APPLE INC.

MarketingChallengesinIndia

RAHULR.MALLYA ROLLNO.94 RollNo94 MBA(IB)200709

MBA(IB)200709 RahulRMallya

TableofContents
Topic ExecutiveSummary AboutApple 2 5 7 9 9 11 12 13 14 20 PgNo.

AppleinIndiaTheEarlydays AppleStrikesBack

Catchin'emyoung

RelyingontheGreyMarkets EnteringintoPartnerships ARetailArm

Apple's5MarketingSecrets Annexures

ExecutiveSummary
Apple Inc., formerly Apple Computer, Inc., is an American multinational corporation with a focus on designing and manufacturing consumer electronics andcloselyrelatedsoftwareproducts.EstablishedinCupertino,CaliforniaonApril 1, 1976, Apple develops, sells, and supports a series of personal computers, portable media players, mobile phones, computer software, and computer hardware and hardware accessories. As of September 2007, the company operates about 200 retail stores in five countries, and an online store where hardware and software products are sold. The iTunes Store provides music, audiobooks, iPod games, music videos, episodes of television programs, and movieswhichcanbedownloadedusingiTunesonMacorWindows,andalsoon the iPod touch and the iPhone. The company's bestknown hardware products includetheMacintoshlineofpersonalcomputers,theiPodlineofportablemedia players, and the iPhone. Apple's software products include the Mac OS X operatingsystem,theiLifesuiteofmultimediaandcreativitysoftware,andFinal CutStudio,asuiteofprofessionalaudioandfilmindustrysoftwareproducts. The company, incorporated January 3, 1977, was known as "Apple Computer, Inc."foritsfirst30years.OnJanuary9,2007,thecompanydropped"Computer" from its corporate name, reflecting the company's ongoing expansion into the consumer electronics market in addition to its traditional focus on personal computers. Apple employs over 20,000 permanent and temporary workers worldwide and hadworldwideannualsalesinitsfiscalyear2007(endingSeptember29,2007)of US$24.01billion. Foravarietyofreasons,rangingfromitsphilosophyofcomprehensiveaesthetic designtotheiradvertisingcampaigns,Applehasengenderedadistinctreputation in the consumer electronics industry and has cultivated a customer base that is unusuallydevotedtothecompanyanditsbrand,particularlyintheUnitedStates.

Products: ComputersAppleMacs LaptopsApplePowerBooks MusicPlayersiPods MobilePhonesiPhones SoftwaresMacintosh PeripheralsAppleTV Problems: Cost:ApplehasalwayspriceditsproductsatapremiuminacountrylikeIndia wherethepercapitaincomeisverylow.Thiscreatedalotofacceptabilityissues. Compatibility: Apples iMacs are not compatible with Windows OS and has its own OS. There is a general concern with the attitude to change over from WindowsOS. Higher After Sales Services: Apple has a good network of after sales services; howevertheproblemlieswiththecostforusingtheseservices. Availability of cheaper substitutes: Apple introduced the concept of a handy MP3 player to the world. But with cheaper substitutes available, the people in generallookdontexercisetheoptionofbuyinganiPod. Solutions: The company has now started making its machines compatible with various platforms. They have adopted the route of making the products available in the Grey Markets. Thelifestyleproductappealstothecustomerbecauseofitssnobappeal. IthasrecentlyenteredintoacontractwithReliancetolaunchiStoresinIndiain early 2008. Association with a trusted brand like Reliance will give it an added impetus.

Learnings:The5mantrasofApplesMarketingStrategy DontsellproductsPeoplewillbuywhatotherpeoplehave NeverbethefirsttomarketMakesomethinggoodgreater EmpowerearlyadoptersHelpyourcustomershelpyou MakeyourmessagememorableBoilthestorydowntoitssyrupgoodness Goonestepfurther Surpriseanddelightyourcustomers.

