74 and a cash ratio of 2.03. Apple has no long-term debt and a 2-to-1 debt ratio (MSN Moneycentral, 2010).
Apple has relatively few weaknesses. The company's emphasis on software, marketing and design has left it with a weakness in hardware. Apple products do not have the superior lifespans one would expect from a product commanding a premium price tag.
Another weakness is the dependence on leadership. Apple without Steve Jobs simply does not perform as well as Apple with Steve Jobs. Jobs is responsible for driving innovation at Apple in particular, and his involvement is a cornerstone of the company's innovation strategy. The importance of the leader is such that negative news concerning his health cause the company's stock to drop sharply. The health of Jobs has been a concern for several years and his departure is expected to have a negative impact on the company's fortunes (O'Toole, 2010).
There are many opportunities for Apple. With the high profile launch of the iPad, the company clearly sees tablet computers as a strong growth opportunity. The product exploits what the company feels is a niche with tremendous potential, currently occupied by products such as e-books and netbooks (Enderle, 2009).
Growth represents another significant opportunity. The company has both organic growth as a potential and overseas growth. The company's recent run of success has come as a the result of building market share in its segments -- organic growth. This is an opportunity that can be exploited for a long time, given Apple's relatively low market share outside of mp3 players. Overseas growth is also an opportunity, given Apple's low profile outside of the West. By extending the company's reach into the world's emerging economies, Apple can grow rapidly for years to come.
There are a few threats to Apple. The economy is not one of them. Competition, however, is. Apple competes against some of the world's largest, best-capitalized and most-recognized brands. This competition is intense and is expected to continue to be so for years coming. Competitive response to Apple's endeavors is expected to be strong. The company's dependence on innovation means that it is subject to a threat from innovation -- if another company takes over Apple's technological leadership, Apple will see reduced revenues as a result.
Apple's objectives should be to increase revenues to $60 billion in 2010. The company should sell 1,000,000 iPad units and should increase its market share in other areas by five to ten points. The target market segments for Apple should not change -- the focus should be on greater penetration of existing target markets.
Apple has a broad target market. Their core is made up of users with higher education levels and higher disposal income. They are between 18-50 years old, live in Western countries and view themselves as unique individuals. It is a fallacy to suggest that Apple should concentrate on niches -- mass market companies are fundamentally different from niche companies. You cannot do $60 billion in business selling to niches, you need to sell to broad spectrum. While Apple understands its target market, that market is by necessity loosely defined; the company characterizes it as roughly "anyone who aspires to live a more creative life" (Morrison, no date).
Apple appeals to its target market with innovative products, innovative product design and with premium branding. The proprietary software serves to emphasize the differentiation of Apple products, as they are not compatible with the products of other manufacturers. The target market finds appeal in the relative uniqueness of Apple products and the snob appeal that goes along with that. Apple's premium positioning leverages this differentiation to promote a premium image of the product and to extract higher prices from the consumers. The focus on consumers with higher income levels is mainly out of necessity -- Apple prices itself out of lower-end markets.
Product. Apple has a range of products to be promoted. These include computers, mp3 players, brand families (iPod, Mac, iPhone). Within each family there are product brands (MacBook, Nano, 3G, etc.). Packaging is not a major component of the marketing scheme, due to the focus on online sales and the in-store presentation that emphasizes the design of the product itself. Apple sells warranties, and derives a respectable amount of income from them. That strategy should not change.
Price. Apple's products command premium prices. The basic idea should not change, but there are elements that could be adjusted. In the less differentiated categories such as smartphones, Apple should price the phone at a more competitive level and place the emphasis on revenue generation from software and applications. With its computers, the prices should come down somewhat as they have not been subject to the same high level of innovation in recent years that the rest of Apple's product lines have. They remain positioned at premium, but until the next generation of personal computers is launched they are not as differentiated -- save for branding and software -- as is reflected by the price.
Promotion. Apple has had considerable promotion success in recent years. The company emphasizes brand and should continue to do so. Apple is increasing its promotional budget in order to increase brand awareness. This approach makes little sense given that the company has the #20 brand in the world. Apple should focus its efforts on strengthening the brand and increasing its international appeal than on generating awareness, which at this point is superfluous.
Apple should also emphasize its newest, most innovative products in its promotions. The company wishes to have a brand based on innovation and excellence, so the best way to achieve this is to focus consumers on the most innovative products. Saturation advertising for the iPad in particular will help support this product, which is the product on which the company is predicating its success for the coming years.
Place. Apple should open more of its own stores. The company has had success in marketing with its stores, but in most markets there are relatively few of them. By building out their retail network, Apple will increase its marketing reach and put more consumers in direct contact with Apple sales representatives. This increases opportunities for cross-selling and improves customer service.
Apple's marketing budget is massive and is expected to increase. An increase in the marketing budget should have an amplification effect on sales, by a factor of at least ten. Thus, an increase in marketing expense of $100 million should result in an increase in sales of $1.0 billion, which would equate to an increase in profit of $200 million based on the current net margin. The sales goal of $60 billion this year represents a continuation of past trends. The company has doubled sales every two years in recent years, so it should be able to get up to around the $80 billion mark in two years, meaning at that $60 billion this year is not unreasonable.
No changes will be made to Apple's marketing organization structure. The company's marketing has been rather successful in recent years, so any changes are unwarranted. The increase in the marketing budget will not change the marketing organizational structure, only its size.
There are many steps to the implementation plan. These including setting objectives, setting budgets, hiring the additional staff members, creating job descriptions, contacting the advertising agency, coordinating with the managers of each product line, setting timelines and many other tasks. There are thousands of people working in marketing at Apple; to attempt to list all of their tasks here is futile. As director of marketing at Apple, I would focus on broad strategy and delegate specific implementation tasks to the thousands of people I have working for me.
In order to evaluate the strategy, it must be measured against the objectives. Sales figures will help to measure the effectiveness of the promotion surrounding the launch of the iPad, the objectives of which are measured in units (in this case, 1,000,000 units in the first year). Another objective is improving brand recognition, which can be measured in brand recognition surveys. Another objective is to build the brand overseas. The success of this strategy can be evaluated with measures of overseas revenue, market share and sales. Of course, broad measures that run corporate-wide are also valuable, such as revenue, revenue growth and market share for the core products. In particular, the pricing strategies must increase sales volumes to a point that covers the lost revenue from the decrease in price. When deviations are discovered, the role of the marketing team is to analyze the situation to determine the cause of those deviations and take steps to address that cause.
Apple Inc. website, various pages. (2010). Retrieved April 19, 2010 from http://www.apple.com
Apple Inc. 2009 10-K. Retrieved April 19, 2010…
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