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Apple Company Market Research Project

MKT 305

By:

Shivam Shah, Kimberly Sahara, Carol Medina, Candice Koh, Jaaron Holmes, TaDarrius Douglas

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Table of Contents

Introduction………………………………………………………………………………………..3

Environmental Scan…………………………………………………………………………….....5

Economic Impact……………………………………………………………………….....5

Technology Trends………………………………………………………………………...6

Political-Legal Trends…………………………………………………………………......6

Socio-Cultural Trends…………………………………………………………………......7

SWOT Analysis…………………………………………………………………………………...8

Mission Statement………………………………………………………………………………..10

Competition………………………………………………………………………………………10

Target Market…………………………………………………………………………………….11

Product and Positioning………………………………………………………………………….16

Pricing……………………………………………………………………………………………18

Distribution………………………………………………………………………………………19

Promotion………………………………………………………………………………………...21

Recommendations………………………………………………………………………………..23

Works Cited……………………………………………………………………………………...27

Appendix…………………………………………………………………………………………35

Introduction

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When we think of innovative computer and cellular phone technology that is constantly

ever-changing, worldwide success, and brand and customer loyalty like no other, what company

usually comes to mind? Apple Inc. Now called Apple Inc., the company began as a manufacturer

of personal computers and it was first called Apple Computer, Inc. ("History of Apple Inc."). The

company we now know as Apple was not as internationally successful as it is today, but after a

few bumps in the road and under the leadership of its founder and former CEO Steve Jobs the

company was back on its feet. Steve Jobs managed to rebuild the company and Apple began to

make its return in 1998 with the introduction of some of its early hardware products including

iMac, iBook, and the Power Mac G4 ("History of Apple Inc."). The year 2001, however, was a

very important year for the company. It was the year that Apple introduced the iPod line and

Apple products started to become increasingly popular worldwide. From that year forward, the

company not only changed people's perception of music through the introduction of the iTunes

music store but also changed the way people communicate with one another since the release of

the iPhone ("Technology: Changing the Way we CommunicateMediaCAST Blog | MediaCAST

Blog."). The release of the iPad has helped consumers stay organized and entertained while also

offering mobility. Furthermore, without Mac desktops and laptops there would be no "mac users"

and media professionals wouldn't have the option of using a computer that is more reliable than

its competitors (Finnie).

Aside from being a top technology company worldwide, Apple has also paired up with

the (RED) charity to enhance its marketing strategy. The goal of this collaboration with (RED) is

"to fight for an AIDS-free generation by 2015" ("Apple - (PRODUCT) RED - Help fight AIDS

in Africa."). In order to do this, Apple has created red products and every time a consumer

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purchases one of the red products, the profits go to AIDS programs in Africa. The charity has

collected more than $50 million from Apple ("Apple - (PRODUCT) RED - Help fight AIDS in

Africa.). In addition to using cause marketing, the company has shown considerable interest for

its effect on the environment, specifically its environmental footprint. One of Apple's main goals

is to create environmentally friendly products. Apple aims to do this by designing products that

require less material and not only lessen carbon emissions but eliminate common toxic

substances that are used in manufacturing products ("Apple - The Story Behind Apple's

Environmental Footprint."). Additionally, Apple also reduces greenhouse gas emissions by

running several of their data centers on 100% renewable energy.

Apple's aim has been to provide consumers, businesses, students, and educational

institutions with the best personal computing experience. Not only has Apple Inc. redefined how

consumers use computers at home, school, and work but has also given consumers a whole new

perspective on the mobile phone and music industry all while exemplifying social responsibility

and environmental sustainability for its stakeholders. Apple's worldwide success is evidence that

the company has succeeded in accomplishing its mission in being one of the world's top

innovative companies.

Environmental Scan

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Economic Impact

Apple has created entirely new products and entirely new industries, by focusing on

innovation. Apple Innovations as a result have created or supported more than 500,000 jobs for

U.S. workers (Apple). With the different products that Apple has available to sell, consumers buy

a lot of supplies which brings money into the economy. Apple products are the first things

someone can name as being a want. Technology is something that is always modern, and

everyone wants to stay up to date with. Apple has always comfortably beats its revenue

estimates, originally when the iPhone was unveiled it was universally revered. Apple‟s release of

its products can impact US gross domestic product (GDP), Apple‟s shares have risen 50% this

year, making Apple the most highly valued company on the American stock market. In the past

11 years Apple has launched three products- the iPod, iPhone, and iPad that have created brand

new markets, fulfilling desires that consumers did not even know they had (Carmen Ballagan).

