Apple Inc. Naics code, 334111, Electronic Computer Manufacturing Apple® -iPad® 16GB* Tablet

The Apple iPad is in its maturing stage. Although the Apple iPad first generation has been discontinued, different models of the iPad has been made yearly since then. “Annual models begin to appear during the maturity stage” (Lamb 191). Post the introduction of the iPad as one of the first tablet PC’s, many competitors have entered the market. Competitors sell their tablets for a lesser price and still provide most of the features that Apple does. In response to the increasing competitors, Apple released the Apple iPad 3^rd generation with retina display at a lower price (Johnathan 2012). The third generation sold 3 million units globally in March of 2012. If consumers continue to respond as well to future generations, analysts believe that tablets could eventually cause the laptop segment to show no growth (Hulkower 2012).

Apple has been very successful in the promotion of the various products that it manufactures. These include the iPod touch, the MacBook pro, MacBook air, the MacBook, the different iPhones, and the different iPads. Apple employs five different promotional strategies to ensure that the company’s sales are kept high. Apple uses the following elements of promotion: advertising, the social media, public relations, personal selling, and sales promotion. Apple’s promotional mix can only be labeled as innovative and prosperous, since its logo has become one of the most recognizable symbols worldwide.

The main promotional tool used by Apple is advertising, which Apple has intensely invested in. Apple’s advertisements are so popular, and can be found on television networks, magazines, and the Internet, especially on YouTube. In 2008 Apple came up with a revolutionary set of televised series that used a form of comparative advertising. Apple came up with a scenario which two men, one older man dressed in a suit representing the “regular” PC, and the younger man dressed casually representing the MacBook. The aim of the advertisement was to portray how highly effective the MacBook computer is, and how ineffective the other PCs are. The advertisement was also designed to be comical, thus it appealed to a lot of potential customers of all ages, and this resulted in it becoming a sensation. The advertisement campaign was so popular that Apple even expanded the scenario globally.

Apple also uses personal selling as promotional tool in its many stores around the world. The many young people working in these stores are always up to date with the latest products, and upgrades the company produces. Their understanding of the various products helps them deal with all the different types of customers; therefore this has helped Apple to build itself a good image in the short and long run all over the world.

Apple also uses public relations as a means of marketing its products. Apple has used public relations campaigns in order to introduce new products. For example Apple carefully choreographed a public relation campaign for the iPad. Apple carefully started to give out bits of information to the media about a new product, in order to create a mystery about the product, in return this created a desire to have the product. Apple also created some speculation about the scarcity of some parts that were essential in the manufacturing of the new product, for the same purpose of creating a desire to have that product. It is simple if you want to gain people’s interest, create a sort of mystery around the object of their interest.

In conclusion Apple mainly uses three promotional strategies, which are advertising, personal selling, and public relations. Apple also uses sales promotion though on a smaller scale. For example the RadioShack, and Apple promotion, shows that if you buy an iPad for 500$, you get 100$ worth of gift cards for RadioShack products. This is a partnership between RadioShack and Apple for sales promotion.

When it comes to promoting Apple products, the company focuses mainly on the advertising, especially through commercials. As mentioned before, the company spends an average of $3,500 to $5,000 on tier one commercial productions (How Much Does It Cost… 2011). Tier One commercials are the most expensive of the Three Tiers because “tier 1 commercial is a national commercial…can be as simple as being created in a studios with a green screen or as elaborate as a Hollywood production” (How Much Does It Cost…2011). However, commercial advertising is not the only type of advertising Apple company do. They also advertise their products in “any technology magazine, and all over the Internet” (Apple – Promotional Strategy). They also focus on other forms of promotion, like personal selling and social media; however, their biggest way of promoting their products is through advertising. Advertising will grab the audience’s attention and interest.

With the Apple iPad, when it first came out, “Apple [had] done an amazing job of promoting their iPad” (Turja, 2011). Turja also noted that promoting the iPad was very successful for there were “several videos spread around the web in addition to commercials on TV and Radio” (2011). In addition to the commercials, “[t]hey also sent out several iPads to technology reviewers in order to promote the iPad” (Turja, 2011). Also, according to Turja, the employees in the Apple stores all carried around an iPad to show potential customers or just visitors what the iPad was and what it can do (Turja, 2011).

Many different advertisements were created for the iPad to target different market groups. Apple tried to create a variety of different ads that will target the business industry, teachers, senior citizens, teenagers, and so on. However, in the end, their message about the iPad is the same to every target market, they are “showing how iPad can be useful, fun and intuitive for everyone” (Turja, 2011).

