Business strategies of apple

The capability of a business to survive in the production is one measure of the business. This implies to being able to continue to exist in the market and the ability of a business to compete. Since 1980s, Marketing Strategies have played a significant role in planning to overcome business challenges and is believed that this will continue to direct the performance of business into the 21st century (Paley 1999). In supplement, it is also believed that good managers have the ability to devise and implement competitive strategies. The corporate strategy and the marketing plan of the business organisation are very closely inter-related. With an inappropriate marketing strategy the decisive goal of profit maximization and growth of business would be an intricate task.

This report is going to discuss the alignment of the business strategies and the marketing planning of Apple which is a highly innovative electronics market leaders providing different range products from such as the iPod, Mac Book, PC’s and Apple TV’s digital music distribution through its iTunes Music Store, and more recently in the generations of smart phone market with the Apple iPhone at fair price and excellent quality customer service. Apple is committed to delivering the best personal computing experience to its students, professors, creative professionals and consumers around the world through its high tech innovative hardware, software and Internet offerings everywhere to every customer in every possible way.

The assignment topic is seemed to be very crucial one under the rapid growth and innovation in consumer’s electronics goods. Apple has been one of the market leaders in being a generation ahead in providing high-tech electronic gadgets and has been holding its existing market share and looking for further growth. The alignment between the business strategy and the marketing strategy has proved to be successful and helped apple in maintaining their brand value and market share.

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This report has got three distinct section Learning Outcomes. It starts with a brief introduction followed by Learning outcome 1 which identifies and justifies the objectives of the marketing and business strategies and also shows weather the marketing plan is supporting the strategic objectives or not. Learning outcome 2 describes about the construction of a marketing plan and the level of importance of each component of the plan, mitigation strategies for the high risk components and producing a market plan. Finally learning outcome 3 emphasizes on the marketing plan gains agreement and then evaluates and reviews the measures for the agreed plan.

1.1 Explain how the strategy of the organization impacts on the marketing plan

Apple’s mission statement is mentioned below (from the official website)

‘The strategic business objective is explained by its mission statement which is based on creating innovative, high-quality products and services and on demonstrating integrity in every business interaction. Apple’s principles of business conduct define the way we do business worldwide. These principles are:

•Honesty-Demonstrate honesty and high ethical standards in all business dealings.

•Respect-Treat customers, suppliers, employees, and others with respect and courtesy.

•Confidentiality-Protect the confidentiality of Apple’s information and the information of our customers, suppliers, and employees.

•Compliance-Ensure business decisions comply with applicable laws and regulations

So its marketing plan is completely aligned with the mission of Apple. Apple focused on providing the best user experiences in the world and has worked hard on making its products to hide the complexity of the software used underneath with a view to create an easy looking electronic gadget. Their deep focus on their consumer experience has given them the desire to do one thing better than everyone else and that started with focus.

Jobber’s six planning questions can be very suitable in order to integrate the framework of strategic objectives and marketing plan.

Fig: Key Questions and the process of marketing planning

Apple has followed the systematic examination of their business marketing environment objectives, strategies and activities with a view to identify the key strategic issues, problems and opportunities. Marketing audits are:

Internal- on micro level and

External- on macro level

Apple has been following the formula of taking care of its customers and is seeking to ‘surprise and delight’ them with their products. They love their customer and want to make all their users happy. Apple promises it will not stop until everyone is satisfied and if not they are ready to refund them.

1.2 Identify the component parts of a marketing plan

SWOT analysis for Apple:

Strength Weaknesses

-Huge brand name/ Brand personality

-Financial vitality

-Smart phone: Highly advanced features,

-Unique look and beautiful design

-Innovation

-First to deliver computer phones

-Expensive

-Limited distribution channel

-Over-pressure in the management to deliver high tech devices in affordable price.

-Increasing demand for better mobile computing experience

-Internet protocol-based network

-Increasing no. of applications

-Very high level of competition (Microsoft, Google, Samsung, HTC, Nokia, Sony etc)

-Changing technologies

-High product substitution effect

– Legal risks

-Imitation

Opportunities Threats

Apple iPhone 4 is the most successful smart phone launched so far. It is highly ergonomics device: beautifully designed and technology leading product with great brand value. Due to these distinctive characteristics it has been successful to steal the hearts of its consumers and has created strong brand equity and customer franchise.

The Apple brand personality is the strategy used to focus on the life style of people. Apple associates the iPhone with the emotions of its consumers which is all about simplicity.

