Recommendations Appendix 19 Introduction 17 18 Customer Value proposition for a business defines the relationship between the buyer and seller, the seller knowledge of the customer needs and values, helps develop the value chain to service a particular need. Customer Value proposition (CAP) is also defined as a process to differentiate in the competitive market, sending across the message which the company builds with the customer. The CAP is understand and denned by Porter M ) as where the seller can create value Witt the help of reputation, advertising, packaging, appearance, product features, and information provided about these products.
Since the buyer is not fully aware of the seller capabilities and the buyer understands only the signals of value, this ambiguity offers the seller to create perceived value and integrate its various operations and productions to the said value. It is based on this value that companies build their longer term association with the customer or the Brand Value. In our discussion below we have discussed Apple Inc. , its history, growth and operations in the United States to understand the various processes and strategies it adopted over time to rate the brand its stands today.
Research Apple Inc. Has been through a long Journey, starting in late asses. The company is a representation of one of the best companies that has learnt to deliver customer value through various marketing, operations, and structural strategies. Apple has innovated starting with Personal computers to Powerboats to pod and now the cloud. The company has adopted a strong, continuous, diversifying, product strategy to innovate, develop, add new products to the market and satisfy customer changing expectations.
Early Apple In April 1976, Apple computers started. However, the company took off to a good start with Apple II only in 1977. It was the first personal computer to come in a plastic case, including color graphics with an attractive appeal, the Apple II was an impressive machine. To add to the growth Apple also launched the most inexpensive floppy disk Apple Disk I in early ’78. This product addition to Apple II increased its sales. Increase in sales however led to an increase in company size disproportionate to the company revenue.
In 1981 the market was saturated with “similar” computers leading to problems in sales for Apple Computers. The company unionized its staff by 40, and its chairman Steven Woozier left the company due to an injury. Steve Jobs became the chairman of Apple computers for the first time in 1981. The company initially failed to capitalize on the initial success due to lack of integration in the internal processes, lack of understanding of customer demand and needs. According to Porter M, sellers’ internal integration of resources is one of the important tools to create sustained customer value.
Steve Jobs was not very successful as the chairman of Apple Initially, as he could not manage the internal resources for developing Lisa and Macintosh. Macintosh failed because of lack of RAM and hard disk connectivity. Partly the product failure could be attributed to the internal decision and management problems between Steve Jobs and John Scullery (The president of Apple during that time). At the Early stage Apple was well accepted by the customer, since the whole IT industry was in the early product life cycle stage.
Development of the complete process and marketing value channel is important for any business at any stage. Internal problems and incompatibility between the top management, R&D, and marketing lead to product failures since the customers received value of the product did not match the achieved value. Product Extensions After a series of legal and management battles, worker layoffs, Windows . 0 and Mac GUI dispute with Bill Gates, the company posted losses in the early eighties.
However, new product innovations such as the Illustrates, the first affordable PostScript laser printer for the Mac, and Pacemaker, one of the first Desktop Publishing programs the company drove and recovered Mac to partial success. Product compatibility Programs and SO is extremely important in a Growing Market. Apple’s Mac was limited by its own hardware and compatibility. The competition for Apple’s Mac was from Windows that had more “widespread” use along with a saturated market. In 1991 Apple launched its first generation laptops titled, “Power Books”.
They were an instant success because of innovation and portability offered by the product. The company however could not capitalize similar success, with its first generation Personal Digital Assistants (Pads), “Newton” that were not well accepted in the market due to poor handwriting recognition. While Apple did not have the best top management to streamline the R&D, logistic, supply, operations, marketing activities of the company, it continued to innovate and create successful products during the asses. During the asses (1994) Apple launched Powerless, with a power PC chip that surpassed Intel’s processors in quality.
Though these products gained momentum, they could capitalize on more profits and market share for the company. However, Apple’s Strategy to license Mac SO to companies failed since licensees found the company policy was too restrictive. During this phase Apple also had problems with back end operations that suffered due to lack of vision from the top management. Apple for the first time in history registered a loss of $68 million. The top management changed with the existing CEO Spindled replaced by Gill Amelia.
During the next year (1996 to 1997) changes made by the CEO Amelia failed to raise from Apple from losses and led to the acquisition of Next, and Steve Jobs returned to Apple. With Steve Jobs expanded role as the interim CEO in Apple, he made many ground breaking announcements bringing new life to Apple. Jobs announced a five year agreement with Microsoft in exchange of stock and a settlement of the ongoing GUI argument. Jobs decisions offered fresh direction to the company. The next strategy was to oust the competition and build competitive advantage with the Buyout of Macros license from Power Computing, IBM and Motorola.
This strategic move led to the close of Power Computing. Customer Desktop Customer Portable High End Low End Professional Desk Top Professional Portable High end Apple Product Matrix In 1997 Steve Jobs made another strategic move to build the competitive advantage he was gaining. Apple computers’ was going to sell on the web and on the Phone. At the same time futuristic editions of Power 63 and the Powerboat 63 were launched. New product entry at a time when a company is gaining quick ground is another process to build and differentiate value with the customer.
