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Brand management Apple inc.

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An attempt to study the brand management strategies of Apple inc.

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Brand management Apple inc.

  1. 1. A little history on Apple inc. Steven Wozniak and Steven Jobs had been friends in high school. They had both been interested in electronics, and both had been perceived as outsiders. They kept in touch after graduation, and both ended up dropping out of school and getting jobs working for companies in Silicon Valley. (Woz for Hewlett-Packard, Jobs for Atari) Wozniak had been dabbling in computer-design for some time when, in 1976, he designed what would become the Apple I. Jobs, who had an eye for the future, insisted that he and Wozniak try to sell the machine, and on April 1, 1976, Apple Computer was born. Hobbyists did not take the Apple I very seriously, and Apple did not begin to take off until 1977, when the Apple II debuted at a local computer trade show. The first personal computer to come in a plastic case and include color graphics, the Apple II was an impressive machine. Orders for Apple machines were multiplied by several times after its introduction. And with the introduction in early ‘78 of the Apple Disk II, the most inexpensive, easy to use floppy drive ever (at the time), Apple sales further increased. With the increase in sales, however, came an increase in company size, and by 1980, when the Apple III was released, Apple had several thousand employees, and was beginning to sell computers abroad. Apple had taken on a number of more experienced mid-level managers and, more importantly, several new investors, who opted to take seats on the board of directors. Older, more conservative men, the new directors made sure that Apple became a “real company,” much to the dismay of many of its original employees. In 1981, things got a bit more difficult. A saturated market made it more difficult to sell computers, and in February. Apple was forced to lay off 40 employees. Wozniak was injured in a plane crash. He took a leave of absence and returned only briefly. Jobs became chairman of Apple computer in March. Brand v/s corporate strategy Apple once again delivered very strong results in the face of hesitant consumers under recessionary pressures. Total revenue growth for the latest quarter was +36% led by the Mac
  2. 2. brand in personal computers at +51%. The MP3 segment led by the I Pod brand delivered growth of +1% while the iPhone sold 1.7 mm units. So how is Apple able to deliver consistent sales and profit growth in tough recessionary times with premium pricing while many of its competitors deliver poor results. In a phrase --it's their superior branding strategy. A company's brand name is often its most valuable asset. Simply put a "Brand" is a name that consumers associate positive or negative benefits or attributes about a particular product, service or company. Many people think of brands as it relates to the supermarket industry. However, a brand can be more than just a product name. Strong brands can evoke images of dependability " Maytag", safety "Subaru", luxury " Tiffany" or in Apple's case "cool or hip and technologically superior". There are many types of Brand names. You can have a corporate brand name "General Mills" for example. Most General Mills products have their own individual product brands "Cheerios". The Big G logo is put on most General Mills products to signify trust and consumer confidence. The individual brand "Cheerios is what most consumers remember. In Apple's case, Apple is the corporate brand with iPod being the individual brand. Some companies brand a service or a component of a product "Intel inside". Other companies use an "Umbrella" brand Pepperidge Farm (owned by Campbell Soup-CPB) This where they use the same brand for multiple products (cookies, bread, crackers etc.). Umbrella brands are used when marketing funds are tight and the umbrella brand provides instant name recognition to the consumer. However, companies must be careful not to use the umbrella brand for all products. Kraft means "cheese" to consumers. Cheese based products under the Kraft brand have done very well. However, when Kraft Foods has used the Kraft brand on other categories (salad dressings, barbecue sauce etc) their results have not been as strong and effective. Apple's success in the last year is based on two strong strategic moves they have made over the last several years. The first was branding and marketing support behind the launch of the iPod. They created a segment (MP3 players) using a very cool, image based television campaign featuring big name music stars to appeal to the image crazed teenager crowd. They provided a good product (not superior in my mind) but correctly branded it and provided a high level of marketing support to cement their image as the only cool MP3 player. I have 3 teenagers and consistently tried to get them to settle for the less expensive Sansa brand but was told it was an iPod or nothing. Apple created a value added difference vs. =their competition (image) based primarily on advertising and "Branding". Secondly, they followed up that success by supporting their Macintosh line of personal computers and highlighted the ease of use vs. the Vista operating system and other computer manufacturers. Their recent quarterly results for Mac's +51% shows this effort has also delivered. Consumers have bought into their branding efforts for Mac's -- they are easier and simpler to use and also more cool than traditional personal computers from Hewlett-Packard (HPQ) and others. In this situation Apple, also benefitted from what's known as the "Halo" effect. In advertising terms this is when when one product or brand from a company benefits in sales from a 2nd product or ad campaign from the same company. The iPod has had a halo effect on the Macintosh brand by bringing in younger, more image conscious consumers. The iPod brand has also provided some of this same "halo effect" to the iPhone. Consumers
