Running head: Apple business strategy 1

Apple Differentiation Business Strategy

MBA 500 Business Performance Management

Riley Putnam

Bellevue University

Professor Travis Kasten

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Apple Differentiation Business Strategy

Introduction

Apple’s competitive business strategy is differentiation across the industry. Apple

attempts to increase market demand through differentiation with innovation for the top of the line

products Apple creates. Apple creates demand for its products and competitive prices for all of

the product differentiation. Apple products can be differentiated based of the form of the product

such as physical structure, size and shape of the product is not like any products out in the

market. Apple was one of the first companies to designed products to include so many features

offered in one package, such as IPhone, IPod, IPad, and IMac. According to Nielson (2014),

Apple has successfully created demand for its product by giving the company power over prices

through product differentiation. This means that there are many different kinds of products that

Apple creates that has a wide range of price, so anyone can afford an Apple product.

Apple’s 4Ps of Marketing

Apple is a worldwide technology company that designs and sells electronics, computer

software and online services. The first P in the marketing mix is products. Apple has many

different product lines such as IMac, IPod, IPhone, IPod, Apple TV, Apple Watch, ITunes, Home

Pod smart speaker and software/programs. Each of Apples products come with different models,

designs and software. For example, the first IPhone generation came out in 2007. Today the

IPhone has grown from the first generation to the seventh generation. Apple has created more

than one IPhone 7 options for customers to get and offers a wide range of price to help ensure

each customer can afford Apples products. IPhone 7 now offers IPhone 7, IPhone 7S, IPhone 7

plus and IPhone 7S plus. Apple is still developing new products, such as the Apple electric
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vehicle. Apple needs to create and innovate new and updated products to ensure their customers’

has product variety to address customers’ needs in different areas of their lives.

The second P in the marketing mix is distribution or place. Apple has many advantages

when it comes to different distribution channels. Apple has many different distribution strategies

to get their products to their customers: Apple stores, online Apple store and app store,

authorized retailers (Walmart, Target, and etc.), telecom companies (US Cellular, AT&T, and

etc.) and fulfillment services (Amazon, eBay, and etc.).

The third P in the marketing mix is promotions. This part of the marketing mix are the

action’s that highlight the image and quality of Apples products. “Promotional or marketing

communications mix supports business position in reaching more target buyers” (Greenspan,

2017). Apple elements of promotions includes: Advertising through their website and Apple

stores and ads through other companies’ websites about technology news. Personal selling, such

as when employees of Apple provide product-specific information and customers’ service to help

the customer make a purchase with in the Apple stores. Apple uses sales promotion when they

offer older models at a discounted prices or offer a better price when some customers would

bundle/buy more expensive products then Apple would give a discount on a product or service.

The last promotions component is public relations. Apple uses this element of the marketing mix

to enhance their corporate image. “For instance, Apple events, leaks of new products features,

press releases, and exclusive interviews are carefully implemented to maximize positive

publicity” (Greenspan, 2017).

Prices and pricing strategy is the last P in the marketing mix. Apple uses a premium

pricing strategy. This part of the marketing mix is how much Apple sales their products to the

customers. Apple premium pricing strategy includes high prices. This helps maintain the high-
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end image of Apple and its products/services. Apple maintains profitability because of the higher

prices.

Apple’s Target Market

Apple has a large target market and with many different age level depending of the

product that they are selling. Apple has a target market for college students age 17-25 to try to

get them to buy their products such as IPod, IPads, IMac and IPhone. These products can help

record notes, socialize with friends through social media, listen to music on the go and these

products are light weight, which will make it easier to carry any of these devices to and from

school much easier.

Another target market are young children and kids, because most of all of Apple products

are easy to use due to their touch screen quality. The most popular Apple products that kids use

are IPads or IPod. These products can have parents download learning game apps to help teach

young children and kids. In my hometown Elementary School, they currently give each student

an IPad for the whole school year. This helps teach different things/course, such as letters,

numbers, and colors. They can practice tracing over letters with their fingers right on the iPad

and this will help the kids learn anywhere he/she is located. I think having access to IPads while

in school will help teach the students how to use technology in education and help them learn

faster with easy access to thousands of apps and learning tools.

