Apple Marketing Analysis Report Apple IP

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Marketing Management
Apple Inc. Case Study
Table of Content
Introduction 2
Apple SWOT analysis 7
Apple PESTEL Analysis ............. 9
Porter's 5 Forces Analysis 11
BCG matrix perspective 12
Ansoff Matrix Perspective 15
Extended Marketing mix Analysis
Conclusion... 17
Recommendation 18
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Introduction
The phone starts ringing, we're going to pick it up and when we touch it,
the ringer volume smartly goes down! Yes! Today a company like HTC could
make this kind of cellphone.
Since the launch of the IBM Simon in 1993, smartphone technology has
reached levels that until recent times had only been dreamed about.
Features such as wireless sharing, HD video recording and mobile internet
are now commonplace and todays average smartphone has more
processing power than computers used by NASA to land a man on the moon.
All over the world, the smartphone experience is being shared by more and
more people every day. (Belic, 2012)
The convergence of mobile telephony, Internet services, and personal

computing devices is resulting in the emergence of a mobile Internet (Ishii
2004; Funk 2001). The key devices for accessing the mobile Internet
-currently dubbed smartphones - are powerful new computing devices
offering traditional wireless voice service as well as native software
applications and, perhaps most importantly, the ability to connect to and
run a myriad of Internet-based services including email, geo-location,
streaming video, and social networking, while providing a good user
experience. The business opportunities presented by this new category have
attracted many of the major global information and communications
technology (ICT) firms, including firms from the mobile telephony, personal
computer, Internet, and personal digital assistant (PDA) industries, into a
complex new landscape of competition. For many of these firms, capturing a
portion of the total value created by the smartphone industry is believed to
be a key to future growth and profits. (Kenney, 2011)
The interest is understandable. Today more than 1.3 billion mobile phone
handsets are being sold annually, and in 2010 smartphones made up almost
20% of that total (Gartner, 2010; Ahonen, 2010). Sales of smartphones are
increasing almost 100% per year, and total global sales volume is expected
to surpass that of PCs by 2012 (Gartner, 2010). By collapsing the boundaries
between previously distinct devices, smartphones are subsuming sales of
mobile phones entirely and, increasingly, netbook and notebook PCs. To
complicate the landscape, the smartphone is not the only device at stake,
tablets and ebook readers are emerging as key components of the mobile
universe. Across all devices, total mobile revenues - including advertising,
subscriptions, handsets, applications, and so on - are forecast to surpass $1
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trillion by 2014 (Gartner, 2010). Given the rate at which smartphone are
penetrating the market and component prices are declining by 2015 there
will be, at least, 2 billion smart mobile devices in use globally. (Kenney,
2011)
According to the instructions we should make a report with a

organizational business plan structure to depict current situations of Apple
Inc./ iPhone division, and then analyze strength and weakness of the
company. I will start with SWOT and PESTEL analysis. Then we review the
most effective force on iPhone production with Porter's 5 forces. Then we will
analyze Apple iPhone Growth and market share in depth with BCG matrix. I
use mostly 2012 figures to draw an up to date image from Apple iPhone
production and market situation. Ansoff matrix will be the next analysis
which helps us understand iPhone market penetration and how it reached
diversification.
Apple is a big company with several products and services that provide
along with products. Each product has its own market. It is possible to use
multiple factors and combine related statistics for analyzing a company with
different product. But in this case we are required to analyze smartphone
industry only. I use recent figures (2010 to 2013) for analyses. For brands
comparisons I consider Apple, Samsung, HTC, ZTE, and RIM (BlackBerry).
For set goals and making the reports objectives we should specify what
we want.
It is required to indicate strength and weaknesses of smartphone section.

In my opinion weaknesses are more important. They could emerge in any
areas such as production lines, technological aspects or selling process and
cause big failures. Prominent strength and weaknesses will be identified and
then will be matched with political, social, technological and environmental
factors.
Industry intensity will be assessed using Porters 5 forces analysis. This

analysis classifies strong and weak points within 5 forces: Threat of new
entrants and substitute products, bargaining power of suppliers and
customers, and segment rivalry. These forces analyze micro environment.
For macro factors we could look into PESTEL analysis.
For market share and growth analysis Growth-share matrix (BCG matrix)
will be used. This method indicates a product strength using its sales cash
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flows. iPhone position will be determined among 4 BCG matrixs categories:

Star, Cash cow, Dog and Question mark.
Apple iPhone as a new product in comparison with existing products

within a new or existing market will be analyzed using Ansoff matrix. Result
shows that iPhone as a new product in 2007 was magnificent. 270,000 units
were sold at that time.
Expanding the concept of the marketing mix is important for companies

that want to adapt to new markets. For example, just placing a product in
stores is not enough. A manufacturer with retail outlets also needs to think
about physical environment and layout. The store should convey the right
look and feel, leading consumers to build up positive associations with the
brand. Products inside the store should be displayed logically and
consistently, in the locations customers would check first if they were
looking for specific items. (WiseGeek.com) Because of all these factors a
complete extended marketing mix (7Ps) will be presented.
Global Smartphone trend

