What’s normally a ho-hum quarter for iPhone sales will be interesting for Apple Inc. This year as the COVID-19 crisis prompts big changes in the way people shop for electronics. Its products and services include iPhone, Mac, iPad, AirPods, Apple TV, Apple Watch, Beats products, Apple Care, iCloud, digital content stores, streaming, and licensing services. The company was.
Apple Inc.’s marketing mix (4P) indicates how the company matches its business activities to the conditions of the global market for information technology, consumer electronics, and online services. A company’s marketing mix involves the strategies and tactics pertaining to the implementation of a marketing plan. The focus of the marketing mix is on the 4P variables, namely, Product, Place, Promotion, and Price. In this business case, the marketing mix is specific to the technological nature of Apple’s business. For example, the company’s 4Ps encompass multinational operations in the consumer electronics market, the information technology market, the Internet services market, and the digital content distribution market. Such diversity in operations brings Apple Inc. in competition with a variety of firms, such as Google, Amazon.com, Samsung, Dell, Lenovo, Sony, and PayPal, as well as Microsoft, IBM and Intel. These competitors are known for their aggressiveness in innovation and marketing. As a result, Apple has a marketing mix that involves various strategies and tactics that correspond to the approaches of these other firms.
In developing its marketing mix, Apple Inc. uses an approach that focuses on premium branding. This approach involves capitalizing on the premium brand, and ensuring that all of the 4P elements support the maintenance of a strong brand image. For example, Apple’s prices match its premium brand, as well as the corresponding consumer perception that equates the company’s products with high value and high quality. Reinforced with appropriate 4Ps, such response to the market enables the corporation to keep its wide profit margins. These conditions help fulfill Apple Inc.’s corporate vision and mission statements.
This marketing mix element determines the outputs of the business organization. In this case, Apple’s product mix includes goods and services that are classified as, or involves information technology. However, the company continues to expand its product mix, creating the possibility of adding non-IT-related products in this 4P element. Apple Inc.’s main product lines are as follows:
These product lines are associated with human resource utilization and business processes based on product-based divisions, which are a characteristic of Apple Inc.’s corporate structure. The Mac product line includes desktop and laptop computers of various sizes for different market segments. On the other hand, the iPad, iPhone, iPod, and Apple Watch are mobile devices with some functions similar to those of Mac products. This element of the marketing mix shows that the company operates in the consumer electronics products. In the company’s current strategic management approaches, the Digital Content product line includes digital music, videos, e-books, and games. Through digital content, Apple TV, and Software like mobile apps, among other products, Apple Inc. operates in the digital content distribution industry. Moreover, the company’s 4Ps include products based on cloud technology, which allows customers to store and access their data, and use software as a service (SaaS), such as iWork for iCloud. The product lines in this 4P element are based on the outputs of the product development growth strategy (see Apple’s Generic Competitive Strategy & Intensive Growth Strategies). This element of the marketing mix reflects Apple Inc.’s evolution from a computer technology business into an increasingly diversified business with focus on information technology.
This element of the marketing mix involves the selection of appropriate places or venues through which the company distributes its products. Apple Inc.’s business case involves company-owned locations, as well as other parties that the company authorizes to distribute its products. The following places are included in Apple’s distribution strategy:
Apple Store is a subsidiary of Apple Inc. that operates physical or brick-and-mortar stores that sell the company’s products, along with related products from other manufacturers. For example, these stores sell MacBook units, as well as peripheral devices from other companies. In addition, customers can buy products through Apple’s website and online stores for desktop and mobile. Customers can buy consumer electronics through the company’s website. Apps, music, movies, and other digital content are available through online stores for desktop and mobile, such as the App Store and the iTunes Store. In this element of the marketing mix, the inclusion of these online distribution channels helps optimize international market reach. Also, Apple Inc. includes authorized sellers in its distribution strategy. These sellers operate stores in various strategic locations, such as in shopping malls in different markets around the world. The sellers include large retail firms like Walmart and Best Buy. Some authorized resellers sell through their own stores as well as their seller accounts on Amazon.com. Moreover, the company has agreements with various telecommunications companies, such as Verizon, AT&T, and Sprint, which offer iPhone units integrated into some of their telecommunications service packages available to subscribers in local or regional target markets. Thus, Apple’s marketing mix is comprehensive in taking advantage of online and non-online distribution channels.
Also called the marketing communications mix, this element of the marketing mix determines the communications tactics that the company uses to reach its target customers. Apple Inc. promotes its products in various ways, involving different communications channels and parties. In addressing this 4P element, the company emphasizes the premium brand image and premium quality of its products. The following communications tactics are in Apple’s promotional mix:
Apple Inc.’s marketing mix includes advertising, such as on Google’s digital advertising network and on technology news websites. The company has agreements with various prominent websites to advertise and promote Apple products. In addition, the company uses personal selling in the form of Apple Store employees who provide product-specific information in the aim of convincing store visitors to make a purchase. Also, among the 4Ps, this element involves sales promotion, which usually happens at the Apple Store locations and authorized reseller locations. For example, some locations offer old models at discounted prices when bundled with larger or more expensive products. Moreover, the company uses public relations to optimize its corporate image. For instance, Apple Events, leaks of new product features, press releases, and exclusive interviews are carefully executed to maximize positive publicity. The company is also involved in various initiatives, such as ConnectED, which aims to improve formal education outcomes, while promoting the business and its products. These efforts are linked to Apple’s corporate social responsibility strategy and stakeholder management efforts. The company uses such communications tactics to satisfy this element of the marketing mix, pertaining to business needs in reaching more customers worldwide.
