Apple Inc. , formerly named Apple Computer, Inc. , is an American multinational corporation which is based on designing and manufacturing consumer electronics and related software products. It was established in Cupertino, California on April 1, 1976 and its primary business is to develop, sell and support a range of personal computers, computer software and hardware, portable media players like the “iPod” and more recently mobile phones known as the “iPhone”. Since its birth, Apple has operated in approximately 200 stores in 5 countries and an online store where hardware and software products are sold.
The iTunes Store provides music, music videos, television programs, movies, podcasts, iPod games, and audiobooks, which can be downloaded using iTunes on Mac or Windows, and also on the iPod touch and the iPhone. The fundamental reason why Apple Inc dropped “Comupter” from its corporate name was so that it could expand into the other aspects of the consumer electronics market without restricting itself to its initial focus on personal computers. This report will use Apple Inc as a case study to underline the importance of Marketing to Organisations in the 21st Century.
What is Marketing?
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The modern definition and history of Marketing: In an electronic journal called “Broadening the Concept of Marketing”, marketing was defined as involving “product development, pricing, distribution and communication; and in the more progressive firms, continuous attention to the changing needs of customers and the development of new products, with product modifications and services to meet these needs”. Such a definition describes the essence of modern marketing very well as it hints how modern successful (“progressive”) organisations should seek to meet the desires of their consumers.
A great misconception of marketing is that it is just regarding selling and advertising but what must be understood is that selling and advertising are only certain aspects of the Marketing Process, and more accurate definitions of marketing would dictate that in reality, marketing is a whole lot more. Theodore Levitt suggested in the Harvard Business Journal 1960 that products were just problem solvers that satisfied the needs and wants of individual consumers.
Marketing is essentially a managerial process involving analysis, planning nd control where carefully formulate programs are carried out. It can be seen as a voluntary exchange of values where there is no use of force or coercion and where benefits to the consumer are offered. A fundamental point to remember is the fact that marketing involves a selection of target markets rather than a quixotic attempt to win every market and be all things to all consumers. The most essential purpose of marketing is to achieve organisational objectives where in the commercial sector, this is profit.
Apple Value Chain
Indeed in the non-commercial sector this would be very different. In the heart of modern marketing, the concept of marketing relies on the organisation’s offerings based on the target market’s needs and desires where products are highly user orientated. In such a process, a set of tools known as the marketing mix are utilised to meet these needs of customers. Marketing has become very important in recent years due to an increase in competition and it can certainly been see to give a company both competitive and strategic advantages over their rival companies.
Before the 1950s, organisations used to identify strategies and techniques for simply selling products and services to customers without any regards to what their customers really wanted. However, during the twentieth century due to an increase in competition in industries, organisations that have been highly responsive to the competitive nature have done so by investing greatly in their marketing. Such organisations show a keen interest in learning about the needs, perceptions, preferences and satisfaction of its constituent publics and rely on systematic information-collection procedures such as formal opinion surveys and consumer panels.
Such an organisation also encourages its constituents to submit enquiries, complaints, suggestions, and opinions and creates formal system that can facilitate this. Examples of this are seen by suggestion boxes, comment cars and consumer committees. The incoming information is then sifted and positive steps are taken to adjust products, services, organisational policies and procedures. Through this, an organisation will aim to create long-term relationships with customers by providing customer value and satisfaction, so customer loyalty and repeat purchasing will be guaranteed in a competitive market.
The modern concept of marketing flow from initially knowing the customers’ needs and wants and then an organisation initiating the process of developing and marketing products and services is a concept that Apple Inc adopted during trading in this era. Below is a model that demonstrates the core marketing concepts used by Apple Inc whereby a better understanding of marketing is illustrated. [pic] Apple Inc can be used to define each of these core concepts:
- Needs, wants and demands: Apple Inc produces products that satisfy the needs of customers from different backgrounds. It can be seen that Apple aim to meet the human states of deprivation, the form these needs take when they are shaped by culture and individual personality and then the financial power to realise them. More importantly, Apple Inc realises that different consumers have different needs and thus the company produces different products to appeal to consumers from a range of different backgrounds. When using iPods as an example of a product. Customers that have a high spending power i. e. are from a high income class, the latest and priciest iPod know as the iPod Touch would be targeted to them.
