Apple Inc. is one of the leading technology companies in the world, and its success depends on the focus on innovation in developing electronic devices and software. To contribute to the company’s further growth and winning the larger market share, it is necessary to identify a new specific product that Apple can introduce in the nearest future to attract more consumers and increase revenues.
The purpose of the marketing report is to introduce a new product that can be developed by Apple to address customers’ interests and needs and present a marketing plan for promoting this product, which is related to the company’s mission and competitive advantage.
Company’s Background and History
Apple Inc. (www.apple.com) was founded by Steve Jobs, Ronald Wayne, and Steve Wozniak in 1976. Currently, this multinational company specializing in producing consumer electronics and devices is headquartered in Cupertino, California, and the details regarding its revenues are provided in annual reports located on the Investor Relations page of the company’s website (https://investor.apple.com/investor-relations/financial-information/default.aspx).
The company started its growth with producing personal computers (Apple I and Macintosh) (Lockamy III, 2017). Thus, Apple’s profitability in the 1980s-1990s mainly depended on producing computers and associated software.
In 2007, the company shifted its focus from personal computers to mobile devices and gained the financial success with producing and selling iPhone, iPod, and iPad that are viewed today as examples of innovative products leading to the market triumph. Apple’s modern products include personal computers Mac, iPhone, iPad, iPod, Apple Watch, and Apple TV. There are also software and applications, including macOS and iOS, iTunes, App Store, and Apple Music among others (Apple, Inc., 2018). Apple is one of the leaders in the world in terms of sales, and its revenue continuously grows.
The company is placed the third one in the world industry of mobile devices after such competitors as Huawei and Samsung. Apple has retail stores in 24 countries over the globe, and more than 120,000 employees work for the company worldwide (Apple, Inc., 2018). The fact that Apple Inc. is one of the most successful information technology companies in the world explains the selection of this firm for the further analysis of innovative products that can be effectively introduced to attract more customers and increase brand loyalty. In this context, it is also important to identify what marketing plan can be efficient to address the company’s mission.
Apple’s current mission statement was presented in 2015, and its formulation differs from traditional variants of such statements. Thus, it is stated that “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software” (“FY 15 first quarter results,” 2015, para. 7). Moreover, it is also noted that “Apple leads the digital music revolution with its iPods and iTunes online store.
Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad” (“FY 15 first quarter results,” 2015, para. 7). The company’s focus is on producing the most revolutionary devices in the sphere of information technology while supporting the position of a leader in applying innovation. This mission statement reflects the company’s overall strategy in winning the market with the help of offering the most original and pioneering products to address customers’ expectations and modern world trends.
The SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis allows for evaluating Apple’s powerful areas, as well as the spheres for improvement, in the context of the company’s internal environment and external factors. The analysis of Apple’s advantages and disadvantages in the market is based on the information provided in the annual report for 2018. The key issues in the company’s development and strategic opportunities are summarized below.
- A strong brand image and recognition, the high loyalty.
- The focus on innovation and investment in research and development.
- Increased sales and high profit margins.
Apple’s brand image is effectively developed, and the company has strong recognition among customers who are extremely loyal to its products. The company has created a specific philosophy associated with possessing and using Apple products while increasing consumers’ interest and loyalty. The main focus is on providing customers with the most innovative and user-friendly products (Payne, 2017).
As a result, consumers receive unique experiences and become interested in buying other Apple devices. The focus on innovation is also important for the company which invested more than $14 billion in research and development in 2018 to design competitive products. Furthermore, the company continuously increases sales (more than $265 billion in 2018 in comparison to about $230 billion in 2017) while focusing on developing effective marketing strategies (Apple, Inc., 2018).
- A limited approach to distributing products.
- The price for products.
- The dependence of sales on iPhone promotion.
Apple’s approach to distributing its products is explained with reference to the philosophy of providing exclusive experiences for users. As a result, direct sales of Apple devices are limited, and the number of physical stores in countries is not correlated with the target audience. Thus, direct sales channels should be developed more intensively to have more authorized sellers in different countries all over the globe (Khan, Alam, & Alam, 2015).
The price for products associated with the covered market segment is also a limiting factor for the company because now Apple is oriented only to the middle and upper classes (Payne, 2017). One more weakness is the company’s dependence on selling mainly iPhones which represent the highest proportion in the company’s sales.
