Apple Recommendation Report
Apple Recommendation Report
Over Apple’s thirty-five year history, Apple has become the worldwide model for what a successful company should look like. Apple’s annual revenue climbed to $108.25 billion dollars and their shares rose 75% during the fiscal year of 2011. After winning the _Fortune_ “Most Admired Company” award for the fifth year in a row and having their value top the $600 billion dollar mark, Apple is asserting its position as the most valuable US company in the world (“World’s Most Admired Companies 1). For Apple to maintain their patterns of growth and dominance in the consumer electronics industry, they will need to place more of an emphasis in growing the Apple brand in international markets.
_PURPOSE AND SCOPE_
The purpose of this report is to analyze Apple’s marketing and sales strategies and provide recommendations where improvements can be made. The report will include the following: (1) The history of Apple as a company. In order to analyze the progression of Apple’s marketing and sales strategies, it is crucial that the members of the consulting team know what type of company Apple is and have sufficient background of the company; (2) The foundation of Apple’s success in launching each new innovative line of products has been their focus on providing a premium product that any type of consumer can understand. Apple has been able to take their vision based around ease of usability for the consumer and develop one of the most unique marketing platforms the electronics industry has ever seen.
This section will discuss the pros associated with each one of Apple’s marketing concepts, ranging from strategies regarding retail stores specifications to packaging details. Each marketing tool that Apple has utilized that has provided a benefit will be discussed in detail; (3) Finally, a list of recommendations for Apple’s marketing and sales strategies will be provided. I will also incorporate the weaknesses I have found from Apple’s marketing and sales strategies and use them to help develop the basis for my recommendations. While the statistics clearly show that Apple has been able to revolution the electronics industry, there is room for Apple to make adjustments to help capture further market share.
Over the past twenty-five years, advancements in technology have created an industry in consumer electronics (computing devices, mobile devices, and AV products) that was valued at $239.4 billion dollars for the US market in 2011 and $964 billion dollars for the global market in 2011 (“United States Consumer Electronics Report Q1 2012” 1). With the US economic crisis negatively impacting the majority of industries in the US, the consumer electronics industry only dropped 1% for 2011. Had it not been for Apple, the industry as a whole would have dropped 6% (Halk 1). Apple is now the biggest US player in the consumer electronics industry, with massive potential upside. The global consumer electronics market will continue to grow each year as new drives in technology continue to pump out new products. With 40% of Apple sales coming inside the US, the room for Apple to capture the international market has never been higher. I am confident that if Apple adheres to the recommendations provided, the net result will be financial gains and global expansion.
The information from this report came from a range of electronic sources and the Steve Jobs biography. The electronic sources include business databases, marketing research databases, and online journals and articles. I have found the business databases to be extremely helpful in performing forecasts and projections for future trends in the consumer electronics industry, whereas the Steve Jobs biography provided extremely useful insight into Apple’s marketing strategies.
BRIEF HISTORY OF APPLE INC.
Steve Jobs and Steve Wozniak had been long time friends since high school. They both shared a passion for electronics, and in 1976, Wozniak developed the Apple I computer in the garage of Steve Jobs. At the time, the Apple I was the first computer with a single circuit board used in a computer. While Wozniak was the genius behind the engineering of the product, he did not see a potential business for the Apple I and was merely proud of the technological breakthrough. Steve Jobs insisted that Wozniak allow him to try and market the innovative product. Due to the young ages of Jobs and Wozniak, they turned to one of their co-workers Ron Wayne (who had started up two companies before working with the two) for help in becoming a new company.
On April 1, 1976, Steve Jobs, Steve Wozniak, and Ron Wayne officially launched Apple Computers Inc. out of Cupertino, California. After helping with the documents to start the company, Wayne signed a withdrawal of ownership in the company, so the majority owners were now Jobs and Wozniak. The two had a partnership that perfectly complimented one another. Jobs was the consummate salesperson and visionary, while Wozniak was the technological genius. Jobs began going to each local computer store to try and sell the Apple I and eventually Paul Terrell’s Byte Shop to bought 50 computers. This was the first time that Jobs saw the potential this new technology had in the market.
