1. Task 1...........................................................................................................................................2

1.1. Role of Strategic Marketing in Apple...................................................................................2

1.2. Developing a strategic marketing plan for Apple.................................................................3

1.2.1. Situation Analysis...........................................................................................................4

1.2.2. Marketing objectives......................................................................................................4

1.2.3. Marketing strategies.......................................................................................................5

1.2.4. Marketing Budget...........................................................................................................5

1.3. Links between strategic marketing and corporate strategy...................................................6

2. Task 2...........................................................................................................................................6

2.1. Portfolio analysis...................................................................................................................6

2.1.1. BCG Matrix....................................................................................................................7

2.1.2. Directional Policy Matrix...............................................................................................8

2.2. Strategic positioning and marketing tactics..........................................................................8

2.2.1. Strategic positioning.......................................................................................................8

2.2.2 Marketing tactics...........................................................................................................10

2.3. Merits of relationship marketing.........................................................................................10

3. Task 3.........................................................................................................................................12

3.1. Segmentation, targeting and positioning of products..........................................................12

3.2. Strategic options to Apple...................................................................................................12

3.3. Marketing mix for Apple iphone........................................................................................13

4. Task 4.........................................................................................................................................13

4.2. Internal strength and weakness...........................................................................................14

4.3. Strategic marketing responses.............................................................................................15

5. References..................................................................................................................................16

6. Bibliography..............................................................................................................................16

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1. Task 1

1.1. Role of Strategic Marketing in Apple

For an organization marketing activity involves two parts, satisfying customer needs and

achieving organizational objectives. An organization can successfully achieve its objectives in

the market if it can satisfy customer’s needs. In this activity, the organization also needs to

compete with its competitors. In strategic marketing, the resources of the organization are best

used and tactics are developed for meeting the corporate objectives (Proctor, 2000). As a part of

their strategic marketing plans, Apple segmented the market and identified the appropriate

marketing mix.

For more than two decades, since its inception in 1976, Apple Computer Inc. was predominantly

a manufacturer of personal computers. By late 1990s, Apple Computers faced low market share

and decreasng sales. Steve Jobs who was ousted in 1985 returned to Apple Computers, realized

that Apple Computer has to change its strategies to improve its market performance and came up

with innovative ideas that eventually uplifted the Apple Computers from the role of computer

manufacturers to the current market leader of consumer electronics with a range of products like

the ipod, ipad and iphones. They dropped the term ‘Computer’ from their name to convey the

clear message that their product range is not confined to computers. The vision of its leader

helped to identify that the organization is in a highly dynamic environment and the planning

cycle may not be adequate to deal with rapid changes in the external environment. In the

beginning, when their product range was confined to computers, they almost lost their market to

Microsoft. But with their new leader, Apple succeeded in combining their power of innovation

and resources with good marketing plans and the mobile phone devices like the iphone and ipad

is pushing up Apple’s share in the internet in a steady rate. The strategic marketing activities of

Apple were not only simply reactive to the environmental changes but it brought some real

changes in its environment.

1.2. Developing a strategic marketing plan for Apple

As the competition in the market place steadily increased, Apple spent more time and resources

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on strategic planning. A strategic marketing plan is the important road map to success (Pride and

Ferrell, 2010). The strategic marketing plan involves the developing, distributing, promoting and

pricing of products that meet the demands of customers in the target market. The plan should be

parallel to the overall direction of the organizational goals and should be coordinated with all the

functional areas of the firm. The development of Apple’s strategic marketing plan involved the

following steps (Blythe et al, 2006).

1.2.1. Situation Analysis

External analysis: In the first step of the planning, the firm conducted a detailed analysis of its

marketing environment. The environmental factors included the political, socio-cultural,

technological, legal, competitive, economical and regulatory factors which may have an

influence on the overall organizational goals. These factors can either create opportunities or can

be a threat to the organizational goals. Opportunities in the environment are then translated to

organizational goals and marketing objectives. The other analysis in this stage includes

competitor analysis and industry analysis. Porter’s five forces model is used as the tool for

industry analysis. In competitor analysis, the capabilities and competencies of Apple’s

competitors like the Dell, Microsoft, Nokia etc are identified.

