oppy drive accessory, made possible
by an ingenious disk controller using only eight chips that Wozniak designed, the Apple II
sold 7,600 units in the following year and 35,000 in 1979.
Key take-aways:
• The 51/4-inch Floppy-drive, along with the opening of the PC market to the casual
user ( Computer Appliance ) set the stage for their brand-image as trend-setters. This
would not be the last time Apple revolutionizes the market.
• Many of the early Apple II users were in-fact users of the Apple I, who were
encouraged to exchange their systems for the newer model so that Steve Wozniak could
avoid service calls on their discontinued line. The response of the existing Apple users
was the beginning of Apple as an aspirational brand in the eyes of the consumer. 


Macintosh

Following as the next iteration of the Apple Lisa, the entire value proposition of the
MacIntosh is two-fold:
1. The MacIntosh introduced to the market, for the very first time a mouse-
controlled Graphical User Interface, as opposed to the then standard of keyboard-based
Interface. MacIntosh II also introduced colour graphics for the very first time; thus adding
fuel to the brand-image of Apple as being a company that creates trends as opposed to
following them.
2. The MacIntosh first all-in-one desktop PC. The standard desktop Wintel PCs, for
the next couple of decades, were modular in nature. Given the success of the Apple II, as
the champion of the casual PC user, Apple wanted to stick to their beginnings by catering
to those consumers who wished to use cutting-edge technology without the hassle of a
complicated setup. This focus on optimizing the consumer's 'Out-of-body
Experience(OOBE)' would go on to define the entire MacIntosh line.
The MacIntosh did not sell as well as the Apple II, facing sti competition from the
IBM PCs and its clones. After the Apple II was discontinued, the MacIntosh line was

APPLE : CASE STUDY OF A BRAND 5

rejuvinated by the returning Steve Jobs through the iMac line in 1998, not deviating from
what brand MacIntosh promised to its customers.
Key Takeaways:
• Despite the strong performance of Apple II, the company decided to continue it's
path of setting trends and starting the next big revolution by means of the mouse-
controlled MacIntosh. While the sales and margins were much poorer than the Apple II,
the MacIntosh line set the new standard for PCs along with the Wintel Desktops that
followed.
• Through Apple's rise, and fall, and rise again in the PC industry, the company
found its core philosphy which it would go on to apply in industries beyond PCs. The
foundation was set for Brand 'Apple' to explode beyond everyone's imagination. It
takes real leadership, real courage to deliberately take cash from a pro table and
successful unit and sink it into the next big thing, even if it takes years for it to pay off
John Proffitt.

iPod

Arguably Apple's first truly disruptive technology, Apple released the iPod in 2001.
This was Apple's attempt at leveraging their strengths in computing technology in the
seemingly matured music player industry. iTunes, the software needed to download
music o the web on Apple systems, had already taken off; thus bringing credence to the
idea of a music player that can hold over 1000 songs. This, as opposed to the existing Sony
Walkman that was limited to the storage of the external cassette tape.
Music lovers were trading tunes like crazy on Napster. They were attaching
speakers to their computers and ripping CDs. The rush to digital was especially marked
in dorm rooms - a big source of iMac sales - but Apple had no jukebox software for
managing digital music. To catch up with this revolution, Apple licensed the SoundJam
MP music player from a small company and hired its hotshot programmer, Je Robbin.
Under the direction of Jobs, Robbin spent several months retooling SoundJam into iTunes
(mostly making it simpler). Jobs introduced it at the Macworld Expo in January 2001. It
was about being very focused and not trying to do too much with the device - which
would have been its complication and, therefore, its demise. Jim Rubinstein (iPod
Designer)
Jobs insisted the iPod work seamlessly with iTunes, and that many functions should
be automated, especially transferring songs. "Plug it in. Whirrrrrr. Done," Jobs told
Fortune.

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 Uniquely focuses on promoting the small size, power, and ease of use of its device
Dennis Lloyd (iLounge)
• 2002: PC versions of the iPods are unveiled. iPod has used a touch-sensitive
circle that emulates the movement of a wheel - a subtle, yet unquestionably superior
design.
• 2003: The new iPods are thinner and smaller than before. Apple's iTunes
Music Store launches with 99 cent per track / $9.99 per album pricing and a library of
200,000 songs. Apple also announces total sales of 13,000,000 songs via iTunes since
launch. 