This element of the marketing mix sets prices, price points, and price ranges for the company’s products. Apple Inc. uses the following pricing strategies:
The premium pricing strategy involves offering products at a premium. In theory, a premium is an amount that is applied in addition to the typical or common price. In this regard, Apple’s use of the premium pricing strategy sets high prices for its products. For example, in general, iPhones are more expensive than Samsung smartphones. Premium pricing maximizes profit margins. Even though the SWOT analysis of Apple Inc. shows that such high prices are a weakness, the company utilizes premium pricing in combination with premium branding and creative innovation. Such combination ensures competitiveness. Creative innovation is supported through Apple’s organizational culture. Aside from premium pricing, the company also uses the freemium pricing strategy. This strategy involves “free” and “premium” pricing combined into a single strategy. In this freemium pricing case, some of Apple Inc.’s products are free, but customers pay to access more, advanced, or better features. For example, the company offers free 5-gigabyte iCloud storage. However, to add more storage capacity, customers must pay a recurring fee. In this regard, Apple’s marketing mix is aligned with premium branding and associated product design and development efforts.
Apple Inc., is a multinational information technology corporation based in California, USA.
The company produces consumer electronics, personal computers, and software. It is one of the largest IT companies in the world and it is often considered to be the most successful startup company of all time.
Apple was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. Their first personal computer, called the Apple I, went on sale in July 1976. It was essentially just a motherboard (with CPU and RAM).
During its first first five years the company flourished, with revenues doubling almost every four months.
In 1977 the Apple II personal computer was released (almost entirely invented by Wozniak).
As opposed to other computers of its time, the Apple II stood out because of its use of cell-based color graphics. It featured an integrated keyboard, plastic case, and eight internal expansion slots.
What really pushed Apple’s computer ahead of the competition (Commodore and Tandy) was a spreadsheet program called VisiCalc – often dubbed as the business world’s first “killer app”.
The Macintosh computer was released in 1984 and sales were fairly strong at the beginning – but began to drop fairly quickly. In the 1990’s Apple made a controversial move and began producing a whole range of consumer products, including digital cameras, CD players, speakers, video consoles, etc. These products did not help Apple at all, in fact the company’s market share and stock value declined drastically.
It was not until 2001, when Apple released its Mac OS X and released the iPod – a portable audio device – that Apple started reporting impressive profit figures. The iPod was incredibly successful – selling over a hundred million units in under six years.
With the iPhone Apple made its entry into the smartphone market.
On June 29th, 2007, Apple introduced its first generation iPhone, and entered the highly lucrative market of smartphones. Over a period of five quarters the company sold 6.1 million first generation iPhones. The iPhone runs on Apple’s iOS mobile operating system. By the end of 2010, Apple had sold 73.5 million iPhones.
In the fourth quarter of 2012, the iPhone 4S and iPhone 5 were the best-selling smartphones in the world, with sales of 27.4 million and 17.1 million units respectively, or 13% of all smartphones sold globally.
On September 10th, 2013, the company introduced the 7th-generation iPhone 5C and iPhone 5S.
Between 2000 and 2006 Apple’s stock value increased surged from $10 USD per share to $190 USD per share.
Apple is now the second-largest information technology company in the world (based on total revenue). In September, 2013, Apple became the world’s most valuable brand, overtaking Coca-Cola. After Samsung, Apple is the second richest cell phone maker globally.
Apple produces a range of cell phones, portable music devices, personal computers, and software. The company also provides networking solutions and other services.
Its main product lines are: the iPhone (phone), iPad (tablet), Mac (personal computer), iPod (portable media device), and iTunes (an online music/video/app store).
The company is trying to gain a foothold in the music streaming business, which expanded by 51% in 2013, while music downloads declined by 2.1%, according to the International Federation of the Phonographic Industry.
|Operating data (in $ millions)||2014||2013|
|Income before income taxes||$53,483||$50,155|
|Balance sheet data (in $ millions)|
|Common share data (in $)|
|Basic earnings per share||$6.49||$5.72|
|Diluted earnings per share||$6.45||$5.68|
|Cash flow data (in $ millions)|
|Cash generated by operating activities||$59,713||$53,666|
|Cash used in investing activities||$(22,579)||$(33,774)|
|Cash used in financing activities||$(37,549)||$(16,379)|
|Cash and cash equivalents at beginning of year||$14,259||$10,746|
|Cash and cash equivalents at end of year||$13,844||$14,259|
Source: Apple Inc. Form 10-K 2014