Background of the organization
Apple Inc. is one of the best internationally known computer companies that specialize in designing and creating iPads, iPods, iTunes, Macintosh desktops and laptop and operating systems like the OS X. The Company has embraced the revolutionary technology and has ventured in the manufacturing of iPhone. Apple is a brand that actively competes with others in the market. According Linzmayer (2004) the brand is very competitive even in the very competitive markets, in the PC market it is well represented by its highly reputed Macintosh computers and accompanying and related programs and software. In the electronics industry and market, Apple is well covered and represented by state of the art and technology savvy products like the iPad, iPod, and distributes music in digital means by use of iTunes Store. In the mobile phone market they remain competitive courtesy of their Apple iPhone. Recently the company ventured in publishing applications, in books, magazines and in games using their Apps-store particularly targeting their iPad and iPhone-computing device.
Strategic marketing planning is the managerial process of developing and maintaining a smooth connection between the set objectives and changing market environment of an organization. It involves planning to get to the desired position using the available resources from the current position the organization occupies (Kotler, 2008). This therefore means that the marketing manager has to establish a strategic fit between the organization’s objectives and resources and its changing market opportunities.
This paper will apply the STEP analytical model to the Apple Inc. situation in order to analyze the changes in the marketing environment. This will help to examine how the changes in both the external and internal marketing environment have affected the company’s products performance in the market.
The external environment is the environment beyond the immediate environment. Changes in this environment affected Apples marketing plans even though the factors in this environment were not plainly affected by what the company had planned. The STEP model is also referred to as the STELP, PEST or the STEEPLE model. According to this model the external influences are categorized into: social-cultural, technical, economic and political and legal factors. These factors in turn influence the immediate environment thus affecting a company’s marketing plans.
The first factor is the social cultural change which includes both the society makeup changes and changes in social attitudes. The changes in the society make up include changes in the age structure over years whereas the changes in the social changes may include for example in the role of women. In the case of Apple the changes were beneficial to its marketing plan. This happened with the growth in demand for on the go products and a growing concern for the environment.
The second factor is the technological changes especially with the competing companies. This change therefore affects the research and development for new products and speeds the improvement and replacement of old ones. The new demand for IPhone especially IPhone 4 for playing games and user interface forced the company to replace the older models with more superior features that were beast suited for this purposes. The inventions shorten the lifecycle of the company’s products. The environment is also growing and developing whereby the devices are converging into one product making other fast become almost obsolete.
The third change that may force a company to change its plans is the change in the economy in the environment and the country as a whole. This change affects the ability of both the consumers and firms to spend money through economic growth and taxation policy. The changes affect the expectations and also shape the response to marketing offers. The economy is however recovering from the global recession which hit the industry hard.
The last factor is the political and a legal change which mainly affects what marketing people are allowed to do, and what they are encouraged to do by the prevailing political ideology. The legal limits in turn place limits on the products, the promotion and packaging, the pricing and the distribution of the firms operating in the affected market. Apple was not highly affected by new laws in the marketing environment. However there exists a potential for new FCC internet regulations. The reforms in the healthcare industry will influence the direction of the company’s new products.
The global environment is also important in this case especially with the highly developing economies such as China. The global bodies also have the potential for putting in place new policies, rules and regulations especially in the global environment and climate which affect the company. The demographic analysis also reveals that the flattening of wages of a large part of the population will level the affluence of individual customers.
Value chain analysis
Value chain activity
Practice, procedure and policies
1. Transition to green technology through reduced use of energy in production and transportation
2. Strong positions of cash to allow the corporation finance its expansions and development programs and projects internally.
Human resource management
3. Establish a selective recruitment procedures and processes to get the required talents
4. A policy which enables a generous remuneration and benefits to maintain a leading talent in the industry
5. Increased its research and development expenses
6. To establish a patent filing policy in order to protect its most crucial inventions and innovations
7. Establish very committed and positive relations with suppliers as an EICC Member
8. An automated system for receiving’s to reduce processes and space as well as costs
9. The acquisitions of raw materials is delegated to OEM partners with a strict supervision
10. The corporation uses the OEM’s economies of scale by producing in other countries to save costs
11. The design and conceptualization of products is strictly done internally
12. The packaging of products is done in a stylish design and also economical
13. Establishing authorized retailers in strategic countries in the world
14. The shipment of consumer products is done directly from chine to international customers
Sales and marketing
15. The adverts popularized “get a Mac” is a favorable advertising strategy for the company
16. The flagship stores and the authorized retailers also enhance branding and the promotion of the corporate image
17. The product launching is done secretively creates hype and suspense among consumers.
18. Apple Genius is a good service and interaction platform
19. The company products come with an extended warranty
20. The customer service also includes free consultation about the company’s products.
Apple incorporation is one corporation which has managed to survive in the highly competitive technology industry. This is because its strategy is focused on innovation and its chosen path is completely different from other personal computer companies. Their products are highly differentiated and of high quality, elegant in design and its customer service is also rated as superior compared to other players in the market. The company also outsources its manufacturing to genuine manufacturers of machines and equipments. However with this superb strategy the market it operates in is highly competitive and this has always been a big challenge to the corporation.
Apple Corporation is currently working on a high differentiation strategy. The focus is on unique product design, of high quality and personalized customer service. As earlier observed the company outsources the production of its products to third party manufactures to enable saving the costs of production through varied economies of scale. The strategy also incorporates value creation through these means so that the target customer is well satisfied by the product.