Lastly, adults and business people are also Apple target markets. According to Saini

(2017), Adults/business people are able to use IPhones in their everyday life to make phone calls,

map directions, internet, documents and cameras all in one device to make it more convenient.

When it comes to business people, most all of Apple devices can let business people finish work
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efficiently and to communicate with clients easily with sending documents on the go and

organized.

Although Apple can target college students, business people, adults and even kids, that

doesn’t mean everyone can afford Apple products. With that being said, Apple has a premium

brand and many products come with a premium price tag that are targeted to a smaller market

share composed of customers that are part of the middle and upper classes. Apple is a brand that

most people want to have, but not everyone can afford Apple products. “The best customers for

Apple tend to be younger and wealthier, so Millennials tend to be the next preferred targeted

demographic after teenagers. Millennials are hooked into technology like no other generations,

exploit the benefits Apple can provide, and leads to more wealth for them and more sales for

Apple” (Gaille,2015).

Apple has successfully positioned their brand/products in the marketplace and keeps

innovating updated and new products to help Apple to grow to the largest technology company.

“Apple has a high rate of innovation and emphasis on excellence in product design, Apple

succeeds even with its relatively high selling prices. This successful position indicates Apples

effectiveness in using its generic strategy and intensive growth strategies” (Meyer, 2017).

Apple’s Ethics.

Apple has a code of business conduct that applies to all its operations, including overseas.

The code of business helps the company state an ethical position as a fundamental component of

their operations. Most of Apple products are created in countries with low labor costs. “The

potential for misconduct is high due to differing labor standards and less direct oversight” (Apple

Inc. Ethical Success and Challenges, 2017). Apple makes each suppliers to review and sign

Apples “Supplier code of conduct” and perform factory audits to make sure each supplier are
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compliance. Apple wants to make sure working conditions in their supply chain are safer and

workers treated with respect and disunity. Apple makes sure that suppliers are operating with the

laws, rules and regulations of the countries in which they operate in. “Apple may visit (and/or

have external monitors visit) Supplier facilities, with or without notice, to assess compliance

with this Code and to audit Supplier’s wage, hour, payroll, and other worker records and

practices. Violations of this Code may result in immediate termination as an Apple Supplier and

in legal action” (Apple Code of Conduct, 2017).

Even with Apple having this code of conduct it still isn’t enough to ensure compliance.

For example, in 2013 the China Labor Watch reports examined conditions in 10 factories that

make Apple products and alleged that 7 major types of problems are widespread: average

overtime 100-130 hours a month, 11 hours work day working weekends and holidays with a day

off allowed a month. These Apple operations facilities have dangerous working conditions which

includes metal dust, unsanitary cafeterias/living quarters. “Outsourcing factors work on very thin

margins, because high tech companies are trying to keep as much profit as possible, and so have

incentives to push productivity and spend as little on labor as possible” (Sherman, 2013).

Apple Corporate Citizenship Policy.

Apple corporate social responsibility (CSR) is not adequate in my eyes as there have been

many issues with oversees not following the laws, rules and regulation that was explain above.

According to Dudovskiy (2017), Apple enforces the suppler code of conduct that is to be the

toughest in the electronic industry. Apple has achieved an average 95% compliance among

suppliers to maximum 60-hours workweek. Apple has invested cases of abuses of foreign

workers and Apple has required suppliers to reimburse affected foreign contract workers $3.9
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Million in excessive fees paid to labor brokers, brings Apple total reimbursements since 2008 to

$16.9 million.

However Apple statements are believable and are taking every effort in making sure that

all suppliers are following the code of conduct and following the labor laws. When Apple was

created and first started to outsource production to china there were many labor laws that were

broken, but after many years and changes. Apple has been cleaning up its act on labor rights.