- Improvements in a distribution network with the focus on direct sales.
- Changes in the marketing strategy to accentuate the sale of products other than iPhone.
- Offering new products.
Apple’s distribution network needs to be extended to cover wider audiences in different regions of the world. Thus, the company is focused on “building and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience” (Apple, Inc., 2018, p. 1). In addition, the shift in the focus from the aggressive marketing of iPhone to other hardware and software can potentially lead to increases in sales.
Apple pays much attention to developing new technologically advanced products to remain the leader in a competitive market. However, more attention should be paid to this sphere because the recent models of iPhone did not gain the expected high-level recognition of customers (Lockamy III, 2017). It is important to focus on developing other products to enter more markets and increase revenues.
- Active competition in the market.
- Increases in labor and research and development costs.
- The entrance of more competitors into the market.
The industry of information technology develops actively, and Apple’s key competitors are also concentrated on innovation and creativity, attracting more consumers. Therefore, the risk of proposing outdated products and losing customers is always high for Apple (Apple, Inc., 2018).
In addition, the aggressive competition is associated with investing more resources in research and development, production, and labor, but these costs constantly increase, making the company find new ways of manufacturing innovative products without negative changes in quality (Khan et al., 2015). The risk of the entrance of other competitors is also high because many new and small companies choose to imitate Apple’s strategies and propose cheaper products.
Apple’s current competitive advantage depends on its leading position in the market of information technology and consumer electronics. The company’s products are unique in their quality, innovativeness, creativity, options, and design. Consumers refer to exclusive experiences while using these products, and the factors of prestige and high quality are also discussed as motivators for buying Apple products. Steve Jobs has contributed to developing the unique image and philosophy of Apple that make people buy Apple products today (Khan et al., 2015). Thus, the company effectively develops its research and development area and relations with suppliers and offers innovative premium-level products.
The main competitors of Apple in the market of computers, tablets, and software are Samsung, Microsoft, Dell, Hewlett Packard, Lenovo, Sony, and Asus. In the market of mobile devices, Apple competes with Samsung, Huawei, Nokia, Xiaomi, Lenovo, and Sony Erickson (Payne, 2017). Apple has “a minority market share in the global smartphone, tablet and personal computer markets” (Apple, Inc., 2018, p. 9). It is explained by weaknesses in distribution and the fact that Apple’s competitors “have broader product lines, lower-priced products and a larger installed base of active devices” (Apple, Inc., 2018, p. 9). The company’s revenue for 2018 is $265.595 billion (Apple, Inc., 2018). The revenue is higher than in 2017 in spite of certain changes in sales of iPhone.
Apple’s introduction of the new product is correlated with increasing the company’s competitive advantage and addressing certain marketing objectives. The first marketing objective to focus on is the following one: To attract 10% of customers from the market of virtual reality devices between January 1, 2020, and December 31, 2021, compared to competitors’ percentages. The second important objective to achieve is as follows: To increase Apple’s total net sales during the period between January 1, 2020, and December 31, 2020, by 12% due to the introduction of a virtual reality console, compared to net sales of 2018.
The Target Market
The current target market of Apple for promoting Mac, iPhone, iPad, iPod, Apple Watch, Apple TV, as well as such services as iTunes, App Store, and Apple Music, includes 20-45-year-old females and males who belong to middle and upper classes. Their incomes are high, and they are ready to pay extra money in order to receive advanced electronic devices and unique experiences. These people are ambitious, and they pay much attention to prestige and access to advanced features or exceptional capabilities (Payne, 2017).
The introduction of the new product (a virtual reality console) is mainly oriented toward the same target market in terms of focusing on females and males who are students and professionals with high levels of income and who are interested in receiving new experiences. Still, the age limits will be shifted to cover 18-35-year-old consumers. The reason is that this group is most interested in purchasing virtual reality devices for study and entertainment.
The new product proposed for being added to Apple’s product line is a virtual reality console named iPlay. While using iPlay, consumers will be able to play games, train, learn, use simulations, and interact in the context of virtual reality generating highly realistic images and sounds. This console should be presented in the form of a standalone virtual reality headset that is the more advanced variant of traditional mobile and tethered headsets.
Although the proposed headset will have the integrated iOS, and it will not need using additional hardware and software to run, it will be possible to utilize it with iPhone and Mac if required for accessing applications and additional software.
