Managing Marketing Resources

Faculity of Business & Law

Building the Apple Store

Tutor: Student: ID number:

Jon James; John Temperley Ahmed Albalooshi 77101751

Executive Summary The Purpose of this report is to critically evaluate the personal computing market trends and analysing strategies used by Apple and Dell. With the discussion of marketing innovation and management in relation with Apple entering the retail sector.

The personal computers industry started in 1833 with introduction of semiconductors. Personal computers have a broad definition that includes devices such as tables. Product differentiation is poor is the industry. Steve Wozniak and Steve jobs founded Apple in 1976. It is innovative in nature and has a vast product line including music players and personal computers. Michael Dell founded Dell Inc. in 1984. Is a large firm, that suffers from poor customer service and product quality.

Apple and Dell have different missions and strategies. Even with Apple being fifth most used computer brand, it is first in product differentiation and consumer trust. Apple s mission statement is aligned with its marketing objectives, where it is become most valuable technology company in 2010. Dell Inc. doesn t achieve its mission and marketing objectives due to lack of customer service and product quality issues.

Apple s leadership and its brand relationship with innovation help place it in its position. Apple s little decisions resulted in successful big decision to move into the retail sector. The retail sector provides Apple with control over its service and is a competitive advantage. Design thinking played a key role in Apple s

retail success. Customer-led value can be achieved with good service and brand management. With a great number of stores in key markets with good customer service provides apple with a competitive advantage that is difficult to imitate.

Table of Content Executive Summary 2

1. Introduction

1.1 Personal Computer Industry

1.2 Apple Inc.

1.3 Dell Inc.

2. Market Trends

2.1 Apple Inc. Strategy

2.2 Dell Inc. Strategy

3. Apple Marketing Innovation and Management

4. Conclusion

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List of References

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Appendices

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Appendix 1

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List of Diagrams

Figure 1

1. Introduction The aim of this report is to critically evaluate the personal computing market trends in relation with Apple and Dell strategies. This report as well discusses the theory of marketing innovation and it s management with Apple s entry into the retailing sector.

1.1 Personal Computers Industry With beginning as early as 1833, when semiconductors where invented, till this day personal computers have evolved and improved to play a major role in people s lives (BBC, 2007). The personal computer industry has witnessed various devices (Mintel, 2011) and has been become a very broad term (Oxford English Dictionary, 2005). Where the term computer is used for any electronic device with chipsets (Oxford English Dictionary, 2005), Not just laptops and desktops, but tables as well (Mintel, 2011). The personal computer industry has a great level of competition, but product differentiation seems to be an issue (Mintel, 2011).

1.2 Apple Inc. Starting with the Apple 1 computer in 1976, which was created by Steve jobs and Steve Wozniak (BBC, 2007), Apple has grown even since to be one of the most trusted and innovative personal computer companies (Mintel, 2011), with a vast line up of electronic devices such as the iPod, iPhone, iPad and Macs (Appendix 1). Apple has managed to differentiate its products from competitors with its innovative nature (Barney, 2011), with its unique customer service and stores launching in May 2001 (Appendix 1).

1.3 Dell Inc. Founded in 1984, by Michael Dell, with its first computers launched in 1985 (Dell, 2011a). Playing a major roll in the Personal Computer industry with competitors such as Hewlett-Packard and Acer (Mintel, 2011). Listed as the 41st in the Fortune 500 five spots behind Apple (CNN, 2011). With issues such as bad customer service and product quality (The New York Times, 2011a), Dell stock prices seem to be falling down since 2007 (Financial Times, 2011a).

2. Market Trends Apple and Dell have different visions and strategies, as Apple is more into innovation and product differentiation though Dell is seek efficiency and high volume sale (Appendix 1).

Figure 1: Source Mintel (2011)

With Computer ownership rising, Apple still is on top in regards to product differentiation and trust. This is due to its products being sustainable and unique (Doyle and Stern, 2006). Even though Apple is the fifth most used computer, other brands fail to have a competitive advantage. This is due to high barriers of entry in result of patients (Porter, 1979).

