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    Situation Analysis
               	
  
         Susanna Walter
 Advertising Management, 355.01
          Professor Stack
         22 October 2009
               	
  
                                                                                                             Walter 2


                                                                                    	
  
                                                                                    	
  
                                                    	
     Table of Contents

                                                             Current Marketing Situation
                                                                    Industry
                                                                    Company
                                                                    Product
                                                                       Stage of Product Life
                                                                       Product Sales Features
                                                                       Positioning
                                                                       Sales History
                                                                       Share of Market
                                                                    Target Market
                                                                    Competition
                                                                       Identification
                                                                       Strengths of Competition
                                                                       Weaknesses of Competition
                                                                       Marketing Activities of Competition
                                                                    Distribution
                                                                    Pricing
                                                                    Communications Strategies/History	
  
	
  	
  	
  	
  	
  	
  	
  	
   	
   	
     	
  
	
                 	
   	
   	
              	
  
	
  
	
  
	
  
	
  
	
  
	
  



                                                                                           	
  
                                                                                                                                                                                                                             Walter 3


                                      Current Marketing Situation


                                                             The Industry


                                                                               The personal computer industry consists of both desktop and
                                                               notebook personal computer hardware. Desktop PCs form the
                                                               largest segment of the market, generating 55.2% of the total
                                                               volume. Notebook sales make up the remaining 44.8% of the
                                                               market's volume.


                                                                               The leading companies in the personal computer market are
                                                               Dell, Hewlett-Packard, Acer, and Apple. The PC market
                                                               generated total revenues of $50.8 billion in 2007, representing a
                                                               compound annual growth rate of 5.6% for the period spanning
                                                               from 2003 to 2007. Market consumption volumes increased with a
                                                               compound annual growth rate of 8.5% between 2003 and 2007, to
                                                               reach a total of 67 million units in 2007. The performance of the
                                                               market is forecast to decelerate, with an anticipated compound
                                                               annual growth rate of 4.6% for the five-year period from 2007 to
                                                               2012, which is expected to drive the market to a value of $63.7
                                                               billion by the end of 2012.1


                                                                               The computer industry includes more than one thousand
                                                               companies. The industry is highly concentrated, with the top fifty
                                                               companies generating ninety percent of the revenue. Demand is
                                                               tied to consumer and business income. The profitability of

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
1	
  Datamonitor <http://web.ebscohost.com/bsi/pdf?vid=25&hid=6&sid=3f8e03de-469e-473f-adb0-
7efba9635c0d%40sessionmgr110>




                                                                                                                                                 	
  
                                                            Walter 4

computer companies depends on purchasing and production
efficiencies, as well as technological expertise. Large companies
have economies of scale in purchasing and production. Small
companies can compete successfully by specializing their
products or developing superior technology.


      The manufacturing process for PCs consists of integrating
circuit boards, disk drives, and input/output devices into a final
product. Companies typically assemble PCs from components
bought from other manufacturers. Key components like
motherboards are typically made especially for a particular
product. Despite new technology, some assembly work is still
labor-intensive. The manufacture of some products requires
highly sophisticated machinery. Although components and other
materials can typically be bought from a variety of vendors, some
components are available from just a few suppliers. For instance,
Intel is the major supplier of processor chips for PCs. Computer
manufacturers rely heavily on technology to produce better
products and lower costs. Research and development spending at
some companies is quite high. Technological advances can
rapidly make products obsolete. The life cycle for computers is
often less than eighteen months.


      Computer companies sell to consumers primarily through
large electronic retailers and department stores, or directly
through web sites. Computer companies have become more
dependent on Internet sales recently. Many companies sell
directly to consumers through their own websites, or through
retailers’ web sites.




                               	
  
                                                                                                                                                                                                                                   Walter 5

                                                                                          Advertising is widely used in the industry to reach
                                                                        consumers. Magazine advertising, direct mail, promotional pieces,
                                                                        and catalogs are common, as is Internet advertising.2




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
2	
  Hoovers <http://premium.hoovers.com/subscribe/ind/fr/profile/basic.xhtml?ID=212>

	
  


                                                                                                                                                                    	
  
                                                            Walter 6


The Company


      Apple is engaged in the design, development and marketing
of personal computers and related software, peripherals, network
solutions, portable digital music players, and related accessories.
Apple offers Mac computing systems, iPods, iPhones, and servers.
The company’s software applications include Mac OS, iLife,
iWork, and Internet applications like Safari and QuickTime. Apple
is headquartered in Cupertino, California and employs 32,000
employees.


