GlobalEconomic Environment Marketing
Table of Contents
Executive Summary 3
PESTEL Analysis 3
Political Factors 3
Economic Factors 4
Social Factors 4
Technological Factors 4
Environmental Factors 4
Legal Factors 5
Economic Factors that Apple Inc Operates 5
Potential impact on marketing strategies 5
Competitive Advantage 5
Segmentation, Targeting, and Position 7
Potential Impact on the Customer Behavior and how it might change 11
Growth Opportunities in the Company’s Macro Environment 11
GlobalEconomic Environment Marketing
Apple Inc has established itself as the manufacturer of some of themost expensive and high quality electronic products in the world.With a manufacturing base in China, the company has been instrumentalin the manufacture of iPhones and computers that stand out. However,the company operates in an environment that is defined by widespreadcompetition. Firms such as Samsung, Microsoft Inc, Sony and otherelectronic manufacturing companies impose lots of competition fromApple. The situation is compounded by the fact that the economicsituation has forced some of the customers are unable to makepurchases of the products manufactured by the company because of thehigh cost of manufacture (Rabia Iftikhar, 2013). The analysis willfocus on the economic factors that affect Apple Inc. and theiroverall operations.
PESTEL AnalysisPolitical Factors
Apple Inc is affected by various political factors in themacro-environment that it is operating from. The most vital factor ispolitical stability in the countries in which Apple Inc is operatingfrom. The political stability is an opportunity for Apple to advanceits business activities. Apple can improve its overall performance bytaking advantage of the opportunities in the macro-environment.
The focus is on the market and industry conditions which have animpact on performance of Apple. Factors such as the inflation rateplay a crucial role in dictating the macro-environment that Appleoperates from. The purchasing power of customers is significantlyaffected with the increase in the inflation rate. However, Apple Inccan count on the existence of their brand to ensure that they getcustomers into making purchases.
The social factors play a crucial role in Apple’s macro-environmentbecause of the impact they have on consumer behavior. Other factorsof significance are the demographic factors such as age. The youngpeople are enthusiastic about the Apple products. The company hastaken advantage of the same to customize their products into meetingthe needs of young people across the globe.
The technological factors are of crucial significance in themacro-environment that Apple Inc operates. The technological factorsprovide Apple an opportunity for growth. The company can takeadvantage of the existing technological advancements to improve onthe nature of products that are manufactured. The technologicalfactors that exist for Apple include the growth in the apps market,technological integration and the cloud computing trend. Apple hastaken advantage of technology to build on their brand and manufacturethe best quality products.
The environmental factors surrounding Apple provide significantopportunities for the growth of the company globally. Theenvironmental factors have an impact on the operations of Apple.Notably, the aspect of sustainability is of critical concern inApple’s macro-environment. Apple has been successful in ensuringthat they conduct their activities in a sustainable manner.
The legal factors existing in Apple’s macro-environment pose athreat to the performance of the organization. The legal factorsinclude the laws or regulations that dictate the operations of thebusiness. Regardless of the nature of the legal environment, AppleInc has strived to ensure that they comply with the regulations forsmooth execution of their business activities.
Economic Factors thatApple Inc Operates
Apple Inc. operates in a unique economic environment thatsignificantly affects the manner in which they conduct theiroperations. The economic factors are essential because of theinfluence they have on the market (Vinayagathasan, 2013). Theeconomic factor that Apple will be operating on relates to inflation.Inflation plays a vital role in determining the consumer purchasingpower. For example, an increase in the rate of inflation adverselyaffects the purchasing power of the consumer is affected (Ball &Sheridan, 2012).
