The Apple Company designs, manufactures and markets computers, networking solutions, software, peripherals and services. Among the many available products are portable music players which they both design & develop. Notwithstanding, they engage in online distribution of television shows, audio books, short films, third-party music-both audio and videos.
Apple has its deepest roots in The United States of America, Europe and Japan. It has about 14,800 employees and has its headquarters in Cupertino, California.
Apple distributes its products through retail stores and wholesales, whole sellers and retailers who are third party to the company, a direct sales channeling panel and lastly through online stores. The entire process goes on globally. Anybody can easily access the products as long as he/she is literate (Freedman and Vohr, 1989)
Apple manages its investments within a Geographical criterion. As mentioned before, some of the regional managerial segments include Japan, Europe, the Americas, retail and others. The United States of America, Japan and Europe are apparently reportable segments and are known not to include retiling segments.
The Americas segment constitute of both American continents (North and South America). The interesting part is that the Middle East and Africa are included in the European segment. The company ensures that hardware and software products produced are similar in each segment. The Services provided in every segment is also similar.
Stores owned by Apple in the United States of America, Canada, Japan and the United Kingdom are operated by the retail segment. There are a total of 116 stores in the United States alone. There are a further eight international stores in Japan, The United Kingdom and Canada.
The Asia-Pacific, which is an umbrella to Asia and Australia minus Japan, is managed by ‘others’ segment. Filemaker, which is a subsidiary to the company, is also managed by the latter. Publications, developments and distribution of application software for Windows-based systems and Mac OS are all handled by Filemaker.
According to analysts, the company is on a yearly steady rise in terms of profit making as it always comes up with unique, effective and efficient products ahead of its major competitors. For example; taking the years of 2004 and 2005 as case study, they collected a gross of $13,931 million by the end of their financial year (September 2005),which compared to the previous year (2004) was an increase of 68.3%.
The increase in profits is credited to increased iPod sales, which skyrocketed by a whopping 409% in the year 2005.The operation profits were $1650 million in 2005 in comparison to $326 million in 2004.Their net profit in 2005 was $1335 million in comparison to $276 million in 2004 (Mylavarapu, 2005)
Apple Company is internationally known and is popular because of the quality of their products. They are known for durable products for a reasonable price though from their history, occasionally they are known to overprice their products leading to customer complaints.
Apple products are also known to be innovative and thus the reason most customers prefer them to others. Top Apple competitors like Sony, Dell, HP, Nokia and IBM also ensure that customers get maximum utility and there is need for maintaining high product standards (Levy, 2006)
Apple Inc. (Apple) was founded by Stephen Wozniak and Steve Jobs in the latter’s garage. The two met each other in 1971 through Bill Fernandez and the Company was incorporated in 1997. The two met at a computer club and were working with Hewlett Packard (HP).
Wozniak quickly found it a hobby to design and manufacture microcomputers which were fairly priced compared to other microcomputers at the time.
Jobs was then fascinated by Wozniak’s creativity & suggested to him that they could team up and start manufacturing Personal Computers (PCs) and then sell them as he was more business minded compared to Wozniak The two premiered the first Apple I computer in the year 1976 but the launch was unsuccessful the reason Apple I differed from other computers at the time and as was the norm, change was hard to embrace.
The computer was using a MOStek 6502 Processor while most computers at the time used an Intel 8080 processor. It was US$ 666.66 a price lower than its competitors.
On showing the members of the Homebrew club, 25 units were ordered by a local dealer who happened to be present at the time of the demonstration. Accordingly, Wozniak quit HP to join Apple and over the next 10-month they sold 200 Apple I computers (IVEY, 2009)
January 3, 1977 saw the arrival of Apple II. The Apple II computer was later introduced by the duo at a West Coast Computer Fair in San Francisco and was to be used as a general purpose computer. It had a 6502 processor, colored graphics, a direct interface color video monitor and a 4 KB RAM audio cassette drive.
Its retail price was US $ 1,298. The audio cassette drive was later switched with a floppy drive in 1978 and the RAM storage increased to 48KB.Three years into its launch; the entrepreneurs garnered a total of US $ 139 million. It can be said that the Apple II was quite a success. 1980 Saw the arrival of Apple III. It cost between US $ 4,340 and US $ 7,800.
