I was first introduced to Apple in the mid-1980s, when I would visit my uncle Tom’s house and play “Dungeons and Dragons” on his Macintosh for hours. Complete with a black and white screen, floppy disk drive, and rudimentary graphics, it’s really amazing to think how far Apple has come since then.
Fast forward to 2012. When referring to the marketing successes of Apple, people tend to point to the company’s creative advertising campaigns, the fact that Steve Jobs was a charismatic CEO, or the diverse array of industry-changing products that have been conceptualized (beginning with the iMac in 1998, followed by the iPod in 2001, the unveiling of iTunes in 2003, the iPhone in 2007, the launch of the App store in 2008, and the iPad in 2010). But none of these observations consider the whole picture or driving force behind Apple’s strategic vision, which was to capitalize on the trend of the convergence between digital consumer electronics and the PC.
Below is a brief video overview of Apple’s more memorable advertising campaigns:
Strategy Drives Tactics
When Jobs took over the reigns of the company as CEO in 1997, his goal was to re-structure the company based on a vision that would position Macintosh as the center of a digital hub for complementary products and services. Some of the ways he achieved this included cutting down the total number of products offered, investing millions in research and development, and revamping the distribution process. Once the iMac was launched in 1998, Apple Computer was rebranded as “Apple Inc” and the company subsequently embarked on a differentiation strategy that included creative advertising, a new web site to manage the sales process, an education initiative through the launch of Apple retail stores, and a heightened focus on customer service. In short, as you can see it was not a particular tactic that fueled Apple’s marketing success, but rather a combination of several components that tied back into the company’s larger strategic vision.
According to the text Contemporary Strategy Analysis, the three prerequisites for effective implementation of a successful strategy include 1) formulating simple, consistent, and long-term goals 2) possessing a profound understanding of the competitive environment, and 3) objectively appraising resources. Steve Jobs inherently understood this, and because of it he was able to turn the company around: following his return Apple posted a $309 million profit in its 1998 fiscal year, reversing the previous year’s $1 billion loss.
Key Marketing Takeaways
In terms of developing a strategic vision as it relates to marketing, below are some of the key takeaways to consider from Apple when formulating a long-term strategy for success:
- Identify Trends – By recognizing such trends as digital consumerism and that the PC industry was becoming highly commoditized, Jobs was able to visualize a strategy for a product that met consumer needs. To uncover such insights, it’s important to look across industries, strategic groups, buyer groups, the scope of a product or service, the functional-emotional orientation of an industry, and time. More info on that topic is available in a blog post here.
- Analyze Competitors – When research pointed to the fact that Apple was losing market share and cannibalizing sales due to their strict licensing policy, Jobs ventured out to contract with Microsoft to develop core products, while at the same time making the decision to utilize Intel chips in their computers, enabling Apple to build laptops that were both faster and less power hungry. By thoroughly understanding his competition, he was able to partner with competitors in ways that were not only mutually beneficial, but downright advantageous.
- Innovate – By following a Schumpetarian model of creative destruction and focusing on the needs and wants of the consumers rather than how to just improve upon an existing product, Apple was able to continuously re-think its product line and invent new products that re-defined the traditional boundaries of the market. Innovation allows for companies to capitalize on the “first mover advantage,” resulting in the realization of high up-front market share and profit margins.
- Position Your Product – Because many computer systems and related products can be easily replicated, finding ways to extend the life of a product through complementary offerings is almost as important as re-invention. For example, the App Store served as a complement to the iPhone which resulted in $1 billion in annual profits. And upon the launch of the iTunes store, an exponential demand for iPods was created.
- Build Brand Awareness – Through utilizing creative campaigns and non-traditional advertising channels for the Mac brand, Apple embarked on a truly unique differentiation strategy, which helped grow brand awareness.
- Optimize Distribution – Apple revamped its distribution system to move from smaller outlets to national chains. They also opened their own retail stores (280 stores in 10 countries), which now account for 16% of Apple’s total revenue. The retail stores were a success because they provided users with an opportunity to learn about, experiment with, and test drive products.
- Don’t Forget Your Customers – Apple is known for superior customer service. In fact, just the other day I corresponded with a customer service representative though their online chat function and received a thorough answer to my inquiry. By creating and sustaining a superior customer service model, competitive advantage can be easily achieved.
Although the steps outlined above contain all the makings of an impressive strategic marketing plan, it is important to keep in mind that strategic planning is only as effective as a company’s ability to implement a strategy. In an era of hypercompetition, where competitors must move quickly to build new advantages and erode the advantages of their rivals, the ability for a company to be flexible and adaptable may be more important today than ever before.
Now it’s your turn: what do you think Apple’s done well? What components of a strategic vision do you think are the most essential? Do you believe that having a strategic is necessary for achieving marketing success?