Apple expanded operations and “spread” though its commerce website Apple Store. Apple store was a phenomenal success driving the company to profitability. Capitalizing on the momentum gained by Apple, the company launched Powerboat 63, an Educational Apple Store, and an entirely new Mac design–the Imax. The Imax was designed to target the low end users who were more prices conscious, and could not buy Apple. Apple diversified turner Witt the merger tot Mac O ND Rhapsody, to lid a modern SO with backward compatibility with most SO 8 applications. SO 8 integrated led Mac SO increased compatibility for sophisticated commands.
During July 1998 Imax was an unprecedented success and it became the best selling computer in the market. The company continued its product strategy with a renewed and more feature driven version of Power 63. Steve Jobs devised his product strategy with a four cornered product matrix for four broadly defined customer segments and sub segments within. The strategy was to provide continuous product improvements to keep the interest of the existing user, simultaneously address the owe end segments (having a larger purchase or customer base) with new products and low priced product innovations.
Steve Jobs continued his product innovation strategy by adding the fifth dimension to his product line with Power, 64 Cube, which the customer was not ready for. The product failed miserably. Failure of 64 and coupled with a few value adds in the form of DVD ROOM compatible PC’s in the market reduced Apple market share. The company however rectified these issues and further diversified into the entertainment sector with the pod, and consumer electronics. The principal reason behind the strategy was the slowdown of the genealogy industry and a spurt in demand for electronics.
Digital Media Further extending on its expanded product strategy the company launched “Supervise” which could read and write both CDC and DVD’s along with two new applications, dived, a DVD-authoring program, and tunes, which allowed users to encode and listen to IMP songs, and then burn them to CDC. Apple’s product exclusivity coupled with the massive demand in electronics booted the sales and profit margins of the company. Apple’s Movie, a digital editing software for Mac users, DIVED allows users to create and burn professional-looking DVD’s, and tunes could add value to CD and IMP players.
Extending the company’s presence to retail market and Justify its positioning of becoming a “digital Hub” Steve launched a number of retail stores across America, selling not only Apple computers, but various third-party “digital lifestyle” products. During the same year (2001), the company announced updates to the book line, and refreshed imams and 64. The same year the company stopped the production of 64. Along with revisions to the base product line of Powerboat and ‘book, the company launched its first product (Hardware) in the “Digital Hub” strategy.
However, the launch of the pad, its digital hub strategy, revised versions of its basic product lines did not help Apple achieve profitability. The losses the company made were partly due to product innovations with an appeal that was not understood by the customer, and due to macroeconomic conditions resulting in low purchasing power of the customer. The strategic moves to again “spread” and drive into a new market segment resulted in failure to interest the customer. The “Switchers Campaign” one of the most noted campaigns also failed to generate customer interest and increase its market share.
Though the company was cake in profitability, the company moved on to push forward its digital strategy with ‘Life, bundled software package that included tunes, photo, movie and DVD along with refurbishments to the Powerboat and book. Powerboats recovered in sales to ensure profitability to Apple during 2003; however Apple was having problems with the professional desktop market. The problem was at the backbend where the processor development wit n Motorola (64) was not keeping up Witt competition. The company then reinvented 64 with the help of MOM, ensuring GO was fully repackaged, new and fast.
GO was adopted well in the market thereby increasing sales. The cost of the development was much lower than the original processor development. Initial product innovations, failures by Apple were principally due the lack of understanding of the customer needs. In real life it is difficult to find examples of businesses that really have top level understanding of the Customer needs and its value proposition. This is typically reflected by 64 Cube and the early launch of the pod. Pod in 1981 was too early for the customer when it was first launched.
Initial success for Apple’s Digital strategy came with the Pod taking off with the launch of the tunes music tore selling individual songs through the tunes application, for 99 cents each. With the success of tunes, Apple planned a strong digital strategy, along with a solid back end plan to develop a strong base for songs with the backing of music labels. Again, with the release of tunes for windows, and the pod and music store integration, the digital music world experience was reinvented. During the first year of tunes, alone Apple gained a market share of 70% of the legal music downloads.
Apple’s success with tunes is one of the examples where Apple created a ‘new market’ that was a ascent need of the customer. With the use of internet, and strictly regulated legal music market, the customer got the opportunity to download music at extremely low rates. This opportunity was created by Apple’s tunes in combination with pod that let the user select and prioritize the songs that he wanted to listen. Growth and Market Share for Apple During 2005 to 2009, Steve Jobs brought around a number of internal manufacturing and process changes gain greater internal supplier and operations control.