Similarly Apple has been working on maintaining its image and is working hard on converting its weaknesses to strength and threats to opportunities by using its official website, stores, blogs and the advertisements to communicate to its users.

Apple has a huge market share and it has been developing new products every 6 months in order to retain the existing consumers and to expand their market share. The first iPhone came into existence on Jan 2007. After that there have been lots of improvements in the software, programmers and the design of the iPhone till it came to the fourth generation today in the shape of iPhone 4 (launched on 7 June 2010). Apple continuously worked on the weaknesses and used its innovation magic as it developed further. And the fact that they are generations ahead of anyone of mobile phone tech has been proved right again. Apple has been working hard equally in terms of market penetration, market development, product development and product diversification whereas talking specifically about iPhone 4 they are focusing on product development concept in relation to Ansoff matrix in terms of strategic thrust.

IPhone 4 is focusing on building and holding the market in terms strategic objectives. Since iPhone 4 is the fourth generation of Apple’s iPhone, they have been working on increasing the technological functions in order to make their consumers happy. Apple is continuously taking the feedbacks from its consumers and is modifying its products more and more just to make it easy for its consumers. This is helping them to take control over it existing market share and at the same time its huge and excellent brand name is inviting more consumers to be a part of Apple’s consumer franchise for instance Mac community, iTunes etc.

Complementing Ansoff’s perspective of growth options, the portfolio analysis offers a perspective for the active evaluation and management of the existing portfolio. These two frames are used in parallel and together they produce a suggestion as to the right corporate strategy for Apple. The portfolio analysis has considered all of the group strategic business segments and subsidiaries from the corporate perspective evaluates them and take this as a basis of plan allocation of resources and with it, the corporate strategy. The basic objective of the portfolio analysis is to realize as high return as possible while incurring as little risk as possible and to operate or establish such strategic business segment as are necessary to achieve it. Portfolio matrix contrasts the strengths and weaknesses with opportunities and threats. (Philip Kotler, 2010. The Quintessence of Strategic Management: What You Really Need to know to survive in business)

Portfolio matrix for Apple:

Fig1.2 (b): BCG matrix [1]

STARS: Stars are leaders in high market growths. They tend to generate large amounts of cash and growth market conditions. Apple computer has a large share in rapidly growing market for portable digital music players. (Cantrell 2006) E.g. iPhone

CASH COWS: Cash cows have high profitability, requires low budget and are the market leaders. They fund their growth. E.g. iPods

QUESTION MARKS: Question marks have not achieved a dominant market position and do not generate much cash. Instead they use a lot of cash in growing the market share. E.g. Macbook pro

DOGS: Dogs are often the failures and have little future. They generate less cash and their market shares are very low. Since a good company should have no dogs, Apple has no DOGS.

Apple’s core strategy is its competitive advantages i.e. their unique and highly innovative technology with flash memory. And to bring these qualities in the eyes of its costumers it has been using its website very efficiently. The official iPhone website does more than just provide information about its products. It provides top tips and tricks for the use of an iPhone and focuses hugely on apps: displays images of apps, provides the “App of the Week,” the website also has sections titled “Apps for Everything” and the “Top Apps.” Apple’s website is a great marketing tool for current iPhone consumers and to those who have an interest in purchasing it. The promotion of the apps is creating a stronger source of revenue for Apple. When customers see top rated applications, they are more likely to download the app, rather than searching through millions of apps to discover one that may be of any worth for them.

1.3 Identify issues of risk within a marketing plan

There are many live examples of failure of the marketing plan of the organisations because of conflicts in management team, reward system, information system, cultural clashes, personalities, political behaviour, ineffective communication and skills gap. These components are enough to create risk within the marketing plan of Apple iPhone 4.

However, there are many methods of conflict dissolve some of them are:

Match the marketing planning process with business culture: – the corporate objective of the iPhone 4 must be aligned with the market plan and both of them should support each other. Some examples are launching the phone in a completely different market- Asia; top-down/bottom-up management and so on. These cultures can bring conflict in business.

Senior management support: – The Senior management should be committed in the plan and involve in the plan as the connection and support it.

The reward system:-this should reward the achievement of long-term objective rather then exclusively focus on short-term result. Short-term reward rather erases the commitment from the managers and demotivates them.

Communication:-The plan should be communicated within the team who are directly or indirectly involved in the planning process.