      Apple recorded revenues of $32,479 million during the
financial year ended September 2008, an increase of 35.3% over
2007. The operating profit of the company was $6,275 million
during FY 2008, an increase of 42.3% over 2007. The net profit
was $4,834 million in FY 2008, an increase of 38.3% over 2007.
During FY2008, the iPod division recorded revenues of $9,153
million, an increase of 10.2% over 2007. The portables division
recorded revenues of $8,673 million in FY2008, an increase of
37.8% over 2007. The desktops division recorded revenues of
$5,603 million in FY2008, an increase of 39.4% over 2007. The
other music related products and services division recorded
revenues of $3,340 million in FY2008, an increase of 33.8% over
2007. The software, service, and other net sales division recorded
revenues of $2,207 million in FY2008, an increase of 46.4% over
2007. The iPhone and related products and services division
recorded revenues of $1,844 million in FY2008, compared to
revenues of $123 million in 2007. The peripherals and other




                               	
  
                                                             Walter 7

hardware division recorded revenues of $1,659 million in
FY2008, an increase of 31.7% over 2007.


       Apple is one of the major providers of personal computers,
portable digital music players, and mobile communication devices.
Apple designs, manufactures, and markets personal computers and
related software, services, peripherals, and networking solutions.
The company also designs, develops, and markets a line of
portable digital music players along with related accessories and
services including the online distribution of third-party music,
audio books, music videos, short films, and television shows. The
company sells its products worldwide through online stores, retail
stores, direct sales force, and third-party wholesalers and resellers.
The company has 247 retail stores, including 205 stores in the US
and a total of 42 stores internationally.


       Apple’s desktops product line includes iMac, eMac, Mac
mini, Power Mac, Mac Pro, and Xserve. Portables include
MacBook, iBook, MacBook Pro, and PowerBook. iPod products
include iTunes Store and iPod services, and the company’s own
and third party iPod accessories. Other music related products and
services include hardware accessories of the company and third
parties, wireless connectivity and networking solutions. Software
services comprise Apple branded operating system and application
software, third party software, AppleCare, and Internet services.


       Apple Computer was founded in 1976 by Steve Jobs and
Steve Wozniak. They introduced the first Apple I computer in
1976. The Apple I was a failure, but Apple II launched in 1980 and
was successful.




                                	
  
                                                            Walter 8

      In the early eighties, competition from the PC market and
internal difficulties led to critical management changes. By 1983,
Apple Computer encountered danger when IBM entered the PC
market, and the Apple III version computer failed. Apple
Computer introduced its first mouse driven computer, the
Macintosh in 1984.


      By 1990, the market was flooded with PC clones and
Microsoft had launched Windows 3.0. In 1994, the company
launched the PowerPC chip based PowerMac. This new chip
allowed Macs to compete with the speed of Intel’s PC processors.
Apple Computer still had problems though, and in 1995, the
company had a $1 billion order backlog. These problems were
compounded by the launch of Windows 95. Apple’s performance
nosedived from 1995 to 1996 when it lost $68 million.


      In 1996, Apple Computer acquired NeXT, and NeXT’s
operating system, Rhapsody became Apple Computer’s next-
generation operating system. By 1997, Apple Computer had
incurred huge losses running in millions of dollars. Steve Jobs, the
original co-founder, returned as interim Chief Executive Officer.
Under his leadership, Apple Computer reorganized to concentrate
on its more profitable competencies. Apple Computer eliminated
its unsuccessful spin offs, including Newton, its personal digital
assistant line of products during this period.


      Soon after Steve Jobs returned, an agreement was made with
Microsoft, and was subsequently followed with the appearance of
MS Office on Mac PCs. In 2001, Apple acquired PowerSchool,
one of the providers of web-based student information systems for




                                	
  
                                                            Walter 9

K-12 schools and school districts. They also acquired Spruce
Technologies, a privately held company involved in developing
and marketing DVD authoring products, in the same year.


      In the following year, Apple Computer, Ericsson and Sun
Microsystems formed an alliance to create a standard format for
delivering multimedia content to wireless devices, such as smart
phones and PDAs. The alliance combined Apple Computer’s
QuickTime video creation software, Sun’s content distribution
software and hardware, and Ericsson’s mobile infrastructure and
services expertise.


      Apple Computer pursued a number of acquisitions during
2002. It acquired Prismo Graphics, Silicon Grail and certain assets
of Zayante, and also acquired the German based specialist music
software manufacturer, Emagic, which became a wholly owned
division of Apple Computer. Additionally, in the second quarter of
2002, Apple acquired certain assets of Nothing Real, a privately
held company engaged in the development of high performance
tools designed for the digital image creation market.


