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Raman Fadaei

2013

Mark

eting ma

nagement

Apple iPhone Marketing Analysis

Marketing Management Apple Inc. Case Study

Table of ContentIntroduction……………………………………………………………… 2

Apple SWOT analysis…………………………………………………… 7

Apple PESTEL Analysis ………………………………………............. 9

Porter's 5 Forces Analysis……………………………………………… 11

BCG matrix perspective………………………………………………… 12

Ansoff Matrix Perspective ……………………………………………… 15

Extended Marketing mix Analysis………………………………………

Conclusion………………………………………………………………... 17

Recommendation………………………………………………………… 18

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Marketing Management Apple Inc. Case Study

IntroductionThe phone starts ringing, we're going to pick it up and when

we touch it, the ringer volume smartly goes down! Yes! Today acompany like HTC could make this kind of cellphone.

Since the launch of the IBM Simon in 1993, smartphonetechnology has reached levels that until recent times had onlybeen dreamed about. Features such as wireless sharing, HD videorecording and mobile internet are now commonplace and today’saverage smartphone has more processing power than computers usedby NASA to land a man on the moon. All over the world, thesmartphone experience is being shared by more and more peopleevery day. (Belic, 2012)

The convergence of mobile telephony, Internet services, andpersonal computing devices is resulting in the emergence of a“mobile Internet” (Ishii 2004; Funk 2001). The key devices foraccessing the mobile Internet -currently dubbed “smartphones” -are powerful new computing devices offering traditional wirelessvoice service as well as native software applications and,perhaps most importantly, the ability to connect to and run amyriad of Internet-based services including email, geo-location,streaming video, and social networking, while providing a gooduser experience. The business opportunities presented by thisnew category have attracted many of the major global informationand communications technology (ICT) firms, including firms fromthe mobile telephony, personal computer, Internet, and personaldigital assistant (PDA) industries, into a complex new landscapeof competition. For many of these firms, capturing a portion ofthe total value created by the smartphone industry is believedto be a key to future growth and profits. (Kenney, 2011)

The interest is understandable. Today more than 1.3 billionmobile phone handsets are being sold annually, and in 2010smartphones made up almost 20% of that total (Gartner, 2010;

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Marketing Management Apple Inc. Case Study Ahonen, 2010). Sales of smartphones are increasing almost 100%per year, and total global sales volume is expected to surpassthat of PCs by 2012 (Gartner, 2010). By collapsing theboundaries between previously distinct devices, smartphones aresubsuming sales of mobile phones entirely and, increasingly,netbook and notebook PCs. To complicate the landscape, thesmartphone is not the only device at stake, tablets and ebookreaders are emerging as key components of the mobile universe.Across all devices, total mobile revenues - includingadvertising, subscriptions, handsets, applications, and so on -are forecast to surpass $1 trillion by 2014 (Gartner, 2010).Given the rate at which smartphone are penetrating the marketand component prices are declining by 2015 there will be, atleast, 2 billion smart mobile devices in use globally. (Kenney,2011)

According to the instructions we should make a report with aorganizational business plan structure to depict currentsituations of Apple Inc./ iPhone division, and then analyzestrength and weakness of the company. I will start with SWOT andPESTEL analysis. Then we review the most effective force oniPhone production with Porter's 5 forces. Then we will analyzeApple iPhone Growth and market share in depth with BCG matrix. Iuse mostly 2012 figures to draw an up to date image from AppleiPhone production and market situation. Ansoff matrix will bethe next analysis which helps us understand iPhone marketpenetration and how it reached diversification.

Apple is a big company with several products and services thatprovide along with products. Each product has its own market. Itis possible to use multiple factors and combine relatedstatistics for analyzing a company with different product. Butin this case we are required to analyze smartphone industryonly. I use recent figures (2010 to 2013) for analyses. For

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Marketing Management Apple Inc. Case Study brands comparisons I consider Apple, Samsung, HTC, ZTE, and RIM(BlackBerry).

For set goals and making the report’s objectives we shouldspecify what we want.

It is required to indicate strength and weaknesses ofsmartphone section. In my opinion weaknesses are more important.They could emerge in any areas such as production lines,technological aspects or selling process and cause big failures.Prominent strength and weaknesses will be identified and thenwill be matched with political, social, technological andenvironmental factors.

Industry intensity will be assessed using Porter’s 5 forcesanalysis. This analysis classifies strong and weak points within5 forces: Threat of new entrants and substitute products, bargaining power ofsuppliers and customers, and segment rivalry. These forces analyze microenvironment. For macro factors we could look into PESTELanalysis.

For market share and growth analysis Growth-share matrix (BCGmatrix) will be used. This method indicates a product strengthusing its sales cash flows. iPhone position will be determinedamong 4 BCG matrix’s categories: Star, Cash cow, Dog andQuestion mark.

