1.0 INTRODUCTION
1.1 MARKETING AUDIT
There is a burgeoning pressure on marketing as a parameter to establish and put into implementation business-oriented techniques, and ways to enhance not only marketing, but also the overall success or potency of any business (Lipnicka and Dado, 2013).
In 2012, Kotler and Keller defined marketing audit as a broad-ranging, structured, unconventional and recurring scrutiny of a company’s market environment, targets, blueprints and activities with the aim of identifying the areas of challenges and opportunities, and finally proposing a plan of action to upgrade the marketing performance of the company.
Furthermore, marketing audit was described by Che and Cotler in 2013 to have 4 major characteristics, which should be:
- In-depth and widely focused, covering the whole marketing environment of the organization,
- An unbiased process and should not be reliant on executives or managers directly associated with making marketing decisions for the company,
- A structured and well organized progression of indicative steps as compared to a disorganized and unsystematic investigation,
- Done frequently. This simply implies that marketing audit for a company should not only be carried out when problems occur but also undertaken on regular intervals.
1.2 TOOLS FOR MARKETING AUDIT
Currently, several companies have put into practice several tools of marketing audit which boost their marketing management, provides solutions to problems faced by the company, control inauspicious effects during crisis, and utilize all possible opportunities the market has to offer. One of these tools is a marketing audit that sets “a marketing mirror” to an audited company. The use of this marketing tool is still increasing especially in western countries (Loya, 2011).
A variety of tools were used to evaluate the internal and external environment through SWOT analysis, PESTLE analysis, Marketing mix and market segmentation used for customer analysis, in order to have a concrete understanding of the marketing activities of the organization.
1.3 WHY IS MARKETING AUDIT A NECESSITY?
Few organizations make adjustments which tend to be feasible both politically and economically, however, these changes still don’t address the source of the problems the company faces (Linia, 2017).
Considering a marketing audit is of necessity for companies of all scales. This gives the company an avenue to recognize and review its up to date status of marketing activities and also helps in minimizing subsequent costs.
Furthermore, Lidia in 2016 stated that the strategy for marketing performance enhancement of a business can be built upon the basis of marketing audit, and gives answers to the following questions below:
- What is the Company’s performance in relations to the market share, customers’ view and profit— What is our stand in the market
- What are our plans of actions—how have we gotten here?
- What will be the long-term achievement if we continue with strategies in place—in what direction are we leading our company?
2.0 APPLE INC
Apple Inc, an American multinational corporation currently worth 1 trillion US dollars, was previously known as Apple computers in 1977 and later renamed Apple Inc in 2007, was founded in 1976 by Steve Jobs, Ronald Whyne and Steve Wozniak with the initial aim of developing and selling and personal computers to the public (Apple Inc, 2014).
Headquartered in Cupertino in California, where the design, development and sales of technological products like phones, computers and software applications are executed,Apple Inc is most recognized for its hardware products which consist of: Mac PCs, iPods, iTouch, iPhones, iPads, Apple watch and Apple TVs, and also professional and consumer interface applications by Apple Inc include the iOS for iPhones, iPads, and iTouch, with O operating-system OS X for Mac Pcs. Other software applications are iTunes, safari web browser, apple pay, iLife and iWork e.t.c (Apple Inc, 2017).
The Apple iPhone which was introduced to the public in 2007, was the first smartphone to have an effective touch-screen user interface, and till date has been the most commercially viable product of the company. The company has sold over 1 billion units globally between 2007 and Q3 of 2018. The iPhone accounts for over 60% of the company’s revenue as at 2018 , Generating over 166 billion dollars within in the third quarter of 2018 (NASDAQ, 2018).
Fig 1: Apple revenue by product group (2017- Q3 2018) Source (Apple 2018)
2.1 VISION AND MISSION STATEMENT
Apple Inc’s success is based on its vision and mission statements which has become a colophon of innovation and distinction in design. It motivates Employees’ to aid and contribute to the innovation and competitive advantage of the company (Apple Inc, 2014).
Its vision statement emphasizes on its foundational values which are product finesse and innovation (Wilson, 2014).
Apple is devoted to delivering the best experience to its customers through innovative hardware, software and Internet offerings, exhibiting superiority as its single core value (Cook, 2014). This is in line with their mission statement to provide world class products for its daily users or customers, with a strong followership (Apple Inc, 2014).
2.2 UNIQUE SELLING POINT
Apple is well known for its imaginative mastermind and edge cutting works in the tech industry. Its provision of products that can be described as state of the art, with very a friendly and highly personalized user interface making it very difficult for its users to shift over to other products (BBC, 2018). Apple provides a lifestyle with their products (Cook, 2017).
