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Apple remains committed to its differentiated positioning, and that will inherently limit their share of the market.
Tablets are Apple's second-largest market. The iPad was launched in fiscal 2010 and in fiscal 2011 it enjoyed 311% growth. It has now begun to emerge as a substitute for personal computers, even in the corporate market (Etherington, 2012). This has helped to drive growth. The iPad has always been a differentiated product within this market, based on its rich features and high price point. As with smartphones, Apple faces competition primarily from Android for this business, with Blackberry and Windows trailing. The tablet business has better low-end options than the smartphone business. For example, Amazon's Kindle and Barnes & Noble's Nook are low-end tablets that evolved from e-readers and have taken a large share of the tablet market. Apple is also going to face increased competition from Microsoft in this market, as Windows 8 is set to be the first operating system to integrate across PCs and tablets. The tablet market is rapidly growing. It is newer than the smartphone market, and many consumers are beginning to re-envision their computer usage around the capabilities of the tablet rather than those of the computer. Thus, the tablet industry holds tremendous promise, even compared with the smartphone industry, and the potential of this industry is evolving. Apple will face challenges entering emerging markets with the iPad, given its price point but the product will remain at the forefront of consumer's minds in the West because there are alternative high-end options beside the Galaxy Tab.
Apple has several other billion-dollar segments as well. The technological shift that took Apple into the smartphone and tablet market initially was in the mp3 player market. This market has long been dominated by Apple, but is in the decline stage of the product life cycle. The industry standard is the iPod, and its sales declined 10% last year. Smartphones, tablets and computers are all viable substitutes. iTunes and other entertainment software lines are worth over $6 billion in revenue to Apple and still growing despite the sluggishness of the iPod, building on the strength of iPhone growth. Peripherals and software are also billion dollar businesses for Apple. As with iTunes, these businesses are ancillary to the core consumer electronics businesses, and build on the strength of the company's core products.
The company's strategy involves a high level of integration between its different products, so that unlike other consumer electronics companies, Apple has a suite of products. Consumer familiarity with one Apple product serves as an inducement to purchase other Apple products. The company's segments, therefore, all support one another. Apple does not have any orphan products that are unrelated to its other businesses. This allows the company to market all products in its own stores and to the same consumers; there are benefits to the consumer to this approach that have helped Apple to build share. All told, Apple's approach to segmentation is to build on its ideas and extend its brand to related products, an approach that has allowed it to enjoy considerable marketing synergies so that growth in one product has a multiplier effect on the growth of other products as well.
Integration of Marketing Communications
Apple makes the integration of marketing communications and promotional activities a central component of its marketing strategy. The concept of integrated marketing is that "all types of marketing communications are carefully linked together" (Girard, 2012). Apple emphasizes tight integration of its messages and its products. The integrated message is particularly important. Apple has a high degree of brand consistency (Eisenberg, 2011), not only with Apple but with "i." It is immediately clear that there is a high degree of relationship between the iPad, the iPod, the iPhone, iTunes and the iMac. The products are also all high end, with simple design that each other emulates. The mobile operating system is consistent across a wide range of platforms.
Apple uses a number of different advertising platforms, including television, print and digital media. The message with respect to brand and the positioning of the brand is consistent across the different platforms. This message -- of Apple as a stylish, superior, premium brand -- has also been consistent across time. The company uses multiple platforms to deliver this message because it wants to reach as many consumers as possible. Each individual product receives its own advertisements, but there is a high level of consistency in the way that each ad looks and feels that conveys the Apple brand, rather than the individual product. The messages are kept simple, and they do not vary significantly across different platforms. For example, a promotion about a new product, the iPad Mini for example, will focus on delivering the same messages about features no matter what platform is used. The different platforms simply help Apple to reach multiple audiences, and to reinforce the message across platforms where spillover occurs.
There are a number of different elements to the promotional mix at Apple. The promotional mix refers to the different types of communications that are used, including advertising, personal selling, and public relations (Riley, 2012). Apple emphasizes advertising as the lead component of the promotional mix. The company controls its message and ensures that the advertising has a high level of reach to its audience.
The second element of the promotional mix for Apple is public relations. Apple excels at creating buzz around its products, and it does this by feeding a sophisticated public relations machine. The company shrouds new releases in secrecy, then leaks information about them through a network of bloggers. This promotion amplifies the interest in the new product before the company brings in the help of the media, who cover new Apple releases to a degree much higher than they cover new releases from competitors (Horwell, 2011). Apple then integrates the buzz with its own advertising and, very occasionally, with press releases. The company releases so little official information that when it does, the release serves the dual purpose of informing and of quieting the rumor mill. Thus, the launch of a new Apple product receives much more attention than the launch of similar products from competitors.
The third element of the promotional mix is personal selling, which occurs both at the store level and at the word-of-mouth level. At the store level, Apple provides a high level of customer service that reinforces the brand's positioning as having high-functionality premium products. The service in store is usually enthusiastic and friendly, and seldom pushy. This makes for a high-end shopping experience relative to some competitor products. In addition, Apple cultivates strong word-of-mouth promotion for its products. The company has built over time a cult of brand personality for itself, and leverages this by providing talking points for its fans, so that they can relay those messages and their own enthusiasm to friends and family members.
Where Apple's promotional mix is less strong is with direct selling, as the company does not use this technique, and sales promotion. These are not important elements for Apple in the promotional mix and given the company's success with respect to sales growth and new product launches in the past few years it is not hard to argue with the company's decision to de-emphasize these elements. Direct selling simply does not fit with the company's image and sales promotion is covered by the advertising and public relations elements. With sales promotion, Apple rarely uses sales to induce purchase, the one major exception being Black Friday, as previously noted.
The communication process emphasizes the information source, the transmitter, the receiver and the destination (Foulger, 2004). Apple manages this process carefully, and has its own unique strategies for dealing with the transmitters. Two critical transmitters -- bloggers and loyal customers -- are external to the company, as is it the news media. As Horwell (2011) notes, the company can often seem disinterested in the messages that these sources are sending. Apple cultivates a rumor mill, and this forms a critical element of the communications strategy. It can be difficult, if not impossible, to control the messages but Apple is unconcerned. On the surface, there can be little integration between these external transmitters and the company's transmitters. Apple only feeds information to the sources, trusting that most of the message it sends will be received by the destination. The company, however, is using the fact that there is a rumor mill and that there is word-of-mouth promotion to integrate with its own messages. When Apple promotes the idea that it is a superior company, that its products are cutting edge, these messages are supported by the presence of third party transmitters, because its competitors have nowhere near the same level of third party transmitter support. The medium is the message in this case, and it supports the overall message that…[continue]
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