- Those who have a weaker spending power could indulge in an iPod shuffle. Apple Inc also meets the memory requirements of their consumers, so for consumers who want to store thousands of songs, videos or photos on their iPod they would be targeted with the iPod Touch which has a 32GB capacity.
- Marketing Offers (products, services and experiences): This is a set of benefits that promise consumers to satisfy their needs through a combination of products, services and experiences offered to a market.
- Apple Inc not only produces products to satisfy needs but also services and experiences by allowing consumers to test out their products first-hand in their stores. It is here where consumers can see the bundle of benefits that come with every Apple product.
- Value and satisfaction: This is what Apple strives to give its customers. Apple in the last few years has relied on its brand, that its products are value for money and creates satisfaction compared to its rivals.
- For instance, iPhone is known to be quite expensive with hi-tech features, but relying on its brand, Apple believes they can gain more customers as customers will view their products as having more value. Apple Mac Computers are generally more expensive than other computers on the market but consumers still purchase Apple computers because they are unique and such customers are willing to pay a higher price for such uniqueness.
- Exchange, transactions and relationships: This is the act of obtaining a desired object from someone by offering something in return.
The consumer offering money for Apple’s product is an act of exchange, where a customer purchases Apple iPod shuffle for ? Even after such an exchange, Apple offers a one-year warrantee and after sales service where the shuffle can be brought into the store if it needs repairing. Through this, long-term relationships are built between Apple and its customers creating customer value and satisfaction, to guarantee customer loyalty and repeat purchases of its products.
Apple’s iPod entered into a very unique market within the high-tech consumer electronics segment. Consumers in the United States were in a “free music” download frenzy and the release of the iPod facilitated to these consumers a way of enjoying their free downloaded music. Functions of Marketing There are various functions of marketing, where selling and advertising are the two functions that are known to individuals, but these are not the most important. A further function of marketing is marketing research. This function links the consumer, customer and public to the marketer through information that is used to identify and define marketing opportunities or threats.
Furthermore, it refines and evaluates marketing actions to monitor marketing performance and to improve understanding of the marketing process. Marketing researchers take on a wide variety of activities, ranging from analyses of market potential and market shares to studies of customer satisfaction and purchase intentions. Apple Inc is known to use market research when a new strategy is developed. For example, Apple would research through means of formal studies of specific situations as to how many and what kinds of people and companies will buy its new ultralight personal computer.
Through this, Apple Inc gains valuable information, which helps them meet customers’ needs and wants. This function uses the various steps shown in the diagram below: Apple Inc uses several methods to gain primary information for its market research such internet data as well as personal contact with customers. The use of the internet used by Apple Inc has increased, due to Apple Inc giving their customers the option of purchasing their products direct from the company at its online store.
Such a method has proven to benefit the company as well as customers, as it is an easy and inexpensive method between the company and its customers with the reduction of the intermediary agent. For example, once customers purchase any of Apple’s products direct from the company through their website, they are required to register their details (email address), which allows Apple to send them online questionnaires that will help Apple to understand the views and suggestions or complaints of their consumers.
The marketing department within organisations is also required to work closely with the finance, purchasing, production and transport departments. In the marketing strategy of the launch of Apple Inc’s first ever iPod, all the departments within the company interacted together to bring the product to the customer. Producing and marketing strategy was one of the main functions of the marketing department, but in designing marketing plans this department had to consult the Research and Development in order to focus on the problems of designing safe and attractive products.
Although there may be disputes between R&D and marketing departments, the Journal of Product Innovation Management states that “It has become part of the traditional wisdom that good relationships between the R&D and marketing departments are essential for effective new product development. ” Meanwhile the Finance department would be concerned with finding and using funds to carry out the marketing plan. Therefore, in order for marketing strategies to be successful, all departments must work together to meet the same objective of satisfying customers’ needs and wants.
Why marketing is fundamental to the successful operations of an organisation Marketing is fundamental to the successful operations of Apple as it brings its products to customers’ knowledge. Without marketing, Apple would be unable to get a message across to its buyers, which will mean there would be a lack of interest generated for Apple Inc products. Apple Inc’s success is due to producing products and then communicating them to their customers through various media, in order to create sales and profits.