Internal Analysis: The internal analysis includes the analysis of the organizational capabilities

and core competencies. The capability of Apple is thought to be in the research and development

function. Apple integrates people, financial resources and equipments to perform various R&D

activities. The analysis shows that the firm’s capabilities are mostly based on the knowledge of

the software engineers and designers, which leads to the development of new products. The core

competencies give a competitive advantage to the firm. Apple had identified product innovation

as its core competence. i phone is the example of an innovative product that is the result of this

core competence (Ireland et al, 2008).

SWOT analysis: The SWOT analysis helps the firm to identify its internal strengths and

weaknesses and external threats and opportunities. SWOT is conducted to find out how to take

advantage of opportunities and how to minimize environmental threats. This analysis helped the

firm to select its strategies.

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1.2.2. Marketing objectives

The marketing objectives should be based on the outcome of SWOT analysis. The objectives

should be compatible with issues identified in the SWOT analysis and they should be SMART

objectives i.e. specific, measurable, achievable, realistic and time bound. The achievement of

marketing objectives should contribute to the corporate strategy.

1.2.3. Marketing strategies

Marketing strategies involves the following steps:

Segmentation: Market segmentation helps the firm to focus on specific areas of the market so

that combating competition becomes easier than focusing on the entire market. Also the

company can allocate its resources in an effective way and reach the right customer group

(Blythe, 2001).

Targeting: Target market is a group of people for which a marketing mix is created by the

business. The marketing mix will be specifically designed to satisfy the needs of this target

group. The product attributes, the target market characteristics and the organization’s objectives

and resources affects the strategy used to select the target market.

Positioning and differentiation: This process helps the firm to identify its brand’s position with

respect to the competing firms. The firm conducted a good amount of marketing researches to

collect information about the market conditions. The position of Apple’s own available products

and that of its competitors are considered in this process (Blythe, 2001).

Marketing mix: Marketing mix is a blend of product, price, promotion and place that is

designed to reach a specific group of customers. A strategy is constructed for each element in the

mix and blended together to achieve the optimum mix. The strength of the mix will depend on

the strength of the individual components of the mix and the total strength will be equal to the

strength of the weakest component (McDaniel and Gates, 1998).

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1.2.4. Marketing Budget

The marketing budget should support the marketing objectives. In turn the marketing objectives,

strategies and programmes should be in accordance with the agreed budgets and sales forecast.

Budgeting helps the organization to allocate resources without wastage.

1.3. Links between strategic marketing and corporate strategy

Strategic marketing forms a part of the long-range planning and business policy of the

organization. The activities like the strength and weakness analysis forms the basis of corporate

goals as well as marketing goals. The activities involved in corporate strategy formation are

closely linked with strategic marketing functions also. If the corporate objectives have to be

achieved, the planning processes of the top management should be inextricably linked with the

different functional divisions of the organization. Corporate planning is usually done with in the

limits set by the strategic planning function of the organization. Separate plans are made for

marketing, finance, production etc and all these are coordinated by the top management.

Marketing function is closely involved in formulating business or corporate strategies of an

organization more than any other functional areas (Foxall, G. R, 1981).

The corporate strategy of Apple is product differentiation through innovation. Apple’s marketing

capabilities highlights this differentiation strategy and Apple strives to develop and enhance this

capability. The firm has a highly skilled human capital who are capable of creating innovative

products and Apple spends good amounts in research and development activities. Innovative

product design may be used for creating innovative products but cannot be used to create product

differentiation. To achieve this, Apple should create product marketing capabilities through

which it can utilize the product innovation capabilities and create market for the products. Thus

the innovative product design capabilities and product marketing will help Apple to achieve its

corporate strategy.