Apple computers started using Intel’s Core Duo CPU and refurbished the entire product line room Power Mac, book, and Powerboat to Mac Pro, Macomb, and Macomb Pro. The company during this time is also reported to have developed its own team of engineers to design microchips. During this time Apple also introduced boot camp to allow users install Windows XP and Windows Vista. During this stage Steve concentrated on Primary Value activities (Porter, M, 2004) that led to important changes in the products that were supplied to the customer.
These changes made the products more relevant and expanded the target market, allowing Mac SO users install Windows, and also targeted “new’ customers using Windows to buy Apple reduce line. The strategy helped Apple grow in size and increase market share to 8% of the total market. Mobile and Entertainment Era During 2007 to 2011 , Steve Jobs announced the most important strategic changes in the company. The company changed its principal focus from Computers to Mobile and Entertainment. The launch of phone and Apple TV marked a sharp rise in share prices that passed the $100 mark.
The most strategic moves during this period were: * Sale of Music on Tunes without DORM, allowing third party players * Launch and success of App Store for applications, the success by app store was unprecedented. Within one month the company sold 60 million applications and bought in revenue of $1 million on the average daily. * Apple also becomes the third largest Mobile handset supplier * Apple also during this time registered a profit of $1. 21 billion, despite Steve Jobs absence for six months for his health in 2009. Launch of pad Witt a similar operating system as the phone, driving the company’s prompts to exceed Microsoft’s market capitalization. * During 2010, the company also launched the phone 4 during 2011, video calling, and multitasking supporting the G internet revise, for greater connectivity across the world. During 2010, the company followed comprehensive product extension and refreshment of its entertainment products, including pod line of IMP players, multi-touch pod Anna, pod Touch with Peacetime, and pod Shuffle.
The company also refreshed its computer products including an updated Macomb Air and ‘Life applications, Mansion their latest SO, along with the launch of the Mac App Store in 2011. The company reached an all time high with its share price reaching over $300 for the first time in history. Post Steve Jobs Apple Inc. As been operating without Steve Jobs January 2011; though he briefly appeared for the launch of cloud, the online cloud platform.
The Apple’s cloud is supposedly the integrated future platform for most of its services, allowing consumers to store vast amounts of music, video, photos and documents on the Web, the one of several emerging “cloud” computing offerings that is diminishing the need for a computer. During 2011 the company also launched Sir, and purchased CA the mapping company. It is too early to comment on the direction of Apple after the demise of Steve Jobs in October 2011, while the company has achieved extremely gig level supply chain efficiency during his tenure, it is still going strong with its well laid out strategy.
Competition Early Competition: Early competition for Apple was from MOM. The competitive environment for personal computers was young and product innovation was key to drive the market. Apple was also competing against a number of clones. The company segmented the customer for its products and started selling products targeting the Apple Quadrant. However, Apple could not compete with IBM which dominated the market, and Apple was fast losing ground. Competition asses:
Competition during the asses gained ground due to Apple’s internal company strife, lack of management vision for a comprehensive customer “need” based product strategy. Apple with the fresh Mac based product line of Quadrant, Centrist, and Performa could not compete with the Windows Based Vim’s PC’s. Others in competition to Apple in early asses were Amiga and Atari SST. The Mac SO was also in competition with Windows Software, but eventually lost to windows software due to its reach and greater adaptability. Competition 2000: The Company went through immense restructuring after Steve Jobs takes position in the company.
Apple during this period is restructured for internal processes, product line expansion, and gerrymandering of the target customer with the help of Microsoft agreement, Company diversification into consumer Electronics and internet based entertainment and storage for the customer. The company has almost no competition for its electronics and cloud based services. The company developed a comprehensive customer centric platform with the help of its digital marketing strategy during this period. The company has almost no competition due to the unified platform it builds for the customer on pad, and the phone.
Though we have Monika, Motorola etc in the handset market along with Google in direct competition to the Apple App store, the brand value of each of these major competitors is diffused by the Apple’s Comprehensive United Marketing Strategy. The company is also making inroads to the Google dominated ad market with the ‘Ad network by offering a feature rich platform. Apple’s cloud is the latest entry into the competitive market with cloud/ utility services directly for the customer. Though we have similar cloud based platforms by Google, Salesrooms, and Microsoft in the market, none of them offer customer driven services.
Overall Apple has emerged as the world’s most customer centric businesses. The company still lags behind MOM, HP, and Dell in sales of computer hardware, but is a market leader in personal computers. The company has achieved growth rates of over 14% according to Macrocosms. Com (Saliva, E, 2011) becoming the third largest provider and a 10. 7% market share. The company has a strong presence in almost all the segments it has addressed over time. Though the company’s products are not “first” in the market, they are driven by Apple’s commitment to deliver value. Recommendations Apple Inc. Rely since its inception could not capitalize on the gains it could have achieved due to the lack of internal management and vision. The company needs to grow and continue with innovation to combat competition in the current day from Google (Android) and other electronic platforms that are being built for applications. The company should carefully plan its applications for its strategic entry into applications, products and services for the corporate.