After peddling to local stores, Jobs realized that they needed to find more capital, due to how many orders were being placed. Wozniak continued to work to develop new products, while Jobs searched for possible investors. Jobs ended up meeting a man named Mike Markkula who saw Apple Computers Inc. as the next breakthrough company in the US. Markkula ended up investing $92,000 dollars, with the intent to invest $250,000 more. Markkula began meeting with Jobs regularly to implement a business plan to match the massive potential the start-up company had. Markkula helped Jobs write a business plan, predicting sales of $500 million in 10 years (Linzmayer 1).
_MARKETING STRATEGY IS BORN_
Markkula would become a father figure to Jobs. Markkula helped instill in Jobs the one principle that would lead to the eventual success of Apple, “you should never start a company with the goal of getting rich. Your goal should be making something you believe in and making a company that will last” (Isaacson 78). I provide this much detail up to this point because this is where Apple came up with their first marketing strategy titled “The Apple Marketing Philosphy.” Jobs and Markkula came up with three principles that became the face of Apple Computer Inc. The first was empathy, an intimate connection with the feelings of the customer: “We will truly understand their needs better than any other company.” The second was focus: “In order to do a good job of those things that we decide to we, we must eliminate all of the unimportant opportunities.”
The third and equally important principle was imputing. It emphasized that people form an opinion about a company or product based on the signals that it conveys. “People DO judge a book by its cover. We may have the best product, the highest quality, the most useful software etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities.” This is the point in time where Steve Jobs would understand the needs and desires of consumers better than any other business leader. He would focus on a handful of core products, and he would care, sometimes obsessively, about marketing and image, even down to the details of packaging (Isaacson 78).
_PRODUCT EVOLUTION AND FINANCIAL HISTORY_
Apple began to create momentum in the market and started placing orders on a larger scale. Apple then developed the Apple II (an epic failure), and visited the Xerox PARC in Silicon Valley. This is where Apple “borrowed” Xerox’s graphical user interface technology, which technology would set the platform for all of Apple’s future products and eventual success. At this time, Jobs said one of his most famous quotes from Picasso “Picasso had a saying- ‘good artist copy, great artists steal’ – and we have always been shameless about stealing great ideas” (Isaacson 98). At this point, Apple had begun to see enough success and went public, with the largest IPO (Initial Public Offering) since Ford went public in 1956. Apple’s debut valuation was $1.8 billion dollars; with shares being traded at $22 dollars a share. More than 40 Apple employees became millionaires over night. Apple had been developing the Macintosh computer, “the computer for the rest of us,” and it debuted on the market in 1984, with the help of Apple’s infamous commercial “1984.”
The Macintosh had the capabilities to be the best computer on the market at the time, but the price was still too high. Apple worked to remodel the Macintosh and by 1990, Apple was able to create a low cost desktop. This was a significant point in their history because they now had created a product that was available to the masses, whereas competing PC companies were selling largely to corporations at a higher price. Apple would build off this philosophy and with continual innovation, Apple was able to come out with new product line after new product line that was targeted for the everyday consumer. New products, up until the current date include: the powerbook, iMac, iPod, Macbook pro, iPad, and iPhone. Each new line of products provided such ingenuity and creativity that the typical consumer didn’t know what to think of the technology. This required Jobs and Apple to be inventive in finding new ways to advertise Apple’s new products. Throughout Apple’s history, Steve Jobs (the CEO for most of the company’s life) would be the face of Apple and the reason that Apple’s marketing schemes were so successful.
Figure 1 shows the progression of each product from the launch of Apple through 2008 (iPad and newer versions of products dating post-2008 are not included).
FIGURE 1: PRODUCT EVOLUTION (1976-2008)
_(SOURCE: HOFFELDER, EBOOKNEWSER)_
In the next section, I will emphasize how important Apple’s incorporation of solid marketing concepts was in successfully launching each wave of products. With each new product launch, Apple continued to grow. By the end of 2011, Apple recorded $108.25 billion dollars in sales. Apple’s stock went from $22 dollars a share initially to current shares being traded at $630 per share. Apple currently has 63,300 employees and 361 retail stores worldwide. The head of the board of directors is Arthur Levinson and the CEO is Timothy Cook. Through the visionary ideas of the late Steve Jobs, Apple has created a consumer electronic empire; with the company being valued over $600 billion dollars (Goldman 1). In the five years between 2003 and 2008, Apple’s share valued increased by 25 times, from $7.50 per share to $180 per share (Hoovers 1). Figure 2 displays the significant increase in revenue and net income for Apple from 2007-2011.