2. Task 2

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2.1. Portfolio analysis

As the complexity of businesses dramatically increased, the managers began to have trouble with

large number of products in a large variety of markets. Portfolio analysis models help the

managers to make a decision with in its clear framework. These frameworks offer an objective

measure for the product and market assessment with respect to their attractiveness. From this

analysis, the firm can take decisions about objectives, strategy and resource allocation. The

portfolio models classifies the current and potential product positions based on their market

attractiveness and also the firm’s capability to compete with in the market. For this purpose,

Apple may use the BCG grid and Directional Policy matrix (Lomax, 2006).

2.1.1. BCG Matrix

The two principal factors in BCG matrix are relative market share and market growth. According

to Kotler (2003) these two factors are indicators of the healthiness of the business. Products in a

fast growing market or with a greater market share are supposed to bring greater profit margins

and vice versa. Following are the components of the model.

Cash cows: they require only low investment because they are the market leaders in a low-

growth market and they have high profitability. Thus these products pay the corporate dividend

and overhead. They generate funds for research and development activities. Hence the firm

needs to protect them. Kotler (2003) suggests that the surplus cash produced by the cash cow

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products may be utilized for the development of stars and questions so that they may ne

developed as future cash cows.

Stars: they are the leaders in markets with high growth. They usually generate large amounts of

cash but also causes large expenses as the market has high growth rates. Portable digital music

players of Apple come under this section (Cantrell 2005, cited in Lomax, 2006).

Question Marks: they do not have a dominant market position and do not produce enough

cash. At the same time they consumes good amount of cash due to growth market conditions.

Dogs: They have a very low market share in a low growth market. They do not have any future

and results in money loss to the firm.

2.1.2. Directional Policy Matrix

This is a multifactor model which is commonly used by many firms. The sectors are determined

by assessing the strength of the individual product, product group or the strategic business unit

on market attractiveness and competitive position. Market attractiveness comes from the

difference in the average long run potential for all participants in the market. Competitive

position analyses the business profitability in relation to competition. Classification of businesses

on these two dimensions gives us a realistic picture of the portfolio.

The multi factor matrix is adaptable to a variety of industries. In this technique, the managers are

getting more freedom as they ae responsible to select the factors that determine market

attractiveness.

2.2. Strategic positioning and marketing tactics

2.2.1. Strategic positioningStrategic positioning of the product involves the process of market segmentation as the first step.

Market segmentation will help the firm to concentrate the resources into more focused group

rather than thinly focusing on a large population. Then the firm can position their product in a

desirable position against the competing products. According to Mercer (1996) “the position

chosen in the market by the supplier for the product or service-against the map of consumer

needs-should define all of the marketing actions thereafter. Whether decided formally or by

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default, it is at the heart of marketing”. The larger market have customers with entirely different

needs, each of these group will represent a different segment. These segments have different

characteristics and firms have to carefully target a specific group of customers. For example, in

the personal computer market, the entire market comes under the broad category of stand alone

computers used by a single person. But the PC manufacturers like the Apple, IBM and Motorola

may segment the market based on the range of chips used in their PC. In case of mobile phones,

people preferring smart phones may be grouped into another segment and people preferring

ordinary talk-only phones falls into another segment. Kotler (cited in Mercer, 1996),

distinguishes two major approaches in market segmentation-consumer characteristics

(psychographic, geographical and demographic) and consumer responses (when used, benefits,

attitudes like loyalty and usage). Customers have their own perceptions of the market and firms

can position their product in the segment which gives them the greatest competitive advantage.

Segmentation and positioning are two processes that overlap. Positioning is concerned with the

products and the supplier has to take decisions what to do with the products to best position them

in the segments. To make the product noticeable to the customers the firm should make the

product different from that of the competitors. For example a position map of the Apple iphone

is illustrated below:

fig.1. Positioning (Perceptual) Mapping

A. Apple’s iphone (£ 500) B. Nokia (£26)

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Low

High price

Low price

High

D

BC

A

C. Sony Ericsson (£ 28) D. Nokia (£ 13).

The above positioning places the Apple iphone in an elite category with high facilities than the other phones with high price.

