Apple Company’s Marketing Strategy

Introduction

Marketing strategy is critical to the success of any company. While many companies strive to achieve the correct market mix to drive success in the brands they create, many often fail. Apple Inc has perfectly been able to develop a marketing strategy that has revolutionized the mobile market and computer industry. Apple Inc is a technology company based in United States. The company sells, designs, and manufactures mobile communication devices, computers, among other trendy devices in the technology market.

Its brands are globally recognized and particularly desirable. However, it faces considerable competition from other companies in the technology sector. This includes Dell, HP, Samsung, and IBM among other smaller players. In light of this competition, it is crucial for Apple Inc to develop the right strategy to drive brands and products. This paper analyses information regarding this aspect of Apple Inc’s operations by looking at the literature surrounding the aspect of marketing strategy, looking at Apple Inc’s budget for marketing and comparing it competitors, analyzing the results to observe trends. The paper finalizes by concluding and offering recommendations regarding the marketing strategy at Apple.

Literature Review

Marketing is the art of pushing brands or ensuring that company products are visible in a market characterized by other similar and alternative products. Marketing takes different shapes. The organizational overall strategy and the nature of its products are quite instrumental in informing a company on the kind of strategy to adopt in marketing its product. The process of coming up with a tailored manner in which to market a company’s product is an interactive one and involves many steps.

A company such as Apple opts for an offensive marketing strategy. This strategy involves intricate store formation in various locations, direct marketing, and other ways that directly interact with the customers. Apple employs a mix of offensive marketing and a touch of conservative marketing. This involves advertising, sales promotions, and a host of other strategies that position the product in the eyes of customer.

It is crucial to underline the budget allocations that various companies may allocate to the branch of marketing. Pundits argue that the marketing budget does not have to be fixed. It fluctuates from one company to the other. Additionally, it changes as per the geographical and periodical instances. Apple should continue their current focus in expanding into more retail outlets domestically such as Wal-Mart and Best Buy, while expanding into retail stores globally such as in China, in Europe, and in Asia. Retail outlets are the fastest growing distribution channel for technology gadgets in the industry (Bloomberg 2).

Apple should implement a strong Customer Service Support Centre for the individual consumer segment and eliminate the process in how Apple originally offered support in a tiered manner, which those paying for support, received the best care. Establishing a Customer Service Support Centre for individual consumers, will allow consumers to receive the highest quality of customer service regardless of cost of the product purchased, and in return help gain market share in the consumer segment (Bloomberg 1).

Methodology

To answer the question regarding the marketing strategy of Apple Inc, the researcher will rely on secondary data and primary data. The primary data will be drawn from the interview questions that the researcher had sent in questionnaires to ask for information regarding marketing strategy at Apple. Additionally, the researcher will use secondary data available on the internet. This is found in analytical pages and previous journals on the topic. The main source of this data will be Apples website, which has the information regarding the budget for marketing. The researcher will compare this budget to other immediate competitors’ budgets to ascertain whether there is a connection between the budget and the success of a brand (Bloomberg 2).

To achieve this end, the researcher will use comparative visual objects such as bar graphs and pie charts. The researcher will additionally use inferential statistical analyses to ascertain if there is a relationship between budget allocations to marketing and the success of a company’s products. This includes the use regression analyses.

Results

Apple Inc.’s business has been growing exponentially for quite some time. Since the death of its founder Steve jobs, however, there have been a number of drawbacks in the innovative company. The following are some of the performances of the company.

