APPLE

INTRODUCTION

Apple Inc. is an American multinational corporation that designs and

markets consumer electronics, computer software, and personal
computers. The company's best-known hardware products include the
Macintosh line of computers, the iPod, the iPhone and the iPad. Apple
software includes the Mac OS X operating system; the iTunes media
browser; theiLife suite of multimedia and creativity software; the iWork
suite of productivity software; Aperture, a professional photography
package; Final Cut Studio, a suite of professional audio and film-industry
software products; Logic Studio, a suite of music production tools;
the Safari internet browser; and iOS, a mobile operating system. As of
August 2010, the company operates 301 retail stores in ten countries, and
an online store where hardware and software products are sold. As of May
2010, Apple is one of the largest companies in the world and the most
valuable technology company in the world, having surpassed Microsoft.

Established on April 1, 1976 in Cupertino, California, and incorporated

January 3, 1977, the company was previously named Apple Computer,
Inc., for its first 30 years, but removed the word "Computer" on January 9,
2007, to reflect the company's ongoing expansion into the consumer
electronics market in addition to its traditional focus on personal
computers. As of September 2010, Apple had 46,600 full time employees
and 2,800 temporary full time employees worldwide and had worldwide
annual sales of $65.23 billion.

For reasons as various as its philosophy of comprehensive

aesthetic design to itsdistinctive advertising campaigns, Apple has
established a unique reputation in the consumer electronics industry. This
includes a customer base that is devoted to the company and its brand,
particularly in the United States. Fortune magazine named Apple the most
admired company in the United States in 2008, and in the world in 2008,
2009, and 2010. The company has also received widespread criticism for its
contractors' labor, environmental, and business practices.

HISTORY
PRODUCTS
Apple's Branding Strategy

Apple Inc. uses the Apple brand to compete across several highly
competitive markets, including the personal computer industry with its
Macintosh line of computers and related software, the consumer electronics
industry with products such as the iPod, digital music distribution through
its iTunes Music Store, and more recently in the smart phone market with
the Apple iPhone.

Apple's product strategy is to create innovative products and services

aligned with a "digital hub" strategy, whereby Apple Macintosh computer
products function as the digital hub for digital devices, including the Apple
iPod, personal digital assistants, cellular phones, digital video and still
cameras, and other electronic devices.

The Apple Brand Personality

Apple has a branding strategy that focuses on the emotions. The

Applebrand personality is about lifestyle; imagination; liberty regained;
innovation; passion; hopes, dreams and aspirations; and power-to-the-
people through technology. The Apple brand personality is also about
simplicity and the removal of complexity from people's lives; people-
driven product design; and about being a really humanistic company with
a heartfelt connection with its customers.

Apple Brand Equity and Apple's Customer Franchise

The Apple brand is not just intimate with its customers, it's loved, and
there is a real sense of community among users of its main product lines.
The brand equity and customer franchise which Apple embodies is
extremely strong. The preference for Apple products amongst the "Mac
community", for instance, not only kept the company alive for much of the
90's (when from a rational economic perspective it looked like a dead duck)
but it even enables the company to sustain pricing that is at a premium to
its competitors.

It is arguable that without the price-premium which the Apple brand

sustains in many product areas, the company would have exited the
personal computer business several years ago. Small market share PC
vendors with weaker brand equity have struggled to compete with the
supply chain and manufacturing economics of Dell. Apple has made big
advances in becoming more efficient, particularly in logistics and
operations, but would still find it difficult to make a profit at the price
levels Dell transacts at.

The Apple Customer Experience

The huge promise of the Apple brand, of course presents Apple with an
enormous challenge to live up to. The innovative, beautifully-designed,
highly ergonomic, and technology-leading products which Apple delivers
are not only designed to match the brand promise, but are fundamental to
keeping it.

Apple fully understands that all aspects of the customer experience are
important and that all brand touch-points must reinforce the Apple brand.

Apple is expanding and improving its distribution capabilities by opening

its own retail stores in key cities around the world in up-market, quality
shopping venues. Apple provides Apple Mac-expert retail floor staff staff
to selected resellers' stores (such as Australian department store David
Jones); it has entered into strategic alliances with other companies to co-
brand or distribute Apple's products and services (for example, HP who
was selling a co-branded form of iPod and pre-loading iTunes onto
consumer PCs and laptops). Apple has also increased the accessibility of
iPods through various resellers that do not currently carry Apple
Macintosh systems (such as Harvey Norman), and has increased the reach
of its online stores.

