Apple Inc.
STEPHANIE ZAU
WENWAN (SOPHIE) YANG
YI JU (GRACE) CHEN
DARENA TULANONT
Written Analysis of a Case
Apple’s 4 C’s
Customers
Competition
•Product based:
•iPod (young adults, students)
•iPhone (AT&T's, largest phone
service provider's customers,
wealthy)
•Mac (wealthy, innovators,
good jobs, trendy lifestyles)
•High end customer base
•Dependent on loyalty of customers
•Will demand quality, service and
dependability when buying
products
•Expects innovative products
•Tech-savvy
•Microsoft (compete in an OS area)
•Acer & Lenovo (big competitor if
Apple decides to go internationally)
•HP (strong presence in retail
channels, focus on design and
marketing strategies)
•Dell (direct sales and build-toorder manufacturing --> cost
saving)
•Samsung, Sony, Creative (iPod)
•Napster, Rhapsody, Walmart.com,
Zune Market place,
Amazon.com (iTunes
Apple’s 4 C’s
Company
•Innovation
•Strong relationship with customer
(love affairs)
•Vertically integrated company
•Oversees all of their product
•Premium and innovative brand
•Strongly emphasizes quality control
•Continuously expanding, updating
and creating product lines
Collaboraters
•Intel supplies microprocessors
•Microsoft for OS (initially)
•Toshiba
•Samsung
Apple’s 4 Ps
Product
•Trendy and stylish
•Durability
•High quality
•Personality
•Universal products
•Reliable
•“Cool to own”
•“Icons of the digital industry”
•Plug –and-play products
•Wide Range—different product lines (iPod, iPhone, iPad, Mac etc.)
•iPod – “foot in the door” to brand
•Strong “Apple” Trademark Company brand name with individual product (subbrands)
Apple’s 4 P’s
Promotion
•The surprise factor and incurred
curiosity regarding product (secretive
in rolling out new products, creating
hype, “Buzz”)
•Iconic silhouette (poster and
commercial)
•Commercial—people listening to
iPod and dancing
•“Think Different” video featuring
Albert Einstein
•AT&T contract (iPhone priced down
due to contract)
•Illustrate product portability and
user friendly
•It’s all about YOU (the “i” factor)
Apple 4 P’s
Place
•Apple Retail Store—unique retail
store experience
•Large retails (Best Buy, AT&T)
•Distributions channels which allow
them to have more control over their
products
•Online store
Price
•Depends on the product line:
•iPod (Affordable)
•iPod shuffle iPod Touch
•iPad (Expensive)
•iPhone (High)
•Mac (High to Expensive)
•High relative to market price
Value Proposition
To create innovative, trendy and high quality products that are user
friendly as well as to provide all consumers with excellent customer
service.
STP
Segmentation
Targeting
Positioning
Younger
generation and
students
On the constant look-out for "cool"
gadgets
Large pool of Word of Mouth (to
parents and friends)
Seeks user-friendliness
Volume
Product as a symbol of
"coolness"
Trendy, High price
Wealthy, trendy,
status seeking
people
Large margins
Raises prestige of product brand
Product that
represents customer's
wealth
Trendy, High price
Exclusivity
STP
Segmentation
Positioning
Targeting
Home buyers
(average Joe
consumers)
Looking for quality and reliability
Price reduction - low margins
Reliable, moderately
priced
Corporate
Long-term contract (Upgrades)
Low Margins
Volume
Wants reliability and performance
Reliable, moderately
priced
Government
Quality and ease of use
Secure settings
Specialized functions
Reliable, high
performance
Perception Map
Problems with Apple is Facing
 How to constantly maintain innovation
 Apple needs to keep up with its brand image
 How to expand PC's share of market (SOM)
 Mac fails to rise above 3% for worldwide PC market
 How to deal with products substitutes
 There are more choice for consumers in this fast-growing
industry
 How to acquire new customers
 Apple's major buyers are the loyalty consumers
SWOT Analysis
Strengths
•Brand Name
•Customer Loyalty
•Reputation
•Service
•Quality
•Unique Retail Experience
•Innovative Product Lines
•Unique Marketing and Advertising
Strategy
Opportunities
•International Expansion
•Product Improvements
•Increase demand of products
•Increase universality of products
Weaknesses
•Copycat Competition
•Bringing in new customers
•Maintaining an innovative momentum
•Cannibalization
•High Priced
Threats
•Great Competition
•Low prices of comparable products
•Imitation or substitute products
Potential Solutions
Outsource Control Over
Productions
Maintain Control Over
Productions
Transform Apple into a
Mainstream Brand
Maintain the High and
Premium Brand Image
Expand Global Market
Focus on US Target
Market
Outsource Control Over Productions
Implementation
•Utilize skills of other companies to contribute to the manufacturing
of Apple products
Advantages
1) Producing and manufacturing the
products will not cost as much
2) Will be able to lower to price of
their products
3) Larger target market because it is
more affordable
Disadvantages
1) Decrease Apple’s control over their
products
2) More likelihood that products will
let slip
• Other companies can find out
and copy the product
3) Will not have as much quality
control
•May take away from the brand
equity
Maintain Control Over Productions
Implementation
•Maintain the current structure of the company—vertically integrated
