Summary on Apple's marketing plan

Apple, Inc. produces and sells computers, mobile phones, tablets, iOS software, digital players, and other related gadgets. By purchasing iCar, the corporation hopes to enter the auto sector. In order to compete, the auto industry has mostly focused on price and positioning as it has been producing cars to fulfill the needs of various market segments. But there is a need to create automotive models with high levels of security, self-driving capabilities, and remote control. These fixes would be available through the iCar model. The car would, however, demand expensive production costs and exorbitant prices as a result. Wealthy customers, professionals, and executives make up the majority of the target market. Therefore, the company would need to design a unique marketing approach to this product. Apple would have to segment the iCar market to base on their needs. It would also have to pursue a positional strategy that fits with the market segment. Apple also needs to position the iCar to meet the needs of the designated market segments. Apple has to concentrate on those features that are not present in available car models such as remote control, high security, and autopilot. It also needs to identify appropriate distribution channels to reach the market. Furthermore, Apple has to use promotional strategies that would attract the iCar market such as personal selling and advertisements.















Portfolio Project

Company Overview

Apple, Inc. is an American company founded on April 1, 1976, by Ronald Wayne, Stephen Wozniak, and Steven Jobs to develop and sell personal computers. The firm's headquarters is located in Cupertino, California (Mickalowski, Mickelson & Keltgen, 2008). The company was incorporated and renamed in 1977. Apple operates in many industries ranging from computers to entertainment media industries. Apple is known as one of the leading companies in developing and selling media devices, computers, mobile handsets, laptop, and digital players. The company also vends many related software, accessories, applications, as well as networking solutions. It has opened 498 stores across 17 countries in the world. Apple leading products include iPhone, Macs, Apple TV and Apple Watch (Mickalowski et al., 2008). Apple, Inc. operates in American, Japanese, Asian Pacific, European, and Greater China markets

Situational Analysis

Strengths

Apple has a strong financial position. The company has seen a stable growth in revenues from 2014 to 2016. In 2014 Apple had an annual income of $183.24billion and profits of $39.51 billion. In 2015 the revenues and net profits rose to 231.28 billion and $53.39 billion respectively. In 2016 the revenues and profits fell to $215.6 billion and $45.69 billion due to decline in sales of smartphones. The trend indicates that Apple has a robust financial situation. Therefore, it has a competitive advantage in carrying research and development as compared to its competitors in the industry. Due to high research and development capability, Apple is the most innovative company in the industry (Kanagal, 2016).

Apple leads in strong brand value. The strong brand is due to high-quality products, profits, and significant market share. According to Forbes, in 2014 Apple brand value was $118.9 billion higher than closest competitor Google at $107 billion. In 2015 and 2016 the brand value was $145.3 and $154.1 billion while in 2017 the value rose further to $170 billion (Farber, 2017). The strong brand is reinforced with the high customer loyalty providing Apple competitive advantage.

Weakness

Apple charges high prices for its products which are incompatible with third-party software. Apple charges high prices for its products compared to others firms in the industry. For instance, iPhone 6 costs ranges between $649 and $849, with 16GB costing $649 while 128 GB costing $849. The price is higher compared to those charged by its competitors. For example, Samsung Galaxy S5 that has 128GB micro SD card only goes for $670. Therefore, Samsung Galaxy S5 $280 cheaper than top spec iPhone 6 (Kypreos, 2015).

The currently Apple faces a decline in sales and particularly iPhone sales. The drop in sales led to falling in revenues from $231.28 billion to $215.6 billion. The net sales declined by $18.1 billion in 2016. The iPhone's sales decreased by 12% in 2016. IPad and Macs also face a drop in sale equivalent to 11% and 10% in the same period. The decline in sales reduces the company competitiveness.

Opportunities

Apple invests in computers and laptops to counter the declining sales of iPhones. In 2014 the company sale revenues stood at $183.24billion while in 2015 it rose to $231.28 billion. However, the sale reduced to $215.6 billion in 2016, and this was due to the decline in the demand for smartphones. The sale of smartphones has dropped for the first time in history. It fell from $345 million in 2015 to $334.6 million devices. The company also can invest in research and development and particularly in the Automobile industry. It can produce and market an electric car (iCar) (Kanagal, 2016). Such car would help in environmental conservation as well as increase the company revenues.