Apple iPhone as a new product in comparison with existingproducts within a new or existing market will be analyzed usingAnsoff matrix. Result shows that iPhone as a new product in 2007was magnificent. 270,000 units were sold at that time.

Expanding the concept of the marketing mix is important forcompanies that want to adapt to new markets. For example, justplacing a product in stores is not enough. A manufacturer withretail outlets also needs to think about physical environmentand layout. The store should convey the right look and feel,

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Marketing Management Apple Inc. Case Study leading consumers to build up positive associations with thebrand. Products inside the store should be displayed logicallyand consistently, in the locations customers would check firstif they were looking for specific items. (WiseGeek.com) Becauseof all these factors a complete extended marketing mix (7Ps)will be presented.

Global Smartphone trendThe global smartphone market has been experiencing explosive

growth for the last several years. Competition has remained fierce all throughout, but the numbers don't lie. Two technologytitans dominate the market, taking a whopping 92% of market share for themselves. These two companies are Google and Apple. Data regarding smartphone sales during Q4 2012 has come out during the last several days, evidencing how much people all over the globe want to get their hands on a smartphone. After a quick look at the information, it becomes evident that the high-end phone market is a one of the most extreme oligopolies of the21st century. With the release of Blackberry 10 just two days away, investors are starting to ask if there really is any room left for Research In Motion's latest offering. (Deshkovich, 2013)

Smartphones are flying off the shelves. According to Strategy Analytics, global smartphone shipments have increased from 490.5million during 2011 to 700.1 million during 2012, which is roughly 30% growth year-over-year. If anything, there is room for disruption within the industry: people will keep buying morephones. As the market grows, however, so does Android's market share: Android went from having 48.7% of the market in 2011 to awhopping 70.1% in Q4 2012. Apple's iOS has also grown slightly,

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Marketing Management Apple Inc. Case Study capturing 22% of the market share by the end of the same period.How much is there left for everyone else? As of Q4 2012, a meager 7.9%.

The success of the iPhone, Pre, and Blackberry shows the strength of consumer demand for an intelligent, multifunctional device. The appeal of the smartphone will create significant newrevenue streams for carriers and developers, who should strive to create new service bundles that build off this mobile platform with converged video, voice, and data applications.(Cellular-news.com)

Future Smartphone sales forecast

Smartphone sales blew past the number of PCs sold last year, and they'll be nearly twice PC sales this year, analyst Alex Cocotas of BI Intelligence predicts.

More startling, smartphone sales will exceed 1.5 billion unitsper year by 2016. This compares to about 350 million PCs and 1.7billion mobile handsets sold globally last year.

Smartphone sales will be driven by two main factors, BI Intelligence says:

Replacement of nearly 5 billion "dumbphones" with smartphones (smartphones currently make up only 10% of handsets worldwide)

Price declines. The average price of a smartphone will dropfrom about $315 last year to $200 over the next several years

This will obviously have a huge impact on the mobile Internet economy, which is already exploding from the growth of smartphone penetration in the past few years.

Some other highlights from the report:

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Marketing Management Apple Inc. Case Study

Smartphone unit sales will grow at nearly a 30% compound annual growth rate over the next five years

Smartphones will represent about two-thirds of all mobile phone purchases by 2016,

Smartphones will be a $320 billion market by 2016.

These forecasts are much higher than those of other industry analysts, who generally expect smartphone unit sales to hit about 1 billion a year by 2015. (Gobry, 2012)

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Marketing Management Apple Inc. Case Study

Apple Mission and Vision statement

Apple designs Macs, the best personal computers in the world,along with OS X, iLife, iWork and professional software. Appleleads the digital music revolution with its iPods and iTunesonline store. Apple has reinvented the mobile phone with itsrevolutionary iPhone and App Store, and is defining the futureof mobile media and computing devices with iPad. (InvestorRelation: Apple.com)

Apple vision statement: Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.

Apple BackgroundOn December 2012 The Economist reported that “Apple became the

most valuable company ever (in nominal terms), beating the record that Microsoft hit in December 1999. Apple’s share price peaked at $705 before entering bear territory and falling by 25%, to $510; at the start of 2012 it had been $410.” (News: TheEconomist, 2012)

Apple Incorporated is an American corporation that designs andmanufactures computer hardware, software and other consumerelectronics. The company is best known for their Macintoshpersonal computer line, Mac OS X, extremely loyal user-base,iTunes media application and the iPod personal music player. Thecompany headquarters is in Cupertino, California, CEO and co-

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Marketing Management Apple Inc. Case Study founder is Steve Jobs and the company boasts 284 retaillocations spanning 10 different countries (Bright Hub, 2010).

Apple Inc. was founded on April 1, 1976 in a garage by SteveJobs and Steve Wozniak. The young entrepreneurs broughtdifferent strength to their fledgling company: Jobs had a flairfor conceptualizing products, while Wozniak had the technicalknow-how to make them happen (Washington Post Economy, 2012).