The global smartphone market has been experiencing explosive growth
for the last several years. Competition has remained fierce all throughout,
but the numbers don't lie. Two technology titans dominate the market,
taking a whopping 92% of market share for themselves. These two
companies are Google and Apple. Data regarding smartphone sales during
Q4 2012 has come out during the last several days, evidencing how much
people all over the globe want to get their hands on a smartphone. After a
quick look at the information, it becomes evident that the high-end phone
market is a one of the most extreme oligopolies of the 21st century. With the
release of Blackberry 10 just two days away, investors are starting to ask if
there really is any room left for Research In Motion's latest offering.
(Deshkovich, 2013)
Smartphones are flying off the shelves. According to Strategy Analytics,

global smartphone shipments have increased from 490.5 million during
2011 to 700.1 million during 2012, which is roughly 30% growth year-over-
year. If anything, there is room for disruption within the industry: people will
keep buying more phones. As the market grows, however, so does Android's
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market share: Android went from having 48.7% of the market in 2011 to a
whopping 70.1% in Q4 2012. Apple's iOS has also grown slightly, capturing
22% of the market share by the end of the same period. How much is there
left for everyone else? As of Q4 2012, a meager 7.9%.
The success of the iPhone, Pre, and Blackberry shows the strength of
consumer demand for an intelligent, multifunctional device. The appeal of
the smartphone will create significant new revenue streams for carriers and
developers, who should strive to create new service bundles that build off
this mobile platform with converged video, voice, and data applications.
(Cellular-news.com)
Future Smartphone sales forecast

Smartphone sales blew past the number of PCs sold last year, and they'll
be nearly twice PC sales this year, analyst Alex Cocotas of BI Intelligence
predicts.
More startling, smartphone sales will exceed 1.5 billion units per year by
2016. This compares to about 350 million PCs and 1.7 billion mobile
handsets sold globally last year.
Smartphone sales will be driven by two main factors, BI Intelligence says:
Replacement of nearly 5 billion "dumbphones" with

smartphones (smartphones currently make up only 10% of handsets
worldwide)
Price declines. The average price of a smartphone will drop from

about $315 last year to $200 over the next several years
This will obviously have a huge impact on the mobile Internet economy,
which is already exploding from the growth of smartphone penetration in the
past few years.
Some other highlights from the report:
Smartphone unit sales will grow at nearly a 30% compound

annual growth rate over the next five years
Smartphones will represent about two-thirds of all mobile

phone purchases by 2016,
Smartphones will be a $320 billion market by 2016.
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These forecasts are much higher than those of other industry analysts,
who generally expect smartphone unit sales to hit about 1 billion a year by
2015. (Gobry, 2012)
Apple Mission and Vision 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
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the future of mobile media and computing devices with iPad. (Investor
Relation: Apple.com)
Apple vision statement:

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.
Apple Background
On December 2012 The Economist reported that Apple became the
most valuable company ever (in nominal terms), beating the record that
Microsoft hit in December 1999. Apples share price peaked at $705 before
entering bear territory and falling by 25%, to $510; at the start of 2012 it
had been $410. (News: The Economist, 2012)
Apple Incorporated is an American corporation that designs and

manufactures computer hardware, software and other consumer electronics.
The company is best known for their Macintosh personal computer line, Mac
OS X, extremely loyal user-base, iTunes media application and the iPod
personal music player. The company headquarters is in Cupertino,
California, CEO and co-founder is Steve Jobs and the company boasts 284
retail locations spanning 10 different countries (Bright Hub, 2010).
Apple Inc. was founded on April 1, 1976 in a garage by Steve Jobs and
Steve Wozniak. The young entrepreneurs brought different strength to their
fledgling company: Jobs had a flair for conceptualizing products, while
Wozniak had the technical know-how to make them happen (Washington
Post Economy, 2012).
Apple I was the first product that Apple Inc. produced. It was a personal
computer (PC) with a MOS 6502 cpu clocked at 1 MHz and 4Kb memory. In
1977, Apple introduced Apple II which became a very successful device.
After that the company began to produce Apple II series. The Apple II was
followed by Apple II plus, Apple IIe, Apple IIc, Apple IIGS, Apple IIc Plus and
Apple IIe Card.
Apple introduced Macintosh in 1984 that became a very successful

computer. It was a first computer featuring a graphical interface and a
mouse for navigation. The new computer sold very well, pushing apple's
fiscal 1984 sales to an unprecedented 1.5$ billion. (Chapman & Haskisson)
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By 1985, however Jobs and Scully began to disagree over the direction
they wanted the company to take. After Jobs' attempt to remove Scully
failed, Jobs left Apple in May to start his own new business, NeXT
Computers. (Chapman & Haskisson)
In December 1996, Apple acquired NeXT, with the plan of using its
technology as the basis for a new operating system. After being gone for
more than a decade, Jobs returned to the company he had originally
cofounded with Wozniak. (Chapman & Haskisson).
In 1998 Apple introduced the new generation of PowerMacs, PowerBooks,