The very successful Apple retail stores give prospective customers direct
experience of Apple's brand values. Apple Store visitors experience a
stimulating, no-pressure environment where they can discover more about
the Apple family, try out the company's products, and get practical help on
Apple products at the shops' Guru Bars. Apple retail staff are helpful,
informative, and let their enthusiasm show without being brash or pushy.

The overall feeling is one of inclusiveness by a community that really

understands what good technology should look and feel like - and how it
should fit into people's lives.

Apple Brand Architecture

From a brand architecture viewpoint, the company maintains a

"monolithic" brand identity - everything being associated with the Apple
name, even when investing strongly in the Apple iPod and Apple iTunes
products.

Apple's current line-up of product families includes not just the iPod and
iTunes, but iMac, iBook, iLife, iWork, and now iPhone. However, even
though marketing investments around iPod are substantial, Apple has not
established an "i" brand. While the "i" prefix is used only for consumer
products, it is not used for a large number of Apple's consumer products
(eg Mac mini, MacBook, Apple TV, Airport Extreme, Safari, QuickTime,
and Mighty Mouse).

The list of Apple's Trademarks reflects something of a jumbled past. The

predominant sub-brand since the introduction of the Apple Macintosh in
January 1984 has always been the Apple Mac. Products whose market
includes Microsoft computer users (for example MobileMe, QuickTime,
Bonjour, and Safari) have been named so they are somewhat neutral, and
therefore more acceptable to Windows users. Yet other product have been
developed more for a professional market (eg Aperture, the Final Cut
family, and Xserve).

Apple Brand Strength Now Creating Financial Success

So far, Apples' branding strategy is bearing fruit. For example, Apple

reports that half of all computer sales through its retail channel are to
people new to Macintosh, the company's sales and margins have been
growing strongly since 2006, and Apple has achieved several "best ever"
quarterly financial results during the past couple of years.

Leveraging the success of the iPod, Apple launched the iPhone (released in
July 07) to extend the brand even further. Apple's buzz marketing efforts in
the first half of 2007 were truly superb, culminating in the release of one of
the most highly anticipated products for many years - and launching apple
into a completely new market: mobile handsets. By July 2008 the buzz
about the 3G iPhone resulted in over 1 million units being sold in the first 3
days of its release in over 20 countries around the world.

Apple Re-entering the Corporate Market via the iPhone Halo

Though no-one at Apple would say so today, the next phase of Apple's
strategy seems focused on the Corporate marketplace.

A long time ago, Apple had a fairly strong market share in large
companies.

A long, long time ago (at the end of the 1970's) the first spreadsheet
program (VisiCalc) was launched on the Apple II. The first PC (the IBM
PC) to run a Microsoft operating system (PC DOS) did not appear until
1981. When Microsoft launched its Excel spreadsheet in 1984 it appeared
first on the just-released Apple Mac, such was Apple's presence among
accounting and finance departments.
Even though Apple effectively stopped competing for corporate business
during the 1990s, the Apple Mac is still used in some corporate
environments. Microsoft still has a vigorous applications development
team totally dedicated to writing business software for the Apple Mac.
New versions of Microsoft Office for Apple Mac still come out
approximately 2 years before similar functionality is placed in the next
version of Microsoft Office for the Windows operating system.

Over the next few years it seems likely that Apple will re-focus on the
Corporate marketplace: Apple has announced that "Snow Leopard" (the
next version of the Apple Mac operating system, due in 2009) will include
features allowing Mac computers to fully support Microsoft Exchange. This
will enable corporate IT departments to support business users who wish
to use Apple Macs for their main email clients.

Also, Microsoft continues to bring out advanced versions of Microsoft

Office for Apple Mac, and - very significantly - in mid-2008 Apple
announced a software upgrade for the iPhone which allows iPhones to be
fully supported by Microsoft Exchange email servers. Corporate IT
departments can now include iPhones as email clients.

Apple's strategy seems clear: to use the popularity of the iPhone to break
back into large corporations, and ultimately have Apple Macs on the desks
of large businesses (or more probably - in the laptop bags of middle and
senior managers in most large businesses. The Macbook Air is also clearly
aimed at this type of market).