Apple has proven that it is possible to earn high margins with brilliant designs and by offering

consumers ways to access the internet effortlessly wherever they go. Apple shows that, even in a

period of recession, consumers are willing to pay for the must-have gadgets. Innovation has been

widely touted as the key to long term economic prosperity (Carmen Ballagan). Apple and the

U.S. tech industry have successfully coordinated global value chains to develop and manufacture

their products while focusing their own efforts on design, marketing, branding, and distribution.

Innovative products such as American technology products are designed and marketed by U.S.

companies; they create valuable jobs for American workers even if the products are

manufactured offshore (InformationWeek). Apple‟s tremendous success with their innovative

products in recent years has driven growth in U.S. employment.

Technology & Industry Trends

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Technology will always be an ever growing industry and the demand for efficient and

smart technological advancements has become more apparent. Everything is changing, consumer

products such as phones and tablets to the way your home computer accesses the Internet. Dual

core and Quad core processors have become the norm in smart technology; as a result people

should expect more powerful devices, smart devices in our pockets are far more powerful than

the desktop computers people dreamed of in the 1980s, as a result they could soon replace our

wallets as well (InformationWeek). Smartphones also bring computing power in the palm of our

hands, (NFC) or Near Field Communications, which is already part of many

smartphones.Imagine tapping your phone to a receiver at a register, instantly paying for an item

without fumbling for your wallet, or being able to load your transit card onto your phone, using a

simple tap to deduct money for every trip on the train (CNN). All things you can do now with a

smartphone would have seemed like science fiction only a decade ago.Because of Technology &

Industry Trends, it has also become easier and cheaper to add Internet connectivity over a mobile

network than to build physical telephone lines. Cheap tablets will bring changes in education,

health care, retail, automobiles.

Political-Legal (laws that impact the industry)

Large companies like Apple can financially support the political process in several ways.

They may give direct contributions at the state and local level. Companies like Apple engage in

political spending indirectly by supporting trade associations. Since 2002, Apple has been a

moderate political spender; the company has contributed approximately $580,000 in corporate

funds to political activities (Political Transparency and Accountability Profile). The debate over

“Net Neutrality” has been an ongoing problem for large technology companies like Apple.

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Congress and the FCC want to impose regulation if need be. Net Neutrality changes the way the

Internet operates (Political Transparency and Accountability Profile).

The push for modernization of the American healthcare system would provide

government money for infrastructure development and implementation for health care providers.

The adaptability of Apple‟s key products in innovation health centric ways could bring new

sources of revenue, because Apple creates new and innovative technologies it could raise the

future value of Apple.

Social-Cultural Trends

Internet and connectivity to the social world is driving a demand for access everywhere,

using high-speed wireless technologies. Smartphones, and other ultra-portable connected

devices, allow users to carry and have access to the Internet everywhere they go these are fast-

growing compared to traditional personal computers (InformationWeek). Apple and other

manufacturers face a loss of relevance in the new technological landscape, driven by consumer

preference. Apple‟s substantial investment in research and development in highly popular

devices, and is at the forefront of this transition. The production and shipment of Apple‟s devices

use considerable sources of carbon emissions and pollution, which may come under scrutiny as a

consumer concern for the environment, which continues to grow (Brian Masi). Apple has already

made commitments to green manufacturing practices as well as implementing the use of eco

-friendly components, and packaging. This proactive step can be used as a marketing tool to

harvest greater respect from concerned customers. Further, the Chinese economy continues to

grow despite worldwide economic contraction. The Chinese economy becomes more and more

developed, increased wages nationwide will increase the costs of production for Apple and its

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OEM partners. The increase in quality of life and disposable income to Chinese citizens will

provide a larger customer base for Apple to tap into (InformationWeek). Strict Carbon emissions

regulations impose a considerable financial burden on the production of Apple‟s products,

driving up costs and shrinking margins. Apple‟s initiative in implementing green practices sets

them apart from many competitors who will also feel the burden of regulation.

