Karthik Apple Nilesh

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  • 8/3/2019 Karthik Apple Nilesh



    Apple Inc., formerly Apple Computer Inc., is an American multinational corporation with a focus on designing and manu-

    facturing consumer electronics and closely related software products. Established in Cupertino, California on April 1,

    1976, Apple develops, sells, and supports a series of personal computers, portable media players, mobile phones, comput-

    er software, and computer hardware and other hardware accessories (Ref1). Apple is engaged in design, development and

    marketing of personal computers (PCs), servers, communication devices, network solutions, portable digital music play-

    ers, and related accessories, software and services. The companys portfolio of offerings comprises Mac computing sys-tems, iPods line of portable digital music and video players, iPhone handsets, iPad portable multimedia and computing

    device, and servers. The companys software applications include Mac OS, iLife, iWork and internet applications such as

    Safari and QuickTime, among others (Ref2).

    Aims and objectives :

    In accordance to this example of Apple, we aim in studying the research of why some brands like Apple sell their

    products in higher price and also sell more in quantity than their competitors. And this research is based on traditional

    marketing and cult marketing to their profits success.

    The objectives are;

    Bringing out or exploring the strategic changes in the year 1997 of the company which changed the company intoprofitability and also paved way for the launch of Mac

    The Apple did not rise up smoothly but had a very tough times. It was nearly in bankruptcy company until when steve

    realised or explored the the strategies in 1997 to bring back the company. In order to save the Apples future the Mac wasdeveloped and relaunched after the strategic changes, which was eventually a huge success. (Kahney ,2008 pg;38)

    Analysing Apple using the traditional 4 ps of traditional mixThe Apple company had ideas that also affects all areas of the four p analysis. The company strives for details which are

    not considered competition in the industry.for eg . Apple was the first company that gave attention to the detail of the


    Analyse the cult marketing and emphasis on the apple as an cult brandThere is an strong name of cult brand for Apple ., for e.g. the company Harley Davidson also is on the same platform of

    riding the name of an cult brand which has lot of evangelists for the company ie fans for the brand which gives an valueto the company.i have described the cult market and how Apple is recognised as cult brand and how it analyses by the cult

    market of its consumers. This theory is used in this case stusy of Apple.

    To analysis the strategic position of the Apple in comparison with its competitors, we should first know the micro (inter-

    nal) and macro (external) environment of the consumer electronic industry.

  • 8/3/2019 Karthik Apple Nilesh




    6Cs of any industry sector investigates the important factors that are affecting the industry and influencing the companiesoperating in that. 6C is an acronym for Customer, Company, Culture, Competition, Country and Currency factors of the

    external macro environment. (Ref3)


    The electronics industry has revised its 2010 exports forecast upward, this time to growth levels that could more than

    make up for last years global downturn-caused plunge but it should also keep in mind that the a weak and unsteady re-

    covery of the global economy it is doubtful whether the demand for electronic products could be strong (T 1.1O) (Chart3)

    Apple's iPhone was outselling the Research in Motion BlackBerry, even though the iPhone had been in the market for

    only 15 months. When measured by revenues, Apple has become the world's third-largest mobile-phone maker, behind

    Nokia and Samsung. All this is happening just as mobile devices are poised to become the most important computing

    platform (T 1.12).


    According to Porters diamond the country become associated with specific types of competitive advantages in particular

    industry (Ref3). Close relationships with other nations is very much important, example Mexico, due to its close

    relationship with the US has become a major centre for the production of computer and consumer products and inparticular TVs and mobile phones (T 1.8).

    In Asia-Pacific there is a significant proportion of the population who are educated, resulting in considerable increase in

    disposal personal income. That would drive the demand for consumer electronics (T 1.9) (Chart IV) (Chart 1) (FT 3.4)

    Japan is famous for its electronics -- and so increasingly is South Korea. Because of the earthquake theres already been aclear impact in terms of the high-end electronics and a lot of the components for Japanese manufactured goods in China.

    The price of Japanese consumer goods for some items in low stock has risen quite rapidly already (T 1.7).


    The consumer electronics industry is probably the most dynamic and the fastest changing industry in the world today. In

    addition, it is one that has a direct impact on every life in the world. In fact, if you look just at the global trend people willspend more money on consumer electronics than any other category of gift. It is the industry that is changing our lives (T


    From the beginning, the employees of Apple learn the Apple way: Think Different. Its not written anywhere and thereare few processes to follow, but they learn it, just the same. And it works, big time (T 1.6).


    Competition is the mechanism that helps more productive and efficient companies expand and take market share from

    less productive ones, which then go out of business or become more efficient. Large companies are pouring money into

    research and development at an unprecedented rate, in response to growing global competition. In many sectors profitsare growing strongly and companies can afford to spend more on R&D (T 1.13).

    Now days competitors of Apple trying to figure out secret success of Apple. Basically Apple has no secret, the way ofdoing things are very simple. Apple is just offering the products which consumer requires eg: iPhone with number

    applications (T 1.14).


    Nowadays consumer technology is becoming more complex with more functionality being constantly added to the core

    product. For example customers are expecting mobile phones with numbers of applications e.g.: digital camera, mp3

    player, etc. (T 1.1).The Company has designed a range of products, services and programs not only for ordinary customers but also to

    address the needs of education customers, including individual laptop programs and education road shows. In addition,

  • 8/3/2019 Karthik Apple Nilesh



    the Company supports mobile learning and real-time distribution and accessibility of education related materials through

    iTunes (T 1.3).


    Currency exchange rates are an important factor as well. The strength (or weakness) of the US dollar versus other

    currencies can directly affect a companys bottom line. Change in the exchange affects the price of imports, which alsoaffect the inflation rate, through its effect on imported costs. For example, a fall in the exchange rate increases import

    prices and creates cost-push inflation (T 1.16).

    The change in market interest rates affects spending decisions by household and companies, economic activity andinflation. For instance, higher interest rates make it more expensive to invest and tend to result in lower expenditure for

    investment. It makes saving more attractive and tend to reduce consumption demand (T 1.18).

    Low interest rate put more borrowing power of the consumers that would impact on demand of Apple products. Growth

    in the sales of Apple has increase the enthusiasm of Apple investors to buy more share of Apple Inc.


    Porters five forces analysis derive five forces that determine the competitive intensity and therefore attractiveness of a

    market. Porter referred to these forces as the micro-environment, to contrast it with the more general term macro-

    environment. They consist of those forces close to a company that affect its ability to serve its customers and make a

    profit. A change in any of the forces normally requires a company to re-assess the marketplace (Ref3)Threats of New Entry

    The consumer electronic market, such as China, is prone to the threat of new entrants. In many countries the industry is

    highly regulated by government organizations, which will limit options for potential newcomers (T 2.2).

    Apple's iCloud may have required an enormous investment. It is understood to have built a data centre in North Carolina

    with an estimated cost of $1bn and measures half a million square feet (T 2.1).

    Apple commands a large portion of the global market for a key component it creates enormous barriers to entry for

    potential competitors. Competitors can obtain the component in limited quantities but at a higher price, therefore placing

    them at a cost disadvantage (T 2.3).

    Power of Suppliers

    Some companies use proprietary chip design which helps the PC manufacturer to switch suppliers of CPUs they have to

    switch to a new type of motherboard, which drives up switching costs. However the powers of chip manufacturer are

    high, they rely on PC manufacturer for a bulk of their business (T 2.4).

    Apple buys lots of components in large quant