FIGURE 2: REVENUE AND NET INCOME INCREASES (2007-2011)
_(SOURCE: APPLE INC., HOOVERS)_
MARKETING AND SALES STRATEGIES: PROS
_DIFFERENTIATION MARKETING STRATEGY_
As the information about the history of Apple shows, the unique and innovative nature of Apple’s products created a challenge for marketing. They needed to be able to come up with a marketing strategy that created enough publicity that consumers would be driven to try their product. Without proper advertisement, consumers would not lean towards buying Apple products, due to the sheer fact that the type of products that Apple was coming out with had never been seen in the marketplace before.
Jobs and Apple were confident that if they could get the consumer to buy an Apple product, then the superior quality and functionality of the product would retain the consumer as an Apple customer for years. Apple based their differentiation marketing strategy on creating unique features and characteristics that enabled Apple to command a premium price for their products. Combine this with high customer service, superior quality, rapid innovation, and Apple’s prestigious brand name and Apple had a plan for success.
Apple’s approach to their business is exemplified by their vision “Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them” (Apple 1). This idea demonstrates the ideology that Jobs had in creating a product that was above the market place. Apple’s goal was and is to create products that are not typical of the industry standard. The mission statement of Apple is “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software, and Internet offerings” (Apple 1). This is the key concept behind each of the marketing concepts I will now discuss.
_IGNORE THE CRITICS_
“Great ideas often receive violent opposition from mediocre minds” – Albert Einstein. As Apple began to explore ideas for new and innovative products, they would build regardless of the perceived cost (Hangen 1). This allowed for Apple to come out with some of the newest and most bizarre product types to ever hit the consumer electronics market. The majority of the time, critics and potential investors would laugh at some of the ideas Apple had. Steve Jobs made it a constant from the top of the organization to the bottom of the organization that critics did not know what would and would not be a success in the consumer population. This idea was taken to such great heights that Apple notoriously did not even believe in market research. Apple would scoff at the notion of target markets, and they don’t conduct focus groups. Apple designs are based on Jobs’ and his team’s perception of what they think is cool and going to be a potential hit.
Jobs states: _”It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That’s what we get paid to do. So you can’t go out and ask people, you know, what’s the next big [thing.] There’s a great quote by Henry Ford, right? He said, ‘If I’d have asked my customers what they wanted, they would have told me ‘A faster horse.” Jobs and Apple hire really smart individuals and allow them to be let loose (Breillatt 2). They are told that no idea is a bad idea. The employees are told to try to innovate and don’t listen to anyone else, and simply go off what they feel is going produce the next big hit._
_PERFECTION TO DETAIL_
_Every since Steve Jobs first came up with Apple, he had one trait that dominated the rest: perfection to detail. His father was a mechanic and from birth, Jobs was able to realize the importance of craftsmanship. When Apple first processed the Apple II, Job’s rejected the original designs of the logic boards inside of the Apple II because the lines were not straight enough. While Jobs was noted as taking this too obsessive habit too far at times, the benefits of Apple’s flawlessly manufactured products provided clear benefits for the company down the road. Steve Job is quoted saying “For you to sleep at night, the aesthetic, the quality, has to be carried all the way down” (McAllister 1).
Apple has taken passion for perfection to the next level. Every detail, even the invisible ones, was created with great care to attention. Apple doesn’t focus on one aspect of the equation; the focus is on the equation of the whole product. Apple has used this perfection to detail concept to market all of their superior products. Apple is continually, in both ads and product descriptions, marketing on the fact that they have the most finished and detail oriented product on the market. This has been a major reason for why Apple consumers are so happy with the overall quality of the product they are receiving. Figure 3 helps to demonstrate the method in which Apple has been able to market their perfection to detail to the consumer._
_FIGURE 3: DETAILS THAT MATTER PRODUCT DESCRIPTION_
(SOURCE: PRODUCT DESCRIPTION, APPLE)
_JUSTIFY THE PRICE_
As stated above, Apple builds beautiful products for an audience that loves them passionately. Then, Apple is able to justify their high price with features and benefits that can’t be matched by any other company. Society is at a time when pricing strategies are all over the place. Companies don’t know what to charge because they are afraid to lose potential consumers if they overvalue their product. Typical companies shoot to the bottom price, instead of strategically pricing a product to what the consumer will pay for a certain good. Apple ignores the traditional model and has built a sales strategy around what they believe is the quality of their products.