2.2.2 Marketing tactics

Tactics are the executional elements in the plan which are the means by which the firm can

accomplish its marketing goals. Once the market is segmented and the position of the product is

determined, the marketing function now has to convey a clear picture about the product to the

customer group. The marketing tactics used should be compatible with the positioning and the

brand image of the product. If the product is positioned in a classic category, the tactics used

should convince the customers of this position. Marketing mix is a company’s tactical tool kit

that helps to establish the strong positioning in the target markets. This tool kit helps the firm to

produce required response in the target market. The marketing mix is consists of the 4 Ps i.e.

product, price, place and promotion. Product is the goods or services that the firm offer to the

market. Apple offers a lot of products ranging from computers to iphones and ipads in different

models to the target market. Price is the money that the customer has to pay for a product. The

firm can adjust the prices depending on the existing competitive situation and bring them to the

line of the buyer’s perception. Place is where the product is available to the customers. Apple has

partnership with independently owned dealerships through which they can make their product

available to the potential buyers. Promotion is the activity of communicating the merit of

products and persuading the target customers to buy the products. The firm can achieve the

marketing goals only through properly blending the marketing mix. The marketing mix clearly

conveys the product and its position to the minds of the customers.

2.3. Merits of relationship marketing

The relationship marketing as an approach started evolving from early 1980s. Earlier it focused

on the development of long term mutually beneficial and profitable relations between a customer

group and the organizations. This concept later developed to include internal marketing factors

also in the sense that managing the external relationships successfully depends on the alignment

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of necessary internal relationships. The proposition by writers like Cristopher et al (2004) makes

it clear that customer satisfaction and loyalty are created by providing superior value for the

customer. This value can be created not only through out the organization but also through a

range of related parties like suppliers, distributors etc.

There are six markets frameworks in the relationship marketing model, namely, internal markets,

referral markets, influence markets, recruitment markets, supplier markets and customer markets

(Cristopher et al, 2004).

a) Customer markets: is placed in the central position of the model. The relationship

marketing creates customer value and satisfaction. This in turn creates loyalty in

customers resulting in long term profitability. Apple designed iphone as a differentiated

product. These products reach the end customers through the dealers and retailers. They

develop good relations with the customer and the firm has to keep their relation with

retailers in good condition to keep the customer market.

b) Referral markets: They create good will to the organization among the customers. If

customers find any difficulty with the product, they can seek the advice of third parties.

Even if there is no direct benefit for the organization, keeping a good referral market will

produce goodwill among customers.

c) The internal markets: refers to the role of employees towards marketing effectiveness.

The quality of the iphones depends on the skill and ability of the employees. When Apple

iphone 4 faced antenna problems, it resulted in customer dissatisfaction which in turn is

caused by the employee’s faults.

d) Recruitment markets: Apple’s core competencies are sustained by the skills and

experience of its employees. The organization may develop good relations with

universities and recruitment agencies who can maintain a sustained supply of skilled

labour force to the Apple.

e) Influence Markets: Payne and Ballantyne (cited in Cristopher et al, 2004) refers to a

range of third parties who have an influence over the firm and its customers. These third

parties include government, media, investors or pressure groups. Relation ship with these

parties may not directly add value to product but will influence the marketing processes.

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Apple’s good relations with the media gave wider publicity to the iphone before it is

launched. This relations act as promotional means better than formal advertisement.

f) Supplier markets: developing close relations with the suppliers creates integrated and

stable supply chains. This helps in integrating quality into the system and reduces costs.

For example Apple can integrate the supplier units of its parts with in the system so that

they can ensure the quality in every steps which will result in improved end product

quality.

