Marketing: Case Study of Apple Inc.

Table of Contents
TOC o “1-3” h z u 1.Introduction PAGEREF _Toc470424134 h 32.Apple’s Market Segmentation Strategies for iPhone PAGEREF _Toc470424135 h 32.1Demographic Segmentation PAGEREF _Toc470424136 h 42.2Behavioural Segmentation PAGEREF _Toc470424137 h 52.3Geographic Segmentation PAGEREF _Toc470424138 h 62.4Psychographic Segmentation PAGEREF _Toc470424139 h 63.Implementation of the 4P’s marketing practice for the iPhone range PAGEREF _Toc470424140 h 74.Forces in the Market Environment Affecting Apple in Qatar PAGEREF _Toc470424141 h 114.1Political and Legal Factors PAGEREF _Toc470424142 h 124.2Economic Factors PAGEREF _Toc470424143 h 134.3Socio-Cultural Factors PAGEREF _Toc470424144 h 144.4Technological Factors PAGEREF _Toc470424145 h 144.5Environmental Factors PAGEREF _Toc470424146 h 155.Conclusion PAGEREF _Toc470424147 h 15References PAGEREF _Toc470424148 h 16

IntroductionApple Inc. is a leading electronics manufacturing and software company based in California, USA. The company manufactures a wide range of computing devices such as personal computers, tablets, smartphones and other hand-held digital devices for personal and business use. Some of the most popular brands associated with Apple include iPhone, MacBook, iPad, iTunes, and iPod. The company also develops software programs such as the iOS operating system for its products. Across the world, Apple is very popular because of its high-quality products combining various technological innovations to offer practical solutions to consumers’ needs.

Apple’s mission is to bring the most captivating personal computing experience to consumers, professionals, students and educators around the world through the innovative internet, hardware and software technologies. The company has a vision of being the global market leader in the production and manufacturing of high-quality computing and mobile media devices.
The objective of this report is to analyze the marketing strategies used by Apple for its iPhone range of products. The iPhone is a line of high-end smartphones designed by Apple since 2007. The paper is divided into three main sections. The first section gives a detailed analysis of the different market segmentation strategies used by Apple across the world. The second section focuses on how the company has applied marketing practices such as the 4P’s of marketing for the iPhone products. The last section explores the microenvironment factors affecting Apple’s marketing strategies. This section uses the PESTEL analysis framework, and its scope is limited to Qatar.
Apple’s Market Segmentation Strategies for iPhone
Segmentation refers to the strategy of dividing a mass market into small parts (segments), which are actionable, profitable, and definable and have sustained growth potentials (Hoyer & MacInnis 2007, p. 72). Due to constraints such as time limitation and scarcity of resources, many companies find it practically impossible to target the entire market. As such, companies focus on definable segments that can be targeted with available resources and time (Armstrong & Kotler 2005, p. 54). Segmentation allows companies to closely tailor their products and services to the expectations, uses, desires and consumption abilities of target customers (Vien 2015, p. 2). Also, the strategy allows companies to concentrate their resources on profitable markets and to implement realistic defensive strategies against competitors (Constantinides 2004, p. 112). Apple uses four different types of segmentation strategies for the iPhone range of products. These strategies are behavioral, demographic, psychographic and geographic.
Demographic Segmentation
Demographic segmentation is the most widely used strategy by Apple. This strategy divides the market based on demographic variables such as gender, age group, household income levels, family size, religion, race and occupation (Danaher, Hardie & Putsis 2001, p. 509). Apple uses demographic segmentation to get the right target market for the iPhones with income, age, and gender being the most important demographic variables for the company. With regard to age, Apple targets consumers in the 18 – 45 years age bracket. In other words, the iPhone is primarily targeted at young and middle-aged adults (Moritz 2009, p. 61). Part of the reasons for targeting this age group is that most of its members are technologically savvy and want to be associated with the latest and fashionable technological products.
With regard to gender, Apple has tailored the iPhone to appeal differently to male and female consumers. The company uses the sleek design and attractive colors to attract women. The company also uses advanced features to make the iPhone more attractive to male consumers. Regarding the income variable, Apple has significantly reduced the prices of iPhones to make them more accessible to price-conscious consumers (Lashinsky 2014, p. 29). It can be noted that when the first iPhone was launched in 2007, it was priced highly compared to rival smartphones from companies such as Samsung and Nokia. This made it difficult for the Apple to achieve its sells targets. To overcome this problem, Apple reduced the prices of subsequent products, especially the iPhone S4, which was marketed to middle-income customers. The company has a strategy of varying the attributes of the iPhone to make the products more appealing to affluent and middle-income consumers. Overall, Apple’s demographic segmentation strategy is very successful as evidenced by the fact that iPhones are the most popular smartphones in most markets across the world.