and the highly anticipated iMac and iBook, which were less expensive
computers aimed at the how-end computer market. After an entire year
without showing a profit, the first quarter of 1998 began three years of
profitable quarters for Apple. (Chapman & Haskisson)
Apple ventured into the market of legal downloads with the introduction of
its iTunes Music Store in 2001. iTunes offers downloads at a specified price
without requiring subscription or monthly fees. iTunes offers its users a
selection of more than 6 million songs, with new songs continually added.
(Chapman & Haskisson)
For music lovers, the iPod is the greatest invention since the Walkman.
With up to 160 GB of storage, it allows users to carry up to 40,000 songs or
200 hours of video wherever they go. There are currently four different iPod
styles: the iPod shuffle, iPod classic, iPod nano, and iPod touch (Chapman &
Haskisson). Apple earned 5,615 million just from iPod in 2012 (APPLE INC.,
2012).
Brief Chronology:
1976 With $1,300, Steve Jobs and Steve Wozniak found Apple
Computer, Inc.
1980 Apple converts to public ownership.
1982 Apple becomes the first Figure 1 1977 Apple II Introduction Ad

Cover
personal computer company to reach $1 billion in annual sales.
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1985 John Scully assumes the helm after a management shakeup that
causes the departure of Jobs and several other Apple executives.
1991 PowerBook line of notebook computers is released.
1994 Power Macintosh line is released.
1996 Acquisition of NeXT brings Steve Jobs back to Apple as a special

advisor.
1997 Steve Jobs is named interim chief executive officer.
1998 The all-in-one iMac is released.
2000 Jobs, firmly in command as CEO, oversees a leaner, more tightly

focused Apple.
2001 The iPod is released; Apple opens its first retail store in Virginia.
2003 Apple opens its first store in

Japan.
2005 The release of a video iPod, the

fifth generation of the device, pushes
total iPod unit sales to 30 million.
In first-quarter 2007, Apple launched its

"revolutionary" product, the iPhone. iPhone
combines three concepts popular with
customers: a mobile phone, a widescreen
iPod, and a internet communication device.
The iPhone brags "an entirely new user
interface based on a large multi-touch display
and pioneering software." which users can
control with just their fingers. The iPhone
default Internet browser will be Apple's own Safari **, but it is open to other
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software as well. The iPhone allows for 8 hours of talk time. Apple sold
1million iPhone less than three month after this product was available to
customers. Apple expects this trend to continue during 2008 and to reach
sales of 10 million iPhones, stealing 1 percent of the mobile phone market
share. (Chapman & Haskisson).
One year following the untimely death of Steve Jobs, the company he co-
founded and led for most of his adult life appears to be thriving and lacking
any serious obstacles to its break-neck growth in a rapidly changing
technology market. (Gallagher, 2012)
That said, Apple Inc. still has plenty of challenges ahead. Some of those
stem simply from the nature of the fast-paced, hyper-competitive consumer
technology business the company currently competes in and largely
dominates. (Gallagher, 2012)
Other challenges may be more unique to Apple and its singular focus on a
relatively narrow line of products. And long-term, the company may still feel
the loss of a leader who possessed an uncanny ability to see around corners,
and bend other strong personalities to his will. (Gallagher, 2012)
The guy who could literally pull rabbits out of his hat no longer exists,
said independent technology analyst Roger Kay. (Gallagher, 2012)
Apples had a phenomenally strong year since Jobs death from cancer last
October, which left the company permanently in the hands of the senior
management team he spent years cultivating, led by CEO Tim Cook. Its also
had some stumbles along the way. (Gallagher, 2012)
Some missteps with features such as Siri the infamous personal digital
assistant first embedded into last years iPhone 4S and the Apple Maps
tool in the latest iPhone 5 have caused some level of embarrassment. The
company under Jobs direction was not free of slip-ups either, and some
issues have spanned both periods, such as growing concerns about the
treatment of workers in the massive Chinese factories that produce the
companys popular products. (Gallagher, 2012)
But if proof is in the numbers, investors may find it hard to argue against
the crew running Apple now. The company is conservatively projected to
report a 44% revenue gain for its just-ended fiscal year with earnings
expected to post a gain of more than 60% from the previous year.
(Gallagher, 2012)
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Apples stock is up more than 70% from the day Jobs passed away,
despite the stated concerns at the time of many investors and analysts
about how well the company could keep its pace of innovation without its
chief visionary at the helm. (Gallagher, 2012)
The key challenge for Apples management team will be in keeping the
companys strongest profit engines humming. And this will involve the right
mix of technological innovation and deal making. (Gallagher, 2012)
The iPhone is the most crucial element. First launched in 2007, the
smartphone accounted for nearly 55% of Apples total revenue in the first
nine months of the just-ended fiscal year. While the company does not
disclosed profitability data on its product lines, analysts believe the iPhone is
the major driver of operating profits, with a gross margin of well over 50%
on the devices. (Gallagher, 2012)
Apple can command those high subsidies because of the strong consumer
demand for the iPhone. But competitors are pushing hard into the
smartphone space. Samsung has already outpaced Apple in global
shipments thanks to its use of Googles Android operating system and its
wide line of phones that appeal to a broader array of markets and
consumers. (Gallagher, 2012)
Apples old nemesis Microsoft is launching an updated Windows Phone