About Apple Inc: t

Apple Inc., form merly App Comp ple puter Inc., is an A , American multinati ional corpora ation with a focus on designin and ma n ng anufacturin consum electro ng mer onics and clo osely related softwar products. Establi re ished in C Cupertino, California on a April 1, 1976, Ap , pple develo sells, a suppor a series of person computers, ops, and rts s nal portable media players, m e mobile ph hones, com mputer so oftware, a and comp puter hardware and har rdware acc cessories. A of Septe As ember 200 the com 07, mpany oper rates about 200 retail st tores in fiv countrie (viz. US UK, Jap Italy a Canad ve es SA, pan, and da)

and an online sto where h ore hardware and software produc are sold. The iTu cts unes Store p provides music, au m udiobooks, iPod ga ames, mus videos episodes of sic s, s televisio program and m on ms, movies whic can be downloade using iT ch ed Tunes on Mac or Win ndows, and also on t iPod t d the touch and the iPhon The co ne. ompany's b bestknown hardware products i include the Macinto line of personal c osh computers, the iPod lin of portable media players, and the iPhone. Ap ne a pple's softw ware prod ducts include the Mac OS X operating s system, th iLife suite of m he multimedia and creativi softwar and Fin Cut Stu ity re, nal udio, a sui of profe ite essional au udio- and f filmindustry software products. y e
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Apple e employs over 20,000 permane and te 0 ent emporary workers w worldwide and had wor rldwide an nnual sales in its fiscal year 200 (ending Septembe 29, 2007) of s 07 g er US$24.01 billion. For a variety o reasons ranging from its philosoph of of s, hy compr rehensive aesthetic design to their adverti c r ising campa aigns, App has en ple ngendered a distinct reputatio in t on the c consumer electronics industry and has cultivate a y s ed custom base that is un mer nusually d devoted to the comp pany and it brand, particularly in the Un ts y nited States.

Apple in Indi The Early Days: e ia e

Apple h identifi India as one of its potential markets f entry. W the G has ied s l for With GDP of the rising like never b before, Ap pple canno ignore this huge market. The ot e compan produc appeal to the you and Ind has abo 52% of its popula nys cts uth dia out f ation under th age of 25 years. he 2

The company tri to lure India wi its qua ied e ith ality produ ucts by in ntroducing the g Apple M Macs that ran on Ma acintosh. H However, t produc never really caugh on the ct ht with the masses. It was nei ither accep pted in the commerc sector (except in the e cial n case of Graphic Designers who liked the salien features of the sof D nt ftware) no by or individu uals as PC A common state Cs. ement that once cou hear w "Well we t uld was, l, have W Windows at work, I g t guess I sho ould get th for my home", wh one ha to hat hen ad choose between th two. To add injur to insult the OS w compat he o ry t, was tible only w with very few program making it user un w ms, g nfriendly an a stand nd d-alone PC C.

The oth problem that Ap her m pple faced w that o pricing. Apple products are h was of high quality products that are pr t riced highl Indians traditiona have a problem w ly. ally with acceptin high pr ng riced goods, especial electron that a not rea reliable so lly nics are ally e, to say. In its race with Win e ndows, it fe behind drastically because the unlicen fell y nsed versions of the lat were e tter easily avail lable while Macintos was not. e sh . also ot in n res esent only in 5 Apple a did no have a retail arm i India, in fact iStor are pre co ountries wo orld. across Th his the serio ously

da ampened i dreams of its tap pping the huge ma e arket lik India. ke Ap pple se ervices also o in lacked in

pr roviding good after s sales In ndia, so omething t that was ta aken care of by the competitors. While M . Microsoft se up cons et sumer serv centre in vice es India, A Apple decid against the same in June 2 ded e 2006 worry ying about the costs that t it was li ikely to inc cur. In short the main reasons fo Apples failure in the early days could be attributed n for s d to the fo ollowing: H High Costs s In ncompatib bility L Lack of a Retail Arm R A After Sales Services

Apple Strikes Back e

n ng: Catchin em youn After al the blun ll nders in the f first few ye ears, Apple g their first got step rig when they ght realised that the d youth in India would n make t the difference for them They w m. went on to target this segment and ced spe ecific introduc product that would ts cater to the need of o ds the sam me. Instead of now concent trating on Gen X, they now shifted y their foc to Gen Y. Some of the imp cus n portant feat tures of th segment are: his Want to ma a style statement W ake e t. Love gadge L ets Both parents are working B Very deman V nding Usually, the only chil U e ld Parents ma childs every wish come tru P ake h ue