  3. 3. clearly know that all 3 products are made by Apple (the corporate brand) and this translates to consumers believing Apple's products are more hip and technologically superior than competitive products. The benefits to Apple as company for this superior branding strategy are immense. It provides a fantastic platform for future new products. Consumers will constantly seek out their new products and view them as the next generation with a cool image and technological superiority, It will also provide them with superior pricing power over the long term. This means that Apple will continue to lead and deliver above average sales and profit growth. As in consumer food products a superior brand name is worth its weight in gold. 5 levels of product v/s brand Customers will choose a product based on their perceived value of it. Satisfaction is the degree to which the actual use of a product matches the perceived value at the time of the purchase. A customer is satisfied only if the actual value is the same or exceeds the perceived value. Kotler defined five levels to a product: Core Benefit - the fundamental need or want that consumers satisfy by consuming the product or service. Generic Product - a version of the product containing only those attributes or characteristics absolutely necessary for it to function. Expected Product - the set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. Augmented Product - inclusion of additional features, benefits, attributes or related services that serve to differentiate the product from its competitors. Potential Product - all the augmentations and transformations a product might undergo in the future. Because Apple has a really wide range of products for this exercise we will select only one, so iPhone it is. Let us now identify the 5 levels of products: Core benefits – iPhone just used for tele-communication Generic product - iPhone with at least features of a smart phone Expected product – iPhone with camera, music and video playback, small application to help perform daily tasks Augmented product – iPhone with 3G fecility, comfortable touch screen, motion gaming, open platform to develop softwares for iPhone and also covers all expected product list Potential Product – All of the above mentioned and better strong body, break-free screen, updated technology, cheaper, no cellular provider lock and many more. Although it satisfies the 5 levels of a product the iPhone as a brand is still the rich boys phone and it prefers this
  4. 4. image unlike many others. Positioning-competitive Marketers manage product positioning by focusing their marketing activities on a positioning strategy. Pricing, promotion, channels of distribution, and advertising all are geared to maximize the chosen positioning strategy. Generally, there are six basic strategies for product positioning: By attribute or benefit- This is the most frequently used positioning strategy. For a light beer, it might be that it tastes great or that it is less filling. For toothpaste, it might be the mint taste or tartar control. By use or application- If you want extreme processing you would go for a AMD processor instead of Intel processors. AMD spends a lot of resources on building high performance parts than on advertising like Intel. By user- Campushook is a social networking site used exclusively by college students. Campushook is too cool for Facebook and serves a smaller, more sophisticated cohort. Only college students may participate with their campus e-mail IDs. By product or service class- Margarine competes as an alternative to butter. Margarine is positioned as a lower cost and healthier alternative to butter, while butter provides better taste and wholesome ingredients. By competitor- BMW and Mercedes often compare themselves to each other segmenting the market to just the crème de la crème of the automobile market. Ford and Chevy need not apply. By price or quality- Tiffany and Costco both sell diamonds. Tiffany wants us to believe that their diamonds are of the highest quality, while Costco tells us that diamonds are diamonds and that only a chump will pay Tiffany prices. Positioning is what the customer believes and not what the provider wants them to believe. Positioning can change due the counter measures taken at the competition. Managing your product positioning requires that you know your customer and that you understand your competition; generally, this is the job of market research not just what the entrepreneur thinks is true. Now coming to Apple and their positioning strategy, According to me Apple uses the Positioning by attribute and also positioning by user. Let us see the different Apple products and their positioning by attribute: iMac – Extreme hardware, costlier than the regular PC Mac OS X - Good graphics, many user oriented features more stable than windows Final Cut pro – World class movie editing softwares, used by Steven Speilberg iPhone – Changed the face of smart phones, the best hardware and software combination at the moment. Ipod – Durable, and well segmented into shuffle, nano, classic, touch, and many more to yet launch. Apple has positioned itself to a certain type of customer, wealthy people, innovators, people
  5. 5. with good jobs, good lifestyle, etc. If Apple targets the poor man type, the trendy guys will stop buying Apples, because everybody can and Apple is not the Porsche of the computers anymore, this would hurt more the brand than maybe the increasing sales because of lower prices, and in good times, where everybody has more money, Apple would have the problem that they cannot rise prices, because everybody expects a cheap Apple (the macroeconomics deflation problem).