platform this fall, with Nokia and Samsung building devices for the software.
(Gallagher, 2012)
Investors will continue to watch closely for signs that Apples current team
can not only push forward its existing product line, but add to them with new
categories and innovations. Though the iPhone 5 launched a year following
his death, a report by Bloomberg BusinessWeek cited unnamed sources as
saying that the device received detailed input from Jobs prior to his death.
(Gallagher, 2012)
Despite Apples strong run of success, its narrow product line and strong
reliance on the iPhone makes it vulnerable to competitors who may come up
with better ideas. (Gallagher, 2012)
Apples future success will likely hinge on its ability to maintain that
posture no matter whos in charge. (Gallagher, 2012)
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Apple SWOT Analysis:

SWOT is a great indicator of an agency's strategic ineptitude. This
involves you creating a two-by-two grid and then populating it with a list of
incredibly obvious client strengths and weaknesses, and another list of
equally palpable opportunities and threats. Then you stand back and gaze at
this list of incredibly humdrum words, such as 'competitors' and 'new
product', and attempt to intuit a bold, new, innovative way of doing
business. (News: Marketing Magazine, 2005)
The table below provides information about current situation of Apples

smartphone market position, strength and weaknesses and also its possible
future situations, threats and opportunities.
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Table 1 Apple Inc. Strengths and Weaknesses
Strengths Weaknesses
Universally accredited and well- Apple is a Big name in the
known brand which also began kind technology world. It brings so much
of revolution in smartphone responsibility and kind of obligation
industry for company and its product. New
iPhone map application problem
and customer frustration would be a
good example.
From the anti-capitalism point of
Brand loyalty is incredible. People view devices like iPhone counts as
will line up in the freezing cold luxuries. They think this kind of
overnight just to be one of the first huge prices could be spend
to get their hands on the new
somewhere more vital.
iPhone! (Guenette, 2012)
Employ high technologies. This Utilize high technology along with
offers unique features for at least high quality hardware component
two purposes. turn Apple iPhone into very costly
One, First degree price merchandise. Probably many people
discrimination and two, luxury cannot afford the price.
customer satisfactions
Ease of use. Apple utilizes user iPhone is equipped with own Apple
friendly design elements for both closed operating system, iOS. And
hardware and software parts of apps which work with iOS can only
iPhone. 3.5 mm audio jack would be be downloaded from App Store.
a good example! Other rivals like Android have more
distribution channels.
Former CEO, Steve Jobs role in Steve Jobs died on Oct 2011. We
developing iPhone and leading can still see his works and ideas in
Apple to the market incredibly. Apple iPhone. His lost can be an
excessive damage to the company.
Having strategic agreements with

well-known mobile carriers. like T-
Mobile and AT&T
Page 13 of 35
Apple summary of PESTEL Analysis

Political The supply and manufacture of many critical components is
factors performed by sole-sourced outsourcing partners in the U.S.,
Asia and Europe. Outsourcing partners in Asia perform final
assembly of substantially all of the companys hardware
products. Manufacturing or logistics in these locations or transit
to final destinations may be disrupted for a variety of reasons
including, but not limited to, natural and man-made disasters,
information technology system failures, military actions or
economic, business, labor, environmental, public health, or
Political issues. (APPLE INC., 2012)
War, terrorism, geopolitical uncertainties, public health issues,
and other business interruptions have caused and could cause
damage or disruption to international commerce and the global
economy, and thus could have a material adverse effect on the
Company, its suppliers, logistics providers, manufacturing
vendors and customers, including channel partners. The
Companys business operations are subject to interruption by
natural disasters, fire, power shortages, nuclear power plant
accidents, terrorist attacks, and other hostile acts, labor
disputes, public health issues, and other events beyond its
control. (APPLE INC., 2012)
Economic The global recession is having a serious impact on Apple's retail

factors performance
The follow-on effects from global economic conditions on the
Companys suppliers could affect the Companys ability to
obtain components. Therefore, the Company remains subject to
significant risks of supply shortages and price increases. The
Company expects to experience decreases in its gross margin
percentage in future periods, as compared to levels achieved
during 2012, largely due to a higher mix of new and innovative
products with flat or reduced pricing that have higher cost
structures and deliver greater value to customers and
anticipated component cost and other cost increases. Future
strengthening of the U.S. dollar could also negatively impact
gross margin. (APPLE INC., 2012)
Social The Companys business requires it to use and store customer,

factors employee, and business partner personally identifiable
information (PII). This may include names, addresses, phone
numbers, email addresses, contact, preferences, tax
identification numbers, and payment account information.
Although malicious attacks to gain access to PII affect many
companies across various industries, the Company may be at a
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relatively greater risk of being targeted because of its high

profile and the amount of PII managed. (APPLE INC., 2012)
Technologic Apple R&D expense is increasing year by year. $1.8 billion