As we say; no one in Apple will currently admit to such ambitions, but this
is clearly where Apple's branding strategy is headed.
Apple Marketing Strategy :

Apple has been so successful in these last years thanks to his fresh,
imaginative way to think and do its business: a winning combination of
exceptional products, great style and design, great strategy, innovative
marketing, sleek and enticing communications.

Apple owes its overwhelming success in the last years to the iPhone and to
the smart iPod and iTunes product combination, a combination of a great
hardware piece with great style, great software, great performance, user
friendly interface, with a good e-business service. The iPod + iTunes halo
effect and new great Mac computers and Mac OS software did the rest in
increasing Apple revenue stream.

In the 5 years between 2003 to 2008 the Apple share value increased 25
times, from $7.5 to $180 per share. At july 2008 prices, before the US
Financial Crisis, Apple stock market capitalization was $160 billion.
In January 2010 Apple shares topped the $210 mark.But even the best
companies with the best products have bottleneck factors which often
avoid full exploitation of the opportunities.
Apple iPhone Marketing Plan

• Executive Summery
• Situational Analysis
• SWOT Analysis
• Marketing Objectives
• Marketing Strategy
• Implementation
• Budget
• Control

Executive Summery

The Past – Steve Jobs, Steve Wozniak and Ronald Wayne established Apple on
April 1, 1976 in order to sell the Apple 1 Computer Kit that was hand built by
Steve Wozniak. The Apple 1 was sold as a motherboard (with CPU, RAM and
basic textual video chips) – less than what is considered a personal computer
today. Apple was responsible for creating the desktop publishing market due to
their innovative programmes, PageMaker and LaserWriter. Between 1983 and
1996 Apple experimented with a number of failed consumer target products
including digital cameras, portable CD players, speakers, video consoles and TV
appliances. Market share and stock prices decreased. In 2001, Apple introduced the
iPod portable digital audio player. The product was phenomenally successful –
over 100 million units were sold within 6 years.

The Present – January 2007, Steve Jobs, the CEO and Co-Founder of Apple,
announces that Apple Computer Incorporated would now be known as Apple Inc.
He also reveals the long anticipated iPhone, a combination of an Internet-enabled
smartphone and the iPod. In June 2008, he announces that the iPhone 3G would be
released in July 2008, this newer version added support for 3G Networking and
assisted GPS navigation, among other things.

The Future – Apple plans on focusing on satisfying personal consumer demands

rather than merely fulfilling a demographic requirement as well as, improving
performance and stability rather than introducing new features when releasing new
versions of any product.
The iPhone targets consumers who need to store information and communicate or
people who want entertainment on the go. Apples target segments consist of
professionals, students, corporate users, entrepreneurs, and health care workers.
Currently, the market for high-end phones like the Apple iPhone is small. Few
people want Internet, video, and PDA features in one device because of the high
price. The smart phone market is still relatively small compared with general
phone market. The market will rapidly increase in coming years due to lower
prices and greater power.

Situational Analysis

Political Situation

• Taxation is something that governments put and Apple should be study this
as country by country case to anticipate profitability, and pricing strategy.
• Importing laws in the world with GATT are in favor of trading.
• Countries are very variable in stability of, so we should study each country
case by case.

Economical Situation

• Economical growth world wide is in a big recession which need careful

manipulation
• Potentiality of the market is decreasing but it is higher than any others in the
Telecom sector.

Socio-Cultural Situation

• Population growth leading to expansion of the sector needs for cell phones.
• People depend more an more on mobile communication everywhere.
• There is educational growth in the world.
• Culture’s perception of the technological devices is positive worldwide.
• Literacy & illiteracy level is not affecting using cell phones but affecting
high technological cell phones, this fact needs to be considered.
• Acceptance of imported products in some countries are less if there is local
provider
 • There are different social views that may affect product should be
considered (e.g.: Boycotting American products in the Islamic world)

Technological Situation

• Level of technology in the world is increasing.

• Internet level of awareness & usage for individuals & industrial aspect are
increasing worldwide
• Fixed phone lines capacity and development attempts.
• New technologies in the cell phones are increasing.
• Future plans for technological linkage between cities, universities, colleges,
hospitals and other institutes are increasing and can be connected to cell
phones
• Level of usage of the E- Technology (online bidding, billing, complaints,
blogging etc) are high and trendy.