It was reliant on the specific configurations it had eight applications. It was later withdrawn from the market reason being that the initial one had technical difficulties. This did not last as it was re-launched in 1981.The newer version have a much lower price tag US $ 3,495. Of its up to date software system and the RAM being increased to 128KB.
The worst part is, after upgrading from the previous one, Apple III was still a failure and in turn the company decided to work on a project dubbed “Lisa”, which involved inventing a computer that had Graphic User Interface (GUI) and a hand held-mouse. Its price was however expensive (US $ 9,995) and it ended up having very low sales (Linzmayer, 2004).
Jobs realized that the first three computers they had manufactured all required different operating systems to function and decided to make a new computer and an operating system. That having been noted, Apple decided to recruit both software & hardware engineers They later came up with Macintosh (Mac) whose price tag was US $ 2,495.
The PC was equipped with a 32-bit microprocessor and a RAM of 128KB.The Mac and Mac OS (Mac’s Operating system) were both released in 1984 and Apple computers could function using it. The Mac was smaller, less costly, easy to use, flexible and adaptable. It could also handle graphics, something other computers could not handles.
Compatibility issues however made it difficult for large co operations to buy the Mac as they were already into IBMs. The Board members dislike to Jobs led to his departure in 1985.He then proceeded to initiate NeXT which was a project designed to cater for students’ computer design.
The Company finally started growing in 1993 after eight straight unfruitful years. Ironically, When NeXT embarked on an ascending spree, Apple was rapidly tumbling down because of stiff competition, reduced hardware and software costs and lack of creative products
A job was brought on board in 1996 as an informal advisor and Apple absorbed NeXT and NeXT’s operating system at a fee of about US $ 400million. In 1998, Jobs was made interim CEO after helping Apple get profits in three successive quarters of the year.
In mid 1998, Customers were shifting from Mac to other computers and Job introduced iMac (Internet MacIntosh) to first time buyers and the migrating customers which sold 2,000,000 units in a year. In 2000 he was made CEO and immediately embarked on releasing new model Macs to regain market share.IMac G5 was released in 2004 and in 2005 they released the Mac Mini.
The premier edition of iTunes was introduced at the MacWorld Expo on January 9, 2001.This edition could burn discs and could run with Mac-OS 9.Soon afterwards, they launched I-Tunes Music Store (ITMS) on April 28; 2003.Customers could now use their Macs to pay and download music.
ITunes 8, which is the latest version, permits customers to program the contents of iPods and iphones, access the internet to download audio music and music videos, games, TV shows, various podcasts, audio books, movie rentals, feature-length films and ringtones (Linzimaye, 2004)
On October 2001 Apple plunged right into the market of digital music. It operated on a 1.8” hard drive and was compared to other portable disc players; its storage space of about 5 GB allowed it to hold up to approximately 1000 songs depending on the track lengths and sizes.
This was way above other flash memory-based players which could hold about 30songs or less. The iPod recorded 125, 000 sales in the last quarter of 2001(Alan, 2001).
A new model of the iPod was introduced in March 2002 with the storage capacity doubled to 10 GB and was retailing at US$499 which later doubled the capacity to 20 GB making alterations and slashing the prices of the previous models On January 11, 2005 iPod shuffle an iPod that used flash memory was introduced.
58% of the flash player market was already on Apple’s side by May 2005 and by the conclusion of that month, they had increased their customer base in the United States alone to 90 percent.
At the beginning of 2006 MacBook Pro came in and replaced The PowerMac and was targeting professionals. The iMac was also introduced which was three times faster than its predecessor.
Later Bootcamp was also introduced to allow users with Intel Mac to install Windows XP besides Mac OS X. Apple finally then changed their name at MacWorld 2007,on January 9,2007 From Apple Computer Inc. to Apple Inc. launhing the Apple TV and the iPhone on the very day (Ivey, 2009).
Policies of a company are described as a company values, culture and its mission. This is what determines customer loyalty to a company. By ensuring equality in employment and through partnership, Apple tries to create a proper customer environment. The Apple Company ensures that these policies are met through its management.
The Individualistic Policy is one of the policies that affect the employees. This policy is directed to the employees to ensure that they engage in production of creative products. This is a major source of innovation in the company. The second policy for its employees is the Unsolicited Idea Submission Policy. Apple and its employees do not consider or even accept any unsolicited ideas.