al factors for 2010, $2.4 billion, and $3.4 billion for 2012 which is a
crucial manner in these days competition (APPLE INC.,
2012)
Environme The Company also sells its hardware and software products to
ntal factors enterprise and government customers in each of its geographic
segments. The Companys products are deployed in these
markets because of their performance, productivity, ease of use
and seamless integration into information technology
environments. The Companys products are compatible with
thousands of third-party business applications and services, and
its tools enable the development and secure deployment of
custom applications as well as remote device administration.
(APPLE INC., 2012)
Legal The Company is subject to laws and regulations affecting its domestic
Factors and international operations in a number of areas. These U.S. and
foreign laws and regulations affect the Companys activities including,
but not limited to, areas of labor, advertising, digital content, consumer
protection, real estate, billing, e-commerce, promotions, quality of
services, telecommunications, mobile communications and media,
television, intellectual property ownership and infringement, tax,
import and export requirements, anti-corruption, foreign exchange
controls and cash repatriation restrictions, data privacy requirements,
anti-competition, environmental, health, and safety. (APPLE INC., 2012)
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Porters 5 Forces Analysis

The Porter's Five Forces tool is a simple but powerful tool for
understanding where power lies in a business situation. This is useful,
because it helps you understand both the strength of your current
competitive position, and the strength of a position you're considering
moving into. (Articles: MindTools.com)
Bargaining Bargaining
power of power of
suppliers customers
Threat of new Threat of

entrants substitutes
Competit
ive
rivalry
Six years to the month after Steve Jobs unveiled the first iPhone, the
smartphone industrys go-go years are officially over. Cautious comments
from Samsung Electronics on Friday underlined the message conveyed by
the latest quarterly results from Apple earlier in the week: even as it scales
new heights, the smartphone market is entering a phase in which vaulting
growth rates and high profit margins will be much harder to come by.
(Waters, 2013)
The developing world, is riding a wave of cut-price devices, many of them

closer in nature to feature phones than the high-end smartphones that have
put Apple and Samsung at the top. (Waters, 2013)
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Apples shares continued to slip following its announcement of weaker

than expected iPhone sales in the final quarter of 2012, with Exxon taking its
crown as the worlds most valuable company. (Waters, 2013)
Despite selling 47.8m iPhones 29 per cent more than in its previous
record quarter a year before Apple failed to live up to Wall Streets high
hopes, leading some analysts to predict the years of super-charged growth
that began with the iPod were behind it. (Waters, 2013)
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:Threat of new entrants

powerful companies like samsung that has . 1
a lot to say these .days with new products in
Smartphone market
Android, as a partially free operating . 2
system could be a influential competitor
Bargaining power of Bargaining power of

suppliers: customers:
a disassembled iPhone as I said before, iPhone
reveals that the competiti counts as a luxury
microprocessor chip is
supplied by samsung;
ve rivalry device. it is expensive
in comparison other
Philips and ...many other in smartphones. retailers
companies provide chips often reports customer
that are central to the Smartpho dissatisfaction about
camera, display, and
motion sensor.
ne iPhone and other Apple
product price.
maintaining good industry
supplier relationships is a
balanced that apple will
have to find in order to
stay ahead of its
competitor. *
Threat of substitutes:
in this conpect we do not look for
other brands similar products. In
fact we should find totally different
product s for this section of analysis.
with the all capabilities that a
smartphone could have , there most
be another revolution or kind of
invention for substitute product.
* (Chapman & Haskisson)
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BCG Matrix Perspective

The growth share matrix is a framework first developed by the Boston
Consulting Group (BCG) in the 1960s to help companies think about the
priority (and resources) that they should give to their different businesses.
Also known as the Boston matrix, it puts each of a firm's businesses into one
of four categories. The categories were all given memorable namescash
cow, star, dog and question markwhich helped to push them into the
collective consciousness of managers all over the world. (Ideas:
TheEconomist.com, 2009)
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For creating a Growth-Share we need two measures. One relative market

share and two market growth. I used a chart which developed by IDC
(International data Corporation) to gather market share informations about
Apple iphone and its rivals.
Figure 2 World Smartphone Market Share
According to this chart Apple iPhone share market is 15% of the overall
market for 3rd quarter, 2012. And it takes second place after Samsung with
31.3% share market. Black Berry (Research in motion), ZTE, HTC are 4.3%,
4.2% and 4% respectively. For developing the BCG matrix we need relative
market share. It means we should compute one brand's share to its largest
competitor: (Wikipedia)
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Brands Samsung Apple RIM ZTE HTC

Market share 31.35% 15% 4.3% 4.2% 4%
Largest 31.35% 31.35% 31.35% 31.35% 31.35%
competitor
Relative market
share( approximat 1:1 1:2 1:8 1:8 1:9
ely)
For market growth rate current sales figures are used in comparison the
same last year.
Figure 3 Smartphone unist sales estimates by OEM (in millions)
Page 21 of 35
For Market growth rate I used the table above and derive the table below:
Smartphone brands 2012 Market growth

2011sales
sales* rate
Apple 148.4 93.1 %59
Samsung 177.4 95.2 %86
Research in motion 41.4 52.8 -%21.5
(Blackberry)
HTC 39.2 44.6 -%12.1
ZTE 26.7 14.9 %79.19
* In millions
Market
growth
100.0% Question
Stars
marks
HT 80.0%
Apple C
iPhone 60.0%
Samsu
40.0%
ng
20.0%
ZTE
0.0% Market Share
35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0
-20.0%
Cash cows RIM