Furthermore, Apple in the last 10 years has introduced groundbreaking products which has had an impact on the functionality in the tech industry (NASDAQ, 2018). The Apple 6th generational iPhone is a typical example which has revolutionized the smartphone market giving their competitors a run for their money.
The iPhones are not that different from its competing device, Samsung, nevertheless, an Apple iPhone can be priced at almost twice as much as their competitor’s without breaking a sweat. This is simply because of the hardcore fan base Apple has built. An Apple user will delightedly pay a premium because his perceived value attached to Apple products.
3.0 SMARTPHONE VENDOR MARKET
The change in technicality and new product spread has made the mobile phone industry a very dynamic market in the ICT sector. Smartphones have gradually evolved to become a standard configuration amidst the various categories of mobile devices, with market shares controlled by very few vendors.
The digital revolution started in 1947 with Bardeen’s, Brattain’s and Shockley’s invention of transistors. Then the monochrome touchscreen was introduced in 1992 Simon by IBM, which consisted of a stylus, and a charging base unit. Nevertheless, it was not categorized as a smartphone (Ralph, 2015).
In 1996, Nokia got into the market and introduced the QWERTY keyboard with the launched the Nokia 9000 communicator. The Nokia 9000 wasn’t still officially called a smartphone, even though it was able to browse the web, send emails, and fax.
In June 2007, Apple released the first iPhone which changed the landscape of the industry. Google then joined the market in 2008 with Android OS-based smartphones, introducing the HTC Dream phone (Liana, 2017).
Since then, the smartphone commerce has been progressively evolving and rising in market size, models and dealers. Currently the smartphone industry is worth over 355 billion U.S dollars with over 1.54 billion units of sales at the end of 2017 rising by 40 million in a year (CNN, 2018). Sales of smartphone devices have sturdily risen over the last decade with no sign of slowing down. Between 2008 and Q3 of 2018, sales of smart phones grew from 170millions of global sales in 2008 to over 1.5 billion sales globally in Q3 of 2018, generating over 400 billion U.S. dollars in revenue ( Bloomberg, 2018).
Other prominent smartphone vendors include Lenovo and Xiaomi, LG, Motorola, Sony, HTC, Infinix and a few others hold the remaining market share (Adrian, 2018).
In the 3rd quarter of 2018, Apple has launched three new flagship models the iPhone XS, XS Max and the XR, with increase in memory content, expansion on the implementation of Face ID and all-screen innovation for their new models. As a result of these improvements in product specifications and expansion to the Indian market, iPhone’s rate of annual production was is projected to rise by 6% (Adrian, 2018).
In contrast, the second quarter of 2018 recorded LG’s declaration of its withdrawal from the Chinese market. This reflects how difficult it is for global brands to endure in the Chinese market, which currently has an increasing sustenance for domestic products.
The US China trade war also, with billions of tariffs in US dollars placed by Trump on goods from China, smartphone vendors who outsource manufacturing in to this region. However, there was a waiver placed on Apple products imported for China (Bloomberg, 2018).
4.0 PESTEL ANALYSIS
The table below indicates a PESTEL analysis for which outlines macro environmental factors surrounding the Apple and its impact on the iPhone market.
Political
- The US-China Trade war (CNN, 2018)
- Free Trade policies (Bloomberg, 2018)
- Disrupt in supply and sales as a result of political unrest in developing countries. (Ha, 2017)
- Political stability in developed countries (NASDAQ 2018)
Economic
- Rapid economic growth in developing nations like Nigeria (Bloomberg, 2018).
- Increase in China’s labour cost (CNN, 2018)
- Growth in Strength of the US dollar (NASDAQ, 2018)
- Stagnating middle-class incomes in a few developed countries, including the United States, (Stephen, 2018)
Socio-cultural
- Lifestyle of people in certain regions. An example is how a typical Asian user finds it difficult to use the various features of the Apple products (Da Gama, 2018)
- Unfamiliarity with products in regions like Africa (Apple Inc, 2018)
- Increase in the usage of social media platforms (Lipnicka, 2017)
- Trends in urbanization and demographics in India and China (CNN, 2018).
Technological
- Rapid up rise in competitors providing similar technological value at a cheaper rate9 (NASDAQ, 2018).
- Google’s smartphone business collaboration with Pixel and Nexus (Bloomberg, 2018).
- Increase in trends of mobile technology
- Global Industrial Revolution 4 (IR 4) driven by technology (Apple Inc, 2018).