SWOT ANALYSIS

Strengths Weaknesses

-Early innovator of computer and non-computer -Price. Apple products in general are normally

technology products such as iPod, iPhone, mac higher priced than their competitors and consumers

computers, and apple TV ("MBA Lectures » Blog that are price sensitive tend to opt for lower priced

Archive » SWOT Analysis of Apple.") or cheaper alternatives. (Harrer)

-Apple is an internationally successful company --Some of Apple's products experience technical

("MBA Lectures » Blog Archive » SWOT Analysis problems and consumers complain that there's a

of Apple.") lack of customer care and having to purchase the

AppleCare package in order to resolve any

-High level of Brand loyalty among customers problems. (Crook)

(Goodson)

-iTunes purchased content such as eBooks, movies,

-The iTunes store is a big part of Apple's revenue. TV episodes and some music work only on apple

People buy music and applications conveniently for devices and computers. This Digital Rights

their Apple devices (Hornshaw) Management protection prevents users from

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moving iTunes content to other devices that are not

- Apple products are reliable, and it is a well-known apple devices.(Aimonetti)

company globally.

-Users would have to get used to the formatting of

-Apple is financially solid, no debt, and $13 billion their Apple products, and has a weak integration

net income in Dec 2011 quarter. between windows software and their apple

software.

Opportunities Threats

-Apple could think about possibly expanding its -Competitors such as Dell, HP, and Lenovo

iTunes store into China which counts for a major offering cheaper personal computer alternatives for

part of its revenue. (AP) students on a tight budget (Smith, “The 5 Cheapest

High-Quality”)

-Apple's collaboration with Bodhi to create an

exclusive handbag for Apple targeted for apple -Samsung will be releasing its Samsung galaxy

enthusiasts with a fashion sense. This will generate note 2 which is a direct competitor to the iPhone 5.

extra revenue/income for the company. ("Samsung Galaxy Note II vs. Apple iPhone 5)

(PRNewswire-iReach)

-Critics say that Android Jellybean is better than

-Apple can think about committing to be a iOS 6 overall. Which will have consumers opting

company that uses 100% renewable for android jelly bean phones. (Smith, “Android

energy.(Joshua) Jellybean vs. iOS 6”)

-Increase their advertising through new possible -Windows 7, and Google operating systems.

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avenues, ex: the fashion industry, film industry.

Mission Statement

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 (Apple).

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.

Competition

Apple creates computers, phones, tablets, music players, operating systems, television

set- top boxes, lifestyle, productivity software, professional media software, wireless routers, and

also sells movies and music. Products created by Apple are intuitive and easy to understand and

learn. Apple offers great customer service and in- store service experiences. Further, Apple stays

at least two years ahead of its competitors, having geniuses in design, software, and retail; Apple

has the cash to invent components, and manufacturing processes (Brian Masi).

Apple‟s direct competitors are Google, Samsung, HP, and RIMM. Apple by forging the

modern smartphone layout first and patenting its screen-centric design, Apple now finds itself in

the position of being able to force competitors to tread warily in their layout of smartphone

elements (Raymond Meyers). Apple has perfected the precision and responsiveness of screens,

the iPhone showed the potential of new screens by increasing their size, given the screens a hard

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glass surface that responded to light finger gestures (The Economist). Majority of other

technology companies have fewer design patents than Apple, design has become an advantage in

consumer choice as weak design patents will have to catch up. Competitors have fewer design

patents because they are less driven by design, unlike Apple much of the industry has produced

predictable standard computer boxes, laptops, and phones and make a minimal investment in

design (TechPinions). Apple ignored the competition and remained convinced that the original

iPhone‟s 3.5 inch screen was sufficient and stuck with it, however when Apple finally embrace a

larger screen size with the iPhone 5, it did not follow directly in its competitors‟ footsteps, rather

it implemented the new phone‟s larger screen in a way that clung to the original iPhone‟s design

goal of being usable with one hand. When Apple unveiled the iPad, competitors released

knockoff tablets with different screen sizes. Apple responded to the iPad‟s competitors by

releasing the iPad mini which is $329, while the Kindle Fire costs $159 and the Google Nexus 7

starts at $199.

Target Market

Apple‟s products and software target numerous markets as each offers an assortment of

features specifically catering to the needs of each individual. Apple targets users who are

typically between ages 14 and 55 plus. Apple's computers all target home users, schools, and

media and design professionals. The newest iMac computer that will be released in November

gives home users the option of conveniently having an all-in-one desktop with faster

performance capabilities and a new storage option called fusion drive. This form of storage helps

to manage files in order to expand performance ("Apple - Press Info - All-New iMac Features

Stunning Design, Brilliant Display & Faster Performance"). iMac computers are aimed towards

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education institutions. Apple offers iMacs to schools at a discounted price (Choi).