Estimates of PC Units Shipped Per Vendor
1Q11 Shipments 1Q11 Market Share (%) 1Q10 Shipments 1Q10 Market Share (%) 1Q11-1Q10 Growth (%)
Company
HP 4214271 26.2 4366543 25.5 -3.5
Dell 3587715 22.3 4080473 23.8 -12.1
Acer Group 1828477 11.3 2435084 14.2 -24.9
Toshiba 1669700 10.4 1506074 8.8 10.9
Apple 1491125 9.3 1254100 7.3 18.9
Others 3321076 20.6 3514063 20.5 -5.5
Total 16112364 100 17156338 100 -6.1
Current Rank Current Year Share Previous Years
Q3
2010
Q4
2010
Q1 2011 Q2 2011 Q3 2011 2009 2010
WW Client PCs 3 13% 12% 13% 13% 12% 13% 13%
USA 2 24% 22% 23% 22% 22% 24% 23%
EMEA 4 9% 10% 10% 11% 9% 9% 10%
Asia Pacific 3 10% 9% 10% 11% 10% 8% 10%
Japan 5 10% 9% 10% 10% 9% 12% 10%
Desktop PC 3 14% 13% 13% 13% 13% 13% 14%
Portable PC 4 12% 11% 12% 13% 11% 12% 12%
x86** 2 27% 26% 28% 26% 26% 27% 28%
Consumer 6 8% 9% 9% 9% 8% 9% 9%
SMB1 4 13% 12% 13% 13% 12% 12% 13%
Public 2 19% 15% 17% 18% 17% 21% 18%
Large Enterprise2 2 29% 27% 27% 26% 25% 32% 29%

Key:

  • *PC’s include Desktops, Notebooks, and data as of November 2011
  • **x86 is preliminary Q3 IDC data
  1. SMB includes companies with less than 500 employees
  2. Large Enterprise includes companies more than 500 employees

It is important to note that Samsung has outspent Apple in terms of budgeting lately. The following indicates their share of advertising lately. Apple spent approximately $68M less in advertising as compared to Samsung that spent over $400M. Market pundits argue that this may indicate a shift by Apple towards other advertising areas. Additionally, it may have refocused on ensuring that its products gain an indomitable standard of branding in the market.

The results of the spending in advertising are as follows. A comparison between spending on Advertising between Apple and Samsung reveals the following.

Samsung (Millions) Apple (Millions)
$401.00 $333.00
$80.20 $297.00
$102.00 $303.00

This shows that there is an all out war to ensure that Samsungs brands outpace Apples brand. It is crucial for Apple to rejuvenate and start spending more on advertising to shelter itself from the competition posed by Samsung. This is a reflection of what competition looks like. Apple is concentrating more of its resources towards developing new products and research and development while seemingly ignoring the budget on advertising (Yarow 3).

Analysis of Results

The following figure indicates the changing nature of advertising between two technology-affiliated companies over the last three years. This shows that Apples budget is remaining relatively stable while the competitors’ budgets are increasing. In 2013, Samsung’s budget increased fivefold. This shows the company’s commitment towards dethroning Apple’s lead in the PCs and tablets market share.

The changing nature of advertising between two technology-affiliated companies over the last three years

The technology industry has the following key success factors that may determine Apple’s success in the formulation of market strategy (Yarow 2).

  • Economies of Scale & Competitive Pricing: These two factors go hand in hand, because individual customers, who represent the highest segment, are extremely sensitive to pricing and economies of scale help a manufacturer to set the price level. If technology development companies are to succeed, they will need to achieve high economies of scale so that they can compete on pricing.
  • Innovation: The technology industry is constantly changing as technology becomes out of date and new technology is unveiled. Hardware and software manufacturers need to be creative and always be on their feet since the industry is extremely dynamic.
  • Efficient Distribution Channel: Gross margins are slim in the computer hardware, software and gadget manufacturing business and therefore it is important that company’s find the cheapest and most efficient manner to get the final product to consumers (Yarow 2).

With Branding Ratings based on consumers and the average price of PC’s sold in the market as the key success factors, Apple ranks as the best company. Many of the industry competitors provide their products at a cheaper price, which is what Apple provides as well. Compared to Samsung, they differentiate themselves with their unique products that establish a higher brand whose innovation is copy-pasted. Hence, this indicates that Samsung, Apples main competitor currently, will need to continue selling their products at a low price and establish a higher brand image among consumers like Apple to gain a bigger market share. This underscores the move by Samsung to increase marketing budget to catch up with Apple on that front. The above success factors will also be quite instrumental towards the realization of this goal.

