Apple Inc. is probably a world’s best-known company, whose success is considered to be definitive and complete. Apple’s innovative and effective ways of making business for a long time have been attracting the attention of numerous researchers and business analysts, while many other companies have been trying to imitate them, with varying degrees of success. However difficult it may be to identify the reasons for success and the company’s trajectory, which led it to become the major software and consumer electronics producer and a provider of online services, it can be useful to gain insight into the work of the company. This analytical report aims to investigate and explore the performance of Apple Inc., its background, corporate culture and client services, as well as its business and marketing strategies to have a better understanding of its strengths and weaknesses, in order to see whether or not such strategies may be applied to other companies and to what extent.
The foundation of Apple company took place in 1976 out of necessity, the founders and owners of the company, Steve Wozniak, Steve Jobs and Ronald Wayne needed a legal entity to begin selling their first product, the PC kits named “Apple I”; almost a year later, in 1977 the company became a corporation, but with only two of the founders, as Ronald Wayne sold his company’s share to Wozniak and Jobs for USD 800$ (Luo, 2013, par. 7-10). Due to innovative products, invented by the owners of the company and its creative marketing, in three years Apple Computer Inc. became highly profitable and in 1980 it was introduced to public on initial public offering with $22 per share (Apple Investor Relations FAQ, 2015, par. 7-8). This was the beginning of a success story, which proved to become even more unique in the years to come.
For example, in 1980s a commercial success in manufacturing and selling the Macintosh personal computers and other hardware allowed the company to grow and develop, despite the disagreements within the board of directors, which led to Wozniak’s resignation in 1984 and later Jobs’ resigning from Apple in 1985 (Hormby, 2013, par. 3-38). Later in the 1990s, however, the company experienced a decline in sales, legal problems and the lack of new ideas, and by 1996 a decision has been made to purchase the NeXT company founded and run by Steve Jobs and to engage Jobs himself as an advisor; together with the chief designer Jonathan Ives he begins to rebuild the company and leads it to another round of success (Marsland, 2014, par. 14).
In the next decade, until 2007 the company was able to restore its positions on the market and become one of the leading computer and electronics manufacturers with a special focus on design and quality of their products and the customer-oriented policies. For example, in 2001 Apple opened its first mono-brand Apple Retail Store with a specific customer environment and access to products without a need to make a purchase (Edwards, 2011, par. 10-20). In 2007, the company’s management announced the new direction of company’s development, the mobile devices, and mobile content. World’s best-selling iPhone and new generation of iPods, as well as a completely new operation system for mobile devices, iOS, were introduced the same year; the company’s shares price soon reached the threshold of $100, and later $300 per share.
Until 2011, when Jobs has passed away due to his long-term disease, he continued to lead the company and launching new products. He was considered to be one of the most charismatic and remarkable company leaders and CEOs of all time. In 2011, a “new era” began, with Tim Cook as the CEO, and by August 2012 Apple Inc. has reached its peak value of 624$ billion, beating the world record and the previous record of market capitalization set by Microsoft (Svensson, 2014, par. 2). Today, the Apple Corporation is still the world’s largest IT company and the richest company with the most valued shares and assets. However, the main factor in the success story of this corporation is not only its background but also the modern practices and strategies, allowing Apple to keep its positions in the market and develop further, despite various troubles that emerge during its lifetime.
The business models utilized by Apple did not always stay the same, and its strategies were changing throughout different periods of its history, but some of the core values persisted from the very beginning, incorporated by the founders themselves. Such were the ideas of characteristic customer orientation, where the manufacturer believed that the customers do not always know what they want, but the company should still be able to communicate with them and speak their language. Apple became the first company to make the technology easier to understand and thus, more available for the customers. Another substantial thing was the brand and the product design. Even at the beginning, Steve Jobs was concerned about an appropriate logo and unique colors of the brand, as well as the slogans for the production.
While the logo stayed mostly the same throughout the years, since its creation in 1977, and the only change that was implemented was making the “bitten apple” monochrome instead of rainbow-colored (Raszl, 2009, par. 1-10), the slogans have changed a few times, each being appropriate for the type of production that the company was focused on making at the time. The advertising also played an important role in making a brand well-known, and in 1984, an award-winning commercial directed by Ridley Scott and inspired by George Orwell’s “1984” became one of the most iconic commercials of the time (Maney, 2004, par. 1-7). The combination of these factors brings the researcher to a conclusion that Apple Inc. has among its core values the brand image and makes significant efforts to receive brand loyalty from its customers.
This distinctive image and style of the company also contribute to bringing the customers into the “ecosystem” of the company and keeping them. The Apple ecosystem is an established business model that has been established for decades but became especially prominent in the past years. Some researchers consider this strategy somewhat aggressive, for example, Harry C. Alford (2015) in his article on Apple’s business model and strategy notes that “in addition to this … ecosystem lock [by the persuasion of customers], Apple has developed another self-perpetuating business model … it involves hardball tactics, lawsuits, and asking courts to prohibit other companies from selling competing products. The end result is less choice for consumers” (par. 3). He also calls these tactics an “ecosystem lock by litigation” (Alford, 2015, par. 3).