Apple I was the first product that Apple Inc. produced. It wasa personal computer (PC) with a MOS 6502 cpu clocked at 1 MHzand 4Kb memory. In 1977, Apple introduced Apple II which becamea very successful device. After that the company began toproduce Apple II series. The Apple II was followed by Apple IIplus, Apple IIe, Apple IIc, Apple IIGS, Apple IIc Plus and AppleIIe Card.

Apple introduced Macintosh in 1984 that became a verysuccessful computer. It was a first computer featuring agraphical interface and a mouse for navigation. The new computersold very well, pushing apple's fiscal 1984 sales to anunprecedented 1.5$ billion. (Chapman & Haskisson)

By 1985, however Jobs and Scully began to disagree over thedirection they wanted the company to take. After Jobs' attemptto remove Scully failed, Jobs left Apple in May to start his ownnew business, NeXT Computers. (Chapman & Haskisson)

In December 1996, Apple acquired NeXT, with the plan of usingits technology as the basis for a new operating system. Afterbeing gone for more than a decade, Jobs returned to the companyhe had originally cofounded with Wozniak. (Chapman & Haskisson).

In 1998 Apple introduced the new generation of PowerMacs,PowerBooks, and the highly anticipated iMac and iBook, whichwere less expensive computers aimed at the how-end computermarket. After an entire year without showing a profit, the first

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Marketing Management Apple Inc. Case Study quarter of 1998 began three years of profitable quarters forApple. (Chapman & Haskisson)

Apple ventured into the market of legal downloads with theintroduction of its iTunes Music Store in 2001. iTunes offersdownloads at a specified price without requiring subscription ormonthly fees. iTunes offers its users a selection of more than 6million songs, with new songs continually added. (Chapman &Haskisson)

For music lovers, the iPod is the greatest invention since theWalkman. With up to 160 GB of storage, it allows users to carryup to 40,000 songs or 200 hours of video wherever they go. Thereare currently four different iPod styles: the iPod shuffle, iPodclassic, iPod nano, and iPod touch (Chapman & Haskisson). Appleearned 5,615 million just from iPod in 2012 (APPLE INC., 2012).

Brief Chronology:

1976 With $1,300, Steve Jobs and Steve Wozniak found Apple Computer, Inc.

1980 Apple converts to publicownership.

1982 Apple becomes the firstpersonal computer company toreach $1 billion in annual sales.

1985 John Scully assumes the helmafter a management shakeup thatcauses the departure of Jobs andseveral other Apple executives.

1991 PowerBook line of notebookcomputers is released.

1994 Power Macintosh line isreleased.

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Figure 1 1977 Apple II Introduction AdCover

Marketing Management Apple Inc. Case Study

1996 Acquisition of NeXT brings Steve Jobs back to Apple asa special advisor.

1997 Steve Jobs is named interim chief executive officer. 1998 The all-in-one iMac is released. 2000 Jobs, firmly in command as CEO, oversees a leaner,

more tightly focused Apple. 2001 The iPod is released; Apple opens its first retail

store in Virginia. 2003 Apple opens its first store in Japan. 2005 The release of a video iPod, the fifth generation of

the device, pushes total iPod unit sales to 30 million.

In first-quarter 2007, Apple launched its "revolutionary"product, the iPhone. iPhone combines three concepts popular withcustomers: a mobile phone, a widescreen iPod, and a internetcommunication device. The iPhone brags "an entirely new userinterface based on a large multi-touch display and pioneeringsoftware." which users can control with just their fingers. TheiPhone default Internet browser will be Apple's own Safari **,but it is open to other software as well. The iPhone allows for8 hours of talk time. Apple sold 1million iPhone less than threemonth after this product was available to customers. Appleexpects this trend to continue during 2008 and to reach sales of10 million iPhones, stealing 1 percent of the mobile phonemarket share. (Chapman & Haskisson).

One year following the untimely death of Steve Jobs, thecompany he co-founded and led for most of his adult life appearsto be thriving and lacking any serious obstacles to its break-neck growth in a rapidly changing technology market. (Gallagher,2012)

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Marketing Management Apple Inc. Case Study That said, Apple Inc. still has plenty of challenges ahead.

Some of those stem simply from the nature of the fast-paced,hyper-competitive consumer technology business the companycurrently competes in — and largely dominates. (Gallagher, 2012)

Other challenges may be more unique to Apple and its singularfocus on a relatively narrow line of products. And long-term,the company may still feel the loss of a leader who possessed anuncanny ability to see around corners, and bend other strongpersonalities to his will. (Gallagher, 2012)

“The guy who could literally pull rabbits out of his hat nolonger exists,” said independent technology analyst Roger Kay.(Gallagher, 2012)

Apple’s had a phenomenally strong year since Jobs’ death fromcancer last October, which left the company permanently in thehands of the senior management team he spent years cultivating,led by CEO Tim Cook. It’s also had some stumbles along the way.(Gallagher, 2012)

