Apple’s Marketing Strategy
The final marketing momentum
To hit the trillion dollar valuation
Tazvivinga Shingirirai Liberty
Local Apple survey results
Introduction To Apple
Apple Marketing Philosophy
Customer Value & Halo effect
Strategic Partners – IBM & HBO
Marketing: Cloud Computing
Surveys about Apple
Current Apple CEO Tim Cook shows off a baseball in the latest world wide developers conference, a very good marketing tactic, as it was held ransom for apple products by baseball team mates.
Apple was voted the overall winner of the 2012 CMO survey award for marketing excellence… yet again. Apple has been selected as the winner or co-winner for five consecutive years by the sample of top marketers. So why is Apple a great marketer?
When Apple, Inc. (then Apple Computer, Inc.) incorporated in January 1977, its investor/advisor, Mike Markkula, assembled a 3 pointer marketing philosophy. Amazingly, thirty-five years later, this philosophy remains at the core of what makes Apple so effective at creating and profiting from loyal customers. This, in my view, is the definition of a strong marketing capability. Here are Apple’s original three points:
- Empathy – We will truly understand their [customer] needs better than any other company.
- Focus – In order to do a good job of the things we decide to do, we must eliminate all of the unimportant opportunities.
- Impute – People DO judge a book by its cover. We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities.
Apple has used these principles to become the world’s most valuable company (measured by market capitalization) and one of world’s most valuable brands. Now that it is valued at $700 billion, will this gigantic momentum make it to cross the trillion-dollar valuation? This paper dwells on the enterprise marketing strategy used by apple, and establishes that the strides to make history as the first company to cross the trillion-dollar valuation are already in place.
The Apple Executives sitting on the front row at the recent wwdc in California
Local Apple survey results
I conducted a local research to find out the prevailing of apple products within the local students on campus, the survey is designed to extract the marketing tactics, which the local students were exposed to from apple. Get to know the students preference about apple and the competition, understand their views about the brand and if it is worth the money or its overvalued. Understand if apple is monopolizing the industry or doing fair competition and trade. The results are purely from the respondents of the survey. Disclaimer is this research does not serve as a definitive analysis of the overall market trends but serves to provide a small sample of the market to the scope of this paper.
The results are as follows, 90% of the respondents had seen an apple advert, mostly on the internet and television broadcast, the viewers like the unique approach apple does with most of its products and services. 80% of the people know Steve Jobs, the founder of the company, many adore him because of his visionary leadership and genius factor. 100% of the people asked do own or wish to own an apple product, of the 60% who already own an apple product, 30% bought in an apple store and the other 30% bought on the apple online store.
In the order of preference 40% want apple, 20% want xiaomi, 20% want Samsung and 10% like Huawei. The majority 60% read news about apple on different news websites, 30% read on the official apple website, and 10% read on other sources, or do not read at all. 60% are satisfied with the customer experience, 30% think apple is monopolizing the industry, and they attribute it to the closed ecosystem, which is hard to compete with. 80% are aware of the recent apple watch, 40% read it on the apple website and 40% from other news sources and websites. 70% would like to buy an apple watch.
80% say apple products are a true value for money and do not think they are over priced, however (30%) still think apple is at par with Microsoft in taking over the future of technology, with most favoring for Google at 40%. The final part of the survey looked upon which media is reaching most of the apple consumers and laptop/desktop internet browsers are the top at 50%, followed by email subscriptions at 30% and lastly mobile phones and tablets at 20%, however all respondents were oblivion of billboards which goes to show there are slowly being disregarded by most of the population. This survey did kick start the research into Apple’s marketing management by painting the way which the local consumers view Apple as a company.
Scores of people wait for an apple store to open for the new product launch in New York USA
Many people in Beijing wait for the official launch of the Apple Store.
Introduction To Apple (Paraphrased From Wikipedia)
Apple Inc. is an American multinational technology company headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, online services, and personal computers. Its best-known hardware products are the Mac line of computers, the iPod media player, the iPhone smartphone, the iPad tablet computer, and the Apple Watch smart watch. Its online services include iCloud, the iTunes Store, and the App Store. Apple’s consumer software includes the OS X and iOS operating systems, the iTunes media browser, the Safari web browser, and the iLife and iWork creativity and productivity suites.
Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976, to develop and sell personal computers. It was incorporated as Apple Computer, Inc. on January 3, 1977, and was renamed as Apple Inc. on January 9, 2007, to reflect its shifted focus towards consumer electronics. Apple (NASDAQ:AAPL) joined the Dow Jones Industrial Average on March 19, 2015.
