Apple Newton started out as an idea, by two college dropouts, but has now grown to be one of the leading firms, in the computer industry, worldwide. This has been attributed to products that satisfy the needs of the market. However, there are real threats that face this firm, and this paper analyzes the problems facing Apple Newton, in relation to the marketing mix and their solutions.
Apple was founded by Steve Jobs and Steve Wozniak, in 1976, both of whom, dropped out of college. The innovation began many years earlier, when Wozniac started designing boxes that would be used to make free long-distance calls. The two of them sold several of those boxes and later began working on Apple 1, which was a computer that did not have power supply or a keyboard. They sold their possessions to raise money for their company, which proved to be a worthy gamble, according to Joia (51-70). This is because they sold many such computers to local retailers as well as to computer hobbyists.
Later, Wozniac started working on Apple II, which was created in such a way that its appeal went beyond computer hobbyists to the wider market. Jobs used high school computer enthusiasts, in designing software and assembling circuit boards. He planned to house the computers in fancy beige plastic containers.
Jobs then planned to transform the company to a large entity by selling a third of it to Markkula, a retired engineer. Markkula paid $250,000 for the share and an aggressive marketing strategy saw it reach the $1 million target in annual sales. The company also prided itself with building the first micro-computer that uses a television set for a screen, as well as having colored graphics. The growth saw more innovation and soon, the Apple II disc was reputed to be the cheapest and fastest disk, that was manufactured, then. This disc led to the development of Apple II software, which signaled that the previous goal of expansion beyond hobbyist markets, was being realized. In fact, by the beginning of 1979, Apple's products were being sold by over 100 dealers and the company ranked among the fastest growing, in the US.
In 1980, the company underwent an IPO and its 4.6 million shares offered were bought within minutes. A subsequent offering, in 1981, saw the same trend being observed. The company worked on creating a successor, for Apple II, which would run the Apple II software, as well as provide expanded graphic capabilities and memory. According to Rotfeld (32-43), things started going wrong when the company pressured Apple III designers for fast completion, although Apple II sales had doubled. Apple III was received quite well, when it was launched and most people believed that it would upset IBM's firm grip on the market.
However, after the release, several units were defective due to insufficient testing. The problem was addressed, after halting production, but the units sold never matched Apple II's sales and production was discontinued, soon afterward. In spite of these problems, Apple grew and was the first PC company to hit the sales mark of $1 billion. In 1984, the company unveiled Macintosh computers, which sold 70,000 units within the first three months of release. Apple continued its strategic marketing plan and a new Macintosh was developed in 1984. the company offered people free testing of the computers for 24 hours, which saw over 200,000 people do so. This computer proved to be very popular for organizations, due to the benefits involved, and 70 percent of sales between 1986 and 1987 was attributed to organizations.
Further innovation of software that was compatible with IBM systems led to rapid growth of Apple, which recorded sales and income of $4.07 and $400 million respectively, up from income and sales of $1.09 billion and $217 million respectively. An inaccuracy in forecasts made Apple purchase millions of memory chips, at high prices, in expectation of an imminent shortage but that did not happen. End of the shortage and lower prices made customers go for less expensive computers, since Apple had increased their prices.
Mismanagement in the 1990s.
According to Luther (63-71), the company entered the 1990s with the knowledge that market conditions had changed and this necessitated a change in its corporate strategy. The company came up with a strategy that produced cheaper and smaller model,s for instance LC and Classic, which were received very well by the market and by 1992, Apple controlled 19% of the market share. Apple's 1990s downfall began with the replacement of the CEOs. For instance, the CEO in 1994, Michael Spindler, licensed Apple's technology to other firms. This led to an influx of clones, which reduced the profits that Apple realized. In yet another case of failure to correctly predict the market trends, Apple underestimated demand for the Power Macingtosh computers in 1994. This was related to an earlier overestimation of the demand for the PowerBook laptops. This underestimation resulted in unfilled orders estimated to cost $1 billion, and the market reacted by fall of 15% in value.
According to Bhide (89-97), this mistake led to the replacement of the CEO, and the incoming CEO, Amelio, also made fatal business decisions. He reduced operation costs and laid off a third of the employees, compensating them with an inadequate compensation package. He was also unable to relate with the corporate structure that had seen Apple grow, during the past decade. This led to losses amounting to $1 billion and reduction in share of price. In 1997 Amelio was ousted and Jobs returned to head the company, in an interim position. He made radical reforms that saw among other things, the licensing agreements were revoked. He undertook further job cuts and a launch of cheaper computers and by the end of 1990s, Apple was on its way to making profits again.
Problems in marketing mix for Apple Newton and their solutions.
The marketing mix combines four elements, that are considered when marketing products.
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