Professional Documents
Culture Documents
2009-14: channels strong performance is expected to continue with an evolving retail environment
Knowledgeable consumers Price comparison Brand awareness High online purchase Compatibility issues One place shopping is preferred Accessories and spares Support and issue resolution Customer loyalty can be built
Drivers of growth
Consumer Demographics Tech savvy youth and early adopters of innovation People who want to set themselves apart personality relevance
APPLE Inc.
Founded on April 1970, Apple Inc is an American MNC that designs, develops and sells consumer electronics, computer software, personal computers Worlds third largest mobile phone maker after Samsung and Nokia As of Nov 2012, Apple has 395 retail stores in 14 countries along with online Apple Store and iTunes Store
BUSINESS STRATEGY
Commitment to bring the best user experience to customer High quality and innovative products to stay ahead of the curve Best buying experience through knowledgeable salespersons Business management is on geographic basis for better insights into consumer preferences and demand
Global economic condition and financial turmoil has materially adverse effect Highly competitive market subject to rapid technological change Frequent product introductions and transitions necessary Inventory risk, asset risk, purchase commitment cancellation risk High dependence on manufacturing and logistic services from outside US Intellectual property ligitation issues Support from third party developers Quality problems Risk of international operations and rules and regulations Legal issues
Target Audience
PC users wanting to be perceived as unique and different Early Adopters of technology Affluent people and less price sensitive EVOLVING CONSUMER PROFILES
Apple targets people and not markets, Focuses on users and lets them decide how and where they will use its products
POSITIONING
Apples differentiation strategy Music enthusiasts and fans (12-35)
Think different Management style a single executive committee Design DNA
Positioned as a premium brand that meets a need Needs based positioning Samsung holds a leadership position in the smart phone market
Broad, deep and refreshed Android offerings Has multiple mid-range and mass market models
Younger consumers
Apple iPhone is more reliable than Samsung, Nokia or Motorola phones (reliability scores)
In terms of the number and frequency of issues and complaints
CORPORATE STRATEGY
Help Apple stay relevant in the digital music era iCloud and iTunes
Primary Business
Product portfolio
Macintosh (Computing Systems) iPods(Portable Digital music and video players) iPads (portable multimedia players) iPhones
Apples retail shift entirely away from boxed software Price of digital downloads cheaper than boxed retail
Also a variety of
CDMA version of iPhone was developed AT&T and iPhone exclusivity All US networks can sell iPhone ends User base grew from 97 to 327 million On Android users HTC, Samsung Patent Wars
Related Software, services, peripherals 3 party digital content and applications Networking solutions
BUSINESS MODEL
Vertical Integration is the key to success Major products sold through third parties B2B sales also play a major role
GENIUS BAR
Apple stores have been responsible for turning the boring computer sales floor into a sleek playroom filled with gadgets -Ron Johnson, Former Sr. VP (Retail Operations)
Technical Support and troubleshooting The heart and soul of Apple Stores technician retention rate >90%
Customer Service
Well trained staff What would like to do today Genius bar, Personalized approach
Premiun segment 2 pronged strategy Low discount on products Supplementary incentive for advertising
Pricing
Communication Mix
Exciting logos and taglines Adverting, Personal selling
Location Strategy
High traffic locations, cities Malls Urban shopping centers
Apple also uses e-commerce to sell its products online Online Apple Store, iTunes Store Warehousing, distribution and other outsourcing operations are controlled by a central data center in the Headquarters
APPLE ABROAD
Store-based entry typically marked by flagship stores with smaller regular Apple stores following subject to demand. Full Retail Apple operates retail stores in 12 markets in 2011. Presence
PRICING STRATEGY iPad Mini created barriers to entry and kept price at floor Perceived switching costs when owning >1 device Increased perceived switching costs if they own more than 1 device iPhone maintaining ~70% manufacturing margin, enabling positive long-run economics
International
78%
HUMAN RESOURCES Apples Greatest strength to deliver quality products On the job attitude extensive training Some HR nuggets Its not about selling There is cutesy acronym Steve Jobs was involved very much The customer is always right Fire for being late Highly criticized practices
SW
STRENGTHS
One of the oldest PC hardware manufacturers One of most globally recognized brands Leader in product innovation Incredible brand loyalty Unmatched product quality
T
WEAKNESSES
New top management Resources incompatible with other computers Limited distribution channels High prices of products Low preference in the IT system for businesses
OPPORTUNITIES
The market gap Huge opportunity in the entry level segment Cater the low-end segment with quality as focus Business IT system centric product development Improves after sales support
THREATS
Intense rivalry from competitors Substitution effect Law suits for innovation infringement can hamper the brand Open source android/linux market Continuous innovation
600
20,000 18,000
500
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 No. of downloads - million
APPLE
23/04
11/07 09/09 16/01 11/07 09/09 04/11 20/03 29/04 01/09 22/01 07/07
400
300
200
100
Software developers pay $99 per year to access iOS development tools
2008
2009
2011
High level of customer service Innovative store designs Appealing to customers Apples move to vertically integrate created one of its biggest strength of controlling a future cash cow (App Store)
COMPETITION
Direct -> Samsung, Blackberry, Nokia Indirect -> Multi Brand electronic Retailers
Retail future is dependent on predicting the next MUST HAVE electronics Should try to launch a new device before smart phones run out of growth
Financial Analysis
Company Return on Invested Capital Apple Samsung 32.8% 14.36% Return on Assets 21.3% 10.78% Gross Margin 44.4% 37%
The future of
Future Strategy
The entry level segment Can thrive in this segment by addressing product quality Come close to the customer More no. of retails stores & improved after sales support Diversification Huge opportunity in TV, AI, Search engine, Pay & Business IT Systems
iCloud
Data security and portability
Pay
Use phone as credit card
Search
Next-Gen search interface, extending Siri (intelligent PA & knowledge navigator
Store based expansion
Tap opportunities in emerging markets like China and Brazil by opening more stores in high income centers
TV
Huge opportunity in the LED TV market
Hardware innovation Improve desirability of Apple hardware through innovation thereby preventing customers from shifting to other brands
Artificial Intelligence
Using state-of-the-art product development & innovation to enter robotics market
Bridge price gaps But this could lead to downgrading the brand image and affect brand perception
REFERENCES
www.apple.com/retail/ www.euromonitor.com/electronics-and-appliance-specialist-retailers www.datamonitor.com/ www.idc.com/getdoc.jsp?containerId=prUS23455612#.UStC2jByDSs www.marketresearch.com/First-Research-Inc-v3470/Consumer-ElectronicsAppliances-Stores-7250364/ www.forbes.com/sites/matthewcarroll/2012/06/26/how-retailers-canreplicate-the-magic-of-the-apple-store-online/ appleinsider.com/articles/12/11/27/apples-ipad-driving-e-commerce-asmarket-shifts-from-desktop-based-purchases www.brighthand.com/default.asp?newsID=19827&news=Apple_verses_Sams ung_Nokia_Motorola_Reliability FixYa report on mobile phone reliability 2012 articles.businessinsider.com/2012-04-27/tech/31415422_1_smartphonescellphone-market-apple-and-samsung/2 Wikepedia.org switchtoamac.com/site/understanding-apples-positioning-part-1-a-premiumbrand-at-a-premium-price.html techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/ gigaom.com/2010/08/26/apple-doesnt-target-markets-it-targets-people/
THANK YOU