The pricing for Apple products is two times greater than what their competition charges, but amazing they are still able to dominate the market. No other company can match the 27″ display of an iMac. No other software can match what iTunes brings to the table. No other laptop is as thin as the Macbook Air. No other phone has the capabilities that the iPhone has. No software is more intuitive and no product more valuable than the Apple’s and they knows it. Apple has created a line of products that is the Rolls Royce of the technology and design world and this allows them to create a sales model that they know their customers will pay for (Hangen 2).
_COMMUNICATION TO CONSUMERS_
The consumer electronics and technology industry is considered to be a very complex industry for the everyday consumer to understand. Historically companies within the industry have not been able to relate to consumers on a personal level. Companies in consumer electronics and the technology industry will talk right over the customer’s head, leaving them clueless about what they may be potentially buying. This has been a problem for companies to be able to capture a larger market share within the consumer electronics and technology industry. Jobs and Apple were able to take the gigahertz, megabytes, and technical jargon completely out of their line of extremely technologically advanced products.
This created an environment where the consumer truly felt like they understood the products Apple was releasing, when in actuality, the technology behind Apple’s products is extremely intricate. Take a look at the way Apple markets any of their products in their product page and you will see that they do discuss product specifications and technical information, but it’s hidden behind the benefits that their audience is truly after. Instead of phrases like display resolution, you’ll see phrases like “edge to edge glass.” The technical jargon is at the bottom of each page, but the easy to comprehend phrases for advanced products is what has made Apple products so marketable to the masses (Hangen 3).
_BUILD A CULT_
Through the superiority of quality in Apple’s products, they have been able to satisfy the vast majority of their customers. By creating products that don’t contain viruses, customers are typically more satisfied with Apple products than with other consumer electronics company’s products. This has allowed Apple to build a brand recognition that is second-to-none in the world right now. Apple offers warranties, free technical support for any problems with the products, and offers guarantees about the quality of their work. This has created a fan base, referred to as “Apple fanboys” that is incredibly loyal to Apple. Apple will build hype around a product months before its release date. Then in the weeks before the product goes public, Apple performs a grand unveiling of the product. The unveiling includes a demonstration of the proto-type and presentation of all the features and functions of the product.
Then, Apple is essentially able to create such a demand for the product based around the hype and consumers will wait in line for over twelve hours to be the first to receive the product. This makes for an experience where if you aren’t one of the first to have the new Apple product, you are not truly a fan of Apple and a part of the trend. Apple has been able to market around the experience of unveiling new product lines, and thus, helped create a customer base that feels passionately about Apple. Apple could essentially release anything and consumers would still buy the product, simply based off brand recognition. Apple has been able to create a brand, in which cool, stylish, and sophisticated are the connotations associated with the type of consumer Apple has essentially created. As the saying goes “once you go Mac, you never go back” (Thompson 1).
_BECOME THE NAME_
Once Apple has achieved their customer fan base and superior brand name, Apple than has been able to capitalize on “becoming the name.” Consumers don’t want to buy MP3 players, they want to buy iPods. Consumers don’t want to buy smartphones, they want to buy iPhones. Consumers don’t want to download music on the internet, they want to go to iTunes. Apple isn’t trying to fit the consumer electronics industry standard, they are trying to own and dominate a market of their own. The iPhone wasn’t the first smartphone, but Apple engineered it to be so unique that customers couldn’t help but think it was the first. The iMac isn’t the first all in one computer, but it became the only one that mattered (Hangen 4). By marketing off of the brand recognition that Apple has already created, Apple is able to drive consumers towards buying their products.
For their commercials over the past five years, Apple has chose to stick with the original naming of each product line. Apple has driven their focused group of products into a different category of consumer electronics. The launch of every new line is simple, using wording such as “the new iPad,” instead of creating an entirely new name. This has been the key to Apple’s success over the recent decade. Apple is a multibillion-dollar company that has only 30 major products on the market. When you look at the types of revenue Apple is producing on an annual basis, there is no other company with that high of sales that only have a product line of 30 products. This focus on driving the brand and creating a core foundation for their business has been what has enabled such an extensive level of attention to excellence, and in turn, create a superior quality product that is recognized worldwide.