•Apple will be developing and producing their products, keeping control
1)
2)
3)
4)
5)
Advantages
Will be able to have more quality
control
Less likely other companies will
find out about their new products
Can feed off of the dramatic reveal
and hype of products to attract
customers
Will be able to turn out products
faster than other companies
Will reach the expectation of
producing innovative, quality
products
Disadvantages
1) Cost of the products will still be
high
2) Target market will stay the same
because still not as affordable as
other products
Transform Apple into a Mainstream Brand
Implementation
•Make products available in more distribution channels—not only primarily in
Apple retail stores
•Make the MAC Operating System compatible to all computers
•Lower profit margins
1)
2)
3)
4)
Advantages
Customers will be willing to buy
their product
Will cater to the customer’s needs
rather than giving a bundle package
with excess features
Will be able to sell more units of
each product
Larger target market
Disadvantages
1) Will retract from the brand equity
2) Brand will be less desirable because
not as “exclusive”
Maintain the High, Premium Brand Image
Implementation
•Increase Research and Development costs to maintain the innovative
momentum
•Maintain the high prices of the product
•Limit distribution channels—primarily sell products in Apple retail stores
Advantages
1) Products will be valuable and more
desirable
2) Loyal Apple fans are seen to be in
an “exclusive” group
• People will want to buy more
apple products so that they can
be in this elite group
Disadvantages
1) Only relying on loyal customers
base to continue buying products
2) Not as affordable
http://woorkup.com/2010/02/13/apple-sales-by-operating-segment-and-products-chart/
Expand Internationally
Implementation
•Change marketing strategy to cater to the country’s situation
•Emphasize an aspect of the brand that is valued in that society, addressing the
consumer’s need
•Must convince the consumer that they need this product
•Example: Asia
•Status is a very important aspect in an Asian society
•Can position the Apple brand as being a high status symbol
•Seen as the “Louis Vuitton” of purses
Advantages
1) Will expand their market
2) Will sell more units and generate
more profit
Disadvantages
1) Will be competing with an entirely
different market
2) Must completely change marketing
strategies to convince consumers
they should purchase the Apple
product over competitor products
Focus on US Target Market
Implementation
•Focus on consumer needs of the US Target Market
•Follow the trends of what is desired
•Improve off of feedback from consumers
Advantages
Disadvantages
1) Will be able to focus attention most 1) Large international target market
important target market
will be disregarded
2) Will be able to more effectively
2) Opportunity to sell more products
cater the product to the needs of US
will be lost
consumers
Recommendations
1) Expand Internationally




Opening retail stores
on other countries
Rationale: secure
significant market
share in emerging
markets such as Asia
Diversify risk by
investing in multiple
markets
Build image as a
prestige global brand
2) Target Specific Markets
with Different Strategies
 Different strategies for
different target markets
 For instance, in Asia, people
have lower standards of
living, so only target the
well-off people who have the
purchasing power and who
value innovation
 Different regions react
differently to the same
marketing campaigns
Recommendations
3) Maintain Control over
Productions
4) Maintain Brand Image
and Prestige
 Outsourcing will hurt the
 Apple’s values are built
brand equity because
there will not be as much
quality control
 Maintaining control will
allow Apple to continue
to meet consumer
expectations of an
innovative, high end
product
on innovation and
prestige
 Drastically reducing
price may tarnish brand
image while driving out
existing, loyal customers
 Retain the same price
range and the trendiness
Recommendations
5) Increase R&D
Incrementally
6) Establish Corporate
Culture
 Keep the innovative edge
 Implement a corporate
by investing more and
more on R&D annually
 Being a technology leader
in the industry means
being the price leader
 Maintain brand image
 *See R&D Exhibit
culture that values
innovation and technology
 Set up a reward system and
a training system to foster
birth of both
transformational and
transactional leaders
 Promote the value of
innovation at all cost to
increase the return ratio on
R&D cost and R&D output
R&D Exhibit
Comparison of R&D Expenses of Major Companies
http://gizmodo.com/5486798/research-and-development-apple-vs-microsoft-vs-sony
Apple Learnings and Takeaways
 1) Different markets need different product positioning




to serve a particular segment.
2) Maintaining the innovation edge is crucial to Apple’s
success.
3) Company needs to maintain brand image when they
have established a strong positioning
4) Maintaining good relationships with collaborators and
channels is vital to the company’s market strategy as well
as their product execution.
5) If there is a strong brand association between products
lines, the halo effect will have a strong influence on the
overall brand image.