Graphic designers, television, movie professionals are also a target of Mac computers.

Graphic designers tend to use mac computers for several reasons: Mac OSX is open source

friendly, mac computers typically come with built in tools made with designers in mind, and

Apple builds their computers with all media professional consumers in mind (Nutter). Even

though you can't really customize Mac OSX like you can in windows, Apple picks the right

software making the computers easier to use. Programs built in mac computers are targeted

directly at television and movie professionals called Final Cut Pro. The program is used mainly

for video and audio editing (Arvidson). Apple's iPhoto software is available on mac computers

which lets those who are photo enthusiasts browse, edit and share photos ("Apple - iPhoto - New

full-screen views, emailing photos, and more.").

College, High School students and faculty and staff of K-12 and higher education

institutions are another group targeted by Apple's Education store. College, High School students

and faculty can receive discounts if the Apple devices are purchased through the institution

("Apple Education Pricing."). College students are also a major target because universities are

now working with wireless carriers in order to make these phones more accessible and affordable

for students. Small to large sized businesses are now providing their employees with iPhone‟s in

order for them to be mobile and stay in contact with the company. The iPhone attracts teenagers,

high school students and college students by its sleek design and availability of applications.

Their peers all have the advantage of being owners of the device so having one is a way of

"fitting in" with the crowd ("iPhone:Target Audience."). The phone also has a stylish design and

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it targets those who want to make it a fashion statement. Loyal iPhone users are known for

staying up to date with the latest technology so the device also targets those who are tech-savvy.

Through the integration of iTunes in Mac computers, iPod devices, iPad devices, iPhone,

and Apple TV, Apple targets music enthusiasts. The iPod line in general targets music, video, and

photo enthusiasts. Consumers can store their collection of music and photos into certain iPod

devices ("Apple - iPod classic - Features - 160GB. 40,000 songs. And more"). In addition,

depending on the amount of storage available on the specific iPod, the device can store a certain

number of hours of video. The iPod shuffle targets consumers on a tight budget because of its

affordable cost. The iPod Nano specifically targets athletes because of its Nike plus integration.

Athletes are now able to track the distance they have ran and can use wireless headphones when

working out ("The All New iPod Nano Includes Built-in Nike+ and Bluetooth"). Older

generations are now being targeted more by Apple because the devices are not difficult to use.

Students can purchase keyboard docks for their iPad devices conveniently in order to take notes

during class. Instead of having to carry a heavy laptop around, travelers can view movies on iPad

devices during their flights (Marshall). Consumers who are avid users of iTunes, Netflix, Hulu

Plus, and YouTube are the main target for the Apple TV device. The Apple TV device allows

users to seamlessly connect to these streaming services. Consumers must own a widescreen

HDTV to use the Apple TV device ("Apple TV - Buy the New Apple TV").

Apple incorporates the use of geographic, demographic, psychographic, and product

related-segmentation into its marketing strategies. Geographically, Apple's retail stores are

located in highly populated cities around the world. Specifically, retail stores are located in large

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shopping centers and highly populated streets in these major cities ("Apple Store."). Apple uses

demographic segmentation widely when marketing its various products. Apple devices are most

commonly segmented by consumer and business income levels and resources as most of its

products are priced significantly above its competitors. They are also segmented by age levels.

Its age levels vary from teenagers to adults ages 55 and older. Certain iPod models offered by the

company could be segmented by gender as they come in a variety of colors. There are both

masculine and feminine colors available for consumers to choose from. Apple's household target

seems to be mainly middle to upper class households who have that extra income to spend on

these "luxury" products although about 28 percent of households earning $30,000 a year or less

are the exception (Kingsley-Hughes). In addition to middle and upper class households, Apple

now targets teenagers as parents are now finding the need to purchase family plans through

wireless carriers which allows the teens to own an iPhone. The touch model of the iPod product

line also conveniently allows teenagers to have almost the full power of the iPhone without

having to spend a monthly cost to own it. Apple doesn‟t specifically say that it targets its

products for business professionals or media professionals but the products are segmented

demographically according to occupation.