Market Analysis and Company Strategy
The Porter’s Generic Strategies Model
This model was developed by Michael porter after he analyzed the market attractiveness using his earlier developed model called The Porter’s five forces Model. His approach stipulates that there is rarely a single strategy that is right; however there are choices to be made about how an organization is to be differentiated from others. The chosen strategy to be applied will therefore be in line and must be in strategic fit with the objectives of the organization.
In his view, porter puts forward the importance of a clear differentiation of the organization by the chosen strategy such that the customers can identify the distinctive feature of that organization. As a result of that observation he identified three generic strategies which he put in his model. He proposed that for success to be obtained an organization must use differentiation, cost leadership or focus.
Differentiation in porter’s model can be defined as the exact satisfaction of the needs of the specific target market segments identified. This may be done by constant monitoring of the market, and thus changing both the offer and the target segments as the marketing environment changes. In this case Apple is faced by a growth in demand for laptop computers especially by women, young people and households due to their preference for games and internet uses. The company has therefore to differentiate itself by manufacturing laptop screens that are best suited for the customer demands. Apple therefore has to differentiate itself by being specific to the demands of the consumers.
Cost leadership is the activity which is done to push down the cost and to enable the organization occupies a section of the market through establishing permanent low prices. Since this is a long term strategy it should be carefully planned. Focus in porters’ model is defined as an organization’s concentration on a very specific market and specializing in fully meeting the needs and close any room for competitors. Since this is a niche market it usually involves very small and specialized markets.
In porter’s view the only successful strategies are those that are on the very points of the triangles not those in the middle of the triangle. This is because in the middle two or more strategies are at work at the same time therefore creating several scenarios according to the position taken.
First, a strategy halfway between focus and differentiation would turn out to be very specialized, which may change quickly, but at the same time not enough to serve the niche market. A second scenario is a strategy halfway between cost leadership and differentiation which may nearly meet the needs of the target segment but at the same time selling cheaply thus ruled out to be neither very customer friendly nor a price leader. Thirdly, another scenario would be a firm that is in between cost leadership and focus. This strategy would work to try an satisfy the needs of a very small market yet at a small profit margin which would be nearly impossible to survive and the consumers may not be moved by the low prices anyway. Lastly a strategy inside the triangle will put a firm at a more disadvantageous position. The consumers would be unable to identify what the firm stands for, or their exact offer.
Apple is faced by two changes in the market which are changes in the product specifications as well as no major changes in the customer’s purchase power. The competition has also copied the company’s products and there is no major difference between the firm’s products and the competitors. The company can therefore choose the alternative that leans more on differentiation. This strategy would differentiate the company’s products from the competitors’ products. This would indeed be very effective since the new products would put the company in its own position in the market segments. Differentiation would therefore prove to be the new strategic direction since the company can also be able to set its own prices in accordance with the differentiated products it offers which are not identical to what the competition is offering.
Having analyzed both the environment and the strategy it is possible to recommend ways that may be adopted at Apple with more clear objectives. This task will involve conducting a SWOT analysis for the company to determine the extent to which an organization has managed to obtain a fit with the environment. The analysis identifies internal strengths and weaknesses and the external opportunities and strengths. Subsequent to this analysis strategies can be developed to exploit on the strengths and opportunities, and to reduce threats and weaknesses (Wilson, 2009).
The SWOT analysis makes use of the results from an environmental analysis with an internal appraisal into one framework for assessing an organization’s current and future strategic fit, or lack of it, with the environment.
The competition has made products similar to Apples products the customer may not distinguish these products.
(i) In the short term, current strengths must be exploited to continue to increase market share in existing markets and product development programs should also continue. These will include the improving the marketing approach by introducing relationship marketing and e-strategies to retain the customer base and keep distance with the competition. The development of new products will involve enhancing innovation within the company and come up with new and related products. The company will experience favorable market growth and market share if this is implemented.
(ii) In the longer term, the analysis done by use Porters Generic Strategy Model identifies that the company must diversify into new markets or into new products and new markets. Diversification opportunities should be sought with a view to exploiting any competitive advantage or synergy that might be achievable. Diversification may be done through incorporating new products and use of e-strategies.
(iii) The company should use its strengths both in Research and development production skills and work more on its marketing expertise in exploiting any identifiable opportunities. These opportunities may include new markets or market segments or important customer preferences.
(iv) The management should also consider engaging in team work between the senior management and other departments. An effective working environment enables the sharing of knowledge and ideas therefore improving creativity and enhancement of innovation.
(v) The consolidation strategy will be implemented in conjunction with relationship marketing to enable the firm retain its customer base. This will ensure that the company retains and grow in the market and raise its market share.
(vi) A review of the firm’s product differentiation and strategic adjustments should be done. This will differentiate the company from the competition. This should be done in consideration of the production costs, prevailing market prices, sales forecasts done and the future growth trend of the firm’s products in the various market segments.
(vii) Apple may in the long term adopt the market development strategy as seen in the BCG matrix which will pay out by ventures into new markets and market segments with the same products.
(viii) The management structure should be restructured to help form an effective management group that will implement better and market oriented policies and strategies.
(ix) The top level management should assign roles to the experienced members of staff who better understand marketing and are concerned about a good market establishment strategy.
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