Threats

Apple, Inc. faces stiff competitions from other firms in the industry. The company MacBook computers are the best regarding quality and features. However, it faces competitions from other laptops such as Dell and Lenovo. The iPhone mobiles face stiff competition from other Android phones such as Samsung models, HTC and Lenovo. Currently, iPhone enjoys 42% while the android phones have 47.5% of market share. Apple, Inc. also faces the threat of imitation from both local and regions companies. Apple creates high-quality products, and it has a strong brand image. These factors could motivate some firms to imitate iPhone products (Kanagal, 2016).

Competitive analysis

Apple, Inc. faces many competitors in the industries in which it operates. The main competitors of Apple are Google, Microsoft, and Samsung. Both these firms serve business, students, professionals, and executives. Apple position itself with premium brands and Google as an organizing word information. Microsoft position itself with Microsoft suite and entertainment and Samsung with massive development infrastructure. Apple produces computers, tablets, and smartphones while Google deals with Google glass and advertising. Google operate exclusively online while Samsung operates online and through retailers. However, Apple and Microsoft have stores located in different countries. Apple has 497 retail stores situated all-around the globe while Microsoft has only 16 located in Canada and USA. Apple, Samsung, and Microsoft both use promotional strategies such as personal selling, advertising, and discounts but Google uses none.





Graph 1: Competitors Analysis



The chart above illustrates how the three firms compete in pricing, revenues, and profits. Even though Microsoft seems to have the highest price for its product, Apple has shown price leadership in most markets in most of its products. Due to the high price and quality of products, Apple receives substantial revenues and profits compared to its competitors.

Most of these tech companies enjoy a major growth in the area of consumer electronics. However, the industry faces a significant threat from other firms who want to enter in on the new segment. Therefore, no position could be regarded as safe and secure. The focus on creating high-quality products has set it apart from its competitors as most consumers regularly seek the best products in the market.

None of the Apple competitors shown above are particularly weak. Even though Microsoft lost much of it market shares during the year 2000; it has managed to compete effectively because of its robust software and the integration of it MS office suite with internet explorer. Google approach of leaving all of its software products in the cloud online has not made many contributions to its growth, but it would be inappropriate to underrate their competitive capacity. Samsung also poses a significant threat to Apple. It produces competitive products that are almost similar to those provided by Apple but commonly sold at lower prices.

Objective of the Proposal

The automobile industry produces cars for various segments of the market, and most of the firms compete in the form of price and positioning. However, the industry lacks car models that offer high security against cyber-attack, autopilot features, high display technology, and remote control functions. These features would make cars comfortable and luxury. The introduction of iCar would offer these solutions. However, iCar would call for high cost of production and eventually premium pricing. Besides, it would also attract mostly high-income earners, professionals, and executives segment of the market. Therefore, Apple would need special marketing approach to increase the brand awareness as well as sales. Therefore, Apple would need partition it market to attract these clients to buy the iCar. It would also need to position the iCar to meet the requirements of the designated market segments. The primary focus would be the additional features to the current car models that iCar offer to the client such as self-driving, remote control through integration with iPhone and Apple Watch. Furthermore, its marketing strategies such as distribution and promotion would also be unique because it would only focus on a given segment of the market.

Segmentation and Targeting

Segmentation of iCar markets is important because it would allow Apple to create a marketing mix for the particular market segment and, therefore, enable the company to meet each specific needs (Mickalowski et al., 2008). It can be demographic, geographic, behavioral psychographic criteria. Geographically, Apple, Inc. would partition the market-based on the region, for example, the United States and international markets (Kalafatis, Tsogas & Blankson, 2000). It could also segment the market-based on density and decide to sell the iCar to the urban residents. Demographically, the company can consider occupation and income of the population and decide to produce the car for professionals, managers, and executive who earn high-income. Apple could also choose target individual of age 25 to 45 years.

