Apple; Market Segments, Target Market and Positioning
Apple are a well-known high tech firm, developing and selling a range of electrical devices, including but not limited to iPods, iPads, iPhones and iMacs, as well as associated services such as iTunes and the Apple App store. The firm has been very successful, the earnings and the profit margin have both been increasing over the last few years (Apple, 2012). The firm may compete with a high level of differentiation, supported by a highly aggressive research and development strategy which leads to innovation. For this to be successful the firm has to know and understand their market segment and target market (Hooley et al., 2007). Furthermore, when a firm has a profit margin so much greater than the competition; 30.05% pre-tax and 11.28% net compared to the industry average of 16.85% pre-tax profit and 11.89% (MSN Money, 2013), it is also likely they had a highly proactive strategy in order to optimize their position with the use of the most valuable segments and target markets that suited the firms capabilities, resources and goals.
The segmentation of the market involves the division of the market into categories based on commonalities in the consumer base (Hooley et al., 2007). There are several market segments for Apple, and with changes over the years as the firms capabilities and products have changed, so have the market segments they serve. Apple has always served educational establishment well, even when the market was a small nice market and Apple had not invented the concept of the 'i' products (Dormeh, 2013). The firm was also popular with business that required heavy graphics manipulation capabilities. However, one may argue that these two, very small and constrained, market segments were not enough to take the company forward, so the company had to expand. However, it is worth noting, that these two core market segments remain, and the firm still serves them well, even if they are not the segments that gain the most attention (Dormeh, 2013).
The breakthrough cam with the development of the iPod, and the firm started to develop a new customer base; the firm was moving into mobile devices which were able provide for convenience. The product was designed with a stylish appearance, and with the supportive services of iTunes, the firm started to establish it as an upper end technology provider.
It may be argued with the development of the 'i' family of products, and the high level of integration, the firm has created their own segment; the segment of integrated lifestyle technology. All of the products are able to integrate and a key characteristic in the products, valued by the consumers, is the empowerment and convenience facilitated by that integration. With the firm using a first mover advantage for many products, as well as the simply designs, there has also been a very strong appeal to the 'technologically elite' (Segall, 2013).
Today the most important market is the consumer market, where the segment is for the higher end lifestyle technological devices, appealing to those who value quality and style. The high level of loyalty Apple has been able to obtain from their customers, has created an Apple segment, with many Apple users continuing to buy Apple products without even considering the alternatives (Segall, 2013; Dormeh, 2013).
The segment is a very broad categorization; to be successful Apple also need to have a very good understanding of their target market. It is here that the issue can become complex, as when looking at demographics, the firm is able to appeal to a number of different consumers, from students and children through to business people. The ease of use and convenience has made many of the products attractive to different groups. The iPod target market includes teenagers and students, as well as adults. The latest marketing, with the psychedelic images of people dancing, appear to indicate that at least one of the main target markets is the student and young adult market, as these are the images utilized in the advertising. However, anecdotal evidence would appear to indicate that many business travelers will listen to iPods while they are commuting to and from work, and those undertaking athletic exercise or working out in a gymnasium may also be seen listening to an iPod.
The same issue appears with other Apple items, the iPad, which is a stylish tablet computer, has been highly successful with business people, and the iPhone appears to have a very broad appeal across different demographic segments. The demographic profile of an Apple user may be male-female, they may be a student, teenager or working adult, and the brand that is found across the globe, there are no constraints in terms of their geographical location.
However, despite this broad profile, there are also some more specific characteristics which help to differentiate the Apple market from others. The products are stylish, and one of that has been noted by many commentators is the ability for a technological item to now being seen not only as fashionable, but even as a fashion accessory (Segall, 2013). Just as individuals may wear certain clothing brands to make statement, reflect the personality, Apple's products have now entered into this realm, where the recognition of the iconic design may also be a personal statement (Kotler and Keller, 2011).
The products themselves are at the upper end of the market, and have a premium price tag to match. Therefore, it may be expected that a significant portion of the target market are within the more affluent social classes or professions, and tend to have higher than averge incomes. In demographic terms, it maybe argued that the target market is within the upper to middle to upper income brackets. This is also been beneficial to the firm, as these individuals tend to be less sensitive to economic changes, such as those seen in a recession (Kotler and Keller, 2011).
The characteristics of Apple users appears to be in the psychographic aspects, the way in which those who purchased Apple products value quality over price, and would rather spend more on a good quality product. The Apple users not only value style and quality, but many also identify themselves with Apple, seeing their devices and the way they use them as an extension of themselves (Seagal, 2013). These are also individuals who value the contribution that technology can make towards their lives, and embrace the technological revolution.
Therefore, the primary target market is an affluent, middle upper to upper market person, who value is not only quality, but the concept an idea of the Apple brand and all of the associations which are tied into that brand. Furthermore, Apple users still tend to see themselves as a niche market, even though some of the products are dominant within their own market segments (Kotler and Keller, 2011).
It is likely that the target market will expand in future years, the 2013 launch of two versions of the iPhone, including one low-cost, may indicate that the company is seeking to increase its share of international target markets, particularly the Chinese market which is expected to develop into the world's largest smart phone market (Grobart, 2013; Kuo, 2013).
The development of a lower cost iPhone may be argued as a risky strategy; is it may appeal to individuals who were previously unable to afford Apple, or may not have wanted to invest a significant amount when lower-cost alternatives were available. There is the potential that with the lower cost Apple, Apple may be able to draw in more potential customers from the middle income segments, who will appreciate the quality and become Apple fans or converts. However, there is also the potential that this may devalue the brand, and the…