Apple is a "lifestyle" brand ("Marketing Minds - Apple's Branding Strategy."). Whether

you're a teenager or college student who is fashionable and likes to stay on top of school, a

business professional who wants a device that conveniently satisfies your organization needs, or

just a consumer ages 14 to 55+ trying to fulfill that entertainment and convenience need, Apple

devices will suit a variety of different lifestyles. The company offers an assortment of software to

consumers which target specific audiences and their various needs. Students can work on papers

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and presentations for school using Microsoft office Mac for students and Musicians can create

and edit compositions and record themselves and their band using Apple's Logic Studio software

("Logic Studio - Apple Store (U.S.)."), just to name a few. Students also have the option of

staying on top of school through apps such as blackboard and the advantage of checking school

email with an iPhone or iPod touch device, professionals can suit their business needs efficiently

because the Apple iPhone integrates features that allow individuals to connect to Microsoft

Exchange and read corporate email, and everyday consumers ages 14 to 55 plus can readily use

apple devices that fit their personal needs on the go ("Apple - iPhone in Business - Integration.").

Product related segmentation is another major marketing strategy used extensively by the

company. Every Apple device is targeted specifically to different groups of consumers and

businesses and features in the products are built around their needs (Sigal). A few examples

include Apple's just released iPod Nano which includes the Nike plus software targeted directly

towards athletes and with its dual-core A5 chip gamers can enjoy faster and more realistic

graphics on the touch model of the iPod line ("Apple - iPod touch - Features."). Apple is

popularly known for its integration of video editing software in its mac computers. This is

another area the company excels in. Apple not only integrates its mac computers with the iMovie

software but also offers a variety of editing software targeted mainly at Media Professionals

(Andrei). Besides coming up with products that meet specific consumer needs, Apple uses a

range of methods to create and build their reputable customer loyalty. Apple's retail stores are

dedicated to serving the needs of all new and existing customers and are considered "friendly"

places where consumers can look at and test out the company's products (CRM Editors). The

staff in these retail locations that are well educated on these products and are there to assist

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customers with whatever need they have (CRM Editors). By selling products to new consumers

that are on their lower end on price range, they effectively promote their higher end products

because consumers who become satisfied with their iPod or iPhone, for example, will most likely

buy a mac computer in the future. The company focuses mainly on "building" that customer

loyalty by using these and other strategies (Peiguss). Apple doesn't really offer loyal customers

any discounts or rewards. Sometimes offering loyal customers rewards for being loyal is not

really necessary if you are a company who is known for having top quality products that stand

out above the rest (Peiguss). Customers will generally be loyal if there are only a few

competitors out there offering the same product and your product offers better quality overall.

These are just a few examples of what the company does in order to segment their products.

Product and Positioning

Apple is a computer company that specializes in the production of personal computers

and computer accessories. Apple has produced many different types of products and is primarily

known for the advancement of multimedia personal computers. Most people that are involved

with video, music, pictures, and sound use Apple computers for their projects because of the

quality of the equipment that Apple uses. "The Group's principal activities are to design,

manufacture and market personal computers and related software, peripherals and personal

computing and communicating solutions" (Winthrop Corporation, 2006). Apple has many

different products other than the personal computer.

It is widely recognized that Apple is a premium brand that demands and earns a price

premium. This price premium spans the entire Apple product lineup encompassing the

Macintosh, iPod, iPhone, software, and accessories. Apple's positioning is aligned with targeting

a less price sensitive customer. As a result, Apple's culture and internal activities are structured

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to meet the needs of these customers; strategists call this needs-based positioning. Apple has

created a culture and a set of activities to differentiate itself from rivals in order to meet the needs

of their target customers.

If Apple were to attempt to compete for all customer segments, it would have to lower

product prices. The danger with such an approach is that it would not only undermine and erode

the company's premium brand image but it would also undermine the company's culture and

internal activities. So what has Apple done in recent history to the Macintosh product line to

demonstrate this premium positioning? Each new Mac revision has either maintained or been

subjected to modest price increase while Apple has simultaneously improved product features. A

few examples include the introduction of the unibody MacBook and MacBook Pro, larger

displays on the iMac, and the replacement of the $499 Mac mini with a higher priced model.

The motive is clear; protect the brand position via a tradeoff. The criticism to reduce prices has

been ignored by Apple. Why hasn't Apple lowered Mac prices? In strategic terms, Apple has

conducted a trade-off. Continue to appeal to customers that have a willingness to pay (WTP)

instead of appealing to a wide range of customer segments that have varying price sensitivities.