Behavioural Segmentation
This segmentation strategy divides the target market on the basis of consumers’ behaviours, decision-making patterns, product knowledge, attitudes and product usage (Cespedes 1995, p. 61). Apple recognizes that most smartphone users use the devices to perform online activities such as shopping and interaction with friends via social media. In addition, most consumers want devices that can satisfy their entertainment needs (Homan, Legon & Libai 2004, p. 271). For this reason, the iPhone comes with enhanced features such as an inbuilt web browser and enhanced internet connection capabilities. The device also comes with a high capacity camera, as well as unmatched media capabilities making it the most innovative entertainment gadget in the market. To reach out to a large number of potential consumers, Apple uses multiple platforms such as print, electronic and online to advertise the product. This has made the iPhones very popular among smartphone consumers all over the world.
Geographic Segmentation
This strategy divides the market based on geographic boundaries that have the potential to impact market communications and consumer’s purchasing behaviors (Hennig-Thurau, Malthouse, Friege, Gensler, Lobschat, Rangaswamy & Skiera 2010, p. 311). Apple has established the business for the iPhone in virtually all countries, making it a leading smartphone manufacturer and marketer in the world. The company uses national boundaries as the basis for its geographic segmentation strategy, meaning that it pursues different marketing strategies in different countries. Apple’s largest and most profitable national market is the United States. Other developed countries such as Canada, Australia, Britain, and Germany have also recorded huge sales for the iPhones (Reese 2010, p. 32). Similarly, emerging markets such as India, China, Russia, South Africa and Brazil have shown great potentials for more iPhone sales. However, competition from other smartphones is very stiff in these markets. In an effort to expand the iPhone’s geographic reach, Apple has adopted the global reach strategy and is actively increasing the number of retail stores (Reiner & Jurich, J 2014, p. 52). In addition, the company sells the iPhones through online platforms, as well as third-party retailers. Apple has programmed the iPhone in different languages and cultural features so that the device can be attractive in different geographic markets.
Psychographic SegmentationThis strategy divides the market based on the values, beliefs, and lifestyles of consumers’ (Delre, Jager, Bijmolt & Janssen 2007, p. 826). Apple recognizes that consumers vary in terms of personality, self-images, hobbies, interest and activities. To capitalize on these differences, the company has tailored the iPhone to be more appealing to the various consumer segments. For example, the iPhone S4 was tailored to meet the needs of a more youthful consumer group. The device has important features such as an easy-to-launch operating system, a spectacular voice recognition application (SIRI) and several other unrivaled apps that made it a quick sale in several markets. These features were enhanced in the subsequent versions (iPhone 5 series and iPhone 6 series), which are being marketed as novel smartphones (Lashinsky 2014, p. 28). For example, the iPhone 6 has a large screen size with enhanced touch capabilities, high megapixel camera, bigger internal storage and numerous aesthetic features. The devices also come in different color shades (such as white, blue, pink, red and black) to give customers a greater variety to choose from.
Implementation of the 4P’s marketing practice for the iPhone range from the viewpoint of a new consumerThe 4P’s of marketing is a model for defining the various components of the marketing mix. The model shows how companies match their business strategies and marketing activities to prevailing market conditions. The 4P’s are Price, Place, Product, and Promotion. Figure 1 below shows models of the 4P’s of marketing (Deffuant & Huet 2007, p. 817; Luan & Sudhir 2010, p. 61). Product refers to the item or service that is the object of marketing efforts. In other words, the product is what a company produces and markets to satisfy specific needs of consumers. To compete effectively, companies must ensure that they have the right type of product (Dibb 2012, p. 34). This can be achieved through extensive market research to determine market needs. Products go through definite life cycles (such as growth, maturity and sales decline phases) (Rahmani, Emamisaleh & Yadegari 2015, p. 98). Thus, it is important for companies to reinvent their products to remain relevant and stimulate more demand in the market.
Price describes the amount of money that customers pay to have their desired product. Price is an important aspect of the marketing plan because it determines the firm’s profitability and ability to attract more customers (Ma & Nakamori 2005, p. 741). If a product is priced highly, it may become less competitive in the market. Conversely, if it is priced lowly, the company may not generate enough sales revenue to sustain its business operations (Macy & Willer 2002, p. 7229). For this reason, successful companies frequently adjust their prices to make their products more competitive (Dye 2000, 141). Place describes the distribution strategy used to deliver the product to the market (Yuksel 2012, p. 52). For companies to make sales, they must be able to distribute and position their products in ways that are highly accessible and convenient to customers (Wayland & Cole 1997, p. 23). This requires a deeper understanding of the attributes of the target market, especially the location of customers, as well as their purchasing behaviours. Promotion refers to the various market communication strategies used by companies to create brand recognition and awareness about their products (Naik, Raman & Winer 2005, p. 25). Common elements of promotion include advertising, public relations, direct marketing and sales promotion.