Targeting follows the segmentation process. It would allow Apple to employ precise marketing and advertising efforts (Kalafatis et al., 2000). It also allows buyers to reach the product and make referrals if possible quickly. In this case, iCar Apple undertake an evaluation to determine the partition it can serve best and particularly the one it can generate customer value over time. For example, it should aim the professionals and executive, as well as high-income earners, would allow the company to make long-lasting customer relationship. Similarly, Apple can decide to create retail stores for the iCar in the global market to reach many customers. The company could also choose to serve only one market partition such as buyers of age 25-45 or serve multiple segments.

Marketing Strategy

Apple marketing strategies show how it equates its business operation to the conditions of the market. The examinations of Apple marketing mix help in determining how the company can manage conditions of the market and the competition effectively through suitable pricing, promotion, distribution, and products. Apple has continuously used its marketing mix to expand its activities to the global market. As one of the biggest firms in the world, Apple acts as an example of marketing mix can enhance the success of businesses.

Price

Apple Inc. does not target all section of the market because it only produces premium products. The company is the market leader in its segment and so uses this factor as a competitive advantage to pursue price leadership strategy. The price charged is due to the high cost of creating the high-quality product and high social status associated with Apple products. All of the Apple, Inc. products such as iPad, iPhone, and MacBook come in the premium category. The iCar uses the same sophisticated technology and so will employ the premium price.

Place

The company uses an aggressive approach to reach out to its customers. It enjoys a competitive advantage through the use of various channels to reach to the buyers. It established its outlets (Apple stores) where it sells its products. The company also collaborate with trade partners to help it maintain the channel of distribution (Astuti et al. 2015). Most of the partners are premium retails such as Best Buy, Target, and Walmart receives Apple products for selling and meeting the agreed target. Apple also sells through the online e-commerce portals. Therefore, Apple can use both non-online and online distribution channels to sell it iCar.

Promotion

Apple uses promotional activities that focus on the quality and premium image of the product to reach the target customers. The company employs aggressive advertising through such channels such as billboards, online ads, TV, and print media. The company ads give it a competitive advantage in the industry in that it uses simple ads that connect to the heart of the people (Astuti et al. 2015). The firm also uses personal selling through it employees who give product specific information to convince those who visit the store to buy. Still, Apple uses public relations approaches such as press releases, to enhance its images, Apple Events, and exclusive interviews to improve the company image. Therefore, Apple can use these promotional activities to market iCar.

Product

Apple uses it high innovation capability to produce high-quality products. The innovation involved and the quality of the product allow the company to charge premium prices. Apple offers many products which include iPhone, iPod, Apple TV, Apple Watch, and Mac. The company would also have the iCar on the list of these commodities.

Positioning

The iCar would be a premium model with the high quality compared to others in the market. It would also be sold at premium prices. The car has various unique features such as auto-pilot, strong inbuilt security against cyber attack, sleek and aerodynamic design, remote control capability, and high technology display. Apple would position iCar as the most secure car in the industry. It has closed operating systems such as iOS with all the data encrypted thus preventing any cyber attacks witness in other models such Porsche, Fiat Chrysler, and Tesla models. The company would also position iCar as the most comfortable in the industry with autopilot features that able it to self-park and carry out other autonomous functions such as navigating at reduced speed in congested areas. It would, therefore, be more competitive than other models provided BMW, Volkswagen, Google, and Tesla.

Furthermore, Apple would position the iCar as one with the best design in the automobile industry. Its sleek and aerodynamic design would allow it to navigate faster than other models in the industry such as Audi’s e-tron Quattro car, Porsche’s Mission E car, and Tesla car. It would also position itself as having high technology display characterized by the OLED display. The many touch screens would allow users to control the iCar by just swiping. The OLED display makes it more powerful car than Audi and Tesla models. The remote control features would also position the vehicle above others in the market. The integration Siri technology to the car would allow users to direct everything in the vehicle from music, light, temperature, speed, and navigation.