2.1 Apple Inc. Strategy 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 reinvented the mobile phone with its

revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices. (Apple, 2011a) Apple s mission statement describes its culture, producing electronic solutions as a hobby (Barney, 1995). Innovation as core, with words used like reinvent and revolutionize. According to Doyle and Stern (2006), innovation is the developing and delivering new solutions that are more efficient than current ones, keeping in mind current and future customer needs. Which is a factor for Apple s

success, where it suppressed Microsoft as the most valuable technology company (The New York Times, 2010). Where factors for innovation in Doyle and Stern s (2006) perspective must be important, unique, sustainable and marketable. Apple is perceived as a creative company, with high levels of differentiation and trust, as shown in figure 1 (Mintel, 2011). This proves Apple s commitment to its vision aligned with its marketing objectives, especially with stocks growing 211.84% from 2008 (Financial Times, 2011b). Where Doyle and Stern (2006), discuss fast growth of innovators. As the iPhone s success was for being at the right place in the right time (The New York Times, 2011b). Which relates to Doyle and Sterns (2006) stressing the need for late comers to suppress the innovator, as Apple did not invent the phone. Conversely, trust in a brand may as well affect confidence in late products such as the iPhone (Doyle and Stern, 2006).

2.2 Dell Inc. Strategy Dell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve.

(Dell, 2011b) On the other hand, Dell s mission to become most successful and provide excellent customer service is not providing the intended outcome (The New York Times, 2011a). With products breaking down from 2003 to 2005, Dell had lost a great deal in its reliability reputation. According to Doyle and Stern (2006), firms need to innovate in order to survive and grow, which Dell seems to lack (The New York Times, 2011a). Especially with the poor customer relations, which is a factor for declined sales. In it s quest to be more efficient with inventory (Appendix 1) with a combination of bad accounting, Dell has found itself in trouble with many lawsuits (The New York Times, 2011a).

3. Apple Marketing Innovation and Management According to Abbing (2010), there is a close relationship between a firm s brand and innovation. He stresses the importance of a brand identity and values being shared with everyone in the organisation and not a specific group. Apple relates to this theory with considering the brands innovation as a hobby (Barney, 1995). Ind (2002) argues, higher management should set an example in which others follow. In relation to Apple, Steve Jobs, former CEO set an example for a proper leader (ITauthor, 2010) and went further as he set a uniform (PC Mag, 2011). The Uniform consisted of the signature black turtleneck worn to signify a bond between employees, which Steve Jobs noticed in Sony (PC Mag, 2011).

On the other hand, Apple decided to move into the retail sector after it had found conflicts between their vision and retailer s (Appendix 1). Where it was obvious that Apple and retailers such as Best buy had different goals to achieve

(Appendix 1). Apple s strategy had to do with good little decisions of recruiting specialists and using their expertise, which resulted in a good big decision (Barney, 1995). According to Barney (1995 pp.55), success does not depend

on doing a few big things right, but on doing lots of little things right. Little decisions in relation to Apple would be placing products in an organised layout or experimenting with different layouts (Appendix 1). Big decisions related to Apple, would be the decision to enter the retail sector. The strategy Apple adopted gave them great control over customer relations, but with the help of retail and merchandising experts (Appendix 1).

Furthermore, the store layout was carefully planned as prototypes were made and tested (Appendix 1). According to Ind (2010 pp.53), design thinking helps

to embed vision in innovation and provide it with a sense of direction. In other words, Apple s concentrated retail space design (Appendix 1) helps provide a clear objective. The Apple suspended logo, use of stainless steel, glass and wood provides a high end perception which relates to Ind (2010) theory of design thinking, which according to Doyle and Stern (2006) helps with customer led value. Where a company is perceived by the customer to have high value. This relates to Apple in the example mentioned above where it had topped Microsoft as the top valued technology firm (The New York Times, 2010).

With over 300 stores worldwide, Apple (2011b) has managed to spread its stores in key markets. With available personal computers and electronic devices for potential customers to test (Appendix 1), staff warm welcomes and genius

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bars (ifoAppleStore, N.A.) which results with product differentiation which according to Potter (1979) is very difficult to imitate.

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4. Conclusion In conclusion, Dell and Apple a two different companies with different strategies. Apple is an innovator as Dell is neither as innovative nor with sustainable product differentiation.