Some missteps with features such as Siri — the infamouspersonal digital assistant first embedded into last year’siPhone 4S — and the Apple Maps tool in the latest iPhone 5 havecaused some level of embarrassment. The company under Jobs’direction was not free of slip-ups either, and some issues havespanned both periods, such as growing concerns about thetreatment of workers in the massive Chinese factories thatproduce the company’s popular products. (Gallagher, 2012)

But if proof is in the numbers, investors may find it hard toargue against the crew running Apple now. The company isconservatively projected to report a 44% revenue gain for itsjust-ended fiscal year — with earnings expected to post a gainof more than 60% from the previous year. (Gallagher, 2012)

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Marketing Management Apple Inc. Case Study Apple’s stock is up more than 70% from the day Jobs passed

away, despite the stated concerns at the time of many investorsand analysts about how well the company could keep its pace ofinnovation without its chief visionary at the helm. (Gallagher,2012)

The key challenge for Apple’s management team will be inkeeping the company’s strongest profit engines humming. And thiswill involve the right mix of technological innovation and dealmaking. (Gallagher, 2012)

The iPhone is the most crucial element. First launched in2007, the smartphone accounted for nearly 55% of Apple’s totalrevenue in the first nine months of the just-ended fiscal year.While the company does not disclosed profitability data on itsproduct lines, analysts believe the iPhone is the major driverof operating profits, with a gross margin of well over 50% onthe devices. (Gallagher, 2012)

Apple can command those high subsidies because of the strongconsumer demand for the iPhone. But competitors are pushing hardinto the smartphone space. Samsung has already outpaced Apple inglobal shipments thanks to its use of Google’s Android operatingsystem and its wide line of phones that appeal to a broaderarray of markets and consumers. (Gallagher, 2012)

Apple’s old nemesis Microsoft is launching an updated WindowsPhone platform this fall, with Nokia and Samsung buildingdevices for the software. (Gallagher, 2012)

Investors will continue to watch closely for signs thatApple’s current team can not only push forward its existingproduct line, but add to them with new categories andinnovations. Though the iPhone 5 launched a year following hisdeath, a report by Bloomberg BusinessWeek cited unnamed sources

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Marketing Management Apple Inc. Case Study as saying that the device received “detailed input” from Jobsprior to his death. (Gallagher, 2012)

Despite Apple’s strong run of success, it’s narrow productline and strong reliance on the iPhone makes it vulnerable tocompetitors who may come up with better ideas. (Gallagher, 2012)

Apple’s future success will likely hinge on its ability tomaintain that posture —no matter who’s in charge. (Gallagher,2012)

Apple SWOT Analysis:

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Marketing Management Apple Inc. Case Study SWOT is a great indicator of an agency's strategic ineptitude.

This involves you creating a two-by-two grid and then populatingit with a list of incredibly obvious client strengths andweaknesses, and another list of equally palpable opportunitiesand threats. Then you stand back and gaze at this list ofincredibly humdrum words, such as 'competitors' and 'newproduct', and attempt to intuit a bold, new, innovative way ofdoing business. (News: Marketing Magazine, 2005)

The table below provides information about current situationof Apple’s smartphone market position, strength and weaknessesand also its possible future situations, threats andopportunities.

Table 1 Apple Inc. Strengths and Weaknesses

Strengths WeaknessesUniversally accredited and well-known brand which also began kind of revolution in smartphone industry

Apple is a Big name in the technology world. It brings somuch responsibility and kind of obligation for company and its product. New iPhone map application problem and customer frustration would be a good example.

Brand loyalty is incredible. People will line up in the freezing cold overnight just to be one of the first to get their hands on the new iPhone!(Guenette, 2012)

From the anti-capitalism pointof view devices like iPhone counts as luxuries. They thinkthis kind of huge prices couldbe spend somewhere more vital.

Employ high technologies. Thisoffers unique features for at least two purposes.One, First degree price

Utilize high technology along with high quality hardware component turn Apple iPhone into very costly merchandise.

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Marketing Management Apple Inc. Case Study

discrimination and two, luxurycustomer satisfactions

Probably many people cannot afford the price.

Ease of use. Apple utilizes user friendly design elements for both hardware and softwareparts of iPhone. 3.5 mm audio jack would be a good example!

iPhone is equipped with own Apple closed operating system,iOS. And apps which work with iOS can only be downloaded from App Store. Other rivals like Android have more distribution channels.

Former CEO, Steve Jobs’ role in developing iPhone and leading Apple to the market incredibly.

Steve Jobs died on Oct 2011. We can still see his works andideas in Apple iPhone. His lost can be an excessive damage to the company.