      Apple launched its iTunes music store, an online store for
downloading music tracks and albums, in 2003. In the following
year, Apple signed licensing agreements with three of the
largest European independent music labels, adding tens of
thousands of additional independent tracks from leading artists to


the iTunes music store in the UK, France and Germany. In the
same year, Apple Computer introduced its fourth generation iPod
portable digital music player.




                                 	
  
                                                             Walter 10

       In 2005, Apple made an agreement to use Intel
microprocessors in its Macintosh computers. Later in the year,
Apple collaborated with Acura, Audi, Honda and Volkswagen to
deliver iPod with their car stereos for 2006 model lines and also
introduced mobile phone with iTunes in collaboration with
Motorola and Cingular Wireless.


       Chrysler, in association with Apple Computer, integrated
iPod options in the audio systems in its 2006 models. In 2006,
Apple Computer sold its student information systems division,
PowerSchool to Pearson. In the same year, Ford, General Motors
and Mazda teamed up with Apple to integrate iPod across their
brand and models. In 2006, Apple Computer teamed up with Air
France, Continental, Delta, Emirates, KLM and United Airlines to
integrate iPod with in-flight entertainment systems.


       In 2007, the company changed its name from Apple
Computer, Inc to Apple Inc to represent its expanding product
portfolio and increasing focus on consumer electronics division. In
the same year, Apple launched its revolutionary product iPhone.


       In 2007, Apple launched iPod nano featuring two inch
display with 204 pixels per inch delivering comparatively better
brightness. In the same year, the company selected T-Mobile, a
major network operator in Germany as the carrier of iPhone in
Germany. Apple also chose Orange as the iPhone carrier in France.


In 2007, Apple released Final Cut Express 4, an upgraded version
of its video edit software Final Cut Pro 6 with additional
capabilities at a lower price.




                                 	
  
                                                            Walter 11

         In January 2008, Apple introduced Time Capsule, a backup
appliance that automatically and wirelessly backs up everything on
one or more Macs running Leopard. In the same month, it also
introduced Mac Pro with eight processor cores and new system
architecture for higher performance than its predecessor.
Subsequently, Apple introduced MacBook Air, a thin notebook,
which measures a maximum height of 0.76-inches.


         Apple introduced Xsan 2, the first major upgrade to its easy
to use, high performance, enterprise class SAN file system for Mac
OS X in February 2008. In May 2008, HBO and Apple announced
that programming from HBO is available for purchase and
download on the iTunes Store.


         In June 2008, Apple introduced MobileMe, a new Internet
service that delivers push email, push contacts and push calendars
from the MobileMe service to native applications on iPhone, iPod
touch, Macs and PCs. In September 2008, Apple introduced iTunes
8, the next major release of Apple’s music and video player for
Macs and PCs. In the same month, Apple introduced the new iPod
nano, and new iPod touch. In October 2008, Apple announced that
all four of the major networks ABC, CBS, FOX & NBC were
offering primetime programs in high definition on the iTunes
Store.


         In January 2009, Apple introduced iWork ’09, the latest
version of Apple’s office productivity suite. In the same month,
Apple introduced iLife ’09, which features major upgrades to
iPhoto, iMovie and GarageBand, and includes iDVD and an
updated version of iWeb. Apple also unveiled the new 17-inch




                                 	
  
                                                                                                                                                                                                                       Walter 12

                                                            MacBook Pro featuring a new built-in battery that delivers up to
                                                            eight hours of use and up to 1,000 recharges for more than three
                                                            times the lifespan of conventional notebook batteries.3




                                                                     SWOT Analysis


                                                                                Strengths


                                                                                     •         Strong brand image
                                                                                                             The Apple brand is well recognized amongst
                                                                                               most consumers. Apple also enjoys a high level of
                                                                                               brand awareness and brand recognition for its
                                                                                               products in all its markets. The company’s brand
                                                                                               value, as per the Interbrand rankings, has improved
                                                                                               from 39 in 2006, 35 in 2007 to 24 in 2008. The brand
                                                                                               value of the company improved to $13,724 million in
                                                                                               2008 from $11,037 million in 2007.
                                                                                                             Apple leverages its brand image to differentiate
                                                                                               its product offering and drive sales. The company’s
                                                                                               strong brand enables it to command a premium
                                                                                               pricing for its products such as iMac, iPod and
                                                                                               iPhone, giving it an edge over regional as well as
                                                                                               other global competitors such as Sony.




