The strategic analysis of the Apple Inc. reveals that the company can take a strategic direction of investing in innovative products each year up to 2020. The aim of this section of the report is to determine the marketing objectives, product-market strategies, segmentation and positioning strategies as well as customer value creation.
Top line revenue objective Gross margin
Year 1 $_____55bn____________ _39.7__%
Year 2 $_____65bn____________ __40_%
Year 3 $________74bn_________ _41__%
Apple experienced a drop in sales in the second quarter of 2016 and this was attributed to various macroeconomic factors as well as the fact that lack of growth in the smart phone market. In the last quarter of 2015 Apple Inc posted record sales of $58 billion and in the second quarter of 2016, the sales dropped by 12 percent to $50.6 billion (Apple Inc, 2011).According to Apple Inc. (2015) the $58 billion sales represented a gross margin of 39.9 percent while this has dropped to 39.4 percent in the second quarter of 2016. Through this strategic marketing report, Apple can increase its sales to $55 billion in 2016, 60 billion in 2017 and 74 billion in 2018; this will result to a gross margin of 39.7 percent, 40 percent and 41 percent respectively. This is supported by the fact that Apple through its employees seeks to continue making top notch products for its consumers.
Product Market Strategies
Product market strategies are detailed in nature as they address the market impact of a product line (Drummond, Ensor and Ashford, 2010). The fundamental decisions that a manager has to make are the products to offer and the markets to target.
This refers to the strategic option that involves selling more of the organizations existing products in the existing markets (West, Ford and Indrahim, 2015). The products that Apple currently offers include MacBook, iPad, iPhone, watches, TV and music (Apple Inc, n.d). These products are offered in various market segments such as the computer segment and the smart phone segment. For Apple to attain an increase in sales to $55 billion, it should increase it sales in the two market segments. These market segments present the best opportunity for Apple to boost its profits and increase sales.
New Product Development
New product development is a strategy that is used by companies to enhance its product offerings (Karamai and Tajvid, 2015). Apple can use this strategy since it comes up with new products for its market segments each year. In a recent interview, Apple CEO Tim Cook revealed that the company will release iPhone 7 this year in an effort to grow sales (Kahn, 2016). Apple should continue pursuing this strategy because its new phones have always proved to be popular among consumers.
Although Apple is a multinational company, its presence in some markets has not been felt. Apple should use this strategy to focus its products on emerging markets. According to Hershman (2016), Apple sees emerging markets such as India and China as chances to enhance its global growth. Apple should use the market development strategy to introduce its existing products to emerging markets to also enhance its sales and profitability.
Radical innovation is strategy that is used by firms to introduce new products to new markets. Apple can use this strategy since the smart phone market is highly competitive as requires uniqueness in products to guarantee success. Apple should use this strategy to introduce new and never seen before products to the market. For example, the Rose Gold MacBook introduced by Apple this year is an example of radical innovation (Ann, 2016).
Segmentation, targeting and positioning strategies
Currently, Apple Inc segments its market according to location, lifestyle, demographics, product related and benefits segmentation. This market segments also determine the position and target market for Apple. Apple is located in over 88 countries where it targets people living mostly in cities. The company should continue with this segmentation strategy because it has resulted to high profits for Apple. In terms of demographic segmentation, Apple targets youth, teenagers, middle and upper class as well as business professionals. For example, teenagers are offered products such as iPods. Moreover, most Apple products are premium products and therefore the company targets consumers depending on their lifestyle (O’Grady, 2009). However, Apple should introduce the new products by keeping in mind that this will bring problems in terms of its segments.
Customer value creation mix
Delivering customer value is as important as identifying value opportunities and choosing value opportunities. Organizations must undertake activities that actually enable their customers to obtain value from their products (Njissen and Frambach, 2013). According to Weinstein (2012), customer value can be created through marketing mix programs and employees. Apple customer mix can be created through the marketing mix. In this case, Apple should offer high quality products such as the iPhone, iPad and MacBook to its consumers. Moreover, the pricing of the products will also determine how customers obtain value from Apple’s products hence the company should aim at reviewing its pricing structure which is considered premium. Furthermore, Apple should also advertise for its products through social media and other contemporary advertising models. The placing of the products should be on the global market and not restricted to certain markets to ensure that Apple enhances its market share.
According to the CMO Survey report, organizations expenditure of marketing depends on the revenues they generate. For example, firms that make revenue of over $10 billion allocate 5.5 percent to marketing activities. Apple makes over $10 billion in revenues and should therefore allocate a reasonable amount to its marketing activities. With a decrease in revenue in the recent quarter, Apple Inc should allocate at least six percent of its revenues to marketing to enhance its growth. Part of this allocation needs to go into marketing of Apple products such as iPhone and iPads. These core offerings should be allocated 50 percent of the marketing budget because they provide the organization with the best chance of enhancing its growth. Furthermore, 20 percent of the revenues need to be allocated to enhancing perceived customer value.
The strategies recommended in this marketing plan cannot work effectively without the use of a proper implementation plan. The top management should collaborate with the marketing department to ensure that the strategy works. Other departments that will also play a critical role include the sale department which will be tasked with meeting the sales objectives. Moreover, the finance department will also play a role in the allocation of funds for the marketing activities. The product development department will also ensure that new products hit the market each year.
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Hershman, B. (2016) Will Apple’s growth come from emerging markets? [Online]. 2016. The Street. Available at: http://www.thestreet.com/story/13436977/1/will-apple-s-growth-come-from-emerging-markets.html. (Accessed: 8 May 2016).
Kahn, J. (2016) This week’s top stories: iPhone 7, Apple Music’s iOS 10 redesign, Tim Cook interview, new apps & more. [Online]. 2016. 9to5Mac. Available at: http://9to5mac.com/2016/05/07/this-weeks-top-stories-iphone-7-apple-music-tim-cook/. (Accessed: 8 May 2016).
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