Critical marketing audit: The case of Apple Inc.

Research Paper (postgraduate) 2012 14 Pages

Communications - Public Relations, Advertising, Marketing, Social Media


Table of Contents

1.0 Introduction and Company Background

2.0 Apple Micro and Macro Business Environment
2.1 Macro Environment
2.1.1 Political Conditions
2.1.2 Economical Conditions
2.1.3 Social-Cultural Conditions
2.1.4 Technological Condition
2.2 Micro Environment
2.2.1 Competitor Analysis
2.2.2 Consumer Behaviour Analysis

3.0 Apple’s Marketing Mix
3.1 Product
3.2 Price
3.3 Place
3.4 Promotion
3.5 People
3.6 Physical Evidence
3.7 Process

4.0 Apple’s Segmentation, Targeting and Positioning Strategy
4.1 Apple’s Segmentation Strategy
4.2 Apple’s Targeting Strategy
4.3 Apple’s Positioning Strategy

5.0 Recommendations for Apple’s Future Marketing Strategy
5.1 Apple’s SWOT
5.1.1 Strengths
5.1.2 Weaknesses
5.1.3 Opportunities
5.1.4 Threats

6.0 Conclusion


1.0 Introduction and Company Background

Apple Inc. is the world’s leading designer, developer and manufacturer of cutting-edge computers, smartphones and other consumer electronics. Headquartered in Cupertino, California, the company boasts of a huge portfolio of popular products which include the Mac line of computers, iPod series, iPad series, and iPhone series among many more others (Canumalla and Viswanadham, 2010). Currently, Apple operates in a highly competitive market comprising of other large consumer electronics and accessories manufacturers such as Samsung, Toshiba, Microsoft, HP, Dell, Lenovo, IBM, Google, LG and Nokia (O’Grady, 2009). Arguably, this immense competitor rivalry has prompted the company to intensify its product development efforts, efforts that have resulted into the successful development of high-tech, beautiful, simple, and quality products such as the iPhone and the Mac series of smartphones and computers respectively.

This report covers a critical marketing audit of Apple. Specifically, the report analyses Apple’s current market strategy and business environment and then goes ahead to offer recommendations that the company’s marketing department can implement to improve the effectiveness of the company’s current marketing strategy so as to shake off competition from rival companies such as Samsung. The report is structured into four main sections, the first section covers the company’s business strategy, the second section covers marketing mix, the third section covers segmentation, targeting, and positioning (STP), while the last section covers recommendations for future strategy.

2.0 Apple Micro and Macro Business Environment

2.1 Macro Environment

Apple’s macro environment comprises of the market conditions that affect the economies within which the company operates. These conditions, according to De Wit and Myer (2009) do not affect the consumer electronics industry alone, but rather the whole US economy. These conditions can best be enumerated using the PEST model which according to Fill (2009) and Kotler and Armstrong (2012) captures the political, economical, socio-cultural and technological, factors of the market.

2.1.1 Political Conditions

Companies based in the US normally experience numerous strategic, tactical and operational advantages due to the fact that the US is a member of several bilateral and multilateral trade organisations (Canumalla and Viswanadham, 2010). Arguably, such agreements lower investment barriers, market barriers, labour barriers, as well as supplier barriers. Nevertheless, these agreements create similar opportunities for competitors. As O’Grady (2009) argues, this creates cost efficiency disadvantages for Apple over its competitors with large asset and capital reserves such as Microsoft.

2.1.2 Economical Conditions

The consumer electronics market in the US is characterised by immense monopolistic competition. According to Canumalla and Viswanadham (2010), the low barriers to entry compounded by extreme rivalry between large players such as HP, Microsoft, Apple, Google, Dell, IBM and Lenovo make the entry into the market by small scale companies easy hence increasing the level of competition. Further, there is strong supply power since processor manufacturers are few. Specifically, Apple market success is influenced by processor manufacturers such as Intel, Cyrix, and AMD (O’Grady, 2009). Further, Apple market success is influenced by the strong buyer power especially the US middle class households whose level of disposable income has been on the increase since the last recession.

2.1.3 Social-Cultural Conditions

Developed nations such as the US with multiple socio-cultural practices and ethnicities experience rapid changes in lifestyles (Solomon et al., 2006). Arguably, these dynamic lifestyles push manufacturers of consumer electronics such as Apple to constantly review their products designs. For instance, some section of the population prefers electronics with better graphical features, others may prefer lighter and smaller products with longer battery life for ease when travelling, others need reliable products for day-to-day operations, and others require new products prestige purposes (Canumalla and Viswanadham, 2010). In order to remain afloat, Apple must fulfil these varying interests.

2.1.4 Technological Condition

The US consumer electronics market is influenced by the rapid changes in technology. Every other single year, integrated circuits as well as other crucial electronic components become more efficient, faster, and cheaper (Canumalla and Viswanadham, 2010). This improves the quality of new consumer electronics. In addition, these dynamic technological changes disrupt the sale of existing products. For instance, hardware and software components changes by leading manufacturers such as Intel and Microsoft respectively affects Apple since the company must adjust its product development efforts to suit these technological changes as well as to offer personalised experience to its customers. Further, and as O’Grady (2009) argues, the need to produce energy efficient-environmentally friendly products requires Apple to review its product development and manufacturing processes regularly.

2.2 Micro Environment

2.2.1 Competitor Analysis

The US consumer electronics industry is populated by large and popular players such as Apple, Toshiba, HP, Dell, Lenovo, Samsung, IBM, LG, Microsoft, Google, and Nokia. As Canumalla and Viswanadham (2010) finds, each of these companies manufacturers a range of smartphones and computers models as well as their respective accessories. However, Apple tops the chart in product innovation, customer service, and economies of scale but performs poorly on distribution channels since Apple products are only available in selected stores (O’Grady, 2009). Google, on the other hand, registers an average score on these four performance indicators while Samsung has the lowest ranking especially going by the recently concluded patent ligation against Apple (Mittan, 2010). Overall, and as Table 1 below shows, Apple has an upper hand over its competitors courtesy of the immense customer loyalty it commands and its high product innovation levels.

While using the competitor array model, as discussed by Gordon (1989), Apple’s competitor analysis can be represented in a two dimensional matrix, where competitors are placed along the top margin of the matrix and critical success factors are placed along the left side of the matrix (see table 1 below). Overall, and as Canumalla and Viswanadham (2010) posit, the US consumer electronics industry is characterised by immense competition, numerous players, low market share, low profit margin, moderate product differentiation, and rapid technological changes.

Table 1: A Competitor Analysis of the US Leading Consumer Electronics Companies

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NB: Success Factor A = product innovation, B = customer service, C = distribution channels, and D = economies of large size. Each company is rated on a scale of 1-10 and overall weight is calculated by multiplying the specific rating by the allocated weight of each success factor.



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critical apple




Title: Critical marketing audit: The case of Apple Inc.