Q1: Select an organisation or a company that you are familiar with. Critically evaluate how this organisation or company has used and could use the main strategic marketing tools presented in this...

APPLE INC.

APPLE INC.
Strategic Marketing

Jue Xiang 1005302
11/22/2014
Jue Xiang (1005302)
1
Table of Contents
1. INTRODUCTION .............................................................................................. 1
2. COMPANY BACKGROUND ........................................................................... 1
2.1. Business Organisation ................................................................................. 1
2.2. Products ....................................................................................................... 2
2.3. Markets and Distribution ............................................................................. 2
3. PRODUCT LIFE CYCLE .................................................................................. 3
3.1. iPod .............................................................................................................. 4
3.2. iPhone .......................................................................................................... 5
3.3. Benefits ........................................................................................................ 6
3.4. Limitations ................................................................................................... 6
4. ANSOFF MATRIX ............................................................................................ 7
4.1. Market Penetration ...................................................................................... 7
4.2. Product Development .................................................................................. 7
4.3. Market Development ................................................................................... 8
4.4. Diversification ............................................................................................. 8
4.5. Benefits ........................................................................................................ 9
4.6. Limitations ................................................................................................... 9
5. CONCLUSION AND RECOMMENDATIONS ............................................... 9
BIBLIOGRAPHY ........................................................................................................ 10
Appendix I – Timeline of Apple Inc. Products ............................................................ 12
Appendix II – Revenue by Apple Inc. Products .......................................................... 13
Appendix III – iPod Sales Chart .................................................................................. 14
Appendix IV – Ansoff’s Matrix of Apple Inc. Products ............................................. 15
Jue Xiang (1005302)
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1. INTRODUCTION
Kotler (1997) notes“Marketing is not like Euclidean geometry, a fixed system of
concepts and axioms. Rather, marketing is one of the most dynamic fields within the
management arena. The marketplace continuously throws out fresh challenges, and
companies must respond. Therefore, it is not surprising that new marketing ideas
keep surfacing to meet the new marketplace challenges.”
This paper critically evaluates how Apple Incorporation uses strategic marketing tools
including product life cycle and Ansoff matrix to manage with its product portfolio in
general and individually, and objectively assesses the success and failure events of
how Apple Inc. implements the marketing strategy. The benefits and limitations of
using marketing tools are discussed.
2. COMPANY BACKGROUND
In this section, Apple Inc. is briefly introduced into three parts related to its history,
current situation and future trends.
2.1. Business Organisation
Apple Computer Company was established on April 1, 1976 by founders Steve
Jobs and Steve Wozniak (Apple Computer Company Partnership Agreement,
1976). The company renamed Apple Inc. and it was incorporated in the state of
California on January 3, 1977 (Investor Relations, 2014). Apple Inc. converted to
public ownership and debuted on the stock market with a valuation of $1.8 billion
in 1980. In 1985, Jobs resigned from Apple Inc. However, Jobs went back to
Apple Inc. as an advisor because of NeXT Software in 1996. In the following year,
Jobs became an interim CEO and he was officially commanded as CEO in 2000.
The iTunes Music Store opened in 2003 with its success of iPod launched in 2001
(Linzmayer, 2004).
Nowadays, the current CEO of Apple Inc. is Tim Cook and the company is
headquartered in Cupertino, California (Investor Relations, 2014). Apple Inc.
designs, develops, and markets consumer electronics and personal computers, and
sells a variety of related software, online services and accessories. The business is
mainly managed on a geographic basis and operating segments includes Americas,
Europe, Greater China, Japan, Rest of Asia Pacific and Retail (10-K Annual
Report, 2014).
The Company’s mission is that “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 the future of mobile media and computing devices with iPad.”
(Investor Relations, 2014).
http://en.wikipedia.org/wiki/Steve_Jobs
http://en.wikipedia.org/wiki/Steve_Jobs
http://en.wikipedia.org/wiki/Steve_Wozniak
http://en.wikipedia.org/wiki/Cupertino,_California
http://en.wikipedia.org/wiki/California
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The broad strategy is to effectively build and expand retail, online stores and
third-party distribution network to increasingly attract more customers with
providing high-quality products and services. Additionally, the Company will
continuously keep large investment in R&D, advertising and marketing which
could deliver innovative products and technologies (10-K Annual Report, 2014).
2.2. Products
A personal computer Apple I was the first product that Apple Inc. launched in
1976 followed by series product Apple II and Apple III released. By 1984, Apple
introduced Macintosh which was the first computer with a mouse and a graphic
display and it became successful. The all-in-one iMac was released in 1998 and
aimed at computer market with an annual sale of 5.9 billion. The iPod was
designed and introduced in 2001 (Linzmayer, 2004). Products timeline see
Appendix I.
Now, Apple’s products and services include iPhone
®
, iPad
®
, Mac
®
, iPod
®
, Apple
TV
®
, the iOS and OS X
®
operating systems, iTunes Store and App store, and
third-party accessories, service and support offerings. iPhone combines a phone,
music player and internet communication in one product which is based on
Apple’s iOS Multi-Touch™ operating system. iPad is a multi-functional
electronic device (10-K Annual Report, 2014).
iPhone and iPad are the major products of Apple Inc. that bring the company’s
most revenue. From the latest Q4 2014 report generated by Apple Inc., the
Company globally sold 39.3 billion units of iPhones and 12.3 billion units of
iPads, which account for 56.2% and 12.6% of its total revenue respectively (Q4
2014 Earing Releases, 2014). Revenue by products see Appendix II.
2.3. Markets and Distribution
Currently, the position of Apple Inc. in the market involves consumer, small and
mid-size business, education, enterprise and government. During 2014, the
Company’s net sales are accounted for 28% and 72% for direct and indirect
distribution channels respectively. The Company continues to expand the number
of retail stores worldwide and typically emphasises on busy areas located in
quality shopping districts, aiming to provide marketing strategy of direct contact
with targeted customers to overcome competitors. On the other hand, the
Company trusts to delivering technical solutions for educational institutions (10-K
Annual Report, 2014).
For global smartphone market, research firm IDC gives a market share report of
mobile operating system in Q4 2013. The report shows that Apple’s iOS had 18%
share and Google's Android had 78%. From IDC’s perspective of market
forecasting, geographic segments Asia and China dominates the major growth
(Edwards, 2014).
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The Company focused on the markets related to personal computer and mobile
communication. However, the markets are highly competitive that Company’s
products features are partially imitated by other competitors (10-K Annual Report,
2014). Main direct competitors would be Samsung Electronics Co. Ltd.,
Amazon.com Inc. and Google Inc. on both hardware and software products fronts.
Lycamobile and Lebara can be indirect competitors as they are...