Apple is the world’s second-largest information technology company by revenue after Samsung Electronics, world’s largest technology company by Total Assets and the world’s third-largest mobile phone maker. On November 25, 2014, in addition to being the largest publicly traded corporation in the world by market capitalization, Apple became the first U.S. company to be valued at over $700 billion. As of March 2015, Apple employs 98,000 permanent full-time employees, maintains 453 retail stores in sixteen countries, and operates the online Apple Store and iTunes Store, the latter of which is the world’s largest music retailer.
Apple’s worldwide annual revenue in 2014 totaled US$182 billion (FY end October 2014). Apple enjoys a high level of brand loyalty and, according to the 2014 edition of the Interbrand Best Global Brands report, is the world’s most valuable brand with a valuation of $118.9 billion. By the end of 2014, the corporation continued to manage significant criticism regarding the labor practices of its contractors, as well as for its environmental and business practices, including the origins of source materials.
Craig Federighi explains the fastest ever adoption of Apple latest operating system, with 55% users already on latest version compared to windows 8.1 that only has 7%.
Apple Marketing Philosophy
Apple Inc. uses the Apple brand to compete across several highly competitive markets. Apple’s brand has evolved as it has expanded its range of products and services. Originally starting in the late 1970s with desktop computers and then laptops in the 1990s, it took over 20 years before the company expanded into its first major new product area with the launch of the iPod in 2001, followed by iPhone in 2007, iPad in 2010, and now Apple Pay and Apple Watch in 2014.
In the early decades, Apple’s brand was very much that of a challenger.
Bringing easy to use computers to consumers and small businesses in a way that as focused on the needs, individuality, and style of ordinary people, rather than the conformity and technical mandates of big business.
Apple’s brand position has evolved, but today’s brand is still consistent with these early promises.
Detailing the improvements straight to the consumers, makes Apple stay up to date with customers – is also a very good marketing strategy – Craig federighi showcasing the next version of OS X called EI Capitain.
Apple’s core competence remains delivering exceptional experience through superb user interfaces. The company’s product strategy is based around this, with the iPhone (with it’s touch screen “gestures” that are re-used on the iPad), Mac, iCloud, iTunes, and the Apps Store all playing key roles. THE distinctive feature of each of Apple Pay and Apple Watch remains their ease of use and elegantly simple use.
Starting with a major re-vitalisation of the Apple brand when the iPod was launched in 2001, Apple has worked hard to migrate its brand and its product strategy in close harmony towards today’s position.
Steve Jobs, Apple’s co-Founder, described Apple as a “mobile devices company” – the largest one in the world. The company renamed itself Apple Inc. rather than Apple Computer. At the time, this was a significant move, signifying Apple’s move beyond being more than a computer company.
The company is now defining itself more broadly than being just a devices company. It has blended its digital content services (e.g. iTunes, iBook’s and App Store) to be a key part of the value proposition to Apple device owners, and (with iCloud in the background) is making many services and functionality which consumers use accessible on whatever (Apple) device they happen to be using at the time, be it at their desk, lap, fingertips or wrist.
Further emphasis is put on both experience and performance to give users the best they can get. Marketing every aspect.
Apple has a branding strategy that focuses on the emotions. The starting point is how an Apple product experience makes you feel. The Apple brand 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. In recent years, this strength in brand preference has flowed directly to Apple’s profits – the company has dramatically improved its manufacturing costs, while still maintaining very strong brand equity.
Customer Value & Halo Effect
Though Apple’s iPhone and iTunes music business is profitable in its own right, Apple’s venture into these product areas was based on a strategy of using the music business to help boost the appeal of Apple’s computing business.
Apple used iPad, iTunes, iPhone, and (very important at the time) iPod to reinforce and re-invigorate the Apple brand personality. At the same time, these product initiatives are growing a highly relevant, appealing brand image in the minds of consumer segments that Apple has not previously reached.
In a so-called iPod halo effect, Apple hoped that the popularity of iPod and iTunes among these new groups of customers would cause these segments to be interested in Apple’s computer products. This does seem to have happened. Since the takeoff of the iPod there has been a dramatic rise in Apple’s computer sales and market share.
Some years ago, Apple’s aspirations for the iPod halo effect was highlighted most strongly when it used the slogan “from the creators of iPod” in its promotion of iMac G5 computers. In this instance, the Apple brand came full-circle – having been built into a branding system that originates in the personal computer market, then leveraged into the consumer electronics market, and then backs into the consumer personal computer market.
This halo effect is extended with the hugely successful Apple iPad tablet computer. Great customer experience with iPhone (and familiarity with Apple’s touch screen gesture controls), combined with a great product in its own right, has made iPod a huge success that in turn is drawing even more people to Apple’s Mac computer products.