The launch of the iPod owed a lot to timing. Steve Jobs knew that, on its own, the mp3
player was useless. He understood that, in order for the device to have value, other co-
innovators in the mp3 player ecosystem first needed to be aligned. And, in October of
2001, when Apple announced the iPod, those pieces were solidly in place: both mp3s and
broadband were finally widely available[15]. In April 2003, Apple announced the iTunes
Music Store, an online retail hub where customers could browse and purchase music for
99 cents per song (or $9.99 per album). By 2005, iTunes' library had grown to 1.5 million
songs. Between the third quarters of 2004 and 2005, sales of the iPod had leapt 616%. As
the same customer base kept repurchasing new and better iPods, Apple's profits soared:
by 2008 it had captured 48% of the mp3 player market share. SanDisk's Sansa mp3 player
was the iPod's closest competitor with 8% market share.


iPhone


If there were any doubts regarding whether the iPod was a disruptive technology, there
were none regarding the iPhone launch of 2007 due to various reasons:
1. iPhone is more of a handheld computer than a phone but when you take this
notion seriously, it is clear that it was disruptive to laptops. The way to think about this
disruption is not to look to the demand-side (where the customers touch the firms) but the
supply-side (what goes on inside the firms).
2. The iPhone offered people things that weren't otherwise available. It was a
new architecture and to replicate it required essentially a clean slate for innovative teams.
Established firms rarely want to give up development teams that have worked well. 


The iPhone rede ned the phone industry and eventually knocking behemoths, like
Nokia, o their perch. This they did, one again, by building o their strengths in computing
technology, their constant innovation of the iPod whose features were also incorporated,

APPLE : CASE STUDY OF A BRAND 7

and the need to serve their customers with the ultimate Out-of-body Experience who
wanted cutting-edge technology with little setup hassle.
• 2010: iPhone sales overtook the iPod sales.
• 2011: Eric Schmidt, then CEO of Google, hails Siri as a potential threat.
• 2013: The App store tops 40Billion downloads!!

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 Brand Equity

Ever since its foundation in 1976, Apple has steadily built a brand that has captured
the imagination of millions of people all across the globe.

Brand Elements

Every brand has certain elements that create a lasting impression on the minds of
the customer, and create an identity or association for the brand. It may be names like
Disney or Google, or even logos like Nike’s “Swoosh” or Starbucks “Mermaid” that
capture the imagination of customers across the globe. Being the most valuable brand in
the world just highlights the importance of some of these key elements that the Apple
brand possesses.

Name

The name Apple has come to be associated with the brand more than the actual
fruit, and that probably underlines the true success of this element. For any brand in
existence, the name is its key identity and such is the valuation of the Apple brand name,
that according to marketing surveys, all 100% respondents were aware of the brand name,
and majority associated it with premium and technically superior and reliable products.

Logo

Probably the most distinguishing brand element for Apple is its logo. What started
off as a picture showing Newton sitting under an Apple tree to the trademark half-bitten
Apple we know today, the Apple logo has come to be seen as a symbol of premium
products.

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Brand Mantra

Apples’ iconic founder, Steve Jobs, provided the perfect slogan for the company
when he associated the brand mantra - Think Different, with Apple. This was not just a
powerful statement that Jobs wanted to apply to the company, but it also created an
Authentic and Emotional Modifier in the customers’ minds about Apple’s differentiation
in terms of innovation and wide product range that sought to change the existing market
scenario. Following the launch of the iPod, Jobs stated Think Different .. Again to signify
the continuing ability of Apple to bring out products that challenged the customers to
think beyond their imaginations and perceive a product that was hitherto not thought of.

Other than its iconic brand mantra, Apple has also associated each of its product line
with catchy and impactful slogans. Some of the best ones are :

• iPod - “Small, but big on music”

• iPhone - “Progress is a beautiful thing”
• iPad - “What will your verse be”
• Macbook - “The notebook people love”

As is evident, all of the slogans create a powerful emotional appeal to the customers
and create a perception of superiority for the products. This superior perception and
premiumness has contributed to Apple being the most valuable brand today.

Brand Positioning

In contrast to many other players in its competing market, Apple has always
maintained it stand and positioned the brand and its products in a premium range. Never
do they have multiple products catering to the same product space nor will there be an

APPLE : CASE STUDY OF A BRAND 10

Apple product that falls in a low or even medium price range. This premium positioning
is in line with Apple’s brand values.
Also, Apple products are targeted at tech-savvy and creative individuals with a
focus on young customers. This is evident from their brand positioning statement :
“Apple is committed to binging the best personal experience to students, educators, creative
professionals and consumers around the world through its innovative hardware, software and
internet offerings”
The key elements of this positioning statement are as follows:
• Value Proposition : “best personal experience”
• Targeted Segments : “students, educators, creative professionals”
• Point of Differentiation : “innovative … offerings”

Brand Associations
Apple is the master of brand awareness. Because of the unique brand elements,
technical features and positive customer experience, customers can easily recognise and
recall the brand, and when refer to some types of products like music players and laptops,
Apple would be the first brand that appear in customers’ minds.
Apple has done great in building positive customer associations, and it has the best
consumer perception of any brand. There are both positive and negative brand
associations of Apple in consumers’ minds, including:

Positive Associations of Apple Negative Associations of Apple

High Quality Overpriced

Innovative Design Over rated

Trendy Pretentious

Reliable Expensive

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 Other than the mentioned associations of Apple, there are many other features than
people associate with the brand, noticeably the “i” in the product names, and even Steve
Jobs.