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
3	
  Datamonitor <http://web.ebscohost.com/bsi/pdf?vid=4&hid=113&sid=cb7f18fc-38be-4f14-991d-
d51aed44d6b4%40sessionmgr104>




                                                                                                                                               	
  
                                                 Walter 13

•   Robust financial performance
         Apple reported robust financial performance in
    the past few years. The company’s total revenue
    increased from $6,207 million in FY2003 to $32,479
    million in FY2008, representing a compounded
    annual growth rate of 39%. The company’s operating
    income recovered from an operating loss of $1
    million in FY2003 to an operating profit of $6,275
    million in FY2008. As a result, the company
    operating profit margin has improved from 3.9% in
    2004 to 19.3% in FY2008. Apple’s net income
    increased from $69 million in 2003 to $4,834 million
    in 2008. Following the trend, Apples net income
    margin improved from 1.1% in FY2003 to 14.8% in
    FY2007.
         The net sales increased around 35% in 2008 as a
    result of increased sales of Mac, iPods, iPhone, other
    music related products and services, peripherals and
    other hardware, and software, service, and other. The
    net sales of Mac, iPods, other music related products
    and services, peripherals and other hardware, and
    software, service, and other increased by 38%, 10%,
    34%, 32%, and 46% respectively in FY2008. Net
    sales of iPhone and related products and services
    were $1.8 billion for 2008, with iPhone handset unit
    sales totaling 11.6 million.
       The company’s cash from operating activities
    reached $9,596 million in FY2008, as compared to
    $289 million in FY2003. Strong growth in revenues
    and cash flows indicates better financial position of




                      	
  
                                                   Walter 14

    the company and helps it to strengthen investor
    confidence.


•   Focus on research and development
         Apple has a strong focus on research and
    development as continual investment in research and
    development is critical to the development and
    enhancement of innovative products and
    technologies. In addition to evolving its personal
    computers and related solutions, the company
    continues to capitalize on the convergence of the
    personal computer, digital consumer electronics and
    mobile communications by creating and refining
    innovations, such as the iPod, iPhone, iTunes Store,
    and Apple TV.
         The company’s research and development
    expenditures were $1.1 billion, $782 million, and
    $712 million in 2008, 2007, and 2006, respectively.
    The company’s R&D spending is focused on further
    developing its existing Mac line of personal
    computers, its operating system, application software,
    iPhone and iPods; developing new digital lifestyle
    consumer and professional software applications; and
    investing in new product areas and technologies.
       In January 2009, Apple introduced the new 17-
    inch MacBook Pro featuring a new built-in battery
    that delivers up to eight hours of use and up to 1,000
    recharges for more than three times the lifespan of
    conventional notebook batteries. In the same month,
    Apple introduced iWork ’09, the latest version of




                      	
  
                                                   Walter 15

     Apple’s office productivity suite and iLife ’09, which
     features major upgrades to iPhoto, iMovie and
     GarageBand, and includes iDVD and an updated
     version of iWeb. Strong focus research and
     development would lead to market leading and
     innovative products such as iPod and iPhone, thereby
     enhancing the brand image of the company.


Weaknesses


 •     Product recalls
      The company’s products and services
     experience quality problems from time to time. Apple
     sells highly complex hardware and software products
     and services that can contain defects in design and
     manufacture. Defects may also occur in components
     and products the company purchases from third
     parties. There can be no assurance the company will
     be able to detect and fix all defects in the hardware,
     software and services it sells.
        For instance, in September 2008, Apple announced
     Ultracompact USB Adapter Exchange Program.
     Under certain conditions, the new ultracompact Apple
     USB power adapter’s metal prongs broke off and
     remained in a power outlet, creating the risk of
     electric shock. Therefore, the company decided to
     exchange every ultracompact power adapter for a new
     redesigned adapter, free of charge. Product defects
     could result in harm to reputation and significant
     warranty and other expenses.




                       	
  
                                                    Walter 16

 •    Patent infringement
          The company is involved in legal complaints
     relating to the patent infringement. As of September
     2008, the company has defended more than 21 patent
     infringement cases, 13 of which were filed during
     FY2008, and several pending claims are in various
     stages of evaluation.
        For instance, Texas MP3 Technologies filed action
     against the company and other defendants on
     February 16, 2007 in the US District Court for the
     Eastern District of Texas, Marshall Division, alleging
     infringement of U.S. Patent No. 7,065,417 entitled
     “MPEG Portable Sound Reproducing System and A
     Reproducing Method Thereof.” The complaint seeks
     unspecified damages and other relief. The hearing is
     set for March 12, 2009, and trial is scheduled for July
     6, 2009.
        In case the company fails to succeed in any of the
     matters related to infringement of patent or other
     intellectual property rights of others or several of
     these matters are resolved against the company in the
     same reporting period, the company’s financial
     condition and operating results could be materially
     adversely affected.