Competition Situation

• There are 19260 cell phone producer in the world, but there are more than 15
big companies competing at the world level Market.

Environmental Situation

• The global concern of the Global Warming issue & other pollution effects
concerning the packaging material and radiation of the cell phones
• The demand of the international environmental approvals is a must (if there
is any)

Sales Situation
Cell phones industries are one of the most profitable industries everywhere and the
Market is increasing

SWOT ANALYSIS

Strengths

Innovative – The iPhone has an innovative touch screen. It also has many
functions of other mobile products all in one device

Compatibility –The phone will work with iTunes and with other Mac/Apple
products and OS software tools which means limitless potential for upgradeability.

Ease-of-Use – The all-new touch screen interface recognizes multi finger gestures,
just as the human hand normally behaves.

Brand awareness – Apple is well known for cool essential gadgets like the iPods
along great technological innovations like the original Macintosh.

Price – iPhone would be sold at a reasonable price for its value.

Quality – Scratch resistant screen – durable and light metallic finish - software
suite resistance to computer viruses.

Opportunities

Increasing demand and expansion to a new target segment – As technology

advances and smart phones get cheaper Apple will attract consumers and get iPod
users to upgrade to iPhones.

Upgradeable – iPhone software allows new exciting features to be brought in

which take advantage of the touch screen ability. Future versions will also be
hardware upgradeable.
Partnerships – Apple can collaborate with many powerful global mobile phone
companies to flood the market with iPhones, which reduces costs in marketing and
increases revenue through long-term agreement deals.

Weaknesses

Image – The Apple brand is not targeted towards business people and does not
have a reputation as being compatible with the corporate world.

Price – Apple does not yet offer lower priced models for more cost conscious
consumers.

User Interface – Touch screen interfaces suffer from the problem of “gorilla
arm”*

* (Gorilla arm is a side-effect that humans face when using touch screens for long
times as humans are not built to hold their arms at waist or head-height, making
small and precise motions. After a short period of time, cramp may begin to set in,
and arm movement becomes painful and clumsy. This is now considered a classic
cautionary tale to human-factors designers.)

Threats

Increased competition – Smart phones are easier to make now more than ever.
More companies may enter the market, and competitors or even Apple contractors
can maneuver around patents to create similar devices.

Downward pricing pressure – The iPhone is marketed as a high-end phone, but

phone prices are almost certainly going to fall when other companies undercut the
price of iPhones.

Difficulty expanding into Asian market – There is less hype and interest in Asia
since smart phones are better known and already widely used.

Competition (Palm) - Palm has the longest history in PDA market and has
experience-developing software for mobile devices. It is also a well-known brand
for businesspeople. Existing software is well established and compatible with
many products for this market. The market is familiar with Palm products;
significant switching costs are involved in going to an iPhone. Palm can add many
similar capabilities to their products that match the iPhone and expand to a wider
market through lower cost and higher-power products.

Marketing Objectives

• Set an aggressive buy achievable objective for the first and second years of
market :
1. First-year Objectives - We are aiming for a 2 percent share of
the U.S and U.K. PDA/Phone market through unit sales volume
of 445,000.
2. Second-year Objectives - are to achieve a 10 percent share
based on sales.
• Extend on the Apple brand name and link to the established meaningful
positioning.
• Extend on Apples image of innovation, quality, and value.
• Measure the awareness and response in order to make adjustments to the
marketing campaigns as necessary.

Target Market

• Differentiate the iPhone from other PDA’s on the market.

• Primary customer targets is the middle-upper income professional to

coordinate their busy schedules and communicate with colleagues, friends
and family.
• Secondary consumer targets are high school, college and graduate students
who need one portable multifunction device.
• Primary business target is to partner with :
• large cell phone service providers, AT&T, Verizon, Sprint and
Cellular One
• large enterprise software firms where information is critical to
the end user.
• Secondary business target is mid-to mid-size corporations that want to help
managers and employees stay in communication or access critical data on
the go.
• Market segment will consist of companies with $10-$50 million in annual
sales.