  6. 6. Points of parity and points of difference Apple has generating a lot of talk with the new MacBook Air and as might be expected there's a lot market buzz as well. I think the best way to tell is to compare this computer with the other Apple laptop computers of similar size. Since Apple's last offering is the MacBook Pro I'll use this as the comparator. To discuss points of parity and points of difference I would like to take to of Apples great products the MacBook pro and the MacBook Air. I've heard it said that the MacBook Air is just a designer laptop for trendy types to show off with. I don't think this is quite fair. The MacBook Air specifications quite plainly demonstrate, this is a serious laptop. A better description might be that this is a business laptop without the fancy graphics or sound. A machine designed for travel not merely to impress. Size and Weight: This is likely one of the most important considerations. You have to haul this thing around with you everywhere you go. A few pounds here or there can add up quickly. • The MacBook Pro weighs 5.4 pounds • The MacBook Air weighs 3 pounds Weight Summary: The MacBook Air weighs 2.4 pounds less than the MacBook Pro. Thickness: The two MacBooks differ in thickness by a quarter inch (1/4) and this could also affect how well it travels. • The MacBook Pro is one (1) inch thick • The Macbook Air is slightly less than three-quarter (3/4) inch thick Size Summary: The MacBook Air is one quarter inch thinner than the MacBook Pro. Processing Power: Both Macbooks use the Intel Core 2 Duo processor, however they differ in processor speed. The MacBook Pro actually has three options when it comes to processor speed to the Air's two. Both machines have an L2 4MegaByte cache. • MacBook Pro Intel Core 2 Duo at 2.2, 2.4, and 2.6 GigaHertz • MacBook Air Intel Core 2 Duo at 1.6 and 1.8 GigaHertz Processor Summary: A higher number here is better. Video Processor(s):The MacBooks differ in this area. This must be one of the areas Apple
  7. 7. chose to save size (thickness) and weight (a difference of over two pounds). • The MacBook Air uses the embedded Intel GMA X3100 graphics subsystem. Embedded meaning it's part of the motherboard. Connected to an external monitor via the micro-DVi port, the max-res in extended desktop mode is 1,280 by 800 pixels (60Hz). Thie highest resolution available is 1,920 x 1200 through the MicroDVI port to an external monitor. • The MacBook Pro uses a separate NVIDIA GeForce 8600M GT graphics processor that's connected to the dual-link DVI connector. In the extended desktop mode, the maximum resolution for the external display is 2,048 by 1,536 pixels (60Hz or 75Hz); mirrored mode, the maximum size is 1,680 x 1,050. Video Summary: The MacBook Pro has better video both in the machine and connected to an external monitor. So if superior graphics are required the Pro might be the better choice. Since the MicroDVI is also expected to support the external optical device using the two simultaneously may be problematic. Sound: Sound quality for the two machines is about equal but the actual externalization of the sound e.g. how you the user hear it is something else. • MacBook Pro: Has stereo speakers built in to the case. You can also connect external speakers or headphones via the headphone jack or via a bluetooth device. • MacBook Air: Has mono output to its speakers. For stereo output you will need to attach speakers or headphones to the headphone jack or a bluetooth device. Sound Summary: If sound quality to a group of users is important the MacBook Pro might be the better choice. Storage: This is another area Apple changed to save size and weight. In order to keep the Air under one inch thick Apple resorted to a smaller thinner disk drive. • MacBook Air: Uses a 1.8-inch PATA (parallel ATA) drive off of a standard PATA bus. This means the drive, though smaller, is slower. • MacBook Pro: Uses the larger, faster SATA (serial ATA) drives off of a 1.5Gbps SATA bus. Storage Summary: This mean that if writing to and reading from your disk storage is important the MacBook Pro is likely the better choice. Wireless Connectivity: The MacBook Air uses 802.11n WiFi connectivity with a maximum throughput of 74 Megabits per second and data rate of 248 Megabits per second. This is the fastest of any of the 802.11 standards. Wireless transmission of 70 meters (230 feet) indoors (depending on wall construction) and 250 meters (820 feet) outdoors means this wireless standard also has one of the longest ranges of any of the 802.11 networking methodologies.