A cursory look also indicates that Apple’s budget for marketing fluctuates and coincides with new product launches. This shows a company that strongly believes in its brands and reflects a bigger task for companies such as Samsung that are clamoring for a significant chunk of the market share as Apple. However, it is crucial to note the ever-burgeoning size of the market share that Samsung is currently enjoying. Apple should also look for new markets as it strengthens the current strong markets (Apple Inc. 1).

Recommendations

Apple’s current Brand Image could be diminishing over the last decade. This is potentially because of fully focusing on the direct distribution, R&D, and intense competition. In the past 10 years, Apple’s R&D spending directly correlates with Apple’s sales revenue in which both factors are lower in comparison to the industry average. In comparison to direct competitors such as Dell and HP, Apple has the highest R&D to Sales ratio. Apple’s current Brand image among consumers is quite evident, since its focus has always been targeted onto large business segment and direct consumers. Apple will need to direct its focus on establishing its brand image through an offensive strategy, which entails investing in Apple stores, R&D, and changes in marketing approaches (Apple Inc. 1).

Apple should begin by establishing signature storefronts similar to how Dell has successfully established storefronts both domestically and globally. This will differentiate themselves from other competitors. Customers at the retail level enjoy the touch and feel aspect of a unit before they initial purchase. This will be a new frontier for Apple to achieve in building a chain of Apple retail stores across the globe. This approach will be a great way for Apple to connect to consumers and expand their horizon in terms of products and services. The trend of retail stores have dramatically increased over the last 12 years. In choosing among brands, the individual consumer segment relies heavily on retail salespeople.

Apple should increase R&D since it is important for Apple to stay competitive because technology is constantly evolving. Innovation is extremely important in technology-oriented business and their companies reputations depend on their R&D. Apple should diversify their product portfolio to keep up with the emerging trend of portable devices such as tablets, PDA’s, and smart-phones. This is especially true in consideration of Samsung’s emergence. Apple will need to spend and increase the amount of funds allocated to the R&D for these emerging products to stay competitive within the industry and maintain sustainability (Yarow 2).

Apple should change their marketing approach by not only focusing on technical specifications, but also concentrating on Apple’s customer service, product attributes, and most importantly differentiating their products through clever advertising techniques. Apple’s current primary target market of individual consumers is the fastest growing in the industry. Apple should further realign its focus into the individual consumer segment to attain greater market share. The large business segment has been shrinking drastically for the last 12 years in both domestic and global markets. Apple will need to direct the company’s efforts into achieving sales within the consumer segment through an offensive strategy, which entails making the individual consumer base the primary target market (Bloomberg 2).

Conclusion

As noted from the discussions above, Apple faces serious competition from its main competitor Samsung especially in the mobile phone and tablets industry. In the Android application platform, Samsung is leading the way. It is therefore crucial for Apple to ensure that it focuses on its marketing strategy to curtail the manner in which Samsung has thrust its force into the industry. Apple should focus on advertising directly to the consumer segment. Apple currently spends a significant amount of advertising budget on the large business segment. Rather, the company should focus on spending dollars on marketing to the consumer base. Apple should also focus on increasing its existing sales force to target the consumer segment. This direct approach will ensure that the company gains trust from consumers, which is likely to bolster its appeal, some more. Failure to do this may reduce Apples strong standing in the mobile phones market and may be the need of the ambitious vision of its founding director Steve Jobs (Bloomberg 2).

Works Cited

Apple Inc. 2012. Apple Inc. (AAPL). Web.

Bloomberg. 2012. Apple Inc. Company Profile. Web.

Yarow, Jay. 2013. Samsung’s Ad Budget Grew By 5X To $401 Million Last Year, Crushing Apple. Web.