Case 2 Lecture Notes
Apple’s Winning Marketing Strategy
Case 2 Apple’s Winning Marketing Strategy*
Synopsis: Few companies have been able to master the arts of product innovation, a “cool”
brand image, and customer evangelism like Apple. After nearly collapsing under
a cloud of bankruptcy in the mid-1990s, late Apple CEO Steve Jobs was able to
save the company he created through product innovation, a masterful marketing
program, and an entrepreneurial corporate culture. This case reviews Apple’s
history and remarkable comeback with an eye toward the marketing strategies that
created the company’s success. The case also examines many of the challenges
faced by a company that continually pushes the boundaries of marketing practice
to stay on top of the consumer electronics and computer industries.
Themes: Product innovation, marketing program, prestige pricing, competition, changing
technology, differentiation, customer loyalty, foreign sourcing, intellectual
property, privacy issues, corporate culture, sustainability
Case Summary
Few companies can boast that they have fans that sleep outside its doors to be the first to snag its
latest products, but such is the case with Apple, Inc. In 2011, Apple surpassed Google to become
the most valuable global brand, with an estimated value of $153 billion. Headquartered in
Cupertino, California, Apple has transformed itself from a company near bankruptcy in 1997
(with a stock price of $3.30) to the world’s most valuable company in 2012 (with a stock price of
more than $600).
Many companies have tried to copy Apple’s strategies, but none have reached the iconic status of
Apple and its products. Some believe that Apple’s success stems from a combination of several
factors, including the leadership qualities of late CEO Steve Jobs, a corporate culture of
enthusiasm and innovation, and the revolutionary products for which Apple has become known.
While every organization must acquire resources and develop a business strategy to pursue its
objectives, Apple has excelled in both leadership and operations. One of the company’s most
important resources is its employees, and the company has effectively recruited, trained, and
compensated employees to create loyalty. Another resource is suppliers, and Apple has created a
highly efficient and effective supply chain with most of its production in China. Apple has also
mastered core research and development skills that have allowed the company to translate its
technological capabilities into products that consumers want and are willing to pay a premium
price to obtain. The capstone of Apple’s strategy is its retail stores that have become a role model
for its competitors, both in and out of the electronics industry. Such factors have allowed Apple
to revolutionize the technology and retail industries.
* Michael D. Hartline, Florida State University, prepared this teaching note for classroom
Case 2 Lecture Notes
Apple’s Winning Marketing Strategy
Teaching Overview
This case provides a brief history of Apple and a review of its product line and marketing
program. Apple has honed its ability to produce iconic products that consumers desire. The
company’s product strategy is based on innovative designs, ease-of-use, and seamless
integration. Apple has not only created highly successful products, but also whet consumers’
appetites for yet-to-be-released and rumored products.
Since the main theme of this case is product innovation, students should be asked to explain how
Apple has managed to reach the pinnacle of innovation and iconic brand status. Most students
will suggest that Steve Jobs, and the culture that he created, is the main reason for Apple’s
success. If true, students should be pushed to explain how Apple’s track record could continue
without Steve Jobs at the helm.
The case can also be approached from a competitive point of view. Though Apple is currently on
top, the quality of competing products (most notably those from Amazon and Google) continues
to increase. And, competitive products are released at a much faster rate than Apple releases new
products. At the time of this writing, articles are beginning to appear in the popular press that
consumers have become fatigued with Apple’s products. Likewise, when the iPad Mini was
finally released in late 2012, many experts panned it for its poor camera and lack of retina
display. These issues have caused Apple’s stock price to drop well below $600 as concerns
mount that Apple may not be able to continue its pace of innovation. Internal executive changes
have also heightened this concern. Given the rapid pace of change in the technology sector,
instructors should thoroughly update themselves on Apple’s current products and strategies
before discussing this case.
SWOT Analysis
Internal Strengths
• High quality, innovative products
• Strong brand cache, customer satisfaction and brand loyalty
Internal Weaknesses
• Loss of Steve Jobs
Case 2 Lecture Notes
Apple’s Winning Marketing Strategy
External Opportunities
• Emerging markets are more profitable than the U.S. market
External Threats
• Competition is vastly improved (especially Amazon and Google)
• Consumers in emerging markets do not replace technology as often as U.S. consumers
Problem/Decision Statement
How can Apple stay on top by continuing its marketing program based on product innovation,
premium pricing, tightly integrated supply chains, and catchy advertising?
Strategy Alternatives
1. Apple could continue to vertically integrate its supply chain by purchasing a major
components supplier, such as Sharp (Sharp makes LCD panels for Apple). This would
2. Apple could move horizontally by purchasing a major content provider (a music label,
3. Apple could invest its cash reserve in emerging technologies, such as flexible displays or
wearable technology. The last version of the iPad Nano created a cottage industry around
wristbands that turned the Nano into a watch-like device. Google has already
demonstrated wearable technology with its Project Glass.
Strategy Recommendations
All three alternatives are viable options for Apple. Students should be cautioned that innovation
Case 2 Lecture Notes
Apple’s Winning Marketing Strategy
plans to purchase one or more companies that allow them to expand either horizontally or
vertically.
Implementation Issues
Apple’s key implementation issue is executive leadership and how the team can perpetuate
Apple’s culture of innovation. Despite the loss of Steve Jobs, current CEO Tim Cook has
Teaching Questions
1. How has Apple developed extreme loyalty among consumers that has resulted in an
almost cult-like following?
2. Describe the role of Apple stores as an important part of its marketing strategy.
3. What will Apple need to do to maintain product innovation and customer loyalty?
This is a difficult question and student answers will vary. The main thing Apple needs to