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Introduction

As people try to address future energy requirements in a quickly growing


and changing world, achieving sustainable transportation seems an
important mission. Electric vehicles represent one of the most promising
ways to increase energy security and reduce gas emissions. Sustainability
combined with innovation? Apple can not be far.
Until now, there is not much information, but questions. Clear is: Apple is
developing an electric car. Will it be self driving? Will there be a
collaboration with any car manufacture? How much will it cost? The people
are curious about the new Apple project with the name Project Titan.
Apple knows how to keep their fans curious and satisfied.
Apple as an innovative brand is having an incredible success in everything
they do. It is said, that the company earns $300.000 per minute. But can
they bewitch their consumers to buy their future car?
The main content of the upcoming study deals with an analysis of the
potential branding and pricing procedures.
But first there is a presentation of Apple as brand with its current
products. Besides that, I am going to give some information about the car
project and the electric car market in general.
Then I am considering different strategies of branding and pricing, by
doing a SWOT-analysis and at the end I write a short personal conclusion.

Apple
Apple was founded by Steve Jobs and Steve Wozniak by creating their
first computer in 1977 in the United States. The then CEO Steve Jobs
made history with the devices as iPhone, Mac and iPad and is the one who
lead Apple to its success. He died in 2013 and the new CEO Tim Cook is
getting things ready.
Apple is a world wide known leading luxury brand in electronic devices
such as smartphones and computers. Apple requires a cash amount of
over $200 billion. This is a huge amount, but considering that Apple owns
10% of the corporate cash reserves worldwide makes their position even
more than clear. Apple has been the top American cash holder since 2011
followed by companies like Microsoft and Google.1

The first graph below

makes clear, how significant the Apple cash was rising till 2012. The
second graphic shows the amount of Apples cash in comparison to other
companies.


1 Appleinsider.com, R. Fingas: Apple cash reserves greater than those held by most US
industries combined, 2015
2 Businessinsider.com, S. Ro: Apple has more cash on hand than all these different
countries, 2014

Besides Apple Music and all the high technology Software of Apple they
offer following products.

Apple Watch

iPad

iPhone

MacBook Air/Pro

iMac

Mac mini

AirPort

Apple TV

iPod nano/shuffle/touch3


3 Apple.com, Products, 2015

Electric Vehicle Market


The EV-market still represents a very small percentage of the total
passenger-car-market, the number of electric car passengers is still very
low as we learn in the graphic below. But the environment and the people
are developing. Through the last years sustainability got more and more
integrated in the global community and it was appreciated by business
models like car or bike sharing. The number of EVs sold is still not
significant. Reasons for that could be that so far there has been a limited
diversity of models, which offer different prices or functions to satisfy the
customers needs. Right now different manufacturers and brands are
developing models with more options in range, styling, functionality to
boost the consumers interests.4
There have been many introductions of new EVs which support them,
from carmakers just as BMW, Porsche, Audi etc.

The top selling electric car is the Nissan Leaf, a small city car with a low
price in comparison to other electric car manufacturers. The price of
purchasing this model is only about 24.000.5
One of Apples biggest competitors will be Tesla Motors. The company is
the high end luxury manufacturer in the electric car market. They sell and

4 https://www.iea.org/publications/globalevoutlook_2013.pdf
5 Nissan.de, electric vehicles, 2015

design premium sport cars. They serve as catalyst and example to other
car makers and opened their technology patent on battery for everyone
since 2014 in good faith. Of course they still own other intellectual
property which prevents a direct copying of their vehicles.6 Their price
position is high, about $100.000 is the average price for a new car.
Other car makers like BMW, Volkswagen with Audi and Porsche, as well as
Mercedes already announced, that they are working on electric vehicles
too. So the competition will not be small.

Apple introducing a car


In my opinion Apple is doing something very clever, according to many
reports Steve Jobs already had the idea of creating a car in 2008, but they
went quiet and concentrated on the electronic devices, especially the
iPhone development, which brought Apple to their leading position.
Meanwhile car manufacturers like Tesla developed electronic vehicles and
Apple watched them. Now that the demand is growing they saw their
chance to realize their idea of creating an Apple car. In other words: They
let others test the market to see how the consumers respond and now
they are planning how to improve the product and enter the market. It fits
perfectly in the brand image of sustainability and innovation, Apple has a
big chance of having a lot of success with their Project Titan. Besides
that, it just came to light, that Apple owns a patent of solid state battery
tech since 2008, which has a big amount of advantages over traditional
cell batteries used by competitors. The solid state cells reduce the risk of
overheating, a problem that Tesla Motors and others have struggled with.7
Not enough, Apple puts unbelievable efforts in recruitments. They are
hiring external workers from Samsung to optimize the battery technology
and ex-employees from Tesla Motors, who have a lot of knowledge about
electronic vehicles. Besides that they employed external workers from GM,

6 https://en.wikipedia.org/wiki/Tesla_Motors
7 http://learnbonds.com/125285/apple-inc-has-patented-an-existential-threat-to-teslamotors-inc/