Having strategic agreements with well-known mobile carriers. like T-Mobile and AT&T

Apple summary of PESTEL AnalysisPoliticalfactors

The supply and manufacture of many critical components is performed by sole-sourced outsourcing partners in the U.S., Asia and Europe. Outsourcing partners in Asia perform final assembly of substantially all of the company’s hardware products.Manufacturing or logistics in these locations or transit to final destinations may be disrupted for a variety of reasons including, but not limited to, natural and man-made disasters, information technology system failures, military actions or economic, business, labor, environmental, public health, or Political issues. (APPLE INC., 2012)

War, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a material adverse effect on the

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Marketing Management Apple Inc. Case Study

Company, its suppliers, logistics providers, manufacturing vendors and customers, including channel partners. The Company’s business operations are subject to interruption by natural disasters, fire, power shortages, nuclear power plant accidents,terrorist attacks, and other hostile acts, labor disputes, public health issues, and other events beyond its control. (APPLE INC., 2012)

Economic factors

The global recession is having a serious impact onApple's retail performance

The follow-on effects from global economic conditionson the Company’s suppliers could affect the Company’sability to obtain components. Therefore, the Company remains subject to significant risks of supply shortages and price increases. The Company expects toexperience decreases in its gross margin percentage in future periods, as compared to levels achieved during 2012, largely due to a higher mix of new and innovative products with flat or reduced pricing thathave higher cost structures and deliver greater valueto customers and anticipated component cost and othercost increases. Future strengthening of the U.S. dollar could also negatively impact gross margin. (APPLE INC., 2012)

Social factors

The Company’s business requires it to use and store customer, employee, and business partner personally identifiable information (“PII”). This may include names, addresses, phone numbers, email addresses, contact, preferences, tax identification numbers, andpayment account information. Although malicious attacks to gain access to PII affect many companies across various industries, the Company may be at a relatively greater risk of being targeted because of its high profile and the amount of PII managed. (APPLE INC., 2012)

Technological factors

Apple R&D expense is increasing year by year. $1.8 billion for 2010, $2.4 billion, and $3.4 billion for 2012 which is a crucial manner in these days competition (APPLE INC., 2012)

Environmental factors

The Company also sells its hardware and software products to enterprise and government customers in each of its geographic segments. The Company’s products are deployed in these markets because of

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Marketing Management Apple Inc. Case Study

their performance, productivity, ease of use and seamless integration into information technology environments. The Company’s products are compatible with thousands of third-party business applications and services, and its tools enable the development and secure deployment of custom applications as well as remote device administration. (APPLE INC., 2012)

Legal Factors

The Company is subject to laws and regulations affecting its domestic and international operations in a number of areas. These U.S. and foreign laws and regulations affect the Company’s activities including, but not limited to, areas of labor, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual propertyownership and infringement, tax, import and export requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy requirements, anti-competition, environmental, health, and safety. (APPLE INC., 2012)

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Marketing Management Apple Inc. Case Study

Porter’s 5 Forces AnalysisThe Porter's Five Forces tool is a simple but powerful tool

for understanding where power lies in a business situation. Thisis useful, because it helps you understand both the strength ofyour current competitive position, and the strength of aposition you're considering moving into. (Articles:MindTools.com)

Six years to the month after Steve Jobs unveiled the firstiPhone, the smartphone industry’s go-go years are officiallyover. Cautious comments from Samsung Electronics on Fridayunderlined the message conveyed by the latest quarterly resultsfrom Apple earlier in the week: even as it scales new heights,the smartphone market is entering a phase in which vaultinggrowth rates – and high profit margins – will be much harder tocome by. (Waters, 2013)

The developing world, is riding a wave of cut-price devices,many of them closer in nature to feature phones than the high-

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Competitive

rivalry

Threat of new entrants

Bargaining power of suppliers

Bargaining power of customers

Threat of substitutes

Marketing Management Apple Inc. Case Study end smartphones that have put Apple and Samsung at the top.(Waters, 2013)

Apple’s shares continued to slip following its announcement ofweaker than expected iPhone sales in the final quarter of 2012,with Exxon taking its crown as the world’s most valuablecompany. (Waters, 2013)

Despite selling 47.8m iPhones – 29 per cent more than in itsprevious record quarter a year before – Apple failed to live upto Wall Street’s high hopes, leading some analysts to predictthe years of super-charged growth that began with the iPod werebehind it. (Waters, 2013)

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Marketing Management Apple Inc. Case Study

* (Chapman & Haskisson)

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competitive

rivalry in

Smartphone

industry

Threat of new entrants:

1 .powerful companies like samsung that has a lot to say these .days with new products in Smartphone market

2 .Android, as a partially free operating system could be a influential competitor

Bargaining power of customers:as I said before, iPhone counts as a luxury device. it is expensive in comparison other smartphones. retailers often reports customer dissatisfaction about iPhone and other Apple product price.

Threat of substitutes:in this conpect we do not look for other brands similar products. In fact we should find totally different product s for this section of analysis. with the all capabilities that a smartphone could have , there most be another revolution or kind of invention for substitute product.