As each new wave of products was released, Apple came up with unique commercials and marketing tools to generate publicity. The first commercial Apple every launched was in 1984 for the Macintosh computer. The commercial, called “1984,” could perhaps be the most important PR decision made by Apple to date. The commercial was directed by Ridley Scott and aired during the third quarter of Super Bowl XVIII. The commercial was an extremely bizarre ad, with zombies and a woman incorporated into the commercial. Most say the zombies were symbolic of Microsoft users, while the woman that freed the zombies in the commercial symbolized Apple giving the freedom back to the people (Dougherty1). The commercial was able to bring much needed notoriety to the Macintosh line of computers. The commercial also foreshadowed an element of advertising that Apple would use for each new product launch: uniqueness.
Through the years, Apple has utilized distinct campaign slogans to launch their new lines of products. From 1970-2009, Apple has seen a variety of different slogans that have been the emphasis for the commercials and ads. The list of slogans the company has used during that time period is: “Byte into an Apple” (Late 1970s), “Soon There will be 2 Kinds of People” (Early 1980s), “The Computer for the Rest of Us” (1984), “The Power to Be Your Best” (1990), “Think Different” (1997-2002), “Switch” (2002-2003), and “Get a Mac (2006-2009). With each slogan came a clever and unique way to convince consumers that they needed to join the Apple revolution. While other companies would simply show their product and list the specifications in their commercials, Apple would find a funny and unique way to convince users that the product users were currently using were inferior to Apple’s products.
For Apple’s “Think Different” campaign, Apple created a one-minute commercial featuring black and white footage of significant historical figures of the past including: Albert Einstein, Bob Dylan, Martin Luther King, Jr., Richard Branson, John Lennon, R. Buckminster Fuller, Thomas Edison, Muhammad Ali, Ted Turner, Maria Callas, Mahatma Gandhi, Amelia Earhart, Alfred Hitchcock, Martha Graham, Jim Henson (with Kermit the Frog), Frank Lloyd Wright, and Picasso. This pushed the public into realizing how innovative Apple products really were by directly comparing Apple as a company to the above listed revolutionary figures in history. For the print ads in _Newsweek_ and _Time_, Apple printed a historical figures picture with the slogan “Think Different” next to it and Apple’s logo at the bottom. This was crucial in helping to create the common connotation we hold today that Apple = innovation. The focus on this campaign was to build the brand rather than build the products.
Another major campaign that helped become the turning point for Apple is the iPod commercials. What the majority of Apple consumers don’t realize is that the initial launch of the iPod was an epic failure. The software and technology was incredible, but the lack of a clever advertising campaign caused the iPod launch to be a failure for the first two years. For the first two years that the iPod was on the market, the iPod only was able to sell 125,000 units. Then, Apple promoted the iPod and iTunes combination with several advertising campaigns featuring people in the commercial as black silhouettes, dancing to music against bright-colored backgrounds. The silhouettes hold their iPods, which are shown in a distinctive white color. Figure 3 is an example of the iPod advertisements that helped turn the success of the iPod around.
FIGURE 4: IPOD SILHOUETTE ADS
(SOURCE: IPOD ADVERTISEMENT, APPLE)
This campaign could be attributable to the turning point of Apple’s success as a company. The success of the iPod is what helped turn Apple’s stock around from $7.50 per share in 2003 to $180 per share in 2008. After the silhouette ads were aired on TV and printed in magazines, the sales of the iPod went from 125,000 units to over 10 million units sold. In the year of 2011, over 304 million iPods were sold (Costello 1).
The last major successful ad campaign that helped bolster Apple’s revenue was the Apple vs. PC campaign. In 2006, Apple released a controversial series of twenty-four “I’m a Mac, I’m a PC” advertisements as part of their “Get a Mac” campaign. The campaign stretched from 2006-2010 and demonstrated the advantages of a Mac product compared to their biggest rival’s, Microsoft, PC products. By intelligently comparing the Mac’s operating system to the operating system of a PC, Apple was able to use irony to exploit Microsoft’s operating system. The flaws and weaknesses in Microsoft Window’s operating systems were brought in full view in a smart, intriguing, and amusing way. This helped Apple close the gap between Microsoft and Apple, while also solidifying to the public that Apple had the better operating system.