Ford, Volkswagen, A123 Systems (Battery expert with companies former


Mujeeb Ijaz) and Doug Betts, a veteran of car industry with 25 years
experience working for Nissan, Toyota and latest for BMW. This is only
possible because Apple is offering an extremely attractive salary and
benefits. Considering rumours on the web, until now Apple has about 600
workers on the project, their goal is to have a team of 1000 high qualified
engineers with different backgrounds to optimize the product. Apple has
great facilities and according to articles on the internet they purchased a
disused naval base near San Francisco as secure test facility, so they can
work super discretely on the project, without being disturbed. Apple is not
going to test the product in public like companies as Tesla and Google,
they want to keep the project on low-profile until now, so later it will
attract more interest and excitement.
The current target date to complete the project is in 2019, but it also
could be later. 8 The Apple CEO Tim Cook is convinced, that the car
industry is close to a massive change and sees Project Titan as a
committed project.
Apple takes into consideration to introduce the first digital license plate.910
The main risk for normal car manufacturers like Mercedes-Benz or BMW
is probably not so much that an Apple car would destroy them, the way
the iPhone did it with Nokia, the company that was once the

biggest

mobile phones factory. Rather, the risk is that Apple could turn carmakers
into simple hardware producers and control the profit.11


8 http://www.macrumors.com/roundup/apple-car/
9 http://www.macworld.co.uk/news/apple/will-apple-make-icar-project-titan-rumourroundup-bmw-3425394/
10 http://www.bloomberg.com/news/articles/2015-11-04/steve-jobs-consideredbuilding-an-apple-car-in-2008
11 http://www.straitstimes.com/world/whats-next-for-apple-icar

The

following

SWOT-

analysis

shows

the

strengths,

weaknesses,

opportunities and threats for Apple introducing a electric car to the


market.

Strengths:
-Financial Position, Tinancial requirements
-Market position
-sSrong brand loyalty
-Battery tech advantage
-value-orientated marketing
-Wide knowledge from hired individuals
-High demand on electric cars in society

Weakness:
-No experience in car industry
-No own knowledge
-Apple depends on external workers

Apple introducing a car

Opportunities
-High support by community
-Could be the most successful product ever
-Awareness of environment protection in society is stronger than ever
-Could turn big car manufacturers into simple hardware producer

Threats
-If the introduction fails, Apple as brand would be affected negatively
-Potential clients could be afraid, because Apple is not a car manufacturer
--Established car manufacturers could introduce electric cars with better
technology
-Car users could show brand loyalty to their brands

Pricing
Apple could set the pricing level high, because of their normal premium
standard products. But why do not try and set the price lower so the
normal user gets the chance to buy it? In my opinion it would not make
much sense. Apple is known for its high standards and also has a huge
support of their loyal consumer base.
A survey confirms that there is a very high percentage of the current
Apple users, that plan to stay with Apple instead of current Android users,
who are partly planning to buy an iPhone in future. Of course they are
established in the smartphone market and we can not reflect that on the

introduction of a car, but it shows how successful they are at what they
do.12
I think Apple should stick to their high pricing with their great marketing.
In the following paragraph I will analyse the pricing strategy for the apple
car according to some of the eight steps to a better pricing.
Assess what value your customers place on a product or service
As I already pointed out, the majority of Apple users are very loyal to the
brand and the apple services in general. This is the result of a very valueorientated marketing strategy. Apples marketing is so effective because of
the fact, that values and beliefs are not just static ideas. Actually when
values are activated they infuse with deep emotions of a consumer. That
is what happens to most of the Apple customers, they start to identify
personally and build up a relationship with the brand. These feelings lead
to a very strong and desperate desire of an apple-product, even if there is
no urgent need.

13

According to this, the apple car launch would be

welcomed with big feelings by the apple community and they would even
agree to pay a high price because they already have an emotional
relationship with the brand. I even think that Apple customers would not
be happy if apple sets the price low, because it would not fit into the
current premium image of the brand. Apple users are confirm, that the
products are high quality and willing to pay a high price for good services.
After the announcement Apple should take into consideration the
emotional reaction of their customer base and according to that reaction,
decide where to position the new product until they release it.


12 http://bgr.com/2015/06/29/apple-vs-samsung-brand-loyalty-survey-rbc/
13 http://articles.bplans.com/apple-echoing-consumer-values-30-years/

Assess customers price sensitivity


The average costs of purchasing a new car in general are about $34.000.
The price is increasing because of technological innovation, like more fuelefficient motors. Electric cars often are more expensive than normal cars.
An electric car of course cuts off fuel costs, and over all it gives the
customer the feeling of doing something good for the environment, which
makes it more attractive. After taking a look on competitors products,
you can see how much a customer is willing to spend on a luxury electric
car. Tesla and BMW, so as Porsche set the prices for their electric cars
around $100.000. As we learned Tesla has even more expensive cars in
their product range. Considering these numbers, Apple as a high class
brand could easily launch the Apple car with a high price, but maybe not
as high as Tesla sells their premium products. Apple has no performance
in the car-industry so far that would justify an extremely high price, as a
brand like Tesla that has years of experience in the car industry. Apple
has to be careful.