Potentialimpact on marketing strategies
The inflation rate which affects the consumerpurchasing power negates the need to come up with appropriatemarketing strategy (Luke & Riley,2015). The rate of inflation serves toguide Apple in coming up with ways through which they can attractconsumers into making purchases despite their purchasing power(Makos, 2015).Indeed, the purchasing power determines the formulation of amarketing strategy to facilitate the attraction of customers intomaking purchases. The potential impact on the marketing strategieswill be discussed under the subareas of
Competitive advantage can be described as thestate when one firm has the edge over the others organizations. Thebenefit of such a competitive advantage is that there would be anincrease in the number of clients seeking products at the givenorganization (Rabia Iftikhar, 2013).However, the organization will only have the competitive advantage ifthe customers are in a better position to make purchases (Sigalas,Pekka Economou, & B. Georgopoulos, 2013).In situations where the consumer purchasing power is limited due toinflation, it is essential for the organization to come up withmethods that endow it with a competitive advantage resulting in anincrease in purchases despite the economic situations at the time(Sigalas, 2015).Apple Inc. has the mandate to come up with strategies that will leadto an increase in the number of customers who wish to make purchasesat the company (Yoffie & Rossano,2012). The competitive advantage isattained by the introduction of factors such as reduction of pricesthat are charged for the products. As it is, Apple Inc has isperceived to be selling products at a slightly higher price (Wang,2014). However, it is vital to acknowledgethe fact other organizations such as Samsung and Microsoft areequally manufacturing the same products (Rahimli,2012). If Apple Inc were to decide tocontinue selling their products at a high cost, the possibility ofpeople making purchases especially with the increase in the inflationrate would be low (Description, 2013).The consumer purchasing power is significantly affected by theincrease in the rate of inflation (Srivastava,Franklin, & Martinette, 2013).However, Apple Inc can still create a competitive advantage thatenables them to attract customers despite the prevailing economicsituation (Campbell, Coff, &Kryscynski, 2012). For example, Apple Inccan reduce the production cost and eventually lower the prices thatthey charge for their products. However, as Apple Inc should see toit that as the lower the prices to meet the consumer purchasingpower, the quality of the products they release to the market is notjeopardized (Vergara, 2012).Through the same, it would be possible to attract many customers viathe creation of a competitive advantage (Bartlett& Ghoshal, 2013).
Segmentation,Targeting, and Position
Segmentation is a strategy adopted byorganizations that focus on the division of the market into variouscategories based on different characteristics (Filip,2012). For example, it could be a divisionbased on similar interests, locations, and needs. The inflation ratecan affect the consumer purchasing power variedly (Vinayagathasan,2013). Because of the same, it could bevital to consider the various channels that exist for segmentation toensure that they can categorize the market into different sections(Bergvall-Kåreborn & Howcroft,2013). Apple Inc can divide the marketinto different segments based on demographic traits, interests andthe overall consumer purchasing power (Bose,2012). The division is instrumental inenabling the organization to attract all groups of potentialcustomers into making purchases (Goyat,2011). For example, the segmentationthrough consideration of age, income, and race means that productswill be manufactured to meet the individual needs of customers withsimilar traits (Lemmens, Croux, &Stremersch, 2012). For example,considering the aspect of inflation that affects consumer purchasingpower, through the segmentation, it would be possible to provideproducts at a price that is commensurate to the individual segment(Haider, Chiarandini, & Brefeld,2012). Apple Inc has the mandate ofensuring that they respond to the consumer needs regardless of theeconomic scenario at the moment (G. Budeva& R. Mullen, 2014). Strategies need tobe introduced which focus on ensuring that customers can still makepurchases despite the prevailing economic situation.
Apple Inc. has adopted a strategy of targeting tofacilitate the organization in ensuring that they achieve the highestprofits possible. Businesses have the mandate to make sure that theyconduct feasibility studies and determine the nature of the marketthat they are operating (Mele, Pels, &Storbacka, 2014). Through theunderstanding of the marketing, it will be possible to come up with astrategy that is efficient enough to meet the company objectives. Forexample, Apple Inc identifies the increase in the number of studentsin need of laptops to facilitate them in various academic work. Theincrease in the number of students serves as an advantage to AppleInc. because of the availability of the market. Through the same,Apple can manufacture products that are targeting the students (Oh,Cho, & Kim, 2014). Further, Apple Inc.has been able to target the young generation who are techno-savvy andhave a passion for music, or games. Through the introduction of themobile apps that respond to such needs, it has been possible forApple Inc. to attract a huge number of young customers into makingpurchases from the firm (Wack &Peters, 2014). However, as the companyintroduces products that meet the needs of the customers,consideration needs to be made to the fact that the economicrecession has significantly affected the purchasing power of theclients. The young generation, for example, looks up to their parentsfor sustenance. Therefore, as the company strives to release productstargeting a particular group of customers, it is vital to considertheir purchasing power (Johnson, 2013). Apple Inc. has however been able to introduce high quality productsto the market targeting a particular group of clients while stilloffering them at affordable products.
Positioning can be described as the processthrough which an organization influences the perception of customersregarding their product (Muhamad, Melewar,Faridah, & Alwi, 2012). The objectiveof positioning is to see to it that the organization creates a uniqueand advantageous position (Shakhshir,2014). Apple Inc prides itself in theability to ensure that they continue providing exceptional products.For example, Apple Inc recently introduced the Apple Pay and theApple Watch that are easy to use. Clients have found it in themselvesto vouch for the Apple products because of the manner in which theyare released.