The key positive takeaway from Apple’s advertising campaigns is that they consistently used bizarre, unique, or funny methods to grow their brand. Apple always portrayed their products as a need for a sophisticated, but fun way of life. Their advertisements enabled Apple to become a household name and to grow their brand into the one of the most recognized brands in the world today.
Apple currently has 361 retail stores worldwide. Jobs and Apple were able to take the traditional boring computer sales floor and turn it into a sleek playroom filled with gadgets. The features of the Apple retail stores include: a theatre for presentations and workshops, a studio for training on Apple products, an open style floor with products on display for consumers to walk around and observe, and the infamous genius bar, which is a group of employees that are experts on Apple products that provide technical support and handle repairs for Apple products. The first two Apple stores were launched on May 19, 2001 in McLean, Virginia and Glendale, California. Upon the first announcements of the launch of the Apple retail stores, many analysts expected the idea would be a huge bust.
David Goldstein, president of consulting firm Channel Marketing, said, “I give them two years before they’re turning out the lights on a very painful and expensive mistake” (Loyola 1). In their first two years of 2002 and 2003, the Apple retails stores posted a $22 million dollar and $5 million dollar loss respectively. From the years 2004-2010, Apple proved their critics wrong and the Apple retail store became a wild success. By 2010, Apple reported $9 billion dollars in sales revenue from the Apple retail stores and $2.4 billion dollars in retail profit. In just the first two fiscal quarters of 2011, Apple reported retail sales of over $7 billion, and a retail profit of $1.8 billion. Figures 5-7 demonstrate the growth of sales, profits, and total number of visitors to each Apple retail store.
FIGURE 5: APPLE RETAIL SALES (2001-2010)
FIGURE 6: APPLE RETAIL PROFITS (2001-2010)
FIGURE 7: TOTAL APPLE RETAIL STORE VISITORS (2001-2010)
Apple currently produces $4032 of sales per square foot of an Apple retail store. Clearly, the Apple retail stores turned out to be one of the most unique and successful retail stores in the history of consumer electronics retail.
_PACKAGING, MANUAL, AND WARRANTY_
Apple’s look is always simple and clean, and Apple wanted their packaging of products to reflect that look. The art on the cover of the box in which Apple products come in is a life-size photo of the product inside. There are no words on the front, besides the name of the product. Since simplicity is exactly what consumers want, the packaging became a perfect marketing message for building anticipation and making the product the star. The material for the packaging is extremely high quality with a soft, rich finish, dull varnish, slightly cream coloring with a silver metallic foil Apple logo on the box (Slivka 1). The details are extremely precise, down to the actual good feel of the box itself. When the consumer receives the Apple product, there is not a thick manual.
Instead, there is simply a two-sided card that leads you to the product instructions on the web. It is such a simple way to learn each new Apple product, that Apple has been able to market their products to any generation of user. Also, each Apple product comes standard with an AppleCare warranty. This provides the consumer with security because Apple will cover any damages to the software or external make-up of the device, unless the product is dropped or has water spilled on it. By packaging such a simple box that makes the actual product the highlight feature and providing a manual that is so simple that anyone could use it, Apple is able to stay consistent with their overall marketing theme of ease of use for the consumer.
_SUMMARY OF PROS_
The summary of the pros that have been listed is that Apple has been able to grow revenue by 20% each quarter for the past five years. Apple has been able to create a marketing and sales strategy, in which the customer is always right. This concept is what has helped build their loyal fan base and grow their brand both domestically and internationally. Apple has built a superior brand based on amazing technology and innovation, but is focused around a user-need driven goal. The end result is one of the fastest growing companies (revenue-wise) of all-time, as displayed by figure 8.
FIGURE 8: QUARTERLY SALES BY PRODUCT (2005-2011)
(SOURCE: SLIVKA, MACRUMORS)
Apple has clearly been able to positively utilize a detailed marketing and sales strategy based around the user. While the majority of Apple’s ideas have resulted in a success, there are a few strategies that have resulted in failures. For this, I have come up with a list of recommendations to help Apple continue to expand and grow. Here is my list of recommendations:
1. _PLACE MORE EMPHASIS ON GLOBAL EXPANSION WITH CONSIDERATION TO PRICE ADJUSTMENTS_
40% of Apple’s sales come from sales in the US (Hoovers 1). With a global consumer electronics industry valued at $964 billion dollars and Apple still being behind Intel, HP, and IBM in international sales, Apple has huge potential to seize the international market share. Apple has asserted its dominance and outperformed the likes of Intel, HP, and IBM in the US, so there is no reason why they cannot take their US business model and incorporate it worldwide. From 2007-2010, Apple seriously overlooked the European market, where they left 300% revenue margins on the table. Also, India and China have two out of the largest five populations of young adults under 30 years old, which age group has been inclined to innovation and technologically sophisticated products (Vertygo Team 1).
