Reference no: EM13780322

Consumers Take a Shine to Apple Inc.

Few companies have fans who sleep outside their doors in order to be the first to snag their newest products. However, this is a common occurrence at Apple Inc. The new iPad (Apple's third generation of its iPad product) sold 3 million units four days after the launch. Headquartered in Cupertino, California, Apple went from near bankruptcy, with a 1997 share price of $3.30, to a brand valued at $153 billion and a share price of more than $600.

Apple first entered the public sphere in 1976 with the release of the computer Apple I, created by Apple co-founders Steve Jobs and Steve Wozniak. A few innovations later, the company had more than $1 million in sales. Yet Apple's luck did not last. Its downturn started during the 1980s with a series of product flops and resulted in near bankruptcy for the company. The return of Steve Jobs, who had been ousted in 1985 due to internal conflicts in the company, instituted major changes for Apple. The company successfully adopted a market orientation in which it was able to gather intelligence about customers' current and future needs even before the customers themselves knew they needed it. For instance, the creation of the iPod and iTunes met customer needs for an efficient way to download a variety of music and listen to it on-the-go. While it was once unheard of to access the Internet from a cell phone, Apple's iPhone made it commonplace. Apple's investment in the iPad set off a massive surge in demand for tablet computers. Apple has become skilled at recognizing strategic windows of opportunity and acting upon them before the competition.

Apple's Pricing and Promotion Strategies

In addition to its revolutionary products, Apple's success in pricing, promotion, and distribution have also contributed to its popularity. Apple products are traditionally priced high compared to competitors. For example, the new iPad retails for approximately $499 (although models with additional gigabytes are more expensive), while the Amazon Kindle Fire retails for $200. Apple's Mac computers are often more than $1,000. Yet rather than dissuading consumers from adopting the products, the high price point provides Apple with an image of prestige. Apple also stresses the convenience of its products as well as the revolutionary new capabilities they have to offer. Thus, it attempts to create value for customers, prompting them to pay more for Apple products than for those of its competitors.

Even with high-quality products, companies rarely achieve the success of Apple. Apple encourages demand for its products through several types of promotion, including word of-mouth marketing. Early on, Apple supported evangelism of its products, even employing a chief evangelist to spread awareness about Apple and spur demand. Successful evangelists spread enthusiasm about a company among consumers, often through word-of-mouth marketing. These consumers in turn convince other people about the value of the product. Through product evangelism, Apple created a Mac cult loyal customers eager to share their enthusiasm about the company with others.

Apple's Impact on Marketing

Apple's corporate culture of innovation and loyalty has created a company that massively impacts the marketing strategies of other industries. For some, this impact has been largely negative. Apple's iPhone increased competition in the cellular and smartphone industries, and its iPad competes with electronic readers like Amazon's Kindle. Apple has also taken market share away from competitors such as Research in Motion (RIM). Many RIM BlackBerry users are opting to exchange their BlackBerrys for iPads or Android devices. On the other hand, many companies are seizing upon the opportunity to learn from Apple. One industry in which Apple has made great changes is in retail.

Apple stores differentiate themselves significantly from other retailers; in fact, Apple took the concept of retail in an entirely new direction. Everything in the Apple store is carefully planned to align with the company's image, from the glass-and-steel design reminiscent of the company's technology to the stations where customers can try out Apple products. Apple stores are a place where customers can both shop and play. Customer service is also important to the Apple store image. Employees are expected to speak with customers within two minutes of them entering the store. Each employee has received extensive training and often receives greater compensation than those at other retail stores to encourage better customer service.

Apple executives constantly look for ways to improve stores, enhance customer service, and increase the time that customers spend in-store. In 2011 the company began to install iPad stations within its stores. The iPads feature a customer service app designed to answer customer questions. If the customer requires additional assistance, he or she can press a help button on the app. The app changes the customer service experience because rather than the customer seeking out the sales representative, the representative comes straight to the customer.

Due to the immense success of Apple stores, other companies are attempting to imitate its retail model. Microsoft and Sony opened some of their own stores, and others use Apple products to enhance their businesses. For instance, some pharmaceutical and car salespeople have adopted the iPad to aid in business transactions, and some restaurants even use the iPad to show menu items.

Apple Going Forward

The death of Steve Jobs concerned some people about the future of Apple. To many customers, Jobs appeared to be a savior who brought the company back from near bankruptcy and who was the driving force behind its innovative products. In the past, whenever rumors of Jobs's health reached the public, Apple's share prices dropped. However, the company remains optimistic. Although Apple must fill its leadership gap and continue innovating to deliver on its promises of quality, the loyalty that fans feel for Apple remains high.

Questions for Discussion

1. How has Apple implemented the marketing concept?

2. Describe the role of Apple stores as an important part of its marketing strategy. ?

3. What will Apple need to do to maintain product innovation and customer loyalty?