Various strategies exist Apple can adopt that forpositioning of their products. The first regards value positioning.The strategy is particularly effective for the customers who aresensitive to changes in the prices. Apple Inc needs to take intoconsideration the purchasing power of the consumers and come up withproducts that adjust to the price changes. For example, with theincrease in inflation rate, the purchasing strength of the customersis affected (Shakhshir, 2013).Most of them are not in a better position to afford some of theproducts sold by the company. Because of the same, it is essential toadopt the value strategy positioning as a way of ensuring thatcustomers with different purchasing power are accommodated (Tang& Wezel, 2015). Apple Inc. can equallyadapt the quality positioning strategy to enable them to attractclients who prefer the quality products. For example, through themanufacture of high quality products, Apple Inc is in a betterposition to attract the consumer who has a taste for the best qualityproducts. Positioning can be achieved through different mechanismsincluding
AppleInc has taken the initiative to promote products through variousavailable channels. Notably, with the growth of internet marketing,Apple Inc has taken to the social networking sites to promote theirproducts (Bradley, 2013).Further, their website has equally served as an appropriate channelto facilitate the promotion of their products.
Applehas capitalized on the nature of products they release to the marketas a way of positioning themselves. For example, the companydistributes phones, laptops, and other electronic items to attractdifferent customers (Whitney, 2014).Despite the inflation rate, the products released to the market havebeen able to attract customers.
AppleInc charges different prices for their products. The differentiationstrategy is particularly useful when it comes to addressing the issueof the inflation rate that has adversely affected the consumerpurchasing power. Each customer will have the opportunity to purchasea product that they can afford while at the same time beingguaranteed of quality (Muhamad et al.,2012).
AppleInc has positioned itself in a state that their products are easilyavailable. The effective distribution strategy makes the productseasily available to the customers. For example, Apple Inc hasestablished distribution centers across the globe making theirproducts readily available (Schuh, Pitsch,& Schippers, 2014).
A brand refers to the distinguishing mark, logo ora combination of items that an organization uses to distinguish theirproducts from others in the market (Matanda& Ewing, 2012). If the brand acquireslegal protection, then it can be viewed as a trademark. Apple Inc hasbuilt on the brand strategy to ensure that they gain a competitiveadvantage over other similar manufacturers (Capozzi,Kellen, & Smit, 2012). Despite theadverse economic situation brought by the inflation rate, customersare still able to make purchases from the company because of thebranding by Apple Inc (Phillips-Melancon &Dalakas, 2014). Customers perceivedproducts offered by Apple Inc as being unique and of the best qualitybecause of the brand architecture. Most of the clients who decide tomake a purchase of an Apple product do so because of the uniquenesswith which it is associated. For example, products such as AppleiPhone, iPod, iPad are themselves brands (Spiggle,Nguyen, & Caravella, 2012). Theinflation rate has not adversely affected the purchasing decisions bycustomers because of the uniqueness of such items. The brand has beenidentified as playing a crucial role in encouraging individuals intomaking purchases from organizations (MarketingMinds, 2015). Because of the same, focuson firms is to establish brands which primarily defines the image ofthe organization. Apple Inc enjoys from the fact that they have apositive reputation in the market because of the brand that they havealready established. The recognition of the fact that the brand of anorganization is essential in encouraging customers to make purchases,Apple Inc has capitalized on the same as a way of improving theirimage in the eyes of the public.
Potential Impact onthe Customer Behavior and how it might change
The inflation rate has adverse effects on the consumer behavior(Ball & Sheridan, 2012). With the increase in an economicrecession, the overall purchasing power is affected as most of thecustomers tend to save their finances for fear of harsh economictimes. Customers need confidence that even as they make thepurchases, they will not have to brace for harsh economic realities.It is out of such sentiments that most of the customers tend toreduce their spending activities on products that they perceive maynot be economically viable for them.
At this moment, any measures to increase the price of commodities maybe detrimental to the organization. It is essential to acknowledgethat factors such as branding may not positively influence thedecision by customers to make the purchases. Nevertheless, Apple Inccan take the initiative to ensure that they adjust their products inline with the prevailing economic situation. Through the same, theconsumer purchasing behavior may be positively influenced. Theconsumer behavior may only change through acknowledgment of the factthe economic times have changed, and they are in a better position tomake purchases comfortably.
Growth Opportunitiesin the Company’s Macro Environment
Technological advancements are an opportunity that presents to Apple.With the increase in the inflation rate, it is vital for the companyto manufacture products at a lower price. This can only be donethrough a reduction in the cost of production. The technologicaladvancements can enable the company to achieve the low cost ofproduction to their advantage and that of customers through areduction in prices (Fowler, Pitta, & C. Leventhal, 2013).Apple can leverage the same by investing in technology to ensure thatthey get the best out of the entire manufacturing process.
