Apple Marketing Communication in the UK, Research Paper Example

Executive Summary

Apple has been a market leader in the United Kingdom for a long time. Customers already have a strong brand preference and loyalty, however, today, it seems like the company is losing market share over Samsung and Google phones. While it is impossible to compete with all manufacturers based on price, and gain new customers, effective integrated communication strategies can increase brand awareness about undecided customers, and further strengthen the loyalty of existing users of Apple smart phones. The below essay is designed to reveal how Apple can re-design its marketing mix in order to create more effective, meaningful messages for potential and existing customers. Focusing on customer experience and innovation, a mix of marketing messages need to be created to regain the lost market share and further differentiate iPhones on the versatile and highly competitive marketplace of the United Kingdom. In order to implement effective strategies, however, the company needs to understand the specific beliefs and values of UK smart phone customers. Through careful analysis of reports and industry statistics, the author of the current study would like to evaluate the current performance of Apple’s marketing in the UK and make constructive recommendations for improving advertising messages.

Introduction

Apple has been known by its speed of innovation and excellent performance. As Heracleous (2012: 58) confirms, Apple’s competitive advantage on global markets lie in Quantum Strategy[1]. Indeed, the company was the first to offer various technological solutions that met customers’ expectation. Starting with the ever so popular iPod, and ending with the latest smartphones, Apple has provided customers with advanced answers. However, competition on the smart phone market has increased during the past ten years, and companies like Samsung are catching up, dipping into Apple’s market share. Indeed, the UK market has some challenges and unique characteristics that make the competition even fiercer. The author of the current study will focus on these unique qualities of the British customer, market trends, and regulations that would affect the company’s performance in the country. While the global market share of Apple is still large, in the United Kingdom, a free market, various substitute products are offered for people who are looking to get the best value for their money. The only way Apple can win the competition is by strengthening the brand’s reputation in the United Kingdom and ensuring that it successfully communicates its product’s unique selling points. By reviewing related literature, the author of the current study hopes to create a marketing strategy that fully utilizes the existing and available marketing channels for strengthening brand image and loyalty.

Literature Review

Ashcroft (2012: 8) describes Apple’s decision to create the iPhone as follows: “By 2009, the product offer was comprehensive but maybe lacking internet connectivity and mobile connection. In 2007 it was time to introduce the iPhone”[2]. Through branding and strategic alliances, Apple managed to make the iPhone and the next generations of the same product a success, and one of the most profitable devices in the history[3].

The overall marketing strategy of Apple was reviewed in detail by Mickalowski, Mickelson & Keltgen (2009). The authors found that – just like in innovation and customer service – Apple had a unique approach towards marketing, too. They sought collaboration with carrier companies, and used the differentiation strategy to position itself on the market, as a successful strategy[4]. Remaining the “innovator”, the marketing department of Apple knew that the latest product will appeal to target customers: those who want better features, and the latest technology: the younger generation[5]. Without continuous innovation, Apple would have appeared “old” and not trendy, and disappeared from the market. The authors (Mickalowski, Mickelson & Keltgen, 2009: 3)  mention that Apple was the first mobile phone manufacturer that came out with a 3.5 inch screen. It was also able to provide solutions for customers who were unhappy with the insensitive keyboards offered by other brands, such as Blackberry. Apple seems to listen to customer needs, and implement changes both in its product development strategy and marketing.

The YouGov website (2012) found that as of March 2012, the UK mobile market was segmented mainly between smart phones and feature phones. Apple had a market share of 29 percent, while Samsung was closing up at 20 percent. Blackberry had 17 percent, while HTC, which is a lower cost device than the above had an impressive 16 percent market share.

A 2012 report published by the YouGov website (2012) found that while Apple was still dominant in the tablet market, it lost market share. This trend indicates that customers in the UK became more budget-conscious and wanted to get the most value for money. Similarly, in the smart phone market, the appearance of Samsung as an innovative company with cost-effective solutions and products that had similar capability as Apple’s phones made the marketplace even more competitive. The full analysis of market trends and conditions will be completed in the next part of the study.

Market Environment Review

Morton (2014) created a research based on smart phone ownership and intentions. One interesting trend needs to be mentioned that will highlight the competitive advantage of Apple over other brands. Questioning smartphone users about their first, second, and third phone, it is important to note that Apple had the highest brand loyalty and customer retention. While 19 percent of respondents stated that they had an Apple phone as their first device, this number increased to 29 percent when asked about second phones, and 37 percent related to the third phone. 54 percent of respondents said they said they wanted an iPhone[6]. This finding, compared with the main competing smart-phone operation system, Android reveals that the reputation of Apple in the marketplace is the strongest. 65 percent of customers had an Android first phone, while only 54 percent as a second phone, and 49 as third[7].

