APPLE INC.

(Product Report)

A Report By
By
Mr. G.L.S Anuradha
SAB/BSc/2020A/WD14007

Course: MGT 20425 Marketing

Mr. Nishantha Ekanayake
Year 2, Semester 1

School of Accounting and Business

The Institute of Chartered Accountants of Sri Lanka
21th July 2021
 Apple I Phone

Introduction

Apple Inc. is an American multinational technology company headquartered in Cupertino,

California, that designs, develops, and sells consumer electronics, and online services. 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 toward consumer electronics.
Apple joined the Dow Jones Industrial Average on March 19, 2015.

Apple is the world's largest technology company by revenue (totaling $ 274.5 billion in 2020) and,
since January 2021, the world's most valuable company. As of 2021, Apple is the world's fourth-
largest PC vendor by unit sales, and fourth-largest smartphone manufacturer. It is one of the Big
Five American information technology companies.

The iPhone is a line of smartphones designed and marketed by Apple Inc. I phone’s consumer
software includes the OS X and iOS operating systems, the iTunes media player, the Safari web
browser, and the I Life and iWork creativity and productivity suites. Its online services include the
iTunes Store, the iOS App Store and Mac App Store, and iCloud.

Development of what was to become the iPhone began in 2004, when Apple started to gather a
team of 1,000 employees led by hardware engineer Tony Fadell, software engineer Scott Forstall
and design engineer Sir Jonathan Ive to work on the highly confidential. (Khan, 2016)
Four Ps of Marketing (4PS)

Marketing Mix of iPhone analyses the brand/company which covers 4Ps and explains the iPhone
marketing strategy. There are several marketing strategies like product innovation, pricing
approach, promotion planning etc. which helps brands like iPhone succeed. iPhone marketing
strategy helps the company achieve its business goals & objectives, and marketing mix (4Ps) is a
widely used framework to define these strategies. Let us start the iPhone Marketing Mix & Strategy
and understand its product, placement, pricing, promotion & other factors strategies: (Inc., 2019)

 Product strategy

These Apple products currently available in the market show the firm’s diversification in this
component of the marketing mix. However, as part of its product development intensive growth
strategy, the company continues to develop new products, such as the Apple electric vehicle, which
is under development through collaboration with firms like Tesla Motors. This product mix shows
that Apple’s marketing mix is extensive in terms of product variety to address customers’ needs in
different areas of their lives.
The product strategy and mix in iPhone marketing strategy can be explained as follows

iPhone mostly comes with a new product every year, which supersedes the previous ones.
Currently it has iPhone X and iPhone 8, which was preceded by iPhone7, iPhone6 and other trailing
versions. Although each year new products, means cannibalization, but in iPhone’s case, the lesser
price of older product attracts a different segment of customers than the newer ones, focus more
on tech specifications.
Apple iPhone offers a unique operating system, running at better speed than any of its present
competitors, promising a flexible working environment and light speed multitasking. Innovative
apps in the apple store, are mostly the first movers, copied afterwards by other brands, according
to the apple techies and consumers both. Many apps that are available can be linked with a
MacBook, and hence, with this strategy, Apple acts as a hook for its all other products, as well.

 placement Strategy

Following is the placement strategy of iPhone:

iPhone has a strong distribution and place strategy as a part of its marketing mix.
 I-stores: These are apple owned stores with highly knowledgeable service people, giving a
lot of time and effort to get the tech specifications across to the customers. These stores with
highly trained sales people, with advices to offer, create a great experience, which enhances
the experience of buying an iPhone. These exclusive showrooms get the products directly
from company at a lesser price.

 Independent stores: Few high-class stores, specially in malls, also place iPhones with
other mobile phones. Buying from these stores is equally good, as these are premium stores
in themselves. They purchase from distributors rather than company itself.

 Online: Apple products are available, on many sites, like ebay, flipkart, or mostly Amazon.
Company’s website also provides the service of fining nearest locator

Second Hand Market: A huge market is present for Apple’s iPhone second hand mobile
sets, for their durability and the status symbol attached to it. Ebay is one of the site dealing
largely in this second-hand segment.

 After sales: iPhone is very well known for its after sales services.
Tie-ups with Companies: iPhone also does tie ups with corporates for its many services.
  Pricing strategy

When the iPhone was first released in 2007 Apple charged its customers $599 for the 8 GB version.
Only 66 days after the initial offer at the end of June Apple dropped the price to $399 for the exact
same device, which led to heavy protests among the innovators and early adopters…The huge
amount of complaints about the price drop made Apple give away $100 store credit cards to all
who bought the new device right after its launch.

Looking at this behavior from the marketing perspective, it is obvious that Apple incorporated
several different pricing strategies at the same time. Clearly there is a certain buyers’ expectation
linked to Apple’s pricing, because the company has created a high quality image with a relatively
high price level. The target group Apple addressed with their former product line is said to have
been used to this image. The selling price of $599 (which is more about $380 higher than the
manufacturing costs) turns out to be extremely well chosen, because just fit in with the rest of the
product line, met the customers’ expectations and underlined the quality expectations. Considering
Apple’s company image again, prestige pricing obviously played an important role in the pricing
decision.

Below is the pricing strategy in iPhone marketing strategy.