I recommend that Apple come up with a strategy to expand their brand into more countries (as they have retail stores in only 15 countries) and place a strong emphasis on capturing the global consumer electronics market. Apple must focus on buying power in international markets. In order to capitalize on the international market, Apple also must consider lowering the price of their products in certain price sensitive areas of the Asian and European market. With the rate Apple has grown at for the past decade, I do not see why the implementation of this plan could not bolster their valuation to $1 trillion dollars in the next 10 years.
2. _OPEN MORE APPLE RETAIL STORE LOCATIONS, BOTH DOMESTICALLY AND INTERNATIONALLY_
As the information from my report shows, the Apple retail stores have proven to be a tremendous success. The only problem is that there are currently only 361 locations worldwide in only 15 countries. I recommend that Apple continue to launch more retail stores worldwide, using their $100 + billion dollars in cash that they currently have. This would greatly help in expanding Apple worldwide.
3. _CONTINUE TO INNOVATE AND ENGINEER NEW PRODUCTS_
Apple has proven that they know what it takes to be the most successful company in the world. At this point, one of my best recommendations is simply to continue to innovate and engineer new products. Apple has methodically boosted revenue and expanded their company year after year. By continuing to come out with new products, consumers will stay loyal and interested in Apple. Apple will continue to be able to market and advertise their brand, and with each new product more and more customers will likely jump on the Apple bandwagon.
4. _DECREASE DELAYS FOR CONSUMERS BY INCREASING SHIPMENT SIZES TO RETAIL STORES_
One major problem that Apple needs to solve is the wait time for the new products. As previously explained, when Apple launches a new product they focus on building hype for the months prior to the launch of the new product. This creates a frenzy of users wanting to buy Apple products and placing their orders early to ensure they receive the new product. Consistently, Apple makes its customers sign onto waiting lists to order their products, where they are often besieged by further delays. Apple must find a way to ship out more products to each retail store location, so that the delay problem will be solved. I recommend that Apple overstock each shipment to each individual Apple store or retailer by 10%. By doing so, Apple will still be able to put customers on waiting lists, but a much larger majority of the customers will not have to wait more than is already required for additional product to come into each location. This will help Apple maintain sales and retain customers.
5. _STRENGTHEN RELATIONSHIPS WITH GOOGLE AND PC INDUSTRY GIANTS_
As a reaction to a perceived threat from Google, Apple recently loosened overly stringent restrictions for developers that sought to develop applications for the iPhone and now allows developers to use a wider variety of computer languages with Apple’s operating system iOS (Valdes 1). As Apple makes 30% off of every application sold, their overly protective nature regarding compatibility issues, and their failure to respond to concerns in a timely enough fashion are a weakness that have caused them to lose business partnerships and revenue. I recommend that Apple strengthen the relationship with Google and the PC industry giants. By doing so, Apple will have more opportunities to participate in joint ventures as technology advances and provide security to Apple in an industry that has drastic changes year to year. This will also allow for Apple to have a more credible marketing strategy going forward.
6. _REMOVE PROPRIETARY SOFTWARE AND SUPPORT OPEN SOURCE DEVELOPMENT TO ATTRACT WORLDWIDE DEVELOPERS TO HELP WRITE APPLICATIONS FOR APPLE PRODUCTS_
Apple recently purchased a processor company and a microchip company so that they can begin designing their own CPUs and microchips. As such, fewer external sources will be involved in the development of their products (Hoovers 1). Designing their own chips will allow Apple to obtain better microchips for their products and share fewer details with external manufacturers. I recommend that by removing proprietary software and supporting an open source development will draw worldwide developers drawn to help write applications for Apple products, which will in turn create a larger base of products for Apple. Additionally, there may be tax and labor advantages to in-sourcing, however, the weakness in this approach lies that this behavior could lead to missed opportunities for improvements that their competitors will be sure to take advantage of. This will also create a situation where Apple will be able to implement more products into their corporate sales strategy.
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