A larger customer base would not only undermine the company's strategic position but it would

also be misaligned with the company's internal activities. At a basic level of analysis, a price

reduction will set a precedent that will not be easily reversed. More damaging however is the

potential for brand erosion and customer confusion about the brand.

Apple's positioning, brand image, and loyal following have created an entry barrier that

PC vendors must cross in order to enter the premium computer market, a market that the

Macintosh has exploited for years. Customer loyalty, advertising, lower price sensitivity of

target customers (relatively inelastic demand), sunk costs, patents and innovation speak to this

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point. Apple products appeal to buyers who are not price conscience and therefore, price

elasticity is not a major concern.

Pricing

The different types of pricing strategies Apple uses is that they set their products and

offers different price ranges for each product based on the amount of storage (gigabytes) the

product offers. Apple‟s strategic pricing of their products has helped the company succeed,

because whenever a new Apple product comes out, many customers are already waiting in a

never ending line to buy this hot new product. After a quarter or so, Apple lowers the price of

the product for example, when the original iPhone was released one quarter later, “Apple cut the

retail price by $200 each (gave $100 rebate coupon to all of the earlier buyers” (Seeking Alpha).

David Bui CEO and Founder of Saleschase.com said “The most potent weapon in

Apple‟s pricing strategy is differentiation. Differentiation is what allows Apple to price its

products at a premium and compel customers to compare Apple products with other Apple

products, rather than with lower-priced products from other reputed marketers. Apple products

look, feel and seem very different from competitors‟ products” (Saleschase.com). This shows

that Apple is a stronger competitor in comparison with some of the other technological

companies who are companies out there.

The similarities of the iPod, iPhone, iPad, iPod Touch, iMac, is that for each product one

can purchase a product with the capacity varying from as little as 2G, to as much as 64GB from

all of the different models and products Apple offers. In fact, they all have versions that you can

purchase with more capacity capability. It is interesting because people want to pay that extra

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money to get the best features on their product, whereas the oldest versions would just be less

extravagant and less “cool” than the hottest version out.

Recently Apple released the iPhone 5 that everyone has been raving about. The price that

is set based on the capacity of the phones is 16GB for $199, 32GB for $299, and 64GB for $399

(Apple). Due to the iPhone 5, Apple lowered the prices for both the iPhone 4S and the iPhone 4

models. Both phones are significantly lower priced than when they have first come out, the

iPhone 4S now stands at $99 for the 16GB, and the iPhone 4 is now free for the 8GB (Apple).

Based on Apple‟s quality of their products and exemplary customer service it is easy to say that

they are pricing their products at reasonable prices, because of their well-known products all

over the world, Apple‟s profit margin does not cease to continue to rise each year. The extent of

Apple‟s products is that an average person would be able to purchase at least one of their

products if not more.

Promotion

An average customer would most likely find out about the firm‟s products through

friends and just the people around them. Due to high demand for their products, there is a vast

majority of people who own and prefer their products over companies‟ products, therefore this is

one of the ways Apple is able to advertise their products which is through consumers. As seen in

some of Apple‟s advertisements in the back of our packet; since the iPod had come out there

have not been a vast amount of advertising done in the media to promote their products. In all of

the examples that we provided for each of the individual Apple products, their advertising

method always displays simplicity and uniqueness

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When it comes to Apple‟s Promotions, they offer many different promotions that allow

many people to purchase their products. The largest promotion is that each year before the

school year starts Apple offers a “Back to school” promotion in which a student or a teacher

decides to purchase an iMac or MacBook (desktop or laptop), they would get a $100 for

applications along with their purchase. They also offer students and teachers the option of

buying an iPad and get $50 for applications. Apple also has an “Apple Educational Discount”

where throughout the year students and teachers are also able to save up to $200 on a new Mac.

A few years ago Apple had the same promotion but offered students only to give a free iPod

Touch when a MacBook laptop was purchased. But that offer no longer stands.

Some of the other promotions that Apple also offers year round is for their iPad mini, if it

is bought online then customers will be able to get free shipping and receive a free engraving as

well. When it comes to ordering online from Apple they offer free shipping on $50 or more,

which is almost every single product from Apple product, unless someone were to buy a iPhone

case or something small like so. Many “high end” companies often offer the option of having

the product shipped to one‟s house, or buying it online and picking it up in the store, Apple offers

this to their customers.