Opportunities


 •    Smartphones
          Demand for smartphones among the mobile
     users is likely to grow rapidly over the next few years.




                       	
  
                                              Walter 17

Increasing demand for PC functionalities to support
the data services along with the voice are expected to
drive the smartphone markets. According to industry
forecast, worldwide smartphone sales to end-users
totaled 36.5 million units in the third quarter of 2008,
an 11.5% increase from the same period in 2007.
 Apple has launched the iPhone, which is a
multimedia and Internet-enabled mobile phone
catering to the required functionalities. iPhone is a
combination of mobile phone, a widescreen iPod, and
the internet functionalities and applications that
support email, web browsing, and maps on a mobile
phone. It has additional features such as multi touch
display and related software.
     Apple gained third position in the global
smartphone market and improved its market share to
12.9% in the third quarter of 2008. Apple’s sales
increased more than four times compared to the same
period in 2007 as a result of wider geographical
availability. The success of iPhone 3G sales in the
third quarter of 2008 propelled the Mac OS X to the
No. 3 position in the global OS provider rankings. For
the first time, iPhone sales exceeded sales of
Microsoft Windows Mobile devices worldwide and in
North America.
     Smartphone sales in North America were the
fastest growing market, with a 68% increase in the
third quarter of 2008. Smartphone sales in Europe, the
Middle East and Africa increased 14% year-on-year.
In Latin America, despite the decline in sales for all




                  	
  
                                                  Walter 18

    handsets, the smartphone market grew 56% in the
    third quarter of 2008. With an innovative product like
    iPhone, Apple is capable of increasing its share of
    growing smartphone markets.


•    New retail stores
         The company opened a total of 247 retail stores,
    including 205 stores in the US and a total of 42 stores
    internationally. The company has typically located its
    stores at high-traffic locations in quality shopping
    malls and urban shopping districts. A goal of the
    company’s retail business is to expand its installed
    base through sales to customers not owning the
    company’s products.
     The stores are designed to simplify and enhance the
    presentation and marketing of the company’s
    products and related solutions. To that end, retail
    store configurations have evolved into various sizes in
    order to accommodate market-specific demands. The
    stores employ experienced and knowledgeable
    personnel who provide product advice, service, and
    training. The stores offer a wide selection of third-
    party hardware, software, and various
    other accessory products and peripherals selected to
    complement the company’s own products. By
    operating its own stores and locating them in
    desirable high traffic locations, the company is better
    positioned to control the customer buying experience
    and attract new customers.




                      	
  
                                                   Walter 19


Threats


 •     Intense competition
          Apple operates in the highly competitive and
     rapidly evolving technology industry. The company
     faces intense competition in consumer electronics,
     personal computers and related software, and
     peripheral products. Rapid technological advances in
     both hardware and software, increasing the
     capabilities and use of personal computers and digital
     electronic devices, characterize these markets. Rapid
     changes in the technology have resulted in the
     frequent introduction of new products with
     competitive prices, features, and performance
     characteristics.
          Some of the competitors of the company include
     Microsoft Corporation, Dell, Hewlett-Packard,
     Fujitsu, Samsung Electronics, Sony, and Toshiba,
     among others. Further, acquisition of Gateway by
     Acer has created a large player in the PC market. The
     company is currently focused on market opportunities
     related to mobile communication devices including
     the iPhone. The mobile communications industry is
     highly competitive with several large, well-funded,
     and experienced competitors. In 2009, Mobile phone
     maker Nokia launched a software and media store
     that aims to compete with Apple online marketplace.
     Intense competition among the PC producers has
     resulted in the price erosion threatening to erode the
     market share of the company.