Anoth her group that A p Apple ident tified was the B s BPO Boom mers. Th hey can be define as fre ed esh gradu uates aged between 1 to 30 ye 18 ears, who receive a above average ies and show the salari qualit ties of Nouveau Riche (New wly Rich). They h . have high aspiration levels and nal fy nting satisf them by flaun stylis sh gadge ets like cell phones, musi ic play yers, watches etc. s, Having identified these sets of people Apple ne picked the right stuff that they g d s e, ext wanted to introdu in the m uce market. Fo e.g. inst or tead of trying to push the 30G or GB 50GB iP Pods, Appl introduc iPod N le ced Nano and iP Shuffl Pod le. This ga the cus ave stomers a c chance to o own an iPod, and th too at a price that did hat t not bur their po rn ockets. Wh an iPo would c hile od cost anywh here betwe Rs. 25 een 5,000 to Rs. 6 60,000, a Nano was p N priced close to Rs. 7,0 and the Shuffle a Rs. 3,000 e 000 at 0. With the new versions in v ntroduced, iPod sale in India skyrock es keted in In ndia, ng her oped count tries. though the same was fallin or remained flat in the oth develo This strategy wa very effe as fective as t this helped Apple ga a stron foothol in d ain ng ld India.

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Relying on the Grey Mark g G ket: Apple d does not have any i h iStores in India as y Even then the sales of A yet. Apple product especial the iPo has reac ts, lly od ched dizzy ying levels in the rec cent past. T This can be attributed to the in d ntroduction of low c n cost versio of the products. But ons mportantly it was be y, ecause of th Grey M he Market that Apple re eally flourished more im in India a.

With n custom duties pa for th no m aid hem, the p products w were avail lable over the counter in the gr markets across t metros of India. A rs rey the s Apple was well awar of s re the sam howeve they did not take a steps t curb thi This in fact worke to me; er, d any to is. ed their ad dvantage. All that company was lookin for was making th word A t ng s he Apple a ho ousehold na ame. The com mpany has always p s provided quality prod ducts and these prod ducts are very addictiv An App user se ve. ple eldom chan nges over to its subs stitutes. Ap pple knew this and thu let the Grey Mark flourish thereby creating a sound cus us G ket h, stomer bas in se India. One nee to rem eds member tha this is an entry str at n rategy for Apple in I India; it st is till in its ea arly days here. Once they hav a strong base of h e ve g Apple Fan they would ns start bo ombarding them with the other products. h r
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Enterin into Pa ng artnership ps: In June 2005, App entered into an a ple d agreement with Intel to use the chips in the l eir n Macs. This was the b M s beginning of Apples opening u to up world an enterin into pa nd ng artnerships Until t s. then, Apple us sed to ex xist as a different stand-al t lone machine t that could not be us along-side any o sed other makes on a networ This w hampe n rk. was ering the s sales prospects for Appl and they moved in the r le d right ing greement. direction with signi this ag

April 2006 Apple in 6, ntroduced Boot Cam a mp, Then, in A re ows ows the tosh. This was softwar that allo Windo OS to be run dually with t Macint the nex big step by Apple in joining forces w the in xt p e g with ndustry lea aders and thus increasi the acc ing ceptability of its machines.

Source: w www.systemshootouts.org g 12

A Retail Arm: entered int an agre to eement wi Relianc Digital to launch its iStore in ith ce h es Apple e India in mid 200 The v n 07. very first of the fo ormat stor would be set up in res p Bangalo follow by Mum ore, wed mbai, NCR and the o R other metr and ma cities. It is ros ajor for the first time that Apple has cont tracted som compan to carry out its r me ny y retail ons. e res tly n ies A, operatio There are iStor current only in 5 countri USA Canada, UK, Italy an Japan. In all these markets t retailin is carrie out by A nd n the ng ed Apple itself f.