-40.0% Dogs
Figure 4: BCG Matrix for iPhone and its Competitors
15 % market share in 2012 is a fair figure for Apple iPhone. However

Samsung is dominating the market by share of 30% as a result of
perseverance in combination with Googles Android during recent years.
According to data and calculation iPhone is categorized in stars segment. It
means high market share within a fast-growing industry.
Stars may generate cash, but because the market is growing rapidly they
require investment to maintain their lead. (Quick MBA)
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Ansoff matrix perspective

In 1957, Igor Ansoff published the Ansoff Matrix in the Harvard Business
Review. It was such an excellent illustration of innovation that many
entrepreneurs still use it today. The Ansoff Matrix shows four different
growth strategies that result by combining existing or new products with
existing or new markets: market penetration, market development, product
development, and diversification. For existing markets and existing
products, you'll want to work on market penetration. How can you do
incremental innovation? How about product-line extension? That would
work. (Comaford, 2007)
Existing products New products
Market Product
Existing Markets Penetration development
New Markets Market Diversification

Development
Table 2: Ansoff Matrix
Apple launched iPhone in 2007. People faced a well-built cellphone that

had only one button in front of. And equipped with Wi-Fi, GPS and a multiple
touchscreen. iPhone market started growing so fast. iPhone were sold
270,000 units at the very beginning of its release. In 2010, apple earned
25.179 million dollars just from selling iPhone and its related product and
services. I derive this two very useful and comparative tables from Apple
Page 24 of 35
Inc. Form 10-K which helps us to understand iPhone's furious growth over 5
years and its revenue making role.
Table 3: iPhone net sales for 2010, 2011 and 2012
2012 change 2011 change 2010

iPhone and related $80,47 $47,05
product and services 71% 87% $25,179
7 7
Apple total net sales $156,50 45% $108,24 66% $65,225
8 9
iPhone sales out of
43.47
proportion to Apple 51.4% 38.6%
total net sales %
Table 4: iPhone net sales by operating segment
Net sales by
2012 change 2011 change 2010
operating segment
Americas net sales $ 50% $ 56% $
57,512 38,315 24,498
Europe net sales 36,323 31% 27,778 49% 18,692
Japan net sales 10,571 94% 5,437 37% 3,981
Asia-Pacific net 33,274 47% 22,592 174% 8,256
sales
Retail net sales 18,828 33% 14,127 44% 9,798
table 3 shows iPhone "product development". We can see iPhone sales

figure and its changes year by year. This kind of growth is terrific for a new
product with no past market experience. As I mentioned earlier Apple sold 1
million iPhones less than three month after its release in 2007.
For market penetration I can refer to table 4 figures. iPhone had some
decline between 2011 and 2012. Maybe it was because of Samsung and
unexpected success. However, still it is a furious growth for apple in all over
the world.
Page 25 of 35
Extended marketing Mix (7Ps)

The extended marketing mix is a combination of elements that make up a
campaign to sell a product. It is an expansion on the original marketing mix
of product, placement, price, and promotion, adding additional factors that
can influence the success of a campaign. Companies preparing to launch
new campaigns need to think about how to organize them, given the
product, the companys reputation, and the market. Failing to assemble the
right marketing mix can result in a catastrophic introduction to the market.
(WiseGeek.com)
Product iPhone combines a mobile phone, an iPod, and an Internet

communications device in a single handheld product. Based
on the Companys Multi-Touch user interface, iPhone
features desktop-class email, web browsing, searching, and
maps and is compatible with both Mac and Windows-based
computers. iPhone automatically syncs content from users
iTunes libraries, as well as contacts, bookmarks, and email
accounts. iPhone allows customers to access the iTunes
Store to download audio and video files, as well as a variety
of other digital content and applications. In September
2012, the Company launched iPhone 5, its latest version of
iPhone. In addition to the Companys own iPhone
accessories, third-party iPhone compatible accessories are
available through the Companys online and retail stores
and from third parties. (APPLE INC., 2012)
Unlike other brands, iPhone was not released in many
versions. During 6 six years it just has 3G, 3GS, 4, 4s and
now iPhone 5. It is a clever strategy somehow. Building few
phones with splendid features, instead focusing on quality
and fundamental parts. In my opinion Apple should
continue this strategy.
Apple provides its own operating system software and
applications. I OS is the Apple mobile operating system. The
company released the latest version, I OS 6 in September
2010. And Apple App Store which is currently has 400
million accounts with registered credit cards provides more
than 650,000 software applications for customers.
Page 26 of 35
Price Apple produced few versions, as I said above. And

iphone is pricey. It was heard that apple intended to
release mini iPhone but it did not happen. I think it
would be a clever strategy to attract customers who
do not want spend that much for their smartphone and
also want to experience Apple world. Mini iPhone could
be a moderate price phone with apple magic features!
In an industry of low profit margins and cost cutting,
Apple takes a different approach to the design of its
products. While competitors are doing everything they
can to keep costs down, Apple does what it can to
make its product different. (Chapman & Haskisson)
Promotio Smart Advertising, user's training and customer's

n instructions are apple tools for promoting its iPhone
more and more. Apple do regards relationship with its
customer. However, it might be effective to offer more
discounts and other options like free shipping,
accessories gift and so on. It will definitely keep
current customers close and attracts more.
Apple heavily promoted the iPhone when it was
introduced in July 2007. Customer and investor
expectations, due to Apples reputation, boosted the
stock price. But when customers do not believe that
the marketing promises have been delivered, stock
price, brand equity, and investor lies in a carefully
thought-out plan. (Chapman & Haskisson)