The virtual reality console will include built-in motion sensors for improving motion tracking and a unique external camera tracker and outward-facing cameras to guarantee moving easily with the six-degrees-of-freedom. The console will also have the in-built accelerometer, gyroscope, and magnetometer. The full package for iPlay will include one virtual reality headset, two motion controllers, and a base station. Controllers will include a touchpad and motion sensing technologies. Software will also be added to the package.
Consumers will be interested in Apple’s virtual reality console because they are waiting for the company’s entering the gaming industry during a long period of time. Apple’s innovative approach will provide users with exceptional experiences offering the most innovative virtual reality headset in the market. It will combine the features of mobile and advanced standalone headsets that are easily compatible with users’ Apple products.
The quality of graphics and sounds, as well as generated environments and sensations, will be higher than the quality of competitors’ products. Thus, the most influential competitors in this market are Sony, Nintendo, Microsoft, HTC, Lenovo, and Oculus VR, who have already launched virtual reality devices and attracted the target audience.
It is important to note that the focus on this product will not require the construction of new facilities or stores. The virtual reality console fits Apple’s competitive advantage and goals because the company should introduce new products and technologies frequently in order to remain competitive (Apple, Inc., 2018). The introduction of this new product is expected by consumers, and it will contribute to attracting new customers and increasing sales. Thus, the key product elements in this case are customer satisfaction, the use of advanced technologies, unique experiences, an effective package, and prestige.
iPlay consoles will be distributed through Apple’s traditional channels, including all Apple Stores over the globe, trade partners, online retailers, such as Amazon, and the company’s website. As a result, potential consumers will receive many opportunities to access the product easily. In Apple Stores, iPlay consoles will be placed separately in order to attract customers’ attention (Lamb, Hair, & McDaniel, 2018). Thus, in stores, much space is required for locating iPlay consoles and testing them.
To promote iPlay consoles, the following media will be used: online advertisements, TV, print media, social networks, and billboards. The combination of several different media for promotion is one of Apple’s major effective strategies. The focus is on aggressive and on-going advertising to generate and increase customers’ demand before launching the product. Much attention should be paid to online advertisements through Google, YouTube and technology- and business-oriented websites and online retailers in order to reach the target audience interested in Apple products (Lamb et al., 2018).
Advertisements on social media should also be intense, involving popular bloggers and experts in IT. Traditional TV advertisements, print media, and billboards should contribute to creating the intrigue around the product. The key message developed for the promotional campaign should be that consumers will receive an extremely unique experience while using iPlay consoles that cannot be compared with any other experience they had. Thus, the focus should be on the idea that this product is worth the wait.
The price set for the iPlay console should be about $900-$1000 that is one of the highest prices in the market. It is important to accentuate the exceptional quality of the product with the focus on setting the price typical of Apple’s traditional pricing strategy. Thus, the pricing objective is to emphasize the uniqueness of the iPlay console and address expectations of the target audience referring to Apple products as prestigious ones.
The marketing project for introducing a virtual reality console will be implemented during the period between January 1, 2019, and March 31, 2020. Preliminary advertising will be realized between January 1 and November 30, 2019.
Sales will be started in December 2019. The overall budget for the marketing project is planned to be about $14 billion. This budget includes the costs for research and development ($6 billion), distribution costs ($2 billion), promotional costs ($2 billion), and labor and construction costs ($4 billion). The anticipated sales are expected to be higher than $35 billion for the period of the first 12 months.
This report has presented the marketing plan for introducing the new product for Apple, Inc. The focus is on developing and launching a virtual reality console (iPlay) in order to increase the company’s net sales. This console will be more technologically advanced and efficient than alternatives proposed by competitors. Furthermore, adding this console to the company’s product line, Apple will address its mission and improve the competitive advantage not only in the US market but also globally.
Apple, Inc. (2018). Annual report 2018: Form 10-K. Web.
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Lamb, C. W., Hair, J. F., & McDaniel, C. (2018). MKTG (12th ed.). New York, NY: Cengage Learning.
Lockamy III, A. (2017). An examination of external risk factors in Apple Inc.’s supply chain. Supply Chain Forum: An International Journal, 18(3), 177-188.
Payne, B. (2017). Brand positioning and its usefulness for brand management: The case of Apple Inc. Newcastle Business School Student Journal, 1(1), 51-57.