Training and development:-Training should be provided if necessary. It improves the team engagement and motivates the team to attain good performance.

These activities if used in the right way helps to minimise the risk of marketing plan in implementing process of iPhone 4.

2.1 Identify the levels of importance of each component of the plan

4Cs marketing mix framework suits Apple the most and is an effective procedure for managing marketing mix decisions. The 4Cs are explained below:

Consumer wants and needs

Developing a new product and selling it to the mass market is not possible. Companies should first study the needs and wants of people and then produce the products that will be able to attract consumers. As the mission statement says, Thinks ahead: Apple saw how the consumer market was and thought of doing something which was a generation ahead and yes it actually attracted everyone.

Cost to satisfy

Costing of the good is one more important issue. No matter how good the product is, if it is not priced according to its potential consumer’s budget than the product will definitely fail. And cost does not mean only the cost of iPhone; it should also consider the factors with it. Apple invests a lot in innovation, high-technology, highly talented manpower, great brand image, consumer loyalty etc so the cost of phone should be up to the marked standard.

Convenience

Whatever a consumer buys should be a matter of convenience. When a consumer thinks of buying an iPhone 4, there should be a convenience place to buy it through Apple store, Apple website, Carriers/Mobile networks, online etc. and which ever way they choose should best fit them.

Communication

Communication is a term used instead of promotion. Communication is to give and take between the buyer and the seller. Apple is using this most efficiently and CEO himself directly answers the queries of the consumers through blogs, websites and press conferences. This has been the best way to retain their brand value in the eyes of their consumers when there are so many issues going on with the new iPhone 4 and the misunderstanding with the media.

2.2 Identify mitigation strategies for high risk components of the plan

Budget for the action plan may be a cost revenue or profit-oriented budget which should be accurate. Action plan and program need a supporting market budget (which the Apple gets from the Director) projected income statement for the launch of a new product. Apple always should check is the budget enough in order to take the marketing mix decisions made and the actions planned.

Kotler proposed the theory that marketing strategies turns to specific action programs when it answers Kotler’s four questions:

What will be done?

When will it be done?

Who is responsible for doing it?

How much will it cost?

These are the most important elements that will help in judging what Apple can do and how things have to be done. These are applicable to the marketing mix as well (7ps or 4cs). Wilson and Gilligan have come up with a frame work to measure action programme outcomes.

Financial measures- This is a traditional method which focuses on the result of implementing marketing plan.

Non financial measures- This method focus on monitoring, reviewing and evaluating marketing mix aspects implemented with the plan.

Action programme outcomes: Wilson and Gilligan’s framework:

Financial criteria

Non-financial criteria

Liquidity

Sales Volume

Cash generation

Market share

Value added

Growth rate

Earnings per share

Competitive position

Share holders value

Consumer franchise

Profit

Reliance on new products

Profitability

Customer satisfaction

Cost leadership

Sustainable competitive advantage

Fig2.2: Action programme outcomes

To judge the management of action programme’s budget and allocate the right amount of resources financial reports, annual reports, and income statements has to be reviewed. And then only the proposed action plans can be fully developed to reflect when activities will start. This activity should then be monitored, reviewed and be completed for Apple.

2.3 Produce a marketing plan

The purpose of the Marketing plan is to translate the positioning statement into recognized and brands. The role of market planning ensure that the marketing mix for the product and services matches changing customers needs as well as creating more opportunities to market new product in new market.

For Apple iPhone 4, 4Cs marketing mix concept suits the most to make an effective marketing plan. This marketing mix focuses the marketing from the consumer’s perspective. It understands consumer’s needs, wants and behavior and helps the company to produce whatever is desired by the consumer or innovates something different what the consumers might have been dreaming about. Similarly, in order to fix the cost of iPhone 4, it has to add up all the production cost as well. So it is the job of marketing department of Apple to focus on which market to go and which target audience to focus depending upon the purchasing power of the buyers.

Market planning process provided a well-defined path from generating a business mission to implementing and controlling the resultant plans for Apple. The typical marketing plan structure is given below:

Stages in marketing planning process:

Business Mission/ Executive summary

Apple’s mission statement in ‘Thinks ahead ‘ so the marketing department keeps its full focus on the innovative, unique and differentiated features iPhone 4 while marketing the product to its potential consumers.

Marketing audit/ Current Market situation

After making sure the mission is clear Apple did a marketing audit. It scanned the market and its macro and micro factors and found out the trend of the market, total available market and the competitors list. They also made a note of the changing environment that is the rapidly changing technology and competitors activities.