3. Task 3

3.1. Segmentation, targeting and positioning of products

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3.2. Strategic options to Apple

3.3. Marketing mix for Apple iphone

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4. Task 4

Every organization is influenced by the changes in its external environment. The environmental

impacts are classified into two groups: directly interactive and indirectly interactive. Those

factors which have an immediate impact on the firm is called a directly interactive factor, for

example a new competitor in the market, suppliers, customers. The indirectly interactive factors

are secondary but have impacts on the organization. These factors include the political, social,

economic, legal and technological factors. The environment affects the organization’s use of

resources. The firm should assess the possible environmental changes and its impact on the

organization. The identification of potential opportunities and threats will enable the organization

to develop appropriate marketing strategies.

Apple’s external environment is turbulent with competitors and new technological

developments. By late 2007, Google developed Android mobile operating system which was a

threat to Apple operating system. Mobile phones developed to a state that they could replace

personal computers. This accelerated the competition between Apple, Google and Microsoft. In

2010, Google launched Nexus One, a touch screen smart phone that runs on Android operating

system and they advertised “web meets phone” which is equivalent to Apple’s ad “the Internet in

your pocket” when they introduced iPhone. Apple responded to this by announcing a strategic

acquisition. They purchased Quattro Wireless, an advertising company that aims their ads on

mobile phone users. Apple is finding opportunities in the technological development and

competition in their environment. The competition inspired Apple to come up with more and

more innovations. The short product life cycle of Apple iphone series is an example of the

innovative capability of Apple. If Apple have to survive competition from Google and Microsoft,

they have to fully capitalize on their core competency of innovation and product differntiation.

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4.2. Internal strength and weakness

4.3. Strategic marketing responses

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5. References

Blythe, J., 2001, Essentials of Marketing, 2nd edition, Pearson education Limited, Essex. Blythe, J., Coxhead, H., Lashwood, M., Patridge, L., Reed, P., Simms, H., 2006,

Strategic Marketing, Select Knowledge, University of Cambridge International Examinations.

Cristopher, M., Clark, M., Payne, A. and Peck, H., 2004, Relationship marketing: strategy and implementation, Butterworth-Heinemann, Amsterdam.

Foxall, G. R., 1981., Strategic Marketing Management, CroomHelm, London. Ireland, R. D., Hoskisson, R. E and Hitt, M. A, 2008, Understanding business strategy:

concept and cases, 2nd ed, South western cengage learning, Mason. Kotler, P., 2003, Marketing management, Prentice Hall Lomax, W., 2006, Analysis and Evaluation, 2006-2007, CIM Course book, Butterworth-

Heinemann, Oxford. Mercer, D., 1996, Marketing, 2nd ed, Blackwell Business, Oxford. McDaniel, C and Galis, R. H., 1998, Marketing research essentials, 2nd ed, South-western

College publications, Cincinnati. McDonald, M., 2007, Marketing Plans: how to prepare them, how to use them, 6th ed,

Butterworth-Heinemann, Oxford. Pride, W. M. and Ferrell, O.C., 2010, Marketing, South western Publishing. Proctor, T, 2000, Strategic Marketing, an introduction, Routledge, London. Bloomberg Business week, Apple Vs. Google, available on

http://www.businessweek.com/magazine/content/10_04/b4164028483414.htm (accessed on 27/04/2011).

6. Bibliography

Nijssen, E. J., Frambach, R. T, 2000, Creating Customer Value through Strategic Marketing planning: a management approach, Kluwer Academic, Boston.

Rama, the Apple iphone-a marketing mix perspective, available on http://www.ama-rochester.org/blogorama/2007/07/the-apple-iphon.html (accessed on 29/04/2011).

Gizmodo, 2010, The Dogs of war: Apple Vs Google Vs. Microsoft (available on) http://www.wired.com/epicenter/2010/04/the-dogs-of-war-apple-vs-google-vs-microsoft/ (accessed on 29/04/2011).

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