A recent We Are Apps (2013) study also revealed that iPhone ownership increased in the United Kingdom in the past two years at a slower rate than general ownership of internet enabled smart phones[8]. This indicates that Apple is losing market share. Blackberry’s ownership has actually declined, therefore, this indicates that Android and Google phones create the greatest threat for Apple’s market share. Still, the iPhone is the most popular device in the United Kingdom, with a market share of  32.1 percent, followed by Blackberry at 7.69 percent, and  Samsung Galaxy at 5.42 percent[9]. The latest Portio Resarch document (2012, p. 2) concluded that “smartphone shipments reached 485 million in 2011, and that number will top 655 million in 2012, rising to over 1 billion smartphones per year by 2016”. This means that the market is constantly growing, and there are several opportunities for companies to enter the competitive device marketplace.

As the younger, technologically enabled and competent generation is an important market segment for Apple’ iPhone, it is important to review a recent survey that was created by the University of Sheffield (2011) among students related to their smart-phone usage habits. 99.6 percent of the respondents owned a mobile phone. A remarkable 27 percent of students owned an Apple phone. This is significant because students usually do not have a high level of disposable income to afford more expensive, high end brands, still their brand loyalty was significant. While for the year of 2011 the market share of Apple was recorded at 28.6 percent, 30 percent of students used i Phone operation systems. Male students were also more likely to own an i Phone than females. This finding is in line with the general statistics that men have a stronger brand preference towards i Phone than women.

It is also important to mention the brand awareness factor that is relevant to a company’s marketing strategy. Worldwide, through social media, according to the research of Sysomos (2013, p. 4), “iPhone gets talked about the most in social media with 6,215,118 mentions, accounting for 60% of the overall share of voice”. This means that there is a strong brand awareness globally. Considering that UK customers are active users of social media, this creates endless promotion and marketing communication opportunities for the company.

Critical Analysis and Discussion

Target Audience

In its current advertising campaigns, Apple focuses on upmarket, young people, aged 35 and below. Advertisements mainly feature males and females who utilize the new i Phone in different ways. The marketing targets young people who are looking for great applications on the move, and love innovation. With the slogan “You are more powerful than you think” (Apple i Phone S, 2014), it is evident that the company is aiming to reach the younger generation. Similarly, the ad titled Metal Mastered (Apple, 2014) is aimed at younger audiences who cannot wait for the latest design and technology to come out, and are conscious about appearance.

The latest UK ad, “Parenthood” (Apple, 2014), however, aims at not single people who are busy professionals, but parents. It is an important shift. The company’s UK marketing management has most certainly realized that there are customers with already existing brand awareness and loyalty who have been using an iPhone for years. Their loyalty needs to be maintained, and the product needs to be repositioned to reach a wider audience. Instead of featuring just the “cool apps” that teenagers can download on their iPhones from the Apple store, the company is communicating an important message: the universal value of the phone that can be utilized by anyone. As the downloaded apps are selected by the owner of the phone, user experiences can be personalized, based on one’s circumstances.

Brand Positioning

The brand Apple has a strong positive image. Most UK customers associate Apple with iPhones and iPads, as innovative products. It has been noted previously that the company listens to the market’s demand and is proud of its reputation of being the first to solve customers’ problem. Several customers in the UK have positive association with the brand. Customer engagement is high in social media, and the value of word-of-mouth and recommendation advertising is high. The global iPhone site has close to 3.5 million likes. The official iPhone 6 page has already got over one thousand likes. The image created by the company through marketing and media communication is that Apple is an innovative company that works hard to create solutions that make people’s lives easier.

Media Selection and Communication Mix Management

Apple currently markets its products through various channels. TV advertisements in prime screening times in the UK are usually scheduled around the launch of a new product. However, collaborative marketing through strategic partners, such as mobile service providers is not not to be neglected. As mobile companies know that many customers have a strong brand preference for Apple, companies are the first to let their subscribers know when the new model is available on a pay as you go or contract package.

Internet based branding is also important, and – due to the popularity of the brand – the company benefits from free online media and social network exposure. Press releases and conferences get a lot of media attention, and the communication strategy of the company is in line with the marketing strategy.

Apple also advertises in technology magazines, and through printed media. However, the greatest exposure of the brand is accredited to TV advertisements and online ads. Interestingly, in the United Kingdom, recently Samsung has created a series of ads for TV and online to mock the company’s reputation on the market (Russell, 2014). Indeed, Apple has used livestream broadcasts to educate customers about the new features, and Samsung is questioning whether the innovations are as great as Apple claims they are. One of the ads actually claims that “every phone has a bigger screen”, stating that the improvements of the new Apple models are artificially “blown up”[10] (Samsung, 2014).