Apple despite having such a vast amount of products at different price ranges from as

little as $20 iPhone cases, to the iMac for $1,299, Apple is still able to lower existing products

and continue to offer reasonable prices to their customers based on each version and the capacity

of the product. When it comes to advertising, Apple used to do a lot of advertising for their

iPod‟s when they were first introduced. Recently, Apple has almost been doing no advertising on

their products. But even though almost no advertising is done anymore, the Apple store is almost

always consistently packed on a daily basis. Most of all their advertising is done through their

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customers and their well -known products; Apple‟s image is also branded based on their sleek,

most trendy items in the technology world.

When Apple announced that they would finally be coming out with the long anticipated

iPhone 5, just by hosting just one conference to introduce the iPhone 5, thousands of people lined

up to purchase the iPhone , on the opening day to purchase their new iPhone 5, many people

even pre-ordered their phones. Because Apple products are sold worldwide and Apple is such a

well-known brand, it is easy to publicize their products though their store fronts and their

customers only.

Distribution

Apple spends certain resources to expand its stores so that it can get its prospects

undivided attention. Apple‟s 372 stores collectively generated $4.1 billion in revenue. That‟s a

vast sum, and one that might lead you to believe that Apple sells most of its gear through its own

stores. But that‟s not the case, according to a new study by Consumer Intelligence Research

Partners (CIRP).

Between December of 2011 and August of 2012, CIRP surveyed 1,227 U.S. consumers

who purchased an iPhone, iPad, or Mac, and found that while Apple Stores sold by far the most

Macs and iPads during the period, they didn‟t sell nearly as many iPhones as the company‟s

retail partners.

In the U.S., Apple‟s retail stores, along with the company‟s online storefront, sold 47

percent of the Macs and 40 percent of the iPads purchased by the survey sample during

December 2011 and August 2012. But they only sold 21 percent of the iPhones. AT&T and

Verizon stores both sold more than Apple, with 28 percent and 26 percent shares of sales,

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respectively. And Best Buy and Amazon (via fulfillments) together sold nearly as many iPads as

Apple itself.

Apple has around 250 stores in the U.S., while Best Buy and Best Buy Mobile total

1,300, and AT&T, Sprint, and Verizon have over 5,000 combined,” CIRP partner Mike Levin told

“AllThingsD. Clearly, the Apple stores are much more productive on a per-unit basis, but their

relatively low store count keeps them reliant on the carriers and Best Buy, not to mention

Walmart, Target and others, for the vast majority of their retail sales

Ultimately, Apple‟s retail partners are as critical to the company‟s success as its own

stores. Sure, the typical Apple Store might cater to 17,000 visitors per week, but that foot traffic

translates to a smaller-than-expected share of the company‟s overall business. As CIRP co-

founder Josh Lowitz told AllThingsD, “Everyone who lives in an Apple Store city thinks that is

where everything happens, but you can‟t sell 40 million plus iPhones in a year through just 250

stores.”

Recommendations

Apple is an innovative company that does not mean that everything done by the company

is perfect. Every company has room for improvement and Apple‟s future of innovations is

definitely one of them. Implementing some, or even all, of the following recommendations,

Apple could greatly increase it sales worldwide, and become an even better company than it

currently is.

22
There are several ways Apple can promote their products yet they go by simple strategies

such as personal selling, “word-of-mouth,” and product differentiation. The late co-founder of

Apple, Steve Jobs, was greatly known for his speeches and how he promoted Apple without

using a lot of their marketing budget, through public relations. Though these are all great ways to

promote Apple, there are still many ways they can improve or work on to attract new customers

or gain the customers of their competitors.

Although Apple is considered a shopping product, where people plan to buy it after

considering competitors‟ prices, it is priced as a prestigious product in the technology industry.

They are considered the “technology industry‟s „high price‟ leader,” which simply means they

sell their products at a higher end value, knowing that their loyal customers will pay this price.

They should market to sell their products at a slightly lower price, to still make profit but also to

synchronize with customer satisfaction. It is known that once Apple comes up with a new

product, or expands the depths of their products, they lower the prices of the least up-to-date

product. There are consumers who appreciate this because they do not need the new, big thing,

but Apple has customers who like to keep up-to-date, especially with Apple‟s innovative

products. Apple‟s loyal customer base is one of the largest in the industry and strategizing in a

way that makes them feel they are an exclusive member might make them happy to spend more.