Finally, there is the aspect of research and development (R&D).Apple can invest in such a venture to ensure that they understand themarket dynamics and introduce products that are responsive to theindividual customer needs. The knowledge obtained through thefeasibility studies is essential in improving the overallunderstanding of the company about the market.
Overall, the economic factors play a crucial role in determining theoverall operations of the organization. The consumer purchasing poweris dictated by the prevailing economic times. Nevertheless, it isessential to consider what can be done to improve the situation so asto maintain the number of customers making purchases from the firm.Price adjustment can positively influence the decision made bycustomers to make purchases despite the economic situation.
Ball, L., & Sheridan, N. (2012). Does inflation targetingmatter? A reassessment. Applied Economics (Vol. 44).http://doi.org/10.1080/00036846.2011.564136
Bartlett, C., & Ghoshal, S. (2013). Building competitiveadvantage through people. Sloan Mgmt. Rev, 43(2),34–41. http://doi.org/10.1108/eb039525
Bergvall-Kåreborn, B., & Howcroft, D. (2013). The Apple businessmodel: Crowdsourcing mobile applications. Accounting Forum,37(4), 280–289. http://doi.org/10.1016/j.accfor.2013.06.001
Bose, T. K. (2012). Market Segmentation and Customer Focus Strategiesand Their Contribution Towards Effective Value Chain Management.International Journal of Marketing Studies, 4(3),113–122. http://doi.org/10.5539/ijms.v4n3p113
Bradley, T. (2013). Android Dominates Market Share, But Apple MakesAll The Money. Forbes, (November), 1.
Campbell, B. a., Coff, R., & Kryscynski, D. (2012). RethinkingSustained Competitive Advantage from Human Capital. Academy ofManagement Review, 37(3), 376–395.http://doi.org/10.5465/amr.2010.0276
Capozzi, M. M., Kellen, a, & Smit, S. (2012). The perils of bestpractice: Should you emulate Apple? McKinsey Quarterly, (4),8–11.
Description, B. (2013). Apple Inc. SWOT Analysis. Apple, Inc. SWOTAnalysis, 1–10. Retrieved fromhttp://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=88362025&site=ehost-live
Filip, A. (2012). Market segmentation – fundamental process inbusiness to business marketing. Romanian Journal of Marketing,(3), 62–66. Retrieved fromhttp://search.ebscohost.com.ezproxy.liv.ac.uk/login.aspx?direct=true&db=bth&AN=87919746&site=eds-live&scope=site
Fowler, D., Pitta, D., & C. Leventhal, R. (2013). Technologicaladvancements and social challenges for one-to-one marketing. Journalof Consumer Marketing, 30(6), 509–516.http://doi.org/10.1108/JCM-05-2013-0549
G. Budeva, D., & R. Mullen, M. (2014). International marketsegmentation. European Journal of Marketing, 48(7/8),1209–1238. http://doi.org/10.1108/EJM-07-2010-0394
Goyat, S. (2011). The basis of market segmentation: a critical reviewof literature. European Journal of Business and Management,3(9), 45–54. Retrieved fromhttp://www.iiste.org/Journals/index.php/EJBM/article/view/647
Haider, P., Chiarandini, L., & Brefeld, U. (2012). Discriminativeclustering for market segmentation. Proceedings of the 18th ACMSIGKDD International Conference on Knowledge Discovery and DataMining, (14), 417–425. http://doi.org/10.1145/2339530.2339600
Johnson, B. (2013). “Will the Apple lovers be disgruntled wheneveryone has an iPhone?”. Marketing Week (01419285), p. 3.Retrieved fromhttp://vlib.excelsior.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=90087098&site=eds-live&scope=site
Lemmens, A., Croux, C., & Stremersch, S. (2012). Dynamics in theinternational market segmentation of new product growth.International Journal of Research in Marketing, 29(1),81–92. http://doi.org/10.1016/j.ijresmar.2011.06.003
Luke, & Riley. (2015). Apple Inc. Retrieved fromhttp://strategicplanning13.weebly.com/pest-analysis.html
Makos, J. (2015). Apple Inc. PESTLE Analysis. Retrieved fromhttp://pestleanalysis.com/apple-pestle-analysis/
Marketing Minds. (2015). Apple’s Branding Strategy. Retrieved fromhttp://www.marketingminds.com.au/apple_branding_strategy.html
Matanda, T., & Ewing, M. T. (2012). The process of global brandstrategy development and regional implementation. InternationalJournal of Research in Marketing, 29(1), 5–12.http://doi.org/10.1016/j.ijresmar.2011.11.002
Mele, C., Pels, J., & Storbacka, K. (2014). A holistic marketconceptualization. Journal of the Academy of Marketing Science,43(1), 100–114. http://doi.org/10.1007/s11747-014-0383-8
Muhamad, R., Melewar, T. C., Faridah, S., & Alwi, S. (2012).European Journal of Marketing Segmentation and brand positioning forIslamic financial services. European Journal of Marketing Journalof Consumer Marketing European Journal of Marketing Iss Anne MaaritJalkala Joona Keränen Journal of Business &amp IndustrialMarketing, 46812(3), 900–921.http://doi.org/10.1108/03090561211230061
Oh, C., Cho, Y., & Kim, W. (2014). The effect of a firm’sstrategic innovation decisions on its market performance. TechnologyAnalysis & Strategic Management, 27(1), 39–53.http://doi.org/10.1080/09537325.2014.945413
Phillips-Melancon, J., & Dalakas, V. (2014). Brand Rivalry andConsumers’ Schadenfreude: The Case of Apple. Services MarketingQuarterly, 35(2), 173–186.http://doi.org/10.1080/15332969.2014.885370
Rabia Iftikhar. (2013). Apple Inc. Implementing StrategicManagement.