Peter McAllister, director of Ethical Trading Initiative says: “We are seeing some positive signs

in China, such as increases in the minimum wage as a results of worker protests and chronic

labor shortage” (Jefferies, 2017). Apple has created a worker education programmers and tighter

monitoring of working hours to help young people aged 16-18 to further their education

opportunities.

According to Apple Supplier Responsibility (2017), Apple measures their progress with

their supplies. They conduct regular assessments. They assess suppliers in three categories: labor

and human rights, environmental responsibility, and health and safety. Apple subject matter

expert (SME) program covered 138 suppliers in 2016. The facilities that were reassessed say

their year-over-year Labor and Human Rights scores increase from 79 in 2015 to 87 in 2016,

Health and Safety scores increase from 79 in 2015 to 91 in 2016, and Environment scores

increase from 67 in 2015 to 87 in 2016, on a scale of 100. Apple is making it sure that their

suppliers are following the code of conduct so it can make sure Apple market communication

with the supplies and that societal conditions are being followed. “Apple has is zero tolerance for

bonded labor. This is a violation of Apple’s code of conduct. Apple sates that if a case is found,

we require the supplier to repay all recruitment fees back to the worker. In 2016, uncovered

violations resulted in $2.6 million has been repaid to over 34,000 workers” (Apple Supplier
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Responsibility, 2017). If Apple don’t require the supplier to follow the Code of conduct and just

let it slide then they will no longer be one of the top technology suppler.

Recommendations

After analyzing Apple, I have come up with a few recommendations to help the company

improve its corporate image and other communications with the market. The first

recommendation would be look more into their supplier channel and do more audits to make sure

the rules, law and regulations are being followed on a daily basic. This will take more than a

couple years to investigate and to ensure they are following the code of conduct. This will help

the customers see that Apple really cares about their workers overseas and will provide the

customers with trust in Apple. Although Apple is doing very well with profits, it makes since to

offer a lower cost product so they can market to more and to help get newer customers who can

afford a lower cost item. This will create a new product line and help innovation and support the

company’s growth.
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References

Apple Code of Conduct. (n.d.). Retrieved from Virginia Community College

https://sites.google.com/a/email.vccs.edu/bus100mlmuseAppleinc/home/Apple-inc-code

of-conduct

Apple Inc’s Ethical Success and Challenges. (2017). Retrieved from

https://danielsethics.mgt.unm.edu/pdf/Apple%20case.pdf

Apple Supplier Responsibility. (2017). Retrieved from

https://images.Apple.com/supplier-responsibility/pdf/Apple-Progress-Report-2017.pdf

Dudovskiy, J. (2017). Apple Corporate Social Responsibility (CSR). Retrieved from

http://research-methodology.net/Apple-corporate-social-responsibility-csr/

Gaille, B. (2015). 18 Key Apple Target Market Demographics. Retrieved from

https://brandongaille.com/18-Apple-target-market-demographics/

Greenspan, R. (2017). Apple Marketing Mix (4P’s). Retrieved from

http://panmore.com/Appleinc-marketing-mix-4ps

Jefferies, D. (2014). Is Apple cleaning up its act on labor rights? Retrieved from

https://www.theguardian.com/sustainable-business/Apple-act-on-labour-right

Meyer, P. (2017). Apple’s Generic Strategy & Intensive Growth Strategies. Retrieved from

http://panmore.com/Apple-inc-generic-strategy-intensive-growth-strategies

Nielson, S. (2014). Apples premium pricing strategy and product differentiation. Retrieved from

http://marketrealist.com/2014/02/Apples-premium-pricing-strategy-product-

differentiation/

Saini, J. (2017). Apple Target Market. Retrieved from

http://Appleinccasestudy.weebly.com/Apples-target-market.html
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Sherman, E. (2013). Apple has China labor problems again. Retrieved from

https://www.cbsnews.com/news/Apple-has-china-labor-problems-again/