Environmental
- Recent Trends in energy efficient products (Ha, 2017)
- Environmental impacts of improper disposals of electronic wastes (Stephen, 2018).
- Recent global focus on environmental issues (CNN, 2018)
Legal
- Incline in regulations on privacy (Apple Inc, 2018)
- Recent increase in telecommunication protocols (Apple Inc, 2018)
Apple depends solely on China for cheap cost of production (Lipnicka, 2017). The US China trade war can be a major opportunity to the company. This is because the US government has put a waiver on Apple products coming from china (Bloomberg, 2018). This simply implies that products from other smartphones vendors involved in China manufacturing becomes affected by the import restrictions by the US. However, the increase in labour cost in China is liable to be a threat to the price of Apple iPhones, as they search for a substitute to Chinese manufacturing (CNN, 2018)
Furthermore, in Africa where familiarity with product is low, a new phase of consumer spending can grow in Areas like this.
Although the rapid dynamism in mobile technologies can drive iPhone sales, the growth in competitors which provides similar technological value at a cheaper has been a major threat to the sales of iPhone, thus affecting revenue.
Apple has paid a lot of attention on reducing environmental impact from production of its products. Currently, renewable resources accounts for about 93% of energy Apple uses for production (Steph, 2018).
From the analysis above, the major drivers for the iPhone are the political, economic and technological factors which can either come as an opportunity or treat if it uses its R&D abilities to its advantage.
5.0 COMPETITOR ANALYSIS AND MARKETING MIX ANALYSIS
Currently, two of Apple’s most daunting competitors in the smartphone market are South Korean and Chinese tech companies, Samsung and Huawei. Samsung mobile, which at the moment is best recognized for its large screen galaxy smartphones has risen to become one of the most preferred smartphones by a very huge slice of smartphone users (IDC, 2018). Also, the Chinese tech giant, Huawei has had one of the fastest growths in the smartphone market with a global expansion.
Although, revenue generated in Q2 2018 from the iPhone sales accounts for about 44% of global smartphone revenues with Samsung claiming 22% of smartphone revenues and lastly Huawei being third on the list with 10% (NASDAQ, 2018). The intense battle between these smartphone vendors to blow the minds of consumers has recently being between these three companies, with Samsung owning over 20% of the smartphone market share. Surprisingly Huawei, for the first time since Q2 of 2010 arrives in the second place with a record high of 15.9% of the market share. Thirdly, while Samsung upheld their position for 3 years, Apple moves downwards to the third position with 14% of the market share (NASDAQ, 2018).
This simply means that Samsung has the most smartphone users, followed by Huawei and then Apple coming in at the third place unrelatedly to their first place in terms of revnue generation from sales.
Fig 2: Table showing smartphone market share by product (Source: IDC)
5.1 MARKETING MIX COMPARISON BETWEEEN APPLE AND ITS COMPETITORS
The table below shows the 7ps of marketing mix use by Apple, Samsung and Huawei respectively.
Apple Samsung Huawei
Product Apple iPhone: Simplicity and edge cutting innovations Samsung Galaxy: Highest quality at a less price Huawei Honor Magic – user centricity and innovation
Price
- Value-based/premium pricing strategy
- Price skimming
- Geographical Pricing
- Skimming pricing
- Competitive pricing
- Product line pricing
- Product pricing policy
- Judicious pricing policy
Place
- Apple website
- Apple store
- Corporate resellers
- Telecommunication companies
- Single distributorship
- Sales and service dealers
- Samsung Website
- Distributors
- Sales networking team,
Promotion
- Advertisements-
- Personal Selling – employees in Apple stores
- Sales Promotion- in store promotions
- Public Relations- apple events
- Digital channels
- Technology blogs
- Samsung websites
- Online marketing
Physical Evidence
- Apple watch Samsung Gear watch Nil
Process
- Product Simplicity
- Focused on customers’ want
- Focused on Research and development
People Steve
- Jobs CEO (1955-2010)
- Tim Cook- CEO Lee Kun-Lee. Chairman
- Kwon oh Hyon CEO Ren Zhengfei – Deputy Chairman
- Ken Hu – Acting CEO
5.2 SWOT ANALYSIS
The table below shows a SWOT analysis of Apple’s competitors, indicating only the strengths and weaknesses.
Samsung Huawei
Strengths
- Brand Image: Samsung has been well recognized for its design features and technology (Hitesh, 2018)
- Global presence:
- Stronghold of the Asian market
- Focus on innovation
- Emerging leader Huawei has sold more phones 10 times more than apple in 2018
- Large distribution network
Weaknesses
- High level of dependence on the US market.