                        	
  
                                                  Walter 20

•    Uncertain global economic conditions
         Uncertainty in current global economic
    conditions poses a risk to Apple as consumers and
    businesses would postpone spending in response to
    tighter credit, negative financial news and/or declines
    in income or asset values. Economic slowdown in any
    major geographic segment of the company would
    affect its financial performance. For instance,
    economic slowdown in the US would decrease the
    demand for Apple’s products and services.
         The US represented Apple’s largest geographic
    marketplace with approximately 57% of net sales in
    2008 from sales to customers inside the US.
    According to the IMF projections, the advanced
    economies like the US is forecast to report a huge
    decline in GDP figures for 2009, compared to 2008.
    The US economy, which was hit by the weak housing
    market, credit crunch and unemployment, is forecast
    to report a real GDP decline of 1.6% in 2009
    compared to 1.1% growth in 2008.
        In addition, the current financial turmoil affecting
    the banking system and financial markets and the
    possibility that financial institutions may consolidate
    or go out of business have resulted in a tightening in
    the credit markets, a low level of liquidity in many
    financial markets, and extreme volatility in fixed
    income, credit, currency and equity markets. There
    could be a number of follow-on effects from the
    credit crisis on the company’s business, including
    insolvency of key suppliers resulting in product




                      	
  
                                                  Walter 21

    delays; inability of customers, including channel
    partners, to obtain credit to finance purchases of the
    company’s products; customer, including channel
    partner, insolvencies; and failure of derivative
    counterparties and other financial institutions
    negatively impacting the company’s treasury
    operations. Uncertain global economic conditions,
    could have a material negative effect on the demand
    for the company’s products and services.


•    Declining PC sales
         The PC sales are expected to decline in the near
    future. Analysts expect industry revenues to fall 5.3%
    from 2008 numbers as against an earlier forecast of a
    drop of around 4%. Sales of Macs in the US stores in
    November 2008 declined 1% from a year ago.
         The UK PC market is also expected to decline in
    2009. Industry sources have decreased its unit
    forecast for the market by 15%. According to industry
    sources, the UK will witness a 3% fall in PC
    shipments during 2009 due to recession. The market
    is not expected to witness growth until 2010.
    Declining PC sales would affect the sales of Apple’s
    desktop products affecting its financial performance.


•    Dependence on specific suppliers
         The company depends on the third party
    suppliers for various components used in its products.
    In the case of personal computers, Apple acquires
    most of the general components from multiple




                      	
  
                                                                                                                                                                                                                                                                               Walter 22

                                                                                                                                                                                                                                   sources and certain key components from single or
                                                                                                                                                                                                                                   limited customers. These key components include
                                                                                                                                                                                                                                   DRAM, NAND flash-memory, and TFTLCD flat-
                                                                                                                                                                                                                                   panel displays.
                                                                                                                                                                                                                                        The company also uses certain customized
                                                                                                                                                                                                                                   components from single source, which are not
                                                                                                                                                                                                                                   generally used by the other PC manufacturers.
                                                                                                                                                                                                                                   Continued availability of these components may be
                                                                                                                                                                                                                                   affected if producers concentrate on the production of
                                                                                                                                                                                                                                   components other than those customized to meet the
                                                                                                                                                                                                                                   company’s requirements. Lack of suppliers of key
                                                                                                                                                                                                                                   components could adversely affect the operations of
                                                                                                                                                                                                                                   the company.4




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
4Datamonitor <http://web.ebscohost.com/bsi/pdf?vid=23&hid=6&sid=3f8e03de-469e-473f-adb0-
7efba9635c0d%40sessionmgr110>
	
  


                                                                                                                                                                                                                                                     	
  
                                                          Walter 23


The Product

  Stage of Product Life Cycle

         The MacBook Pro is in the growth stage of the product
  life cycle. The portable computer division of Apple recorded
  revenues of $8,673 million in 2008, an increase of 37.8% over
  2007. Apple continues to constantly develop and enhance the
  appearance and technology of the MacBook Pro. In January
  2009, Apple introduced the new 17-inch MacBook Pro
  featuring a built-in battery that delivers up to eight hours of use
  and up to 1,000 recharges for more than three times the
  lifespan of conventional notebook batteries.


  Product Sales Features


         •   Precision aluminum unibody enclosure
         •   Full-size backlit keyboard
         •   Multi-Touch trackpad for precise cursor control;
         supports two-finger scrolling, pinch, rotate, swipe,
         three-finger swipe, four-finger swipe, tap, double-tap,
         and drag capabilities
         •   13.3 inch, 15.4 inch, or 17 inch LED-backlit glossy
         widescreen display
         •   Built-in battery that lasts up to 7 hours on a single
         charge and can be recharged up to 1,000 times
         •   Built-in iSight camera
         •   Built-in stereo speakers
         •   Built-in omnidirectional microphone




                              	
  
                                                                                                                                                                                                                                          Walter 24

                                                                                                                                                           •                 Built-in AirPort Extreme Wi-Fi wireless networking
                                                                                                                                                           •                 Built-in Bluetooth 2.1 + EDR
                                                                                                                                                           •                 Built-in 10/100/1000BASE-T Gigabit Ethernet
                                                                                                                                                           •                 Two USB 2.0 ports
                                                                                                                                                           •                 FireWire 800 port
                                                                                                                                                           •                 SD card slot
                                                                                                                                                           •                 Mini DisplayPort
                                                                                                                                                           •                 NVIDIA GeForce 9400M graphics processor5