Figure1: Perceptual Map

Self-driven





iCar



Audi

Porsche

Tesla models



Affordable



Classy





Toyota

Nisan

Not Self-driven

BMW-i model





In figure 1 above, the iCar is classified together with Porsche and Audi as a classy and self-driven car. However, iCar rank high in both autopilot technology and classy design. Tesla model S and X, appear as affordable but self-driven cars. Toyota and Nisan fall under non driven and affordable cars, with Toyota being more affordable than Nisan.

Marketing Research

Marketing research helps to gather information about the automobile market, the existing competitors and the potential customers of the iCar. It will assist in learning about consumer’s wants, needs and beliefs even before venturing into the production of the Car. The research would help to select the target demographic profile, the location of the stores and in setting the price for the iCar. Moreover, it would also assist in identifying the market needs. For example, the automobile industry requires cars that are environmentally friendly. It would also contribute to determining the size of the competitors and the strategies they employ in to effectively compete. Still, conducting market research will help to define the feasibility of the iCar, identify ways to promote it in the market as well as develop a competitive strategy. The best methodologies to use in the marketing research is customer satisfaction questionnaires, interviews, focus groups, task analysis, and usability testing

Ethical and Legal Factors

Apple, Inc. would need to acquire a license or permit from the government to produce self-driven cars. The company would also need to establish non-disclosure agreements with other automobile firms that it will partner with the market the iCar project. The non-disclosure agreement would help to keep the confidential information. It would also be vital for the company to secure it a business trademark to avoid trademark infringement by other firms in the industry. Apple should also ensure that it defines its policies to prevent employees’ actions that can be unethical or illegal.

Corporate Social Responsibility (CSR) Strategy

In the marketing of the iCar, Apple can employ operational driven CRS in making sure that the production facility safer and efficient for its employees (Lindgreen & Swaen, 2010). The company can also pursue compliance driven strategy such complying with governmental regulation on safety and quality of goods as well as limiting the violation of health and environmental regulation. Moreover, Apple, Inc. can pursue customer driven CRS by engaging in philanthropy and charitable giving in the community, engaging in and producing a device that improves people’s lives and embracing zero human right violations.

Financial projection

Apple, Inc. is expected to generate a lot of income from the sales of the iCar. Since the iCar is a premium product, the company would focus on executives, professionals and high-status persons to purchase the product. These consumers would be willing to spend any fortune to acquire the car due to its high quality and a symbol of status. Apple, Inc. would, therefore, expect a stream of revenues from the sale of the car. The company revenues, expenditure, and profit are shown in Table 1.

In table 1, the assumption is that in year 1 to year 3, Apple will sell 2000, 4000, and 6000 units of iCar respectively. If the unit price of iCar is $40,000, then the revenues for the three years would be $80 million, $160 million and $240 million. Apple would be also likely to incur various expenses in producing and marketing iCar. These would include wages, sales, and marketing costs, license, and fees, depreciation, legal and professional fees as well as insurance. In table 1, the expenses for the first three years would be $44.7million, 45.95 million and $46.80 million respectively. In each year, the company would be making profits because the income generated from the sales exceed the expenditure on production and sales.

With the revenues and expenses, the net profits for year one would be $35.3 million, year two would be $114.05 million and year three would be $193.2 million. The first three years would cover the introduction and growth phase. The introduction of the iCar would take one year and would involve promoting the iCar features such as autopilot, high quality, high security, and several OLED displays. The growth stage would take two years and would encompass brand differentiation through pricing and showcasing in the dealership.

Table1: Financial Projections

iCar Profit And Loss Projection

Year

1

2

3

Revenues

 

 

 

Unit sold

2000

4000

6000

Price per unit

$40,000

$40,000

$40,000

Total Revenues

$80,000,000

$160,000,000

$ 240,000,000

Operating Expenses

 

 

 