Place Marketers develop distribution strategies to ensure
that their products are available in the proper
quantities at the right time and place. I think Apple do
this very well. But in some third-world countries Apple
does not service like us and Europe. Maybe it is
because of low demand but markets are growing so
fast and Apple have to concentrate on those place that
even has low demand currently.
Apple has revealed For consumers, who are covered
by consumer protection laws or regulations in their
country of purchase or, if different, their country of
residence, the benefits conferred by Apple's One Year
Page 27 of 35
Limited Warranty are in addition to all rights and

remedies conveyed by such consumer protection laws
and regulations, including but not limited to these
additional right (Apple Support)and the country list is
very limited. According to consumer laws In Asia
pacific only Australia and New Zealand could cover
consumer needs
Physical in the days when manufacturing dominated the economy,

layout the physical layout of production units such as factories was
not very important to the end consumer because they never
went inside the factory. However, today consumers typically
come into contact with products in retail units - and they
expect a high level of presentation in modern shops - e.g.
record stores, clothes shops etc. in my opinion Apple doing
great in this section. Apple stores in all over the world
provide good deal of sales and services to customers.
However in some location these retail store does not provide
the complete service that a store in us could.
Provision Customer service lies at the heart of modern service

of industries. Customers are likely to be loyal to organizations
that serve them well - from the way in which a telephone
customer
query is handled, to direct face-to-face interactions.
service Although the 'have a nice day' approach is a bit corny, it is
certainly better than a couldn't care less approach to
customer relations. Call center staff and customer
interfacing personnel are the front line troops of any
organization and therefore need to be thoroughly familiar
with good customer relation's practice. (Business Case
Studies, 2012).Steve jobs offer 100$ credit for itunes to
customers who already purchased iPhone at higher price
and they were upset about iPhone price cutting. Which
company do this to its customers?!
Processes associated with customer service are a number of
processes involved in making marketing effective in an
organization e.g. processes for handling customer
complaints, processes for identifying customer needs
and requirements, processes for handling order etc.
(Business Case Studies, 2012).
Page 28 of 35
Apple 1 year limited warranty and AppleCare Protection

Plan benefits are in addition to rights provided by consumer
law (Apple Support)

Conclusion
In this report, I used marketing tools for analyzing Apple iPhone's market
position and growth situation. We all know Apple is a big company with
worldwide reputation. People willing to line up for new products and mostly
they are satisfied with results. Nevertheless Apple has problems too.
Technology is a very competitive market. And day by day companies do
more R&D to make products better than others.
We reviewed Apple strength and weaknesses, all the good things like
brand loyalty, unique technology especially in iPhone, matchless interface
and applications, strategic agreements with big companies like AT&T and
Weaknesses like expensiveness, retailers controlling problems, vigorous
competitor like Samsung and RIM. Apple is on top from so many points now,
no doubt. But with PESTEL summary that I discussed earlier we know there
is no certainty in these days market. Brands devour fame and income and
willing to do their best.
I reviewed Apple form 10-K deeply. Apple financial statements say

everything is ok and growth is more than satisfactory. But in risks section
many items were mentioned to remind investor it is a very hard business.
Both Ansoff and BCG matrix are fine for iPhone, Samsung running so fast
but Apple still dominates US and aside recession points, figures show Apple
knows the business.
Recommendations
Page 29 of 35
Regarding all the analysis is made; there are some suggestions and
strategies for Apple which can be useful in educationally scale.
iPhone Operating System It is a privilege that apple has its own

operating system for iPhone, but regarding open source operating
systems like Android, there could be a slip for Apple in these days.
iOS has a lot of unique features that distinguish it from other OSs.
Sometimes iPhone users say they can not switch to any other
operating system and they love Apple and its iOS. But open source
OS are growing so fast. Android is capturing market and sure we
should expect others that maybe come tomorrow or a bit later.
None-free applications are often pricey in App Store. Even some
essential software for backing up and data storing has a price in
iOS. Apple should break or eliminate some of these and let the
customers enjoy from free or low-price stuff more.
Mini iPhone and China Market An iPhone Mini priced at $330 in
China would provide a healthy shot in the arm to Apple's Chinese
smartphone sales, according to Morgan Stanley analyst Katy
Huberty. A low-priced iPhone would add another 20 percent to the
10 percent Chinese market share currently addressed by the iPhone
5, the analyst said today. Smartphone prices are starting to stabilize
in China, which will open up the market for such a phone. But a deal
with China Mobile is also key. (Whitney, 2013)
Industry Smartphone industry is a highly attractive industry. As it is
mentioned before, other company is growing furiously. According to
Ansoff matrix we are to face both existing markets and new
markets. Non-stop technology cause new demands and new
markets, the more technology growth, more demand and bigger
markets will rise. Apple should play with prices cautiously with
continuing premium price strategy. Technologically Apple is on Top
but R&D should rise due to competition.
R&D expense increased $952 million or 39% in 2012 compared to