                                                                                                                         Positioning


                                                                                                                                                           The MacBook Pro is positioned as the most advanced
                                                                                                                         notebook on the market. It is positioned as the epitome of
                                                                                                                         precision engineering and advanced technology. The MacBook
                                                                                                                         Pro is designed to provide the best computer experience
                                                                                                                         possible. Everything works, and everything works together
                                                                                                                         because Apple makes the hardware, the software, and the
                                                                                                                         operating system. Only Apple could make a notebook like the
                                                                                                                         MacBook Pro. The MacBook Pro truly is the next generation
                                                                                                                         of notebooks.


                                                                                                                         Sales History


                                                                                                                                                           The MacBook Pro was first introduced in January of
                                                                                                                         2006. Apple recorded notebook revenues of $8,673 million in
                                                                                                                         2008, an increase of 37.8% over 2007. Apple’s growth in sales
                                                                                                                         of notebooks was due, in part, to strong demand for the



	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
5	
  Apple <http://www.apple.com/macbookpro/specs.html>

	
  


                                                                                                                                                                                                                                   	
  
                                                                                                                                                                                                                                   Walter 25

                                                                                   MacBook Pro, which increased in every operating segment
                                                                                   except Japan.6


                                                                                   Share of Market


                                                                                                          Apple's market share of personal computers rose from
                                                                                   7.4 percent in 2008 to 7.6 percent in the first quarter of 2009.
                                                                                   Apple is in fourth place for both market share and shipments of
                                                                                   computers in 2009, as it was in 2008. HP’s market share rose
                                                                                   from 23.8 percent in 2008 to 27.6 percent in 2009. Dell saw its
                                                                                   market share fall four points to 26.3 percent. Acer has 10.5
                                                                                   percent market share.7




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
6	
  Apple <http://www.apple.com/investor/>
7	
  Macworld <http://www.macworld.com/article/140029/2009/04/pcshipments.html>

	
  


                                                                                                                                                                         	
  
                                                              Walter 26


The Target Market

       The target market for	
  Apple consists of students,
consumers, creative professionals, businesses, and government
customers. The MacBook Pro family of notebook computers is
designed for professionals and advanced consumer users. The
target market for the MacBook Pro consists of both males and
females, ages fifteen and older, with middle upper income. The
target audience for the MacBook Pro consists primarily of
generations X and Y. The target audience for the MacBook Pro
consists of those who can afford and are willing to pay premium
prices for a superior computer. Professionals in media and design
are certainly in the target audience, as are consumers with
advanced computer needs or desires or a particular interest in
photography, music, video, etc.




                               	
  
                                                                                                                                                                                                                            Walter 27


                                                              The Competition

                                                                        Identification

                                                                                  •          Dell

                                                                                                       Dell is one of the leading technology companies,
                                                                                             offering a broad range of products, including desktop
                                                                                             PCs, servers, networking products, storage, mobility
                                                                                             products, software and peripherals, and services. The
                                                                                             company operates in the Americas, EMEA and Asia
                                                                                             Pacific. It is headquartered in Round Rock, Texas and
                                                                                             employs 78,900 people including 2,400 temporary
                                                                                             employees.
                                                                                                       The company recorded revenues of $61,101 million
                                                                                             during the financial year ended January 2009, a
                                                                                             decrease of 0.1% over 2008.The operating profit of the
                                                                                             company was $3,190 million in FY2009, a decrease of
                                                                                             7.3% over 2008. Its net profit was $2,478 in FY2009, a
                                                                                             decrease of 15.9% over 2008.8

                                                                                  •          Hewlett-Packard

                                                                                                         Hewlett-Packard (HP) is a global provider of
                                                                                             personal systems, imaging and printing products, and
                                                                                             technology solutions. The company is the largest player
                                                                                             in the inkjet printer and laser printer market. HP is one
                                                                                             of the major companies in the enterprise storage and
                                                                                             servers markets. The company is also one of the market
                                                                                             leaders in the global PC market. It operates in the US
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
8	
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c7c7ed9ce94d%40sessionmgr10>	
  



                                                                                                                                                   	
  