Apple has a number of different channels for distribution. They distribute their products to the consumer directly and indirectly using a number of different channels such as retail and online stores, direct sales force, and wholesalers, retailers, and value-added resellers (Form 10-K, 2012). Apple begins the distribution process with manufacturing the products and shipping them to the distribution centers, or hubs. From there, the products may be shipped directly to the online stores and retail outlets, which sell them directly to the consumer. Another option is that Apple ships its products to a direct sales force, which ship the product to a retailer and then to the customer. Apple may also ship their products to a third-party wholesaler, who also functions to ship the products to a retailer to sell to the customer (Form 10-K, 2012).

Figure 1: The Distribution Channel

Final Customer

Retailer

Retailer

Final Customer

Final Customer

Final Customer

Final Customer

Direct Sales Force

Third Party Wholesaler

Apple
Manufacturing

At the beginning of the distribution channels is the manufacturing of the products. This channel is both transactional and logistical. It is transactional because it involves taking risks on new products and negotiating different aspects of the products. Manufacturers also have a logistical function as they distribute the products to the Distribution Hubs and also sort and store the products. Then, the Distribution Channels or Hubs primarily serve logistical functions. They also sort and store the products they receive from the manufacturers and then distribute them to a number of different channels.

The direct sales force and third-party wholesaler channels of the distribution are involved in transactional and facilitating functions. They are transactional because they contact and promote the products to customers, as well as negotiating the price and other aspects of the product. This is also a facilitating channel because it requires research and financing.

The online stores, retail stores, and retailers are all types of transactional and logistical functions. They promote the products to the customer as a transactional function. Logistically, they are all responsible for sorting and storing the merchandise. Also, their job is to distribute it to the customers.

Apple’s products are currently sold worldwide through a variety of direct and indirect distribution channels, such as retail stores, online stores, direct sales force, third-party cellular network carriers, wholesalers, retailers, and so on. Thus, channel conflict within the company’s distribution structure is definitely unavoidable. There are two types of channel conflict, which are horizontal conflict and vertical conflict.

Horizontal conflict occurs among channel members at the same level (Lamb et al., 2012). Apple’s horizontal conflict usually happens because of the difference between the company’s direct retailers’ and indirect retailers’ goals. The iPad 1^st Generation is not really available on the market now, as it has been replaced with newer versions, so we cannot compare the exact prices being offered by the direct retailers and indirect retailers. However, the prices of products offered by the indirect retailers, such as Amazon, Target, Best Buy, etc., are always a little bit lower than the direct retailers’ prices. The main reason was because the indirect retailers want to attract more customers to enhance their sales growth whereas the direct retailers care about reaching specific sales and market share goals. The price difference has somehow made Apple’s direct retailers unable to compete because most of the time Apple does not reduce the price of its products. Thus, the company has been implementing stricter price requirements so that the indirect retailers cannot give too much markdown to the price (Apple, 2012).

Vertical conflict occurs between channel members at different levels of a marketing channel (Lamb et al., 2012). Some of Apple’s resellers have been affected because of weak economic conditions. Due to limited number of customers, some resellers have considered the expansion of the company’s direct sales conflicting with their business interests as distributors and resellers of the company’s products. They do not want to compete aggressively with too many direct distributors from Apple. This conflict has either discouraged resellers from investing their resources in the distribution and sales of the company’s or leads them to limit distribution of those products. In this case, Apple has invested in programs to enhance reseller sales such as assisting resellers’ stores with Apple employees and contractors and improving product placement displays (Apple, 2012).

These conflicts cannot be totally avoided, but they can be reduced to minimum. Because of different goals, strategies and capabilities, channel members will always compete with each other. Different levels of Apple’s distribution channel may have different objectives, which lead to conflict within the company. Overall, Apple has been trying its best to minimize all the conflicts by applying many price requirements and giving assistance to its distributors if necessary.

References

Apple. (2010). Apple.com. Retrieved from http://www.apple.com

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Apple Promotional Strategy - Essays - Maqbooli. (n.d.). Retrieved February 13, 2013, from http://www.studymode.com/essays/Apple-Promotional-Strategy-480006.html

Form 10-K. (2012, September 29). Retrieved February 12, 2013, from http://www.sec.gov/Archives/edgar/data/320193/000119312512444068/d411355d10k.htm

How Much Does It Cost to Make A TV Commercial? (n.d.). Maus Media Group Blog. Retrieved February 12, 2013, from http://mausmediagroup.wordpress.com/2011/03/08/how-much-does-it-cost-to-make-a-tv-commercial/

Hulkower, B. (n.d.). Tablets - US - April 2012. Retrieved February 13, 2013, from http://academic.mintel.com/display/590326/?highlight=true#.

Jonathan. (n.d.). Product Life Cycle – The iPad Experience | Tha Business. Retrieved February 13, 2013, from http://www.thabusiness.com/2012/03/product-life-cycle-the-ipad-experience/