2011 and $647 million or 36% in 2011 compared to 2010. The
growth in R&D expense was driven by an increase in headcount and
related expenses to support expanded R&D activities. Although total
R&D expense increased 39% and 36% in 2012 and 2011,
respectively, it remained fairly consistent as a percentage of net
sales. (APPLE INC., 2012)
Statistics shows Apple doing this strategy very well.
Page 30 of 35
The Company continues to believe that focused investments in R&D

are critical to its future growth and competitive position in the
marketplace and are directly related to timely development of new
and enhanced products that are central to the Companys core
business strategy. As such, the Company expects to make further
investments in R&D to remain competitive. (APPLE INC., 2012)
Stock markets Both technical analysis and fundamental analysis

support a potential target of $340 for Apple stock. A less discussed
but more important problem for Apple is its heavy dependence on
subsidies from phone carriers. When a consumer buys an iPhone 5
from a carrier for $199 the carrier may be paying Apple over $600
and subsidizing the consumer. Recently there have been negative
musings both from AT&T and Verizon about the high level of
subsidies for iPhones. The subsidies on Google Android based
phones and Microsoft Windows phones are lower. (Arora, 2013)
The foregoing is a negative long-term outcome. For the time being

according to our proprietary sentiment indicator, sentiment on
Apple has reached the level of negativity that is interpreted as
bullish.
We recommended Apple long at $131 and have now taken profits on
90% of the position. The plan is to hold on to the remaining 10% as
a long-term core position in the portfolio and trade around it with
short-term trades. On Friday, the stock dipped below the upper
band of our buy zone for a short-term trade. (Arora, 2013)
Page 31 of 35
Bibliogaphy
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Page 34 of 35

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Apple SWOT analysis 7

Apple PESTEL Analysis ............. 9

Porter's 5 Forces Analysis 11

BCG matrix perspective 12

Ansoff Matrix Perspective 15

Extended Marketing mix Analysis

The convergence of mobile telephony, Internet services, and personal

According to the instructions we should make a report with a

It is required to indicate strength and weaknesses of smartphone section.

Industry intensity will be assessed using Porters 5 forces analysis. This

flows. iPhone position will be determined among 4 BCG matrixs categories:

Apple iPhone as a new product in comparison with existing products

Expanding the concept of the marketing mix is important for companies

Global Smartphone trend

Smartphones are flying off the shelves. According to Strategy Analytics,

Future Smartphone sales forecast

Smartphone sales will be driven by two main factors, BI Intelligence says:

Replacement of nearly 5 billion "dumbphones" with

Price declines. The average price of a smartphone will drop from

Some other highlights from the report:

Smartphone unit sales will grow at nearly a 30% compound

Smartphones will represent about two-thirds of all mobile

Smartphones will be a $320 billion market by 2016.

Apple Mission and Vision statement

Apple vision statement:

Apple Incorporated is an American corporation that designs and

Apple introduced Macintosh in 1984 that became a very successful

In 1998 Apple introduced the new generation of PowerMacs, PowerBooks,

1980 Apple converts to public ownership.

1982 Apple becomes the first Figure 1 1977 Apple II Introduction Ad

1991 PowerBook line of notebook computers is released.

1994 Power Macintosh line is released.

1996 Acquisition of NeXT brings Steve Jobs back to Apple as a special

1997 Steve Jobs is named interim chief executive officer.

1998 The all-in-one iMac is released.

2000 Jobs, firmly in command as CEO, oversees a leaner, more tightly

2003 Apple opens its first store in

2005 The release of a video iPod, the

In first-quarter 2007, Apple launched its

Apples old nemesis Microsoft is launching an updated Windows Phone

Apple SWOT Analysis:

The table below provides information about current situation of Apples

Table 1 Apple Inc. Strengths and Weaknesses

Having strategic agreements with

Apple summary of PESTEL Analysis

Economic The global recession is having a serious impact on Apple's retail

Social The Companys business requires it to use and store customer,

relatively greater risk of being targeted because of its high

Technologic Apple R&D expense is increasing year by year. $1.8 billion

Porters 5 Forces Analysis

Threat of new Threat of

The developing world, is riding a wave of cut-price devices, many of them

Apples shares continued to slip following its announcement of weaker

:Threat of new entrants

Bargaining power of Bargaining power of

* (Chapman & Haskisson)

BCG Matrix Perspective

For creating a Growth-Share we need two measures. One relative market

Figure 2 World Smartphone Market Share

Brands Samsung Apple RIM ZTE HTC

Figure 3 Smartphone unist sales estimates by OEM (in millions)

Smartphone brands 2012 Market growth

Cash cows RIM