On account of its uniqueness, quality and status, Apple iPhones follow price skimming strategy.
Skimming price means if a brand wants to stand out, it will invest a lot on R&D for bringing their
X Factor with every new launch. This R&D cost and the X-factor, allows the iPhone, to charge
more as part of its marketing mix pricing strategy. This price is gladly accepted by the target
segment, as these are very loyal consumers. Apple does not provide discounting on any of its
product, for it will lead to either Brand Dilution or loss of focus from premium category. Although
selling stores and online stores keep coming with discounted price, once the market value of
product decreases with new launches. Also, Apple iPhone follows similar pricing policy across all
markets. Although to allow for price effectiveness it follows a cost-effective operation strategy,
with minimal cost spent on manufacturing, although maximum on R&D. Apple stores providing
an experience to its customers, also price based on the added value of experience over product.

 Positioning strategy

It's widely understood in strategy that a firm that is known for delivering a certain value may end
up confusing customers (or perhaps undermining its own credibility and reputation) if it attempts
to deliver alternate value. The attempt to simultaneously deliver inconsistent offerings will not
serve a firm's strategic position. Many continue to criticize Apple's premium positioning and
pricing.
This criticism is sourced from the press, customers, and competitors. In recent months Microsoft
has unleashed a PR campaign in which they call out an "Apple tax", that is the premium paid by
consumers who choose Apple's Macintosh computers. This is the first post in a series that analyzes
the Apple product strategy with a specific emphasis on the Macintosh.

At its most basic level, competitive strategy is deeply rooting in being different from rivals. For
years Apple used the phrase 'Think Different' (video), a marketing slogan that not only shaped
consumer perception but also represented the company's

The promotional strategy in the iPhone marketing strategy is as follows.

iPhone has created a unique position in the market, with its innumerous differentiating factors. Its
new models always have a new tagline. iPhone 6 said ‘The only thing that has changed is
everything’. Such position itself, promotes the brand. Its ads never compete with the competitors,
but show how the world is changing with each of iPhone for its tech savvy customers. Launch
events are very dramatic for iPhones. The newly launched wireless charging feature, and all such
technologies, get people in the awe. Social media, you tube etc. are some platforms highly utilized
by the iPhone, to talk about uniqueness of features, also used by tech gurus for spec comparisons,
etc. Biggest ones are second hand sales offer. Other being knowledgeable sales staff and point of
sale advertisements. Thus, with its unique value proposition, iPhone, it sets a standard in the
product and has no close competitor as of now, reason being a vast loyal customer base. Hence
this concludes the iPhone marketing mix. (shas, 2014)
  Other factors
Communication

Apple Inc. uses different communication channels to popularise its iPhones. The objective of using
an integrated marketing communication is to reach many customers and boost the sales volume.
The company uses promotional and advertising instruments to draw the attention, desire, and
interest of the clients. Besides, Apple posts sleek images of iPhones on its website to attract
customers. Apple uses print and broadcast media to market iPhones. Other communication
strategies that the company uses include digital media, point-of-purchase, direct marketing,
personal selling, sales promotion, and public relations among others.

Brand equity

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 but it also emerged as a major smartphone player nowadays.

It even enabled the company to sustain pricing that is at a premium to its competitors. Apple
follows blue ocean strategy to distinguish & differentiate itself from other smartphone players in
the market. Apple’s brand is very much that of a challenge, bringing easy to use computers &
smartphones to consumers and small businesses in a way that is focused on the needs,
individuality, and style of ordinary people, rather than the conformity and technical mandates of
big business.

Competitive analysis

The technology industry is highly competitive & is crowned by a large number of players who are
fighting for existence by eating up each other’s share. Counterfeit products are also the biggest
threat to the players like Apple & Samsung.

Because Apple has focused over the years on seamlessly tying its hardware and applications
together with an integrated operating system, one works very much like the other has helped Apple
in creating sustainable advantage. Apple has always been known for its innovation & out of box
ideas like “SIRI”, a personal assistant having features of speech control and interactivity, user-
friendly software platform.

Apple uses disruptive innovation in order to kill their earlier technology before their competitor’s
do which is making them more competitive & in a way proving to be a smart strategy.
Market analysis

Apple is facing huge competition from Microsoft and Google from the software point of view and
LG, Samsung, Sony, Blackberry are already challenging with their innovative brands. Moreover,
Chinese companies are giving head-on competition to Apple. Changing lifestyle, developing
nations, changing the economics of rural population due to migration to urban areas is the driving
force for the success of the whole industry.

Customer analysis

The company is targeting professionals, students between the age of 18 and 35 basically. It has
3 types of customers broadly categorised as:

The hard worker: Hard working people who have low income or maybe university going teenagers,
having the aspiration to own an Apple product.

The growing people: Middle-class income group working somewhere or is a businessman.

Upper strata: These people have a high standard of living, they are tech savvy & innovators.
(Pratap, 2017)
Conclusion & Recommendation

The main conclusion that can be drawn is we found to be the most interesting about iPhones is
how they are very innovative and early adapters. Apple is usually the first company to come out
with a new product line before anyone else. This is very risky but it seems to be working to Apples
advantage. This shows that taking risks can sometimes make or break you and Apple has great
potential and has a lot to improve. The 4Ps of marketing is a model for enhancing the components
of apple company’s iPhone products’ "marketing mix". It helps to Apple company’s’ iPhone
products to define its marketing options in terms of price, product, promotion, and place so that its
offering meets a specific customer need or demand. With using 4ps and specialized modern
marketing strategy, Apple company achieved the goals of their iPhone very successfully as above.

References

Inc., A., 2019. Annual report 2019, s.l.: annualreports.com.

Khan, R., 2016. Apple india, Mumbai: Scribd.

Pratap, A., 2017. notesmatic. [Online]

Available at: https://notesmatic.com/apple-marketing-mix-4ps/
[Accessed 21 july 2021].
shas, p., 2014. Marketing Mix of Apple iPhone. 2 may.