In a move, which brought matters full circle, the 2011 Lion version of Mac OSX gave the Mac the same touch screen gesture controls which iPad and iPod users have learned. In 2014 at the company’s World Wide Developer Conference, it further strengthened the link between the Mac and other product lines by making it easy to provide continuity of user experience for a customer using a mix of Apple devices during her daily life.
Apple is employing the halo effect in its Apple Mac product strategy.
From mid-2012 onwards, OS X incorporated many small changes to the Mac user interface that make the Mac’s style of use much more like the iPad and iOS. By introducing such changes (which have frustrated some long-term Mac users), Apple has clearly decided that greater volumes of Apple Mac can be sold through selling to iPad (or iPhone) users than can be generated by upgrade sales to long-term Mac users.
This extension of a common user experience across Apple products was further strengthened by the introduction of the Apps Store to Mac OS X in mid-2011. Mac users can now buy their OS X applications with the same convenience as iPad or iPhone users can buy iOS Apps.
Also in 2012, Apple dropped the Mac part of the name from the operating system, so that it is now called just “OS X”, rather than “Mac OS X”. This small but important branding change opens the way for Apple to consolidate, perhaps into a single Operating System, the software used across its multiple devices.
Expect the Halo to Speak – Siri and beyond
Speech will be the next dimension in which Apple will gaining synergy across its product lines. The natural language speech processing and interactivity capabilities introduced in October 2011 on the iPhone 4S are being introduced on the iPad (which now uses the same operating system and A7 processor as the current iPhones).
Next version of Siri, advanced and appealing to more users, without compromising on consumer’s privacy
Apple is giving substance to speech interactivity by giving it a character – a personal assistant called “Siri”. Siri can be somewhat customized by using different languages and idioms (for example, there are three versions of English speech available with country-specific accents and pronunciation – US, UK and Australian). Presumably other customization or personalization features will also be introduced (perhaps user choice of name and other “identity” characteristics).
Siri highlights the marketing genius of Apple: speech control and interactivity are not new features on computers or phones. For example, smartphones running Microsoft’s Windows Mobile operating system have had very similar functionality to Siri for some time. When Apple created the Siri “personal assistant” which gives these otherwise rather hard to describe features a character, consumers were given a hook around which they could finally understand what voice interactivity was all about.
Having taught customers to use touch gestures, Apple is now going to teach us how to speak to computers (almost unavoidably, in a specific Apple dialect of speech interaction).
Strategic Partners (IBM & HBO)
Apple is Re-entering the Corporate Market via the iPhone and iPad Halo Effect
In recent years a large part of Apple’s strategy seems focused on the corporate marketplace. The company is careful to maintain its brand values as it engages with corporations: it positions itself as facilitating the use of the individual’s devices of choice (primarily iPads and iPhones) in the corporate world so that businesses can innovate and develop new ways of doing business and improving the world around them. Apple also announced a global partnership with IBM in mid-2014, which will see IBM furthering the penetration of iPads and iPhones into large corporates though its IBM Mobile First initiative.
The business market has been important to Apple before: A long time ago, Apple had a strong market share in large companies. Even though Apple effectively stopped competing for corporate business during the 1990s, the Apple Mac is still used in 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: The company provides regular updates on the proportion of Fortune 500 companies which are either trialing or deploying iPhone (currently over 90%), and the iPad. In 2009, when Apple announced “Snow Leopard” (the then-latest version of the Apple Mac operating system) it included features allowing Mac computers to fully support Microsoft Exchange. This enables corporate IT departments to support business users who wish to use Apple Macs for their main email clients. Apple’s Mac OS X Lion release (in Summer 2011) includes all the functionality needed to use a Mac as a business server.
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.
One aspect of Apple’s strategy seems clear: to use the popularity of the iPhone and iPad to break back into large corporations, sell lots of those devices, and have Apple Mac back 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 and iPad are clearly designed for business markets as well as for consumers, and Apple continues to display its mastery in smoothly morphing customer experience and brand preference from one product category to another.
As we say, no one in Apple will currently admit to such ambitions, but Apple’s branding strategy is clearly expanding to include business and corporate markets once again.
Several Companies working with Apple on latest technologies creating Marketing Synergies
Marketing: Cloud Computing
The next step in Apple’s marketing strategy is the Apple iCloud, which delivers a seamless experience for using and sharing content across all your Apple devices (iPhone, iPod, iPad, or Mac). iCloud enables a common “it just works” experience for using content across all of Apple’s mainstream products. iCloud positions the company for a future where customer’s experiences and their digital lives transcend the hardware devices which they use, and enables Apple to extend the brand experience well beyond individual products.