Apple u understand that Ind is a uni ds dia ique marke and that it has a l of poten et t lot ntial that see ems to be growing indefinitely. The company realises th India is a e g hat market that they cannot af y fford to lo So, instead of ta ose. aking on t operat the tions themsel lves, they have hired an exper in the field to carr out the operation on d rt ry ns their be ehalf. This wo ould just be the begin b nning. As of today, iPod is the only Appl product that le India ha really experienced Apple M as e d. Macs are u used by a n negligible portion of the f populat tion. Produ ucts like A Apple Pow werbooks, Apple TV iPhone, etc have not V, , even to ouched the Indian sh hores. With the adve of iSto ent ores, the In ndian loya alists have a l to look forward to lot o.
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Apple 5 Ma es arketing Secret g ts:

Accordi to Stev M. Cha ing ve azin, Form Apple Marketing Executiv there a 5 mer g ve, are key lear rning from Apples m m marketing pursuits. H calls th The 5 secrets of the He hem f Worlds Best Mar s rketing Ma achine. Th are: hey Dont sell products People wi buy wha other pe D p ill at eople have Never be th first to m N he market M Make some ething goo greater od Empower early adopt Help your cust E e ters p tomers hel you lp Make your message m M memorable Boil the story dow to its sy e e wn yrup good dness Go G one step further - Surprise a delight your cust p and tomers.

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Dont Sell Products - People buy what other people have.

Products Dont Sell. People Do. Look carefully at Apples iPod commercials. Youll see lots of happy, energetic people dancing in silhouette against a colorful and ever-changing background. Notice the distinctive white headphones flowing in unison to the owners movements. What you dont see is a focus on iPod. No close-ups of how you select a song or adjust the volume level. Why would Apple take all the time to make a great user interface only to not show it on television? The reason is simple: Apple isnt selling you an MP3 player. They are inviting you to experience the Apple lifestyle and to become part of the iPod community. Use any other MP3 player and youll hear good music. Use an iPod and youll feel good. Youll fit in. Product features dont create fans. Focus on what people do and show how they feel using your stuff.

Show What Matters. Those white iPod headphones were not designed by engineers - they are a pure Apple marketing trick designed to make the visible part of their product a status symbol. Wear white headphones and you are a member of the club. Think back to the first PowerBook- it was a unique dark grey color (it was patterned after a color designed by Whirlpools Refrigerator research to hide or eliminate fingerprints) In both cases, the distinctive grey PowerBook case and the more recent white iPod headphones are status symbols (and uniquely Apple.) Even the glowing Apple logo was fixed to be right-side up for others (its upside down to you when you open your new MacBook because you are selling the brand to others for Apple). Figure out how to add something to your product that does for you what Apples white headphones do: give people an easy way to sell for you while making them feel like they are part of an exclusive club.

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Never be the first to market - Make something good greater.

Improve The World Conventional wisdom says being first to market is advantageous and that Apple is a leader in creating new categories. Conventional wisdom is wrong on both counts. Apple has never really invented anything new. They didnt invent the PC, the MP3 player, downloadable music, and certainly not the mobile phone. The Mac, iPod, iTunes and iPhone are all successful because they were late to market and improved on existing designs and functionality. Apple does one thing very well: making complex things easy and elegant. The iPod is successful because it makes getting your music into your pocket dead simple. Apple took existing MP3 player designs and applied their experience and technology to improve it. Plug your iPod in its cradle and it takes care of moving your music to your iPod, organized the same way it is on your computer. Youre done (and your iPod is charged at the same time - bonus!) Other MP3 players are still trying to catch up with this elegant brilliance. On the other hand, Apples Newton tried to carve out a whole new category - Portable Digital Assistants - and failed miserably. Even the Mac improved on Apples Lisa. Just ask Steve.

iPod Doesnt Make The Music Sound Better. As an Apple employee and engineer by trade expecting a miracle in 1997 (when the company was near bankruptcy) I was let down when I first saw the iMac. On paper it was no better a computer than the Performa it replaced so we promoted it as the easiest way to get on the Internet. That marketing saved the company, not better technology, Today, the iPod doesnt make your music sound better, provide better battery life, or save you money, What it does is make Apple fans.