Recommendation

Development Areas

It is important that the company keeps on listening to customers and responds to threats of new or expanding brands. While successfully applying the diversification strategy for brand positioning, the company should successfully communicate the benefits associated with using an iPhone. Indeed, the company should focus on the diverse and unique features of Apple’s phones that make users happier than those who choose another brand. In order to stop losing market share, the company needs to ensure that it responds to claims stating that “Apple is no better than other smart phones” in a positive and believable manner. This would strengthen brand loyalty among existing customers. Unique features to be communicated through online channels and TV advertisements could include: ongoing support with phones, more apps available than any other store, improved compatibility with devices. Further, the company could create a community of Apple users and strengthen the “sense of belonging to a distinguished group” among existing and new customers.

Threats Identified

The main threat of the competitive UK smart phone market is the threat of substitute products, according to Porter’s Five Forces model (Porter, 1979).  As it is high, as well as the rivalry among competitors, as it has been revealed during the review of marketing channel utilization, it is important that brand loyalty is maintained. According to Porter (1979), the threat of substitute products is low when the cost of switching to another product is high. In the case of UK markets, once a person is ready to upgrade its phone, their mobile company will offer them options to take out a new phone on a contract, therefore, the cost of switching is low. Further, the cost of substitute product (Samsung Galaxy or Google phone) is lower than Apple’s and this further increases the threat.

Opportunities Identified

Apple should engage in meaningful conversations with existing customers and take advantage of the free marketing provided by customers online and through word of mouth recommendation. Loyalty and “refer a friend” programs should be developed, and communities of Apple owners should be created backed up by the company, offering discounts and competitions. Apple should also encourage users to create videos and enter a competition online featuring why they think the i Phone is the best value for money. This will help the company understand users better, and identify unique selling points that can be featured in future advertisements to maintain brand awareness and reduce the impact of Samsung’s aggressive marketing.

Conclusion

It is evident that Apple has to face a great rivalry with Samsung and other smart phone manufacturers in the next few years. The market is competitive, and there is a great amount of rivalry among competitors, and a huge threat of substitute products. This means that the main challenges of Apple in the UK market are: successfully maintaining and increasing brand loyalty and communicating the unique features of the product towards existing and new customers. By integrating marketing strategies and using various communication channels, allowing customers to create and talk about their own experience, the company can achieve this goal and maintain its market share.

Bibliography

Ashcroft, John. 2012. “Apple from the iPod to the iPad A Case Study in Corporate Strategy”. Second Edition.

2011. “Internet Technology: Youth Technology Trends”

CSS Insight Report. 2014. “Global Smartphone Market Analysis and Outlook: Disruption in a Changing Market”

Heracleous, Loizos. 2012. “Quantum strategy at Apple Inc” <wbs.co.uk>

Kotler, P., Armstrong, G. 2013. “Principles of Marketing. Saylor Publishing.

Mickalowski, K., Mickelson, M & Keltegen, J. 2009. “Apple’s iPhone Launch: A Case Study in Effective Marketing” Augustana College.

Morton, Philip. 2014. “Android’s Weak Gravity”. Foolproof. London.

Ofcom. 2011. “Communications Market Report: UK”

Portio Research. 2012. “Smartphone Futures 2012-2016. Worldwide market analysis and competitor positioning in the high-end handset market in 2012 and beyond.

Smart Phone Market Research. 2014. “Smartphones. <http://www.smartphonemarketresearch.com/category/smartphones/>

We Are Apps. 2014. “UK Mobile Insights Report 2013 Q4” Web.

YouGov Research. 2012. “ Apple remains dominant in UK tablet market, but competition is catching up” <Yougov.com>

YouGov. 2012. “Smartphone growth in the UK: Challenges in the handset market” <Yougov.com>

Sysomos Research. 2014. “Industry Insider. Smartphones”

The University of Sheffield. 2011. “Student Mobile Research Survey”

Porter, M. 1979. “How Competitive Forces Shape Strategy” Harvard Business Review.

Source: We are Apps.  UK mobile devices usage and demographic roundup.  2013. p. 5.

[1] Heracleous states that this quantum strategy lies in Apple’s ability to balance intense efficiency with serial innovation (p. 58).

[2] The author states that while competitors did not even consider putting a similar product on the market, customers were ready. This is a good example of how Apple seized opportunities in customer demand.

[3] Ofcom, 2011.

[4] Kotler and Armstrong, 2013

[5] See: BT. 2011

[6] See Appendix A for graphical representation of figures

[7] Morton, Philip. Android’s Weak Gravity. p. 2.

[8] See Appendix B for graphical representation of figures

[9] We Are Apps. “UK mobile devices usage and demographic roundup” 2013. p. 7.

[10] Samsung: It Doesn’t take a genius. 2014. Available on YouTube.