SWOT Analysis

Apple did a fair and justified SWOT analysis and discovered that it is a very strong market leader in the market of smart phones but at the same time realized that there are a number of competitors who were competing and imitating the technology. Pricing strategies were extremely competitive as well so in order to stay in the market for long run and to maintain the market share they had to sacrifice some bits of their margin and fixed the cost of the iPhone 4 which is comparable to its competitors.

Marketing objectives and issues

Apple used Ansoff’s matrix to determine its marketing objectives. Apple has been working hard equally in terms of market penetration, market development, product development and product diversification whereas talking specifically about iPhone 4 they are focusing on product development concept. They have put all their efforts to serve their consumers with the features, facilities and applications which are easily accessible and have lots of comfort in using.

Core strategy/Marketing structure

After identifying the marketing objectives they discovered their target market and the target audience. In the beginning it came as a professional phone so its target audience/market were the business class people and was highly advertised on business areas, sites and high-class society especially in USA and Europe. But soon they realized, niche marketing was not a good option for them to grow their market share. So they decided to take over the market by decreasing the price of the phone and making it affordable to general middle class people. Similarly they launched iPhone 4 in Asia, Middle East and more countries as well.

Action programmes

Action programmes is the planning carried out at the marketing mix decision stage in order to change it into actionable programmes, plans and activities. Apple believed in thinking from the consumer’s side rather than producer’s side and believed in give and take rather than selling and buying. So they choose 4Cs Marketing Mix elements.

Budgets

Budget is the most important factor while planning marketing process. Apple had a clear idea of its present position and its revenue plus the margin it was generating which helped it to forecast the right amount of budget for marketing iPhone 4.

Control/ Implementation

So after the successful launch of iPhone (June 2010), and making record sales in the first two weeks, Mr. Steve Jobs still focused and monitored the evaluating results and on-going planning modifications (Product life cycle), consumer’s views and feedbacks about iPhone4. Series of press conferences were launched, and surveys were conducted. The sales of iPhone and the market coverage was continuously monitored and reviewed. Right after having rumors about reception problem, the company immediately decided to give free cases to the iPhone 4 users in order to solve the problem.

3.1 Discuss how the plan support strategic objectives

Jobber suggested 5 different ways in which an organisation is structured to implement a marketing plan which are:

No marketing department.

A functional organisation

A product-based organisation

A market-centred organisation

A matrix organisation

Out of the above 5 structures, Apple as a company is a product-based organisation as it focuses on individual product responsibility. Managers are appointed product wise and they can have their own market strategies. Each manager focuses on the marketing strategies and presentation of their product in the market. This is an expensive way of marketing for Apple as it has to spend individually in each product and it is more likely to create conflicts between the product lines.

Marketing implementation is the process of converting marketing strategies and plan into marketing actions with a goal to accomplish strategic marketing objectives. Kotler et al suggested that for the successful implementation of marketing plans, reward system is an essential factor. Reward may be formal or informal but it should guide the whole marketing process. Short-term reward results the manager’s performance going down and loosing focus on long term goals. Kotler also mentioned that Successful marketing implementation of the marketing plan depends on the effectiveness of the mixture of five elements: organisation structure, action programmes, decision and reward system, human resources and company culture into a coherent programme that fits the business strategies.

Marketing control is the process of measuring and evaluating the results of the marketing plan and strategies and taking corrective action to ensure that the wholesome objective is attained. Apple had clear picture in mind and had set a goal of being the best smart phone in the world. Then they measured their performance through the sale of the phone, consumer feedbacks and critics. When they saw that there was a problem and its consumers were not happy they evaluated their performance and took the corrective action immediately.

There has been a significant importance of Jobber’s concept of operational control during the implementation of the marketing strategy. The operational control includes the following methods:

Customer satisfaction measurement:

Sales and market share analysis:

Cost and profitability analysis:

All these methods have huge significance for Apple’s iPhone 4. By communicating with the consumers through the official websites, surveys and questionnaires Apple collected lots of productive feedbacks. Similarly, the quarterly sales growth and the revenue generated every quarter was a helpful to understand the business growth. Comparing the sales with the competitors made them find out their market share growth in the market.