Apple believes it is essential that for their marketing strategies and techniques to succeed they must obtain what customers’ need and want and then exchange products and value with them. Apple identifies potential customers and their needs and then designs the products to meet them. The product is then promoted to make customers aware of it and then delivered to them. The core marketing activities are which re essential for organisational success are:
It is essential Apple Inc’s products are produced competitively in line with their competitors, but at the same time have value and satisfaction the customers need and want.
- Research: Apple Inc’s use various ways of communicating with their customers and their suppliers, so they get the best deal financially and services from both the customers and suppliers.
- Distribution: Apple Inc plays a great attention on managing marketing channels, so that products are delivered at the right price, at the right place and at the right time.
- Pricing services: Apple Inc prices are competitive where it is priced based on their competitor’s prices. However, Apple can afford to mark their pricing up more than their competitors simply due to the original features and designs of their products.
Apple Inc follows these activities in order to be successful and competitive. The company’s success depends not only on its own actions but also on how well the entire value chain serves the needs of final consumers.
Describe the marketing process with particular emphasis on the development of integrated marketing strategies by organizations. Under the marketing concept, companies must find a way of exploring unfulfilled customer needs and bring to market, products that satisfy those needs. The process of doing so can be modelled in a sequence of steps: the situation is analysed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are made, the plan is implemented and the results are monitored.
An understanding of customer needs helps organisations build a marketing strategy- which is defined as a plan that determines to meet the organisation’s objectives. Marketing strategy is the marketing contribution. The marketing process is used to show marketing’s role and activities in organisations and the forces that influence marketing strategies. Below is a more detailed view marketing process which will be discussed in greater detail: [pic] Situational Analysis and the Marketing Environment:
A thorough scrutiny of the situation an organisation finds itself in serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. Furthermore, the organisation must also understand its own capabilities and the environment in which it is operating. Essentially as the famous business mogul, Clive Firanthis stated ‘successful companies are those who take a pro active rather than a reactive response’. The marketing environment in which Apple Inc operates is one that faces a fast pace of technological change and aggressive competition in all areas of its business.
Apple’s main customers are primarily in the education, creative, consumer and business sectors. By looking at model above, the outer layer can be described as the macro environment for Apple Inc. This means the broad societal factors that influence an organisation. This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization).
It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology. The next layer looks at the mircoenviroment, that is the set forces close to an organisation that has a direct impact on its ability to serve it’s customers.
The microenvironment includes customers markets, competitors, organisation departments, and market channel firms. The reason for Apple’s apparent and sustained success is that the company have been able to deal with the changes that have occurred in its ‘marketing environment’. It is mainly through Apple’s research & development and superior ease of use of their products, seamless integration and innovative industrial design that the company is able to offer to the market such products.
The organisation identified the factors externally affecting them via PESTEL (Political, Economic, Social, Technological, Environmental and Legal) analysis and adapted to it. For example a comparison of an Apple product can be made with that of one of it’s main competitors: for the 8GB Apple iPod Nano and 8GB Sony MP3 Player, a PESTEL analysis was could be carried out and a comparison can be drawn between the two products and companies considering the political, economic, social and technological factors that would be responsible for the sales and consumption or even the general success of these products.
As evidence of the success of these products it can be seen that both the products seem to have considerable presence in the market, although Apple iPod Nano would have advantage as the first mover or pioneer in MP3 launch. Apple works closely with its employees, customers and suppliers as they seek to contain costs, deliver improved products and remain competitive in the global market place. As Apple faces competition from organisations like Sony it is essential for it to understand their customers’ needs and wants to identify the product investment and service quality improvements, which it will generate value in the years ahead.
Apple works closely with local communities and the Government to ensure that the continued operation and expansion of its business is politically, economically, socially, environmentally and legally sustainable. This is in turn a key part of relationship marketing. An academic journal by Atul Parvatlar stated that “The willingness and ability of both consumers and marketers to engage in relational marketing will lead to greater marketing productivity”. This underlines the importance of marketers working closely with their customers for greater productivity.
By working in partnership with all its stakeholders, Apple has experienced sustainable growth in the last few years and is likely to continue doing so in the future. Internal factors: There are several methods for carrying out a situational analysis and assessing the marketing environment. A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for Apple Inc will be used in this report. This technique used to compare an organisation’s internal strengths and weaknesses with the opportunities and threats in the external environment.
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