Bargaining power of suppliers:a disassembled iPhone reveals that the microprocessor chip is supplied by samsung; Philips and ...many other companies provide chips that are central to the camera, display, and motion sensor. maintaining good supplier relationships is a balanced that apple will have to find in order to stay ahead of its competitor. *

Marketing Management Apple Inc. Case Study

BCG Matrix PerspectiveThe growth share matrix is a framework first developed by the

Boston Consulting Group (BCG) in the 1960s to help companiesthink about the priority (and resources) that they should giveto their different businesses. Also known as the Boston matrix,it puts each of a firm's businesses into one of four categories.The categories were all given memorable names—cash cow, star,dog and question mark—which helped to push them into thecollective consciousness of managers all over the world. (Ideas:TheEconomist.com, 2009)

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Marketing Management Apple Inc. Case Study

For creating a Growth-Share we need two measures. One relative market share and two market growth. I used a chart which developed by IDC (International data Corporation) to gather market share informations about Apple iphone and its rivals.

Figure 2 World Smartphone Market Share

According to this chart Apple iPhone share market is 15% ofthe overall market for 3rd quarter, 2012. And it takes secondplace after Samsung with 31.3% share market. Black Berry(Research in motion), ZTE, HTC are 4.3%, 4.2% and 4%respectively. For developing the BCG matrix we need relative marketshare. It means we should compute one brand's share to itslargest competitor: (Wikipedia)

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Marketing Management Apple Inc. Case Study

Brands Samsung Apple RIM ZTE HTCMarket share 31.35% 15% 4.3% 4.2% 4%Largest competitor

31.35% 31.35% 31.35% 31.35% 31.35%

Relative market share( approximately)

1:1 1:2 1:8 1:8 1:9

For market growth rate current sales figures are used in comparison the same last year.

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Marketing Management Apple Inc. Case Study

Figure 3 Smartphone unist sales estimates by OEM (in millions)

For Market growth rate I used the table above and derive the tablebelow:

Smartphone brands 2012sales* 2011sales Market growth

rateApple 148.4 93.1 %59Samsung 177.4 95.2 %86Research in motion (Blackberry)

41.4 52.8 -%21.5

HTC 39.2 44.6 -%12.1ZTE 26.7 14.9 %79.19* In millions

Page 25 of 41 Market

growth

Marketing Management Apple Inc. Case Study

0.05.010.015.020.025.030.035.0

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Figure 4: BCG Matrix for iPhone and its Competitors

15 % market share in 2012 is a fair figure for Apple iPhone.However Samsung is dominating the market by share of 30% as aresult of perseverance in combination with Google’s Androidduring recent years. According to data and calculation iPhone iscategorized in stars segment. It means high market share withina fast-growing industry.

Stars may generate cash, but because the market is growingrapidly they require investment to maintain their lead. (QuickMBA)

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Market Share

Cash cows

Stars

Dogs

Question marks

Apple

Samsung

RIM

ZTE

HTC

Marketing Management Apple Inc. Case Study

Ansoff matrix perspectiveIn 1957, Igor Ansoff published the Ansoff Matrix in the

Harvard Business Review. It was such an excellent illustration of innovation that many entrepreneurs still use it today. The Ansoff Matrix shows four different growth strategies that resultby combining existing or new products with existing or new markets: market penetration, market development, product development, and diversification. For existing markets and existing products, you'll want to work on market penetration. How can you do incremental innovation? How about product-line extension? That would work. (Comaford, 2007)

Table 2: Ansoff Matrix

Apple launched iPhone in 2007. People faced a well-builtcellphone that had only one button in front of. And equipped

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MarketDevelopment

Productdevelopment

MarketPenetration

Diversification

Existing products New products

New Markets

Existing Markets

Marketing Management Apple Inc. Case Study with Wi-Fi, GPS and a multiple touchscreen. iPhone marketstarted growing so fast. iPhone were sold 270,000 units at thevery beginning of its release. In 2010, apple earned 25.179million dollars just from selling iPhone and its related productand services. I derive this two very useful and comparativetables from Apple Inc. Form 10-K which helps us to understandiPhone's furious growth over 5 years and its revenue makingrole.

2012 change 2011 change 2010iPhone and relatedproduct and services

$80,477 71% $47,05

7 87% $25,179

Apple total netsales

$156,508

45% $108,249

66% $65,225

iPhone sales out of proportion to Apple total net sales

51.4% 43.47% 38.6%

Table 4: iPhone net sales by operating segment

Net sales by operating segment 2012 change 2011 change 2010

Americas net $ 50% $ 56% $

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Table 3: iPhone net sales for 2010, 2011 and 2012

Marketing Management Apple Inc. Case Study

sales 57,512 38,315 24,498Europe net sales 36,323 31% 27,778 49% 18,692Japan net sales 10,571 94% 5,437 37% 3,981Asia-Pacific netsales

33,274 47% 22,592 174% 8,256

Retail net sales 18,828 33% 14,127 44% 9,798

table 3 shows iPhone "product development". We can see iPhonesales figure and its changes year by year. This kind of growth is terrific for a new product with no past market experience. AsI mentioned earlier Apple sold 1 million iPhones less than threemonth after its release in 2007.