Sales and marketing

15,000,000

15,300,000

15,400,000

wages

13,500,000

14,200,000

14,800,000

Legal & Professional fees

120,000

130,000

1,400,000

Insurance

7,200,000

7,150,000

7,100,000

Depreciation

6,000,000

6,200,000

6,300,000

Licenses and fee

1,800,000

1,800,000

1,800,000

Total expenses

$44,700,000

45,950,000

46,800,000

Net Operating Profits

$35,300,000

114,050,000

193,200,000



Implementation Plan

To implement distribution channels, Apple would first evaluate iCar end users need to buy by determining where they would prefer to buy, any training or education needed, any additional services the potential customers would need in addition to iCar. Next phase involves matching the end user need to a distribution approach such as direct delivery to the end user that need lots of information and service, websites and retailers for relatively straightforward buying process (Savov, 2016). In the event, Apple would prefer that iCar brand to grow beyond the direct methods of distribution; then it would need to partners with other firms that have relations with the iCar such as automobile companies. Lastly, Apple would build distribution channels with the partners by establishing goals and service requirement, delivering the products as well as set the required prices.

The first step Apple can take to implement marketing communication is understanding the audience by analyzing current customers and reason that motivate them to buy iCar. The next step would be to identify a compelling, robust and unique Selling Proposition that when communicated effectively would drive the sales of iCar. Apple would then sharpen the iCar brand look and feel by being honest, genuine and sincere to the product. It would involve the use of logos, marketing collaterals, and business cards. The company should then ensure that the all messaging is consistent by outlining the main words to use (Kanagal, 2016). Apple would then choose the media mix based on the communication goals, audience, and budget. The last step would involve setting communication goals or metrics and linking it to sale metrics to identify if the strategy is working.

In implementing promotional strategies, Apple would first assess the marketing communication opportunities by examining and understanding the need of the target market. Apple would then identify the communication channels to use such as magazines, newspapers, face to face, telephone contacts, and emails. Apple would then state promotional objective. The next step would be to choose promotional mix personal selling, advertising, and sales promotion. The next step would be developed promotional message by focusing on the structure, content, and format of the message. Lastly, Apple would need to determine how to evaluate the effectiveness of the promotional mix.

Figure 2: Promotional Plan.



Marketing Plan

Situational Analysis

The primary market segment the iCar would be professionals, executives, and wealthy persons age 25-40. The company would concentrate on both domestic and international market and particularly in countries with high per capita income. Even though the automobile industry is very competitive, the company aimed at providing high quality, environmentally friendly, secure and luxurious car.

Market Analysis

The auto industry is experiencing growth, and by 2020 the sales would be approximately 30 million units. The competition of the industry is high, with firm competing in price, design, and positioning. However, iCar would compete effectively in the sector because of its high quality, environmentally friendly, autopilot, remotely controlled by the use of Siri application. These features would offer consumers the luxury they would need.

Pricing & Positioning Strategy

The iCar would position itself as the premier brand in the industry attracting mainly affluent individuals. Apple would employ the premium pricing strategy and would charge each iCar $40,000. The price would help to promote it as a high-status car model.

Distribution Plan

Apple would use various distribution channels such as Apple stores, and premier retails firms such as Amazon, Best Buy, and Target. It would also use the online e-commerce portals. All these channels would ensure that the car reaches the target customers.

Promotions Strategy

Apple would employ various promotional strategies to market the iCar. It would use the advertisement through TV, newspapers, and magazines. Apple would also use public relations such as Apple Events, exclusive interviews, and press releases. These approaches would help to reach the iCar customers.

Technology

Technology would assist in the marketing process in many ways. It will enhance marketing research through efficient data collection. Social media avenues such as LinkedIn Twitter and Facebook would help to gather unfiltered feedback from customers. It will also help in data analysis. The use of advanced data analytics tools would help to give more insight on the data and thereby assist in making strategic decisions in time (Song & Song, 2010). The use of data mining and visualization models as well predictive models would help to analyze the various status of the consumer such as acquisition, retention, and churn.

Technology will also help marketers to communicate with clients. The use of emails, telephone calls, and social media allow Apple, Inc. to provide feedbacks to customer’s queries. Moreover, technology would act as a suitable platform to promote the iCar. The company websites and the different social media sites such as YouTube, LinkedIn, Twitter, and Facebook is a proper channel to advertise the iCar. Apple would also benefit from TV channels and online ads to market the iCar to the customers. Furthermore, technology would assist in monitoring the marketing process such as collection of customer’s feedback and use these responses to evaluate the impact of a marketing campaign on the sales of the iCar. Data analysis using technological tools would help in making strategic decisions fasters (Rust & Espinoza, 2006).