The role of information in marketing control is very significant. By the use of IT the marketing head of the Apple Inc. realized how the performance of the iPhone 4 was in the market and then they turned in taking the corrective action. With out the use of IT no company can evaluate their performance and modify their course of action. Similarly, the community of the Apple users and iTunes gets updates about the new promotions of the company’s new applications and products. The users have their own account with Apple gets to know about the product activities even before the media gets it.

Fig: Role of information

3.2 Outline an approach to gain agreement for the marketing plan

David Jobber identified the four key issues for the successful implementation of marketing plan. To implement a successful marketing plan it is the utmost necessity for Apple to gain the support and commitment of the following key resources:

1. Gaining support of key decision makers/senior level Management for the proposed plan and overcoming the opposition of others: This will encourage to all acting group and it helps to reduce the resistance as well.

2. Gaining the required resources (people and money) to be able to implement that plan: the company as is an innovative and high-tech company, Apple should make sure it has enough fund and RIGHT manpower.

3. Gaining commitment of the individuals and departments in the organization who are involved in front-line implementation like marketing, sales, service and distribution staff.

4. Gaining the co-operation of Production Department and R&D needed to implement the plan: it should make sure it has enough finance to support the R&D and produce enough iPhone’s product to meet the demand.

IPhone 4 had some issues while implementing the marketing plan in the beginning but Jobber’s five stages ladder of support concept model helped it to convert the resistance to support.

Fig: Jobber’s 5 stage model of ladder of support

According to Tony Proctor’s view of thinking of organisation as an internal market for change initiatives, he proposed a concept that communication can help to gain agreement and support for marketing plans in the following ways:

Involving people in the process even before it starts and making them ready for the change.

Consulting them timely and empowering them with the responsibilities to make the change happen smoothly

Understanding the culture of the organisation, as new strategies that run counter to the traditional values of an organisation. This is the one main reason which creates resistance and makes it difficult to introduce.

These points are carefully demonstrated in the right time by iPhone 4 and this helps to gain the agreement and support to the marketing plans with ease.

Apple also used Proctors internal market to implement change strategies. Proctor also considered about the organisation as an internal market for change initiatives and identified the key skills of communication to overcome the resistance from within the organisation for successful implementation of marketing plan along with the ways of making people more aware. He proposed communication as a tool for overcoming resistance. In order for the communication to be effective, it should have the following skills:

The ability to get people to accept ideas

The ability to cope with difficult obstacles

The ability to plan and manage time in an effective manner.

The ability to create the enthusiasm and motivation to follow through strategies

Implementation strategies

Jobber identified the following potential barriers to implementing the marketing plan:

Seen as a high-cost solution

Unquantifiable benefits

Personal ambitions

Inappropriate reward system

‘Saying’ versus ‘doing’ (not following up with actions things you agreed or were committed to).

Referring to Kanter (1988) and Piercy (2001) Jobber highlights following as typical forms of resistance in any organisation:

Criticism of specific details of the plan

Foot dragging

Slow response to requests

Unavailability

Suggestions that despite the merits of the plan, resources should be channeled elsewhere.

Arguments that the proposals are too ambitious

Hassle and aggravation created to wear the proposer down.

Attempts to delay the decision, hoping the proposer will lose interest

Attacks on the credibility of the proposer with rumour and innuendo

Deflation of any excitement surrounding the plan by pointing out the risks

Jobber suggested four steps structured approach to deal with resistance to the marketing plan.

Fig: Jobber’s model of managing resistance

Importance of internal communication by Kotler and Keller and Ballantyne:

(a) Good internal communication- All the team contributing the plan should have access and make the communication smooth.

(b) Suitable organizational structures- The structure of the organisation should be simple and easy to have good communication flow.

(c) Adequate training and resources- Training and development creates motivation and improves performance of the team.

(d) Total commitment from senior management- senior management is the leader the iPhone 4, so their involvement in the plan and their feedback can help to create better plan and to improving customer service and satisfaction.

(Tony Proctor, Creative Problem Solving for Managers: Developing Skills for Decision Making, p250-267)

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3.3 Identify an evaluation and review measure for the agreed plan.

After the plan gains support and agreement, its implementation has to be evaluated. Kotler and Keller have put forward a four stage ‘criteria- responsibility-purpose’ framework for evaluating the success of the implementation of the marketing plan.

Apple has used this framework to plan, collect information and present findings on the evaluation. After the evaluation it becomes the basis for the development of the future strategic marketing plans by providing contribution to the internal and external audit.

Fig: Kotler and Keller’s Criteria-responsibility-purpose’ framework