For market penetration I can refer to table 4 figures. iPhone had some decline between 2011 and 2012. Maybe it was because of Samsung and unexpected success. However, still it is a furious growth for apple in all over the world.

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Marketing Management Apple Inc. Case Study

Extended marketing Mix (7Ps)The extended marketing mix is a combination of elements that

make up a campaign to sell a product. It is an expansion on the original marketing mix of product, placement, price, and promotion, adding additional factors that can influence the success of a campaign. Companies preparing to launch new campaigns need to think about how to organize them, given the product, the company’s reputation, and the market. Failing to assemble the right marketing mix can result in a catastrophic introduction to the market. (WiseGeek.com)

Product iPhone combines a mobile phone, an iPod, and anInternet communications device in a singlehandheld product. Based on the Company’s Multi-Touch™ user interface, iPhone features desktop-class email, web browsing, searching, and maps andis compatible with both Mac and Windows-basedcomputers. iPhone automatically syncs content fromusers’ iTunes libraries, as well as contacts,bookmarks, and email accounts. iPhone allowscustomers to access the iTunes Store to downloadaudio and video files, as well as a variety ofother digital content and applications. InSeptember 2012, the Company launched iPhone 5, itslatest version of iPhone. In addition to theCompany’s own iPhone accessories, third-partyiPhone compatible accessories are availablethrough the Company’s online and retail stores andfrom third parties. (APPLE INC., 2012)

Unlike other brands, iPhone was not released inmany versions. During 6 six years it just has 3G,3GS, 4, 4s and now iPhone 5. It is a cleverstrategy somehow. Building few phones withsplendid features, instead focusing on quality andfundamental parts. In my opinion Apple shouldcontinue this strategy.

Apple provides its own operating system softwareand applications. I OS is the Apple mobile

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operating system. The company released the latestversion, I OS 6 in September 2010. And Apple AppStore which is currently has 400 million accountswith registered credit cards provides more than650,000 software applications for customers.

Price Apple produced few versions, as I said above. And iphone is pricey. It was heard that apple intended to release mini iPhone but it did nothappen. I think it would be a clever strategy to attract customers who do not want spend that much for their smartphone and also want to experience Apple world. Mini iPhone could be a moderate price phone with apple magic features!

In an industry of low profit margins and cost cutting, Apple takes a different approach to the design of its products. While competitors are doing everything they can to keep costs down, Apple does what it can to make its product different. (Chapman & Haskisson)

Promotion Smart Advertising, user's training and customer's instructions are apple tools for promoting its iPhone more and more. Apple do regards relationship with its customer. However, it might be effective to offer more discounts and other options like free shipping, accessories gift and so on. It will definitely keep current customers close and attracts more.

Apple heavily promoted the iPhone when it was introduced in July 2007. Customer and investorexpectations, due to Apple’s reputation, boosted the stock price. But when customers donot believe that the marketing promises have been delivered, stock price, brand equity, andinvestor lies in a carefully thought-out plan.(Chapman & Haskisson)

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Place Marketers develop distribution strategies to ensure that their products are available in the proper quantities at the right time and place. I think Apple do this very well. But insome third-world countries Apple does not service like us and Europe. Maybe it is because of low demand but markets are growing so fast and Apple have to concentrate on thoseplace that even has low demand currently.

Apple has revealed “For consumers, who are covered by consumer protection laws or regulations in their country of purchase or, if different, their country of residence, the benefits conferred by Apple's One Year LimitedWarranty are in addition to all rights and remedies conveyed by such consumer protection laws and regulations, including but not limited to these additional right” (Apple Support)and the country list is very limited. According to consumer laws In Asia pacific only Australia and New Zealand could cover consumer needs

Physical layout

in the days when manufacturing dominated the economy, the physical layout of production units such as factories was not very important to the endconsumer because they never went inside the factory. However, today consumers typically come into contact with products in retail units - and they expect a high level of presentation in modern shops - e.g. record stores, clothes shops etc. in my opinion Apple doing great in this section. Applestores in all over the world provide good deal of sales and services to customers. However in some location these retail store does not provide the complete service that a store in us could.

Provisionof

Customer service lies at the heart of modern service industries. Customers are likely to be

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customer service

loyal to organizations that serve them well - from the way in which a telephone query is handled, to direct face-to-face interactions. Although the 'have a nice day' approach is a bit corny, it is certainly better than a couldn't care less approachto customer relations. Call center staff and customer interfacing personnel are the front line troops of any organization and therefore need to bethoroughly familiar with good customer relation's practice. (Business Case Studies, 2012).Steve jobs offer 100$ credit for itunes to customers who already purchased iPhone at higher price and they were upset about iPhone price cutting. Which company do this to its customers?!