  8. 8. Brand element The memorability of this product is high thanks to the name of their products, for example iMac, iWork, iLife or even iPhone. They all have have “i” prefixed to their names to signify Internet or innovation and most of all interesting. All Apple products are known for their breadth taking user interfaces and custom graphics. Often known as the rich boy's PC, Apple always was remembered as a premium brand of products (computers to start off with). The name Apple is rather not so meaningful because “Apple” normally used in a conversation get a fruit in your mind but for anyone and everyone who has a computer and an Internet connection would always related it with Apple Inc. Also the transferability of this product is low. This became clear when all their products use a unique trade marked name like the iPhone or iPod etc although they all use Apples brand values and position. The apple logo is flexible over time. It has been used for several years already and today it does not look old-fashioned at all. So the adaptability of Apple is good as well. If you look below the apple logo from the past till date and the change in it:
  9. 9. Apple is a protected, registered trademark, protactability being the fifth criteria. Brand communications In 2006, Apple released a controversial series of twenty-four Straw man "I'm a Mac, I'm a PC" advertisements as part of their Get a Mac campaign. The ads, which are directed by Phil Morrison, star actor Justin Long (Accepted) and author and humorist John Hodgman (The Daily Show) as a Macintosh (Mac) and a PC, respectively. The format for each commercial is similar: Long introduces himself as a Mac and Hodgman introduces himself as a PC (assumed to be running the Microsoft Windows operating system), then the particular facet of computing is stated, after which the Mac is depicted as being able to do whatever the PC is able to do, but does it quicker, more safely, more creatively, or with more versatility. Since the launch of the original ads, similar commercials have appeared in Japan and the UK. While they use the same form and music as the American ads, the actors are specific to those countries. The UK ads feature famous comedy duo Mitchell and Webb; David Mitchell as the PC and Robert Webb as the Mac. The Japanese ones are played by Rahmens, with Jin Katagiri as the PC and Kentarō Kobayashi as the Mac. In 2007 during the launch, a new iPhone print ad has debuted and is featured in the August 2007 issue of Details Magazine. The ad features a right-facing iPhone on a black background, with a hand coming from the right, seemingly lit only by the phone, interacting with it. Below the image is the tagline “Touching is believing.” MacDailyNews has suggested that in light of the “Jesus Phone” or “God Phone” moniker some have applied to the iPhone, the ad may be deliberately referencing Michelangelo’s The Creation of Adam fresco found in the Sistine Chapel.
  10. 10. The Creation of Adam is a fresco on the ceiling of the Sistine Chapel, painted by Michelangelo circa 1511. It illustrates the Biblical story from the Book of Genesis in which God the Father breathes life into Adam, the first man. Chronologically the fourth in the series of panels depicting episodes from Genesis on the Sistine ceiling, it was among the last to be completed. It is one of the most famous images in the world.