Marketing Strategy

First Advertising Foray

Talk publicity, talk Apple (The launch of Macintosh 128)

After it failed to capture a sizeable market by Apple III, Apple left no stone unturned
to publicize its next venture, the Macintosh 128 system. It was announced to press in late
1983, followed by an 18-page brochure distribution included in various magazines. But
the real debut of the product happened a little later. The costliest television commercial of
all time, the famous 1984 was aired. This was aired in the third quarter interval of January
Super Bowl. This advertisement is now considered to be a masterpiece. Two days after the
advertisement was aired, the Macintosh was launched in the market. Despite initial
hiccups, this brand proved to be a success story for Apple.
In his 1983 Apple keynote address, Steve Jobs read the following story before
showcasing a preview of the commercial:
"It is now 1984. It appears IBM wants it all. Apple is perceived to be the only hope to o er
IBM a run for its money. Dealers initially welcoming IBM with open arms now fear an IBM
dominated and controlled future. They are increasingly turning back to Apple as the only force that
can ensure their future freedom. IBM wants it all and is aiming its guns on its last obstacle to
industry control: Apple. Will Big Blue dominate the entire computer industry? The entire
information age? Was George Orwell right about 1984?"

In March 1984 Michael Tyler, a communications expert quoted by The New York
Times, said "The Apple ad expresses a potential of small computers. This potential may
not automatically ow from the company's product. But if enough people held a shared
intent, grass-roots electronic bulletin boards (through which computer users share
messages) might result in better balancing of political power.

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 4P’s: The Marketing Mix

Products

Apple offers a relatively smaller range of products in the consumer electronics

category, focusing only on personal computers, mobiles, tablets and portable music
players. Lately, it has also entered the market space for TVs and other internet services.
The following picture shows the Apple product range :

Price

In keeping with the brand value of premium products, Apple generally puts hefty
price tags on all its products, which are priced at a premium compared to competition.

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Promotion and Place

The differentiating factor in almost all Apple products promotion have been the
yearly expos where new products are launched. Starting from Steve Jobs launching the
colourful range of iPods to Tim Cook launching the latest iPhone, these expos have
redefined the product promotion for Apple.

Other than these expos, another feature of Apple promotion are the physical Apple
retail stores. Overtime a new product is launched, Apple stores are renovated to promote
the new product.

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 Other than its vast network of worldwide retail stores, Apple also sells its products
via online retailers like Amazon, and also through partnerships with service providers like
Verizon.

Market Scenario & Financials

Market Share

Personal Computers

Lenovo HP Dell Acer

Apple Others

20%
33%

19%
6%
8% 13%

Smartphone

Samsung

Apple

Huawei

Lenovo

LG

Others

0 12.5 25 37.5 50

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 Financials

Latest Profit & Loss Statement

Source : http://www.apple.com/pr/library/2015/10/27Apple-Reports-Record-Fourth-Quarter-Results.html

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5-year Trend

Net Profits (in $billion) Revenues (in $billion)

60 240

45 180

30 120

15 60

0 0
2011 2012 2013 2014 2015

Source : http://www.marketwatch.com/investing/stock/aapl/financials


APPLE : CASE STUDY OF A BRAND 17

 References

. [1]  https://archive.org/stream/byte-
magazine-1977-04/1977_04_BYTE_02-04_Baudot_Machines#page/n11/mode/2up 


. [2]  http://www.statista.com/statistics/263264/top-companies-in-the-world-by-
market-value/ 


. [3]  Owen Linzmayer, Apple Con dential: The Real Story of Apple Computer, Inc.
(San Francisco, CA: NoStarch Press, 1991) 


. [4]  Linzmayer, Apple Con dential: The Real Story of Apple Computer, Inc. 


. [5]  http://creativebits.org/interview/interview_rob_jano _designer_apple_logo 


. [6]  http://www.fundinguniverse.com/company-histories/apple-computer-inc-history/ 


. [7]  http://www.foundersatwork.com/steve-wozniak.html 


. [8]  Building the Mac by Walter Issacson 


. [9]  Libes, Sol (September 1985). "The Top Ten". BYTE 


. [10]  Leopold, Todd (February 3, 2006). "Why 2006 isn't like '1984'" 


. [11]  http://www.cnet.com/news/adobe-and-apple-allies-and-rivals-through-the-ages/ 


. [12]  http://arstechnica.com/features/2005/12/total-share/3/ 


. [13]  https://www.youtube.com/watch?v=lSiQA6KKyJo 


. [14]  http://www.nytimes.com/1984/03/04/weekinreview/the-computer-the-
consumer-and-privacy.html 


APPLE : CASE STUDY OF A BRAND 18