Processes associated with customer service are a number of processes involved in making marketing effective in an organization e.g. processes for handling customer complaints, processes for identifying customer needs and requirements, processes for handling order etc. (Business Case Studies, 2012).

Apple 1 year limited warranty and AppleCare Protection Plan benefits are in addition to rightsprovided by consumer law (Apple Support)

ConclusionIn this report, I used marketing tools for analyzing Apple

iPhone's market position and growth situation. We all know Appleis a big company with worldwide reputation. People willing to line up for new products and mostly they are satisfied with results. Nevertheless Apple has problems too. Technology is a

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Marketing Management Apple Inc. Case Study very competitive market. And day by day companies do more R&D tomake products better than others.

We reviewed Apple strength and weaknesses, all the good thingslike brand loyalty, unique technology especially in iPhone, matchless interface and applications, strategic agreements with big companies like AT&T and Weaknesses like expensiveness, retailers controlling problems, vigorous competitor like Samsungand RIM. Apple is on top from so many points now, no doubt. But with PESTEL summary that I discussed earlier we know there is nocertainty in these days market. Brands devour fame and income and willing to do their best.

I reviewed Apple form 10-K deeply. Apple financial statements say everything is ok and growth is more than satisfactory. But in risks section many items were mentioned to remind investor itis a very hard business.

Both Ansoff and BCG matrix are fine for iPhone, Samsung running so fast but Apple still dominates US and aside recessionpoints, figures show Apple knows the business.

RecommendationsRegarding all the analysis is made; there are some suggestions

and strategies for Apple which can be useful in educationally scale.

iPhone Operating System It is a privilege that apple hasits own operating system for iPhone, but regarding opensource operating systems like Android, there could be aslip for Apple in these days. iOS has a lot of unique

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features that distinguish it from other OS’s. SometimesiPhone users say they can not switch to any otheroperating system and they love Apple and its iOS. Butopen source OS are growing so fast. Android is capturingmarket and sure we should expect others that maybe cometomorrow or a bit later. None-free applications are oftenpricey in App Store. Even some essential software forbacking up and data storing has a price in iOS. Appleshould break or eliminate some of these and let thecustomers enjoy from free or low-price stuff more.

Mini iPhone and China Market An iPhone Mini priced at$330 in China would provide a healthy shot in the arm toApple's Chinese smartphone sales, according to MorganStanley analyst Katy Huberty. A low-priced iPhone wouldadd another 20 percent to the 10 percent Chinese marketshare currently addressed by the iPhone 5, the analystsaid today. Smartphone prices are starting to stabilizein China, which will open up the market for such a phone.But a deal with China Mobile is also key. (Whitney, 2013)

Industry Smartphone industry is a highly attractiveindustry. As it is mentioned before, other company isgrowing furiously. According to Ansoff matrix we are toface both existing markets and new markets. Non-stoptechnology cause new demands and new markets, the moretechnology growth, more demand and bigger markets willrise. Apple should play with prices cautiously withcontinuing premium price strategy. Technologically Appleis on Top but R&D should rise due to competition.

R&D expense increased $952 million or 39% in 2012compared to 2011 and $647 million or 36% in 2011 comparedto 2010. The growth in R&D expense was driven by anincrease in headcount and related expenses to supportexpanded R&D activities. Although total R&D expenseincreased 39% and 36% in 2012 and 2011, respectively, it

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remained fairly consistent as a percentage of net sales.(APPLE INC., 2012)

Statistics shows Apple doing this strategy very well.

The Company continues to believe that focused investmentsin R&D are critical to its future growth and competitiveposition in the marketplace and are directly related totimely development of new and enhanced products that arecentral to the Company’s core business strategy. As such,the Company expects to make further investments in R&D toremain competitive. (APPLE INC., 2012)

Stock markets Both technical analysis and fundamentalanalysis support a potential target of $340 for Applestock. A less discussed but more important problem forApple is its heavy dependence on subsidies from phonecarriers.  When a consumer buys an iPhone 5 from acarrier for $199 the carrier may be paying Apple over$600 and subsidizing the consumer. Recently there havebeen negative musings both from AT&T and Verizon aboutthe high level of subsidies for iPhones.  The subsidieson Google Android based phones and Microsoft Windowsphones are lower. (Arora, 2013)

The foregoing is a negative long-term outcome.  For thetime being according to our proprietary sentimentindicator, sentiment on Apple has reached the level ofnegativity that is interpreted as bullish.We recommended Apple long at $131 and have now takenprofits on 90% of the position.  The plan is to hold onto the remaining 10% as a long-term core position in theportfolio and trade around it with short-term trades.  OnFriday, the stock dipped below the upper band of our buyzone for a short-term trade. (Arora, 2013)

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Marketing Management Apple Inc. Case Study

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branding-Three-telltale-signs-agencys-ineptitude/?DCMP=ILC-SEARCH

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