Apple has invested in a one million square foot Apple data center in rural North Carolina. This data center will be used as the core of a data repository for Apple’s iCloud services, which will enable Apple to leverage its customer franchise into an even broader market space. Apple iCloud is one of many ways in which Apple and Google are fast becoming archrivals.
New Market Categories: Apple Watch and Apple Pay
The use of the Apple Pay and Apple Watch brands reflect just how strong the Apple brand name has become over the last 10 years. The Apple Pay and Apple Watch names are descriptive and they leverage the full strength of the Apple brand in each of the new categories, which Apple is entering.
The brand promise, which the names of Apple Pay and Apple Watch contain, is now greater than the halo effect – in a way that would not have been possible 10 years ago. Because the Apple brand personality is now so strong, our expectations are already set, with the products themselves having to live up to the brand promise. Their role is to sustain the brand promise, rather establishing it, as many of the i-products needed to.
They hire customer-obsessed, empathetic employees. Steve Jobs had unique and effective insights about how people want to interact with technology. Jobs used a quote originally attributed to Henry Ford to describe why these insights were so important: “If I had asked people what they wanted, they would have said faster horses”—illustrating the problem that customers may be limited to thinking only in terms of what they know, instead of what is possible. So Jobs and colleagues thought about the customer experience more deeply than the customer could. Jobs once said, “One of the keys to Apple is that we build products that really turn us on. ”Lucky for customers, this often means products are exactly what they want because Apple employees are so deeply entrenched in and committed to the customer’s experience.
Vice president of Apple Pay announces its entrance to the United Kingdom.
Iterative customer involvement, this customer obsession makes formal market research less important. However, it is no secret that Apple spends an enormous amount of time observing customers using Apple’s and other companies’ technologies. Called “participatory design” or “usability testing,” Apple integrates customer experience into its design and development process to understand their “pain points” and “opportunities.” Of course, Jobs himself was often the most important customer, but this did not get in the way of more systematic participation from customers throughout the process.
The personalized Retail shops
A retail presence gave Apple another forum to flex its design prowess. Customers come into the stores to experience firsthand the aesthetics and ease of use of Apple products. They also get to see the larger “solution” that the array of interconnected products offers. Carefully recruited and trained sales associates are encouraged to take customers on a “ride” which former head of Apple Stores, Ron Johnson, describes as “something short, fun, and something you want to talk about.” Finally, the stores provide a place where customers can go for support (the Genius Bars), creating yet another touch point to delight the customer. The result: the highest retail sales per square foot among U.S. retailers.
Unified Apple experience, creating a closed ecosystem that boost customer value and loyalty.
The price maintenance approach cuts both ways: Retailers have relatively little incentive to carry Apple products, or to dedicate precious retail and advertising space to them, if the potential profit from sales is so low. On the other hand, large chains not uncommonly turn a barely profitable product into a “loss leader,” selling it below cost to increase customer traffic or to boost sales of ancillary goods, such as accessories and cables that have a higher profit margin.
This is where the second part of Apple’s retail strategy kicks in: The company supplements its tiny wholesale discounts to resellers with more substantial monetary incentives that are available only if those resellers advertise its products at or above a certain price, called the “minimum advertised price” (MAP). This arrangement enables retailers to make more money per sale, but it prevents them from offering customers significant discounts, resulting in the nearly homogeneous Apple pricing we are used to.
The strategy benefits Apple in a number of ways. First, the company makes more money on direct sales and doesn’t have to compete against marked-down prices offered by its own resellers. Since Apple’s own retail operations are among the most profitable in the world, undercutting their prices for the sake of a wider distribution network would be counterproductive.
The apple online store prices for ipads, covers many budgets and makes each price category accessible to all the different market segments.
Most important, the narrow range of price variability prevents any one retailer from establishing a strong enough market position to give it an advantage in future negotiations with Apple. Big-box store chains like Wal-Mart are notorious for using their heft to extract higher and higher discounts from manufacturers—even to the point of forcing the latter out of business. By keeping its products’ prices on an even keel, Apple reduces the potential for future conflict within its distribution channels, which also helps keep its own retail operations operating in the black.
After five CMO Survey Awards for Marketing Excellence, Apple has shown that it is not only an outstanding technology company but also an outstanding marketer. Apple’s marketing strategy is a unique blend of traditional and nontraditional elements. However, at the core, Apple has figured out how to attract and retain customers, to generate an enormous amount of word of mouth and brand appeal, and to build a business model, channel structure, and momentum that give it a powerful competitive advantage
Apple thanks the developers and continued support from the loyal customers