Identify an optimal pricing structure


Apple should defiantly take into consideration to sell their customers
packages or even give quantity discounts to their clients. A lot of business
clients that are already using Apple hardware in their companies would be
very interested in buying a bundle of the new car. Same as individual
apple customers who are very loyal to the brand. These customers are
used to a high standard and would agree to the brands average high
pricing structure.

Consider competitors reaction


Competitors like Tesla Motors, which will be the biggest competitor, will
have to respond to the new Apple product. As already mention they have
much more experience and are already an established brand in the EVindustry, but still they do not have the brand loyalty and consumer base
that has Apple. Apple has way more canals to do marketing and the
chance to attract more people. Considering the strong financial position of
Apple they can easily position their car at a lower price than Tesla in the
premium section. The release of an iCar is a big threat to Tesla and they
have to worry about their leading position as premium brand in the
electric car industry. Their current reaction to the announcement is that,
the apple is hiring people they have fired and that there is no threat. The
CEOs comment was If you dont make it at Tesla, you go work at Apple,
at the same time he welcomed other car manufacturers to EV-market
mentioning that they have opened their patents for use by anybody.

14

As mentioned above, Apple is very focussed on the battery improvement,


which could justify a high pricing, while Tesla Motors is not concentrating
that much in developing new battery types. This will definitely cause a
battery war at Teslas Motor, because Apple owns the patent on solid state
battery.
As a respond Tesla has work on battery to justify their price or, what they
are actually working on, to make them as cheap as possible and so lower
their prices.15
If this happens Apple has to respond with high quality batteries to defend
their premium price. Apple should take companies like Tesla Motors as
serious competition. Still, I am sure, that Apple is aware of its competition
and will perform successful and increase their profit by setting their
pricing high.

14 http://www.dezeen.com/2015/10/14/tesla-elon-musk-slams-apple-electric-carambitions-watch-design/
15 http://learnbonds.com/125285/apple-inc-has-patented-an-existential-threat-totesla-motors-inc/

Analyse whether the returns are worth the cost to serve


Of course Apple has a strong financial position and they have the
possibility to invest a lot of money in their car project by hiring external
workers. It gives them the advantage to do huge investments in
development and research to make sure the project will not leave a loss
for the company. Rather they are making this effort to make sure, that
the final product will be sustainable and bring notable returns to the
company. Of course it is possible that it will take apple some time to
establish the car to leave a high margin. But they definitely have it in
mind and are doing the best to respond to the customers needs and
desires by creating the product and sell it for a competitive price.

Branding
According to the 3Is by Philip and Milton Kotlers of branding apple has a
great advantage because the brand is the most established worldwide
with a customer loyalty, that other brands only can dream of.
Apple also covers the Brand Equity Drivers:
There are only a few people that are not aware of the brand Apple, it is
the most popular brand worldwide. With a high differentiation Apple
created an empire. Apple only fits with Apple, so Apple has it own
software and can hardly be connected to software which is not Apple. As
already mentioned, Apples marketing strategy is high value-orientated
and creates an emotional relationship and trust with the customers.
The accessibility of Apple products is quite special. Apple has developed
the great model of their Apple Stores, which numbers keep growing.
Nowadays Apple products are purchased all over the world, through Apple
Stores, Resellers or the internet. As a result Apple today is the most
powerful brand and is flexible and as it shows in the current project they
have the unique ability to hire and retain very talented employees.

Following futuristic goals were reached through the great branding by


Apple.

Building emotional connection as key

Creating /engineering a complex customer experience.

Customer-relevant innovation as key success factor.

Outstanding customer service as key success factor.

Hiring the right employees and creating the appropriate


culture because of strong brand position

In my opinion the move of introducing a car will make the high brand
position stronger than ever. And the iCar will be launched as the most
successful product in Apples history. They have all the requirements they
need. As a move of diversification they will enter a new market and
change it for ever, as they did with other products before.

Conclusion

At the end I am sure, that Apple will perform great with positioning their
car at a high price. According to the quote Apple users love their Apple
stuff; their huge and loyal customer base is used and willing to pay high
prices for Apple products because of positive emotional relationship. Apple
keeps their promises, they always did and that is the reason why
consumers trust in their technology.

Our society is more aware than ever, that our environment has to be
protected, emissions should be reduced to the minimum. Apple has the
opportunity to change the car technology for ever. Pioneers as the
mentioned Tesla Motors made it possible and created a fundament for
Apple

that

electric

car

technology

is

the

future.

Apple

has

the

requirements that justify a high price and as pointed out in the text above
the pricing and branding support the project at its fullest.
I really appreciate the Project Titan and hope that Apple will change the
car industry, because the reduction of the car emission is a big part of the
environment pollution.
Good luck Apple.

References
1. http://appleinsider.com/articles/15/05/07/apple-cash-reserves-greaterthan-those-held-by-most-us-industries-combined, accessed 18.11.2015
2.

http://www.businessinsider.com/global-cash-reserves-companies-

nations-2014-4, accessed 21.11.2015


3. http://www.apple.com/pr/products/, accessed 18.11.2015
4.http://www.nissan.de/DE/de/vehicle/electric-vehicles/leaf.html,
accessed 19.11.2015