Figure SEQ Figure * ARABIC 1: 4P’s of Marketing Source: Kotler, Keller, Leong and Tan (2012)
Apple’s product strategy revolves around the iPhone, which is a high-end smartphone combining several features to offer an unparalleled user experience. The iPhone was the first multi-touch smartphone in the world (Reese 2010, p. 32). Since the first iPhone product was launched in 2007, Apple has continued to expand the range of product attributes and features. The latest and most sophisticated iPhone model is the iPhone 7 Plus, which is a major improvement from the previous models. All versions of the iPhone have been sold successfully in different markets such as China, India, and the United States.
Apple’s uses premium and skimming strategies to set market prices for the iPhone range of products. The premium pricing strategy emphasizes the product’s unique value to customers. This strategy has helped to maintain the image of the iPhone as a high-end smartphone. Generally, Apple’s premium pricing strategy involves relatively higher prices than comparable products from rival companies. The downside of this pricing strategy is that the iPhone attracts a smaller market share, especially from low-income consumers (Lashinsky 2014, p. 52). Nonetheless, the company records high profits from the sale of iPhone because the premium pricing entails high-profit margins. Apple is known to reduce the prices of its products after initial product launch. This strategy has enabled the company to penetrate strongly competitive markets, especially in Europe and Asia.
Apple’s place strategy involves a holistic approach aimed at enhancing the distribution of products to the market. Considering that the iPhone is marketed in all parts of the world, Apple has adopted sophisticated distribution channels comprising of company-owned stores, third-party retailers, online app stores and telecoms companies (Marcia 2012, p. 28). Company-owned stores are the primary distribution strategy for the iPhone. The company also sells through selected authorized retailers such as Best Buy, Targets, and Wal-Mart. Leading telecoms such as Sprint, AT&T and Verizon have signed strategic partnership deals to sell iPhone products in their stores. To cater to a greater market share, Apple utilizes fulfillment services, which enabled the company to sell the iPhone through online retailers such as eBay and Amazon.com. Thus, Apple’s place strategy is very comprehensive in that it utilizes online and offline capabilities.
Apple’s promotion strategies are designed to emphasize the premium quality and high-end image of the iPhone products. To this end, the company utilizes different marketing communication strategies to create stronger brand equity (Marcia 2012, p. 29). In particular, the company’s promotional strategies include advertising, sales promotion, public relations and personal selling. The iPhone is widely advertised through the company’s websites, social media platforms and technological sites and magazines. The company utilizes personal selling in the form of in-store employees who provide crucial information about the product and convince customers to make a purchase. Regarding sales promotion, Apple offers old iPhone models such as the (iPhone 4) as discounted prices. The company uses public relations to optimize the corporate image. Common public strategies used by Apple include exclusive interviews, press releases and special events.
Forces in the Market Environment Affecting Apple in QatarThere are various models that can be used to analyze and understand the most important external factors that influence an organization’s decision-making and marketing strategies (Jager 2000, p. 34). The most effective and widely used model is PESTLE analysis. This framework is used to scan the macro-environment of an organization to identify political, economic, legal, technological, socio-cultural, environmental factors (Constantinides 2006, p. 413). The figure below shows a presentation of the PESTLE framework
PESTEL Model. Source: Jurevicius (2013).
The part that follows presents an analysis of PESTLE factors that can affect Apple in Qatar.
Political and Legal Factors
Political factors are related to the prevailing political environment in a country and also the policies and attitudes of the dominant political parties and movements (Baker 2003, p. 23). The influence of political factors may manifest in governments controlling of commercial activities, taxation policies and foreign exchange policies (Kotler & Keller 2009, p. 61; Watts & Dodds 2007, p. 444). Since political factors are influenced by the government, they are unavoidably intertwined with various legal factors such as consumer protection laws, restrictions on monopolies and mergers, employment laws and foreign trade regulations (Kotler, Keller, Ang, Leong & Tan 2012, p. 22). Qatar is a small country located on the southern coast of the Persian Gulf to the east of Saudi Arabia. Although the government claims Qatar to be a constitutional monarchy, political parties, and national-level elections are not allowed in the country. The Monarchy retains absolute powers and appoints cabinet ministers and key government officials from the royal family (Ibrahim & Harrigan F 2012, p. 8). The government of Qatar has implemented favorable laws and policies to allow foreign investment in the country. However, Apple’s businesses in Qatar are likely to be affected because Qatar is not a democracy. The judicial system is very strong, and the companies are expected to abide by the various laws and regulations. Overall, the political and legal environment in Qatar does not present any major challenges to Apple.