While the first strategy is usually considered ethical enough for a large business, another might be considered unhealthy; however, both of them bring the necessary results to the company. Still, such strategies are not suitable for every type of company, as they involve significant expenses and efforts, as well as the need to create the departments of lawyers and marketing specialists, expert and loyal to the company.
Apple is able to follow these guidelines because of its size and position in the market and also because of its overall course of marketing and promotion of its production. In any case, there still exists a sound idea that can be used by other companies, striving to succeed in a way Apple did. It involves the creation of a unique company image and in offering the customers something that no one else is able to give, so that the customers will get involved in a company’s ecosystem by their own will, and will become loyal to the brand because of its qualities and advantages.
A research conducted by Johnna Montgomerie and Samuel Roscoe was described in an article named “Owning the consumer – Getting to the core of the Apple business model”. It includes an analysis of Apple’s strategies since 2003, claiming that “the Apple business model is designed to drive consumers into its ecosystem and then hold them there, which has been hugely successful to date and has allowed Apple to wield enormous power in the end-to-end supply chain” (Montgomerie & Roscoe, 2013, p. 290).
The authors speak about unparalleled control that the corporation yields over its supply chains, turning them into a part of their ecosystem; the stages of these chains include the manufacturing and assembling facilities, retail stores, and, most importantly, even implies the integration of hard- and software or content for greater comfort of the customer, which also helps to “own the consumer” (Montgomerie & Roscoe, 2013, p. 297). However, being so closely related to the suppliers make the company dependent on its own supply chain, and as it happened to Apple, unscrupulous and disreputable partners may essentially damage the image of the company. Moreover, the authors of the article emphasize that Apple’s business model, despite being highly effective in attracting and keeping the customers, also has numerous faults:
The content supply chain has been easily replicated by competitors and, as such, facilitated the creation of rival multi-channel platforms. Apple’s position is further complicated because it not only faces competition from rival ecosystems but also from itself because with each new product launch previous devices become redundant … we see that Apple’s rather unsophisticated retailing strategy of forcing big box retailers to compete against its own retail stores places important constraints on its ability to grow. (Montgomerie & Roscoe, 2013, p. 297)
These arguments allow to see the risks in following the business model proposed by Apple Inc., but also highlights the advantages of its strategies that can be adopted by other companies, even if their size is much smaller.
Nathan Hangen (2010) in an article describing seven key strategies of Apple marketing, claims that the particular lessons that this corporation is able to teach its customers and followers include the financial and marketing tricks in the same proportion as the attitude, and all of these can be very important in building a successful, sustainable, developing company. (par. 1-20). The author also names these strategies and illustrates them with appropriate examples: “Ignore your Critics … Turn the Ordinary into Something Beautiful … Justify Your Price… Communicate in the Language of Your Audience … Extend the Experience … Build the Tribe … Become “The Name”. (Hangen, 2010, par. 1-20). All of these ideas put together with bright slogans are the same strategies that were described by numerous researchers in academic papers.
However, the inspiration that these ideas bring and the words that were used to illustrate them are definitely capable of empowering and encouraging the entrepreneurs in building a better business, that will be more customer-oriented, more innovative and will attract attention with high-quality and unique production. For example, the slogan telling to turn ordinary into beautiful refers to creative design of the products, a direction of development that was emphasized by Jobs himself as one of the most important in his business; while Apple’s justification of the price shows how making exclusive and unmatched products can help to sell them at a price that no other company would find fair.
This factor is closely interrelated with another one, the creation of an ecosystem, or a “tribe”, which involves gaining the customer’s loyalty and keeping it by proposing him or her more products, as well as services and experiences that attract attention and satisfy the needs. Thus, such ideas wrapped into slogans in an aphoristic style can become the most powerful source of inspiration and empowerment for other companies, and can help their management to improve the business results, and, what is more important, the satisfaction with their own work. Indeed, everyone knows that the most inspirational quotes that are now popular among the young entrepreneurs were created by Steve Jobs, the owner and the founder of the Apple Inc., and probably this is not a coincidence.
References
Alford, H. C. (2015). Apple’s strategy evolves but their business model remains unchanged. The Hill. Web.
Apple Investor Relations FAQ (2015). Web.
Edwards, B. (2011). A Tale of Two Apple Stores (the First Two). Web.
Hangen, N. (2010). 7 Key Strategies That You Must Learn From Apple’s Marketing. Web.
Hormby, T. (2013). Good-bye Woz and Jobs: How the First Apple Era Ended in 1985. Web.
Luo, B. (2013). Ronald Wayne: On Co-founding Apple and Working With Steve Jobs. Web.
Maney, K. (2004). Apple’s ‘1984’ Super Bowl commercial still stands as watershed event. USA Today. Web.
Marsland, M. (2014). Jonathan Ive Designs Tomorrow. The Time. Web.
Montgomerie, J., & Roscoe, S. (2013). Owning the consumer – Getting to the core of the Apple business model. Accounting Forum 37, 290-299.
Raszl, I. (2009). Interview with Rob Janoff, designer of the Apple logo. Web.
Svensson, P. (2012). Apple sets record for company value at $624B. Web.