This helps in holding off potential misunderstandings and conflicts in case the end product tends to be similar to or marketing methods may appear similar to those that they had been issued with. Harassment policy is enacted to enhance employee welfare while in the company.
This policy seeks to eliminate any kind of harassment in the Company. Harassment policy is mainly aimed at curbing sexual harassment (Llliev, Lindinger and Poettler, 2004).
The Privacy Policy is one of the policies for its customers. Apple protects personal information and any information about their customers; that they rightfully obtained from Apple. It could be disclosed to a third party if and only if is completely necessary, and in which case the third party has to be a business associate.
The other Apple policy to customers is the rebate policy which is offered to any customer who buys a product online or in Apples retail outlets. In addition, sales refund policy which outlines customer’s right and obligation with regard to purchases is practiced to ensure customers enjoy their rights. The sales and refund policy also contains the customer do and don’ts as outlined in the warranty strategy (Lliev, Lindinger and Poettler, 2004)
The first policy aimed at the society is the dividend policy which has helped a great deal in raising the company’s stock in the market environment. It can therefore be argued that the Apple Company culture is adaptive in nature as it tries to sell the importance of creativity and innovation.
The second policy aimed at the society is the Apple business conduct policy. The business conduct policies explain how the Apple Company carries out its business worldwide and also illustrates the services they offer to the society. It contains apples do and’ don’ts in business illustrated in details.
Some of the customers services offered include setting a helpline for business conduct, Education about the customer’s right to take legal action and support services given to Purchases ops apple products and software. The third policy aimed to the society is the patent policy and copyright policies which mainly warn against patent theft and infringement of the company’s ownership of property. (Apple Company Inc, 2010)
Through the environmental policy, Apple Company wishes to limit the harm caused to the Environment, through toxic air emissions by the products, and activities carried out in the manufacture of their products.
For this reason Apple has engaged in recycling their products and production of Macs free from chemicals(PVC and BFR,s). The Apple environmental policy also covers suppliers and it encourages them to try as much as possible to carry their business in a manner that will least affect the water and the energy (Apple Company Inc, 2006)
In order to survive in a competitive environment, marketing is very important. Apple Company markets its products through advertisements, product promotion, and product revitalization and through product positioning.
Apple Company ensures that the demands of customer are met, and for this reason they encourage innovation and creativeness as the major marketing priorities. The Apple Company also uses marketing mix as a marketing strategy (Lliev, Lindinger and Poettler, 2006).
Product positioning involves creating a brand image to customer that assumes personalities. This includes creating products that are efficient, intellectual, and stylish so as to capture the attention of the youth. Through brand positioning, Apple Company is able to create brand image and therefore capturing customer loyalty.
Customer loyalty ensures that Apple is able to compete favorably with its competitors in saturated markets. This is the major reason as to why the Apple Company stresses on innovation and creativeness, as this catalyses achievement of product loyalty (Lliev, Lindinger and Poettler, 2004).
Advertisement is a major marketing strategy used by the apple Company in reaching its target market. The Apple Company uses several media for advertisement, for instance cinemas, bill boards and television.
Majorly it uses televisions because it is best in showcasing their creativity in making sleek designs and their level of innovation. Through advertisement Apple is able to market most of its products. The Apple Company also uses their website in marketing images of their products. Details of the products and the brand image are clearly outlined in their website (Lliev, Lindinger and Poettler, 2004).
In marketing mix, two essential features are illustrated. First is the issue of pricing. The Apple Company charge different prices in different markets. This has enable it acquire high value for their products where the demand is high to carter for the low value they acquire from the other markets.
Secondly, Apple Company uses their retail outlets as an essential feature in market mix. The Apple Company positions their retail outlets with areas with a high population density, for instance in the United States of America. Their outlets are situated next to cinemas, shopping malls and busy streets. In areas with low population, very few outlets are found.
Product revitalization is also used for marketing. It involves making communication and development of the product while ignoring the success of making the product appeal to many people. Instead, the Apple Company Target a few potential buyers whose loyalty may benefit the company.
