APPLE OPENS MORE OF ITS OWN STORES
Apple has announced plans to open more of its own branded stores in the USA and China as it continues to develop this distribution channel. Just a few years ago, the Silicon Valley company, famous for the first popular personal computer in the 1970s and more recently the iPad Air, always relied on other retailers and its website to sell its ever-growing range of products. The new retail stores are likely to be well received by consumers if recent reports from London and New York are any guide. They will be supported by a varied promotional mix including extensive use of social media. Some business analysts believe that Apple runs a real risk of coming into conflict with its existing retail partners – including the US chain CompUSA. ‘Why should other retail stores bother to sell and promote Apple products if the company is going to compete directly with them on the high street?’ said one investment specialist. There are also fears that Apple could fall into the same trap as Gateway, another PC maker focused on the consumer market. Gateway had to close about 40% of its North American stores, saying it had over-extended itself at a time of slowing sales of PCs. Apple is investing heavily in property and there is always the risk of stock build-up at a time of slower world economic growth. Apple plans to open its two new stores in high-profile shopping centres near Las Vegas in the USA and in the Chaoyang district of China. Apart from selling the usual Apple products – computers, iPads, Apple TV and the like – the main draw in the shops will be the Genius Bar – a counter where shoppers will find several highly trained Mac Geniuses ready to advise on any technical questions. There will be a hands-on Apple Retail Store Experience giving consumers the chance to test-drive Apple’s entire product mix. The stores will also run a series of daily creative workshops to teach customers how to make the most of the programs available.
20 marks, 40 minutes
1. Define the term ‘distribution channel’. [2]
2. Explain two reasons why Apple might want to open more of its own stores as part of its distribution strategy. [4]
3. Analyse two effects on existing retailers of Apple products of the opening of new Apple stores. [4]
4. Evaluate the importance of distribution as part of Apple’s overall marketing strategy. [10]
Key concept question
20 marks, 40 minutes
With reference to one organisation that you have studied, examine what changes innovation brings about in the management of marketing mix. [20]