Furthermore, Apple has benefited from entering the retail sector and this is due to careful planning and attention to detail. Apple in control of its customer service and merchandising with the key role of sustainable product differentiation has placed it where it is today. The contribution and support

with good leadership from management has helped create a culture that motivates innovation. It is good small decisions that create good big decisions, resulting in a successful firm.

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List of References Abbing, E. (2010) Brand-driven innovation. Case Postale, AVA publishing.

Apple (2011a) Frequently asked Questions [Internet]. Cupertino, Apple. Available from: < http://investor.apple.com/faq.cfm?FaqSetID=6> 20th October 2011] [Accessed

Apple (2011b) Apple retail stores [Internet]. Cupertino, Apple. Available from: <http://www.apple.com/retail/storelist/ > [Accessed 20th October 2011]

Barney, J. (1995) Looking inside for competitive advantage. Academy of management executive, 9 (4) November, pp.49-61

BBC (2007) Building the digital age [Internet]. London, BBC News. Available from: <http://news.bbc.co.uk/1/hi/technology/7091190.stm> [Accessed 20th October 2011]

CNN (2011) Fortune 500 2011 [Internet]. Georgia, CNN. Available from: < http://money.cnn.com/magazines/fortune/fortune500/2011/full_list/> [Accessed 20th October 2011]

Dell (2011a) Company timeline [Internet]. Roynd Rock, Dell. Available from: < http://content.dell.com/us/en/corp/our-story-company-timeline.aspx> [Accessed 20th October 2011]

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Dell (2011b) About dell:faqs [Internet]. Roynd Rock, Dell. Available from: < http://www.dell.com/content/topics/global.aspx/about_dell/investors/main/en/fa qs?c=us&l=en#faq8> [Accessed 20th October 2011]

Doyle, P. and Stern, P. (2006) Marketing management and strategy. Harlow, Prentice Hall.

Financial Times (2011a) Dell inc, dell:nsq company performance [Internet]. New York, Financial Times. Available from: <

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=DELL:NSQ> [Accessed 20th October 2011]

Financial Times (2011b) Apple Inc, aapl:nsq company performance [Internet]. New York, Financial Times. Available from: <

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=AAPL:NSQ> [Accessed 20th October 2011]

ifoAppleStore (N.A.) The stores [Internet]. Palo Alto, ifoAppleStore. Available from: <http://www.ifoapplestore.com/the_stores.html > [Accessed 22nd October 2011]

Ind, N. (2002) Living the brand. London, Kogan Page.

ITauthor (2010) What makes steve jobs an irresistible leader? [Internet]. Edinburgh, ITauthor. Available from:

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<http://www.itauthor.com/2010/02/06/what-makes-steve-jobs-anirresistible-leader/ > [Accessed 20th October 2010]

Mintel (2011) Desktop, laptop and tablet computers Research Report: Technology: UK. London, Mintel Oxygen .

UK

augest 2011.

Oxford English Dictionary. (2005) 3rd ed. Oxford, Clarendon.

PC Mag (2011) Why steve jobs wear a black turtleneck? [Internet]. New York, PC Mag. Available from:

<http://www.pcmag.com/article2/0,2817,2394529,00.asp#fbid=2oDyHqjkozV > [Accessed 20th October 2011]

Porter, M. (1979) How competitive forces shape strategy. Harvard Business Review, 57(2) Mar/Apr, pp.137-145

The New York Times (2010) Apple passes Microsoft as no.1 in tech [Internet]. New York, The New York Times. Available from: <

http://www.nytimes.com/2010/05/27/technology/27apple.html> 20th October 2011]

[Accessed

The New York Times (2011a) Dell inc. news [Internet]. New York, New York Times. Available from: <

http://topics.nytimes.com/top/news/business/companies/dell_inc/index.html? scp=1-spot&sq=dell&st=cse> [Accessed 20th October 2011]

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The New York Times (2011b) Apple Incorporated (AAPL) [Internet]. New York, New York Times. Available from: <

http://topics.nytimes.com/top/news/business/companies/apple_computer_inc /index.html?scp=1-spot&sq=apple&st=cse> [Accessed 20th October 2011]

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Appendices

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Appendix 1

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