Positioning

• Using product differentiation, positioning the iPhone as the versatile,

convenient, value-added device for personal and professional use.
• Focus on the convenience of having one device for communication, but also
music, pictures, and video, and full Internet access.
• The iPhone will be promoted as both professional and hip.
.

Marketing Mix Strategy

Product

• Full year warranty along with an optional three-year Apple Care warranty
• Same taste as all other Apple products
• Special edition version to be launched (including the iPhone Beatles edition
celebrating their 40th anniversary)
• Launching a cheaper version in 2008 with less
advanced features along with a more
advanced version for professional use
• Adding the following features to the iphone
(large disk storage capacity, lower weight,
thinner device, long battery life, 4G wireless,
GPS and improved camera)

Price

• Set the base model at a cheap price of $349

• A more advanced model for $399
• Special limited edition Beatles iPhone for special prices
• Generally lower our prices to ensure we establish market dominance in as
short of time as possible
 Place

• Massive rollout worldwide at all reputable major retailers

• Massive rollout Online, Showrooms and in all cell phone providers
• All Apple Stores the Apple website will dedicate themselves to the iPhone
• Eye catching displays will be found at all physical
stores featuring the iPhone to make the product
stand out from the pack
• Apple Stores will have the iPhone on display a full
month before its worldwide release

Promotion

• Integrate Apple message of revolutionary communications and audio/visual

experience together in all media advertisements

• Differentiate the iPhone against others is the touch screen functionality

• Emphasize Apple brand prominently and associate the
iPhone with the iPod’s groundbreaking lineage
• Original but tasteful advertisements at the same time
• A massive TV campaign is planned before launching the iPhone featuring a
soon to be legendary ad to be the talk of the country
• Advertising will be appearing on a regular basis to
maintain general public awareness

Marketing Research

• Four age groups will be targeted: 15-20 years, 20-25 years, 25-45 years, and
45 years and up
• High School and College aged people will demonstrate social uses
• The 25-45 years group will be used to determine business application and
social/personal use
• The 45 years and above will give us a plan to market to more senior well-
refined group
• This research will be done through surveys (via email campaign through
portals such as, iTunes and other on-line application developed for the
iPhone) and interviews (in Apple stores) with the same age groups listed
before
• To bring the iPhone to the front of the business world it is important to
research different ways to grow the 15-25 year old group into business uses
of the product
• Brand awareness will be an important tool in taking the Apple brand from
"social cool" to "business cool".
• We will ask for feedback on iPhone features, and implement those changes
most important to the end user in the next generation iPhone
• We will allow users themselves to design their own ideal iPhone on-line and
use any useful ideas to further refine future iPhone models
• We will continuously scour the Apple fan websites to understand what the
Mac faithful are saying, as they are our best customers.

Implementation

Compensation system

• workers $5 incentive pay for every non reject phone they produce
• $10 per phone six sigma quality program
• each worker $5000 each year for best practice training

use control measures to closely monitor quality and customer service

satisfaction

consumers can contact the main headquarters about any possible technical
problems – by using Apple Customer Service Bar and a customer service
phone number stored in the phone book

In case of slow sales

• Offer iPhone to customers who have purchased other Apple products $10
per phone six sigma quality program, which will lead to:
• demonstrate the product for consumers, it will promote synergy and
lure buyers.
• develop deep relationships with two very different segments: those
who have it and those who aspire
 Budget

• Our break-even analysis assumes wholesale revenue of $500 per unit

variable cost of $250 per unit and est. fixed cost of $50 million. Based on
these assumptions the break-even calculation is $50 million divided by $500
minus $250 equals 200,000 units sold.
• Break-even calculations indicate that Apple will become profitable after the
sales volume exceeds 200k. After the first year Apple will make a profit of
1.25 billion minus 50 million in fixed costs.
• Recommended price is $350. The markup is 40 percent.
• It is predicted that sales volume will increase at least 60 percent from this
change; this will decrease the impact of fixed costs and improve
opportunities to increase our production scale, which will further improve
profits in the long run

Control

To plan our strategy we will meet monthly with the board of Apple, present
our information, and make a proposal for continued marketing efforts.
Before each meeting our team will meet in private, with each person
presenting their own proposal based on the information they have learned.
After the initial proposals, we will vote on the best one or come to a
compromise. The final proposal sent before Apple is the result of that
meeting.