Ways that Apple can do this is by starting an Apple Loyalty membership. If they are a member in

this Loyalty program, they get perks that do not apply to non-members. For example, if the

member spends a certain amount, $500, annually, (not including a laptop that already costs a

thousand dollars), they can get a product in store for free, or for a lesser price than valued, such

as head phones or an iPhone case. It is easy to buy a laptop cover, or phone case elsewhere,

23
especially at a lower price than Apple sells it for, but if Apple had this incentive; consumers

might have more initiative to buy from them.

Apple can or should also promote their iTunes Application by providing customers in the

Loyalty Program ten dollars‟ worth of iTunes services for every $250 they spend. This type of

CRM (Customer Relationship Management) would definitely increase customer satisfaction

while promoting Apple‟s products (Contemporary 321). They should also organize little events

that only Loyalty members are invited to, where they can explore new technologies or let the

members be the first to know of the new products they are working on. This would be a great

way to keep the customers on their toes, excited about the upcoming products but also making

them feel special and important to the company.

Apple is a leader in the technology industry because they are unique in what they do and

they stick to their originality. Whether it be product differentiating, where all their products,

inside and out, are cluster free, or if it is the way they advertise their products, which is not very

often. You might sometimes see an ad for the iPod and a girl or boy dancing to it, or different

colored backgrounds with the Apple brand mark centered in white. Apple recently came out with

a commercial that introduced the new Apple headphones, a never before seen headphones which

are shaped to fit your ear hole, instead of the custom round earpiece. Apple would also do great

in product placement, as many celebrities already use their products. But if it were seen on more

television shows or movies, it would be attract more consumers and other target markets. These

simple strategies are a great way for Apple to save money on their budget but they should

definitely consider making more advertising through the television. As an innovator of

technology, maybe they can find a way to use their new feature, holographic, through the

television to promote such a neat service.

24
When deciding what other promotions Apple can undergo, we automatically thought of

guerilla marketing as that is a fast and easy way to go viral, especially for Apple, which is

already the topic of conversations. We researched and found that there was not much guerilla

marketing that Apple already used so that type of promotion would definitely be one to consider.

We did, however, find one way they managed to have marketed seamlessly through their

consumers. With each product bought from Apple, they provide you with a sticker with their

brand mark, and people would stick that on in their house, computers, cars, backpacks,

notebooks or anywhere they pleased (Vertigo). Regardless where it was stuck, it was easy

advertising for Apple to have come up with, that other competitors have not yet achieved. More

tactics like these would be beneficial for Apple to remain the leader in innovation and in

technology, in remembrance of the greatest guerilla marketer and innovator himself, Steve Jobs.

It is easy to buy a laptop cover, or phone case elsewhere, especially at a lower price than Apple

sells it for, but if Apple had this incentive; consumers might have more initiative to buy from

them. This would also help stabilize sales throughout the year, and not just during the beginning

of a school year.

One way to create product diversification is to create a "phablet" to compete with

Samsung‟s note II. The tablet will be smaller than the iPad mini but bigger than the iPhone.

Specifically a 6 inch tablet with the availability of a phone. This will also add product length to

Apple's tablet line which includes the iPad and iPad mini. Creating this "phablet" will allow

Apple to target a whole new market which would include consumers that want a mobile device

larger than a smartphone but smaller than an actual tablet like the iPad or iPad mini ("Phablet.").

With the creation of this "phablet" device, price should be a big concern. Apple should try a new

pricing strategy and maybe make the price of their product lower than its competitors but still

25
higher than what it costs the company to make the product in order to make a profit. In order to

lower its product cost; however, apple must reduce production costs. This can be done by

increasing its use of recycling in its products and cutting down energy costs. Energy can be cut

down by using energy efficient computers, lighting, and machinery (Ellyn).

Another example of product diversification is if Apple creates a music streaming service

similar to other streaming services such as Spotify and Rdio. The new streaming service would

allow users who do not want to buy music on the iTunes store a chance to listen to music

unlimitedly without downloading it. Users would be able to listen to whole albums and even new

releases would be available the same day albums come out. The service would be relatively

comparable to other streaming services such as Spotify and Rdio but instead of offering it for

free to consumers, Apple could charge a fee but one that is less than competitors. For example,

Rdio allows unlimited web streaming of music for $5 a month, Apple could charge users $1.99

per month on a monthly basis to use their service or $25 on a yearly basis ("Rdio - Pricing.").

This would allow Apple to target a whole new market while also generating some extra revenue

without overcharging consumers that just want the option of listening to music without having to

download it.

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Appendix

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