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Empower Early Adopters - Help your customers help you.

Early Adopters Want To Help You Early adopters are taking a chance on you and want you to succeed. iPhone users feel what early PowerBook users felt in 1993. If you walked down the aisle of an airplane then youd notice those distinctive grey Apple laptops standing out in a sea of unremarkable beige ones. Track balls and palm rests were real Apple innovations in the day (other laptops had the keyboard on the front lip - Apple fixed that) but the grey color was more important because it did two things at once: hide grime while differentiating its owner. Having a PowerBook was a status symbol so owners were proud to show them off and help win converts. Apple earned nearly 40% marketshare on the back of early PowerBooks users. Look at how iPhone users today are adding their voice to Apples own marketing efforts. I decided to purchase my iPhone only after reading a blog from one earlyadopter who tried to scratch his screen and failed. Real users unbiased, heartfelt reporting will convince more people to choose your product than your own polished collateral ever will.

Stickers & T-Shirts How can happy early adopters market for you? Simply provide something with the product that does it for you. Come up with your own version of Apples white headphones to make your product stand out. Or borrow another Apple trick give away stickers (Ive lost track of how many Dells Ive seen sporting Apple stickers) or make T-shirts available from your website so owners can proudly display your logo for you. And in the Web 2.0 world, make part of your website embeddable on any MySpace or FaceBook profile and make it easy to cut and paste your HTML code anywhere.

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Make your message memorable - Boil the story down to its syrupy goodness.

Marketing Isnt About What You Say Before the Internet, marketers reached potential customers via print, billboard, radio and TV ads. Marketers had 30 seconds to tell their story and competition was limited to brands with multi-million dollar budgets. But the web changed all that. Today attention spans are only a few seconds long and anyone with and Sense account can vie for the same customers as big brands. And while a companys website is now the primary place to tell a story, many marketers push so much drivel at people that most visitors leave without taking action. Webmasters call it the bounce rate. Make sure everyone who comes to your website leaves with clarity about you via a tight, memorable message or image, even if they dont purchase. Only then can they spread your word. Marketing isnt what you do to reach your first customers, its what you do to help your first customers reach the rest. Tight messages are required.

Marketing Different Look at how Apple focuses the message. Mac was The Computer for the Rest of Us. iPod was 1,000 Songs in Your Pocket. iMac was 3 Steps to the Internet. And Pepsi challenged Coke only after Choice of a New Generation These messages are memorable and transcend product features. Lift occurs only after prospects and customers can easily repeat your message to their friends and colleagues. Great marketing entices people to consider your product and purchase it. Apples marketing is so good it creates purchases even before people see it. That happens when people do your marketing for you - 250,000 first day iPhone sales proves the point. Remember, Marketing isnt about what you say, its what others say for you. Make sure you equip them with the right words.

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Go one step further - Surprise and delight your customers

Focus On The Feel Marketing is all about the complete package. Walk into an Apple store and youll feel less like you are in a store and more like youre in a museum. This gives future customers a chance to experience the product among other like-minded people in a safe and fun environment. Make your website feel like an Apple store surround the product with testimonials and customer feedback.

Start With The Packaging Many marketers forget that their relationship with the customer really starts after they buy from you. Make their first experience memorable. Remember, you are counting on your customers to help spread the word - and they need positive experiences to share. So start with the packaging. Look at the iPhone box: finely crafted, with extra touches like velvet-lining reminiscent of a fine watch box. The iPhone rests in a tiny lucite bed, cradling the object dart. Included is a tiny pamphlet called Finger Tips (cute, huh) and a cleaning cloth (along with the allimportant white Apple stickers). The experience of opening an Apple product becomes one more thing to share with the world - Google the plethora of unboxing sites dedicated to sharing the experience of opening a new package. Only Apple and Sony rate a high number of people eager to share with the world. Make great packaging and youll have earn your own fans. And remember that fan is shorthand for fanatic. The Mac was not just easier to use than the PC - it also had style. Style is Apples brand. Creative people gravitate to it because it frees their brain from having to use a computer. Designers, authors, artists and your customers are all fans of good design and respond to those extra, thoughtful touches.

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