- Explosive batteries of some of their smartphone products
- Reliance on other parties for software (Andriod operating system)
- Misconception of brand image
- Absence in the US market
- Gap in product range
- Reliance on other parties for software (Andriod operating system)
From the tables above showing the SWOT analysis, Samsung’s global presence as well as Huawei’s large distribution network and focus on innovation increases a threat to iPhone’s position in the market. However, Huawei’s absence in the US coupled with Samsung’s bad reputation as a result of their explosive phone batteries and reliance on other parties for software can be a door breaking opportunity for the Apple iPhone to take over the market in the future.
6.0 CUSTOMER ANALYSIS
Market Segmentation and their variables:
Demographic segmentation Geographical segmentation Psychographic segmentation Behavioural Segmentation
- Characteristic 1 Age Region Lifestyle User rate
- Characteristic 2 Gender City Openness to change Attitude toward product
- Characteristic 3 Income Population Density Price sensitivity User Status
The table above is a segmentation of the smartphone market with different variables surrounding them.
The table below shows a comparison in target market between Apple and its two major competitors Samsung and Huawei.
Company Demographic segmentation Geographical segmentation Psychographic segmentation Behavioural Segmentation
Apple Inc
About 28 percent of iPhone users are female, while 78% are male. Distributions of users age are 6% for people older than 50 years old with 31% between the ages 35 -49, and 63% between the ages 15-34. They also target medium to High income earners. The Us and international market targeting mostly urban areas. Apple iPhone users are from the medium to high income earners. Since income is relatable to lifestyle, its lifestyle targets are the Modern, young professionals, adaptable to modification etc. Apple iPhone customers usually end up being very loyal to the apple once they start using it. This describes the hard core users Iphone has.
Samsung
- Samsung users are dominated by males within the age 18-64. They also target medium to High income earners.
- Samsung has global presence in Asia and other countries world wide targeting both rural and urban areas.
- Samsung mobile users’ Lifestyles are either – sports oriented, passionate. With outgoing personalities.
- Samsung Users are either hard core users, soft core users or even switchers, with a Perception of trendiness and advancement in functionality.
Huawei
Huawei users are dominated by men between the ages 30 -34. With targets on upper- middle and middle-income users. Hongkong to other developing and third world countries. 56.9%of users are in 3rd-tier cities with 12% in 1st-tier cities. For Huawei, they have a target audience of young generations who are social and business-oriented. Focused on speed of data a lot more than price of product. Huawei users are either soft core or switchers who are
The table above indicates the segmentation of Apple Customers as well as Samsung and Huawei customers. Key drivers from the customer analysis are age and income distribution under the demographic segment, followed by the market region, with the lifestyle of users and finally their attitude towards the apple iPhone.
Households with at least one Apple currently mostly in the US and across Europe and Africa surprisingly with most of its user population being students and young professionals living in urban areas within the age 15- 34.
7.0 RECOMMENDATION
A SWOT analysis for both external and internal factors linked with Company and its products will be carried out in this section. Afterwards, a recommendation with a strategy will be give on a new product or service to introduce in order to enhance the profitability and strong position in the market share.
APPLE INC STRENGTHS
- Market leadership
- Strong brand image
- High profit margin
- Solid financial position of the business
WEAKNESSES
- High prices compared to competitors
- Range of products is slim
- incompatibility of products
- Fall in global market share
OPPORTUNITIES
- Surge in request for innovative mobile devices
- Product diversification
- Establishment of strategic partnerships
SO STRATEGY
- Focus more on production of iPhones.
- Build apps to make the iPhone compatible with other smartphone products
WO STRATEGY
Launch a class of products with a competitive price to appeal middle class users.
Threats
- Increased competition
- Rising costs of manufacturing
ST STRATEGY
- To lessen the weight of competition, a larger range of products should be launched. to grow its customer base pressure.
- Build manufacturing plants in regions with lower cost of labour
WT STRATEGY
- Release a range of competitively priced products to attract middle class customers and reduce the pressure from competitors.
- Expand in range of products and use existing supply chain proficiencies to cut the cost of production.
With the major increase in competition in the smartphone industry, many users are beginning to have variety of choices at a cheaper rate with similar functions. This means other smartphone vendors have the chance of growing their customer base with apple having a constant or decline in market share, as users are unable to meet up financially with high end products. At this, it recommended that Apple reduce the pace at which it launches iPhone products for high income users and focus on releasing a range of iPhones for the middle-class user. This way, they get to take a new slice of customer base in the market.