Evaluation and Control Metrics

Monitoring the progress of the marketing plan would involve the use of return on investment (ROI), sale volumes, customer response, competitors’ response, and expansion. Measuring ROI would require Apple to determine whether the amount that it has invested in the marketing campaign for the iCar has resulted in increased sales and revenues. The number of sales could also assess the efficacy of marketing plan. An increase in sales from 4 million to 6 million as shown in Table 1 indicate a positive effect of the employed marketing scheme. Furthermore, obtaining online and in person, customer service and feedback can help determine the response of customer to the quality and services of the iCar. The client's response shows whether the he or she is satisfied with the product. They also show the possible improvement that the company should undertake to improve iCar.

Moreover, the increase in distribution of the product to other regions through natural growth or customer recommendation could indicate that the campaign was effective. An expansion of the iCar to other new locations can show that the marketing plan is successful. Finally, the response of competitors such as by copying the marketing campaign can symbolize that the plans have a positive effect. When rival firms decide to increase their price, uses similar distribution channels or promotional strategies would indicate that plan was effective.

Conclusion

Apple, Inc. develops and markets digital media devices, mobile handsets, computers, laptops, and software. The company has decided to venture in the production of iCar. The iCar is a premium project that would require a substantial amount of dollars to acquire. The car model uses electricity, is self-driven, faster, quality, security and high production cost. The high price charged for iCar would attract mainly affluent clients particularly those who are wealthy and desire high social status. Therefore, Apple needs to segment iCar markets by focusing on factors that would lead to increased iCar sales. It should consider partitioning its market as the domestic and international level to capture larger customer bases. It will also have focused on the segments comprising of professionals, executives and other high-income earners who have a high demand for status products such as iCar. Furthermore, the company management would need to use the marketing strategies that it has used in its previous premium products such as iPhone. The iCar is a classy product and would fit in the distribution channels used for iPhone. The use of promotional mixes such as personal selling, advertisement and sale promotions would contribute to increased iCar brand awareness and sales.









References

Astuti, R., Silalahi, R. L. R., & Wijaya, G. D. P. (2015). Marketing Strategy Based on Marketing Mix Influence on Purchasing Decisions of Malang Apples Consumers at Giant Olympic Garden Mall (MOG), Malang City, East Java Province, Indonesia. Agriculture and Agricultural Science Procedia, 3, 67-71.

Farber, M. (2017). Google Tops Apple as the World’s Most Valuable Brand. Fortune. Retviered from http://fortune.com/2017/02/02/google-tops-apple-brand-value/

Kalafatis, S. P., Tsogas, M. H., & Blankson, C. (2000). Positioning strategies in business markets. Journal of Business & Industrial Marketing, 15(6), 416-437.

Kanagal, N. B. (2016). Issues in Marketing Strategy Implementation. International Business Research, 9(11), 16.

Kypreos, E. (2015). iPhone 6 vs. Galaxy S5: Which to buy? Trusted Reviews. Retrieved from http://www.trustedreviews.com/opinions/iphone-6-vs-galaxy-s5#DjyiMkWOdy5wx3RM.99

Lindgreen, A., & Swaen, V. (2010). Corporate social responsibility. International Journal of Management Reviews, 12(1), 1-7.

Mickalowski, K., Mickelson, M., & Keltgen, J. (2008). Apple's iPhone launch: A case study in effective marketing. The Business Review, 9(2), 283-288.

Rust, R. T., & Espinoza, F. (2006). How technology advances influence business research and marketing strategy. Journal of Business Research, 59(10), 1072-1078.

Savov, V. (2016) Apple’s grand unifying strategy: high-profit margins. The Verge. Retrieved from http://www.theverge.com/2015/9/10/9300231/apple-watch-iphone-sales-profits-strategy-market

Song, L. Z., & Song, M. (2010). The role of information technologies in enhancing R&D–marketing integration: an empirical investigation. Journal of Product Innovation Management, 27(3), 382-401.