The Apple Company concentrates on promising opportunities where a link between the company’s identity and the brand enables relocation of reliable values (Kennedy, 2010)
Apple Company is a very successful in its business of dealing with computer software, peripherals, manufacture of computer and selling of computers, marketing, networking solutions and in the offering of quality services.
Despite its success, other factors also curtails its operations, limits its maximum enjoyment of profits by lowering the profit margin and trying to restrict its expansion for instance completion. It is therefore necessary to analyze the company’s strength, weaknesses for better understanding of its operations (Apple Computer Inc, data monitor, 2009, pg.18)
The Apple Company distributes its products a worldwide its major markets being in Asia, Europe and the United States of America. Statistics however prove that more than 50% of their sales originate from external markets. Apple Company has continued showing a significant growth in its several markets worldwide, registering a 4.2 % profit margin in 2009 and of 2.8% on industrial average.
Due to stability in its performance and continuous strength in its operations, a lot of investors are swayed to invest in Apple Company hence improving its strength in the industry (Schoening, Sunder bag and Pazoki, 2005)
The Apple Company deals with a variety of services ranging from computes, phones, Computer software, Peripherals, manufacture designs and many other income generating activities. This enables the company to spread any risk of loss from non performance of a product or service since other product will restore their financial performance by generating income throughout.
Variety of products and services have made the company a major ball player in the investment and company business, which has been maintained because of the company’s innovation (Kennedy, 2010). The Apple brand image is widely known to customers.
Customer loyalty and strong brand name is enhanced by the fact that the company produces quality products with a custom brand image which is widely recognized. Its brand image deters the entry of some products in the market and enables the company to fetch attractive price packages due to the customer loyalty (Newyork times, 2004)
Apple Company has widened the scope of its activities by registering with many media companies. Currently, the Apple Company is doing very well in the music industry as their iphones and some iPods can download music directly from music websites for direct enjoyment of their customers. This level of efficiency as generated a lot of awareness and profits for Apple products as music sales alone generate a lot of profit (Levy, 2006)
Despite the strength that Apple enjoys in the market, it also has some weaknesses. Apple Company incurs a lot of operational costs in its several retail outlets worldwide, which amounts to limited returns. This gives Apple’s competitors an edge over them (Schoenig, Sundberg, Pazoki, Torres &Marshall, 2005, pg.14).
Apple Company incurs a lot of operational costs in its several retail outlets worldwide. In addition, its products lack compatibility, which discourages consumers on using them since they cannot buy a certain part and used it in another machine (Lliel, Lindinger Poettler, 2004, Pg.160)
IBM and Freescale are some of Apple Competitors who supply it with key manufacturing components. This is not healthy business wise as this can put the company in undue disadvantage in terms of competition.
IBM supplies Apple Company with the G5 processors whereas Freescale supplies the company with G4 processors. These two processors are key components of manufacture of Apple’s products (Apple Company Inc, Data monitor, 2006)
Fig 1: market share of some of Apple’s products
Apple Company’s market share has continued to grow. It is estimated that currently, their market share has increased to 10% worldwide with a 21% market share in the United States. In 2009 the sale of Apples operating system steadily rose from 9% to 9.63% whereas the market of its competitor Microsoft decreasing with approximately 0.44% (Appendix 1) 9(Martin, 2009).
However, its Competitors continue getting more revenue than the Apple Company (see figure 2). Improvement of the Apple Company is credited to the creativity and quality products they manufacture accompanied with the ipod sales which has generally increased. Despite, its increase in market share the incompatibility of Apples products continue hindering its maximum sales as most of their competitors’ products are compatible.
Fig 2: Total revenue in comparison with the competitors.
The history of the Apple Company shows the gradual innovation and growth of the Apple Company. Its success can be credited to its sound business policy that has helped uplift the Company’s Image to the society and the continuity in innovating quality products. The Company’s marketing strategy is good since they focus mostly on the customers’ needs, incorporating them in their products.
Apple Company therefore manages to remain relevant in the computer and software market and in production of Mac computers and I Pods that have holds a very strong image, hence which securing customer loyalty.
Nevertheless, there is an intensified competition from other companies which strive to push the Company’s products out of the market. It is therefore important for the company to continue carrying out intensive market research so as to improve on its marketing strategies. (Schoening, Sunder bag and (Pazoki, 2005)
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