                                                                                                                                                                                                                             Walter 28

                                                                                             and other countries. It is headquartered in Palo Alto,
                                                                                             California and employs 321,000 people.
                                                                                                           The company recorded revenues of $118,364
                                                                                             million during the financial year ended October 2008,
                                                                                             an increase of 13.5% over 2007. The increase in the
                                                                                             company’s revenue was mainly due to strong growth in
                                                                                             international sales. The operating profit of the company
                                                                                             was $10,473 million in FY2008, an increase of 20.1%
                                                                                             over 2007. Its net profit was $8,329 million in FY2008,
                                                                                             an increase of 14.7% over 2007.9

                                                                                   •         Acer

                                                                                                                 Acer is engaged in research, design, manufacture
                                                                                             and distribution of computers, mobile phones and
                                                                                             related IT products. Its product range includes desktop
                                                                                             personal computers (PCs), notebook computers,
                                                                                             servers, storage products, liquid crystal display (LCD)
                                                                                             monitors, high-definition televisions (HDTVs),
                                                                                             projectors and handheld/navigational devices, among
                                                                                             others. The company offers its products under four
                                                                                             brands, including Acer, Gateway, eMachines and
                                                                                             Packard Bell. The company operates in Taiwan,
                                                                                             Europe, Asia, and North America. It is head quartered
                                                                                             in Taipei, Taiwan and employs about 6,730 people.
                                                                                                                The company recorded revenues of
                                                                                             TWD546,274.1 million ($17,344.2 million) during the
                                                                                             financial year ended December 2008, an increase of
                                                                                             18.2% over 2007. The operating profit of the company

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
9	
  Datamonitor <http://web.ebscohost.com/bsi/pdf?vid=4&hid=3&sid=9ca6ed6a-df54-4fc2-8f3b-
1dbefb66de89%40sessionmgr11>	
  



                                                                                                                                                   	
  
                                                                                                                                                                                                                         Walter 29

                                                                                           was TWD14,072.3 million ($446.8 million) in FY2008,
                                                                                           an increase of 38.2% over 2007. Its net profit was
                                                                                           TWD11,742.1 million ($372.8 million) in FY2008, a
                                                                                           decrease of 9.4% over 2007.10


                                                                       Strengths of Competition

                                                                                 • Dell

                                                                                                     o Strong brand value

                                                                                                                              Dell enjoys a strong brand image
                                                                                                               supporting its growth. The company is among
                                                                                                               the top 100 brands in the world, with a brand
                                                                                                               value of $11,695 million, according to
                                                                                                               Interbrand annual ranking 2008. It was ranked
                                                                                                               32 in the list of top 100 brands.
                                                                                                                              In the second half of the FY2008, Dell
                                                                                                               started offering products through indirect sales,
                                                                                                               such as leading retail chain stores. It offers
                                                                                                               select products through strategic relationships
                                                                                                               with a various major retailers like Wal-Mart and
                                                                                                               Best Buy in the US; Wal-Mart and Pontofrio in
                                                                                                               Latin America; Carphone Warehouse,
                                                                                                               Carrefour, Tesco and DSGi in EMEA region;
                                                                                                               and Gome, HiMart, Courts and Bic Camera in
                                                                                                               Asia Pacific region. With its entry into indirect
                                                                                                               sales channel model, Dell’s visibility among the
                                                                                                               individual customer in the retail space is
                                                                                                               increasing, which further increases its brand
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
10	
  	
  Datamonitor <http://web.ebscohost.com/bsi/pdf?vid=4&hid=3&sid=b4387afb-bc04-4df0-ab9f-
47ac6073303a%40sessionmgr14>	
  



                                                                                                                                                	
  
                                           Walter 30

   value.
      Strong brand value enhances the company’s
   market penetration capability and provides cross
   selling opportunities.

o Robust market position

        Dell has a robust market presence in IT
   systems market. Despite losing market share to
   other players in the recent past, Dell continues
   to remain a strong player in the IT systems
   market. Dell was the second largest player in the
   in the worldwide PC market with approximately
   15% share of the volume shipment in 2008. In
   the notebook PC segment, it was the second
   largest player in 2008 with a market share of
   approximately 14%. In the US, the company
   continued to be the leading PC vendor with
   approximately 30% market share of the volume
   shipments in 2008. It is also a leading player in
   the computer peripheral equipment and software
   wholesaler market. The company is also the
   fourth largest player in the worldwide disk
   storage systems market with a market share of
   over 10% in 2008. It is the third largest player in
   the worldwide servers' segment with a market
   share of approximately 12% in 2008.
      Dell's strong market position in the IT
   systems market provides it with a competitive




               	
  
                                                                                                                                                                                                                          Walter 31

                                                