Economic Factors
Economic factors are the most important consideration for any organization. They include GDP growth rate, the cost of raw materials and labor, employment, and unemployment rates, monetary policies and inflation and exchange rates (Carley 2003, p. 134; Yoo, Donthu & Lee 2000, p. 195). Table 1 below gives a summary of key economic facts about Qatar.
GDP $167 billion (2015 nominal)
GDP per capita $71,481 (nominal 2015)
GDP by sector Agriculture (0.1%), Industry (58.8%), Services (41.1%) (2015)
Inflation 1.6% (2015)
Labor force 1.64 million (including foreigners )
Exports $77.74 billion (2015); Liquefied Natural Gas, Petroleum Products, Fertilizers and Steel
Imports 37.15 billion (2015); Machinery and Transport Equipment, Food, and Chemicals
Major trading partners India, Singapore, South Korea, UAE, China, UK, US, Japan, Italy Germany
Table SEQ Table * ARABIC 1: Key economic facts for Qatar, The Ministry of Development Planning and Statistics
The economy of Qatar is dominated by the industrial sector with the energy (oil and gas) industry accounting for a third of the country’s GDP. The sector also employs a lot of people. To avoid overdependence on the energy sector, the government launched a new development plan, which sets the direction for capital expenditure and encourages increased private investments in key industries. Over the years, the government has diversified the economy by giving more incentives to investors in the non-energy sector. This has led to a steady growth of other industries such as telecommunication and technology in general (The Ministry of Development Planning and Statistics 2015). The government has invested substantial resources in the development of internet and mobile telecommunication technologies. Most places, households and individuals in the country are connected to high-speed internet. In addition, the government has maintained a steady GDP growth fueled mainly by the boom in the energy sector. The country maintains strong trade ties with many countries, which has helped to stabilize exchange rates and inflation. All these economic factors are favorable to Apple.
Socio-Cultural Factors
The socio-cultural factor is related to the cultural values, norms, and practices of the people. Qatar is a highly heterogeneous society (Kotler & Keller 2009, p. 22; Vliet 2011). The country’s population is about 2.2 million but indigenous populations (citizens) account for less than 10% of the total population. Indians comprise the largest group of foreigners living in Qatar. Other notable groups include Pakistanis, non-Qatar Arabs, Chinese, Sri-Lankans, Nepalese, Filipinos, and Koreans. Under Qatar laws, foreigners are not allowed to register as citizens. Arabic is the national language of Qatar and is used widely in education, business, and government communications. However, due to a large number of foreigners living in the country, other languages such as English, French, and Chinese are also spoken. Islam is the state religion and is practiced by virtually the entire indigenous population. Foreigners are allowed to practice their respective religions. A key socio-cultural consideration for Apple is that its marketing strategies in Qatar must take into account the heterogeneous nature of Qatar, especially about language, religion, and cultural aspects.
Technological Factors
Qatar is a technologically advanced country, a factor that contributed its successful bid to host FIFA games in 2022. Over the years, various technologies have become mainstream in Qatar (Multiples 2015). The IT sector has grown rapidly due to the presence of a large number of foreigners. Smartphones are used by many people in Qatar. However, due to the small size of the country’s population, the market for most IT products (such as smartphones) is not lucrative.
Environmental FactorsThe government of Qatar has established an environmental protection committee whose mandate is to implement policies about the conservation of the environment. With the 2022 FIFA World Cup, a large number of foreign investors are looking at Qatar to determine its attractiveness (Multiples 2015). The government is determined to promote sustainable business practices and make Qatar attractive to foreign investors.
Conclusion
Analysis of Apple’s marketing strategies shows that the company has adopted sustainable practices to market its products. Among the company’s diverse products, the iPhone is the best performing in terms of sales volumes. The United States remains the largest and most profitable market for the iPhone. Apple is actively seeking to expand the global market for the iPhone. The company’s products are of high quality, durable and promise to offer great value to customers. Heightened competition and uncertain global economic climate are some of the factors affecting Apple’s marketing efforts in different parts of the world. With regard to the Qatari market, the macro-environment is favorable although Apple will have to tailor its products to the diverse needs and expectations of consumers.

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