Rahimli, A. (2012). Knowledge Management and Competitive Advantage.Information and Knowledge Management, 2(7), 37–43.Retrieved fromhttp://iiste.org/Journals/index.php/IKM/article/view/3255
Schuh, G., Pitsch, M., & Schippers, M. (2014). Design of marketpositioning model for resource efficient tools considering the entirelifecycle. In Procedia CIRP (Vol. 16, pp. 170–175).http://doi.org/10.1016/j.procir.2014.04.074
Shakhshir, G. (2013). Positioning Strategies Development. Journalof Chemical Information and Modeling, 53(9), 1689–1699.http://doi.org/10.1017/CBO9781107415324.004
Shakhshir, G. (2014). The Positioning Analysis of Premium Food Brandsin the Romanian Market. International Journal of EconomicPractices and Theories, 4(2), 206–213. Retrieved fromhttp://ijept.org/index.php/ijept/article/view/The_Positioning_Analysis_of_Premium_Food_Brands_in_the_Romanian_Market/123
Sigalas, C. (2015). Competitive advantage: the known unknown concept.Management Decision, 53(9), 2004–2016.http://doi.org/10.1108/MD-05-2015-0185
Sigalas, C., Pekka Economou, V., & B. Georgopoulos, N. (2013).Developing a measure of competitive advantage. Journal of Strategyand Management, 6(4), 320–342.http://doi.org/10.1108/jsma-03-2013-0015
Spiggle, S., Nguyen, H. T., & Caravella, M. (2012). More ThanFit: Brand Extension Authenticity. Journal of Marketing Research,XLIX(December), 1–17. http://doi.org/10.1509/jmr.11.0015
Srivastava, M., Franklin, A., & Martinette, L. (2013). Building aSustainable Competitive Advantage. Journal of TechnologyManagement & Innovation, 8(2), 47–60.http://doi.org/10.4067/S0718-27242013000200004
Tang, Y., & Wezel, F. C. (2015). Up to standard? Marketpositioning and performance of Hong Kong films, 1975-1997. Journalof Business Venturing, 30(3), 452–466.http://doi.org/10.1016/j.jbusvent.2014.07.010
Vergara, R. (2012). Samsung Electronics and Apple, Inc.: A Study inContrast in Vertical Integration in the 21 st Century. AmericanInternational Journal of Contemporary …, 2(9), 77–81.Retrieved fromhttp://aijcrnet.com/journals/Vol_2_No_9_September_2012/9.pdf
Vinayagathasan, T. (2013). Inflation and economic growth: A dynamicpanel threshold analysis for Asian economies. Journal of AsianEconomics, 26, 31–41.http://doi.org/10.1016/j.asieco.2013.04.001
Wack, K., & Peters, A. (2014). Apple Pay Could Leave SmallerBanks Behind. American Banker, 179(145), 5.http://doi.org/1
Wang, H.-L. (2014). Theories for competitive advantage. In BeingPractical with Theory: A Window into Business Research (pp.33–43).
Whitney, L. (2014). iPhone market share shrinks as Android, WindowsPhone grow | Apple – CNET News. Retrieved fromhttp://news.cnet.com/8301-13579_3-57616679-37/iphone-market-share-shrinks-as-android-windows-phone-grow/
Yoffie, D. B., & Rossano, P. (2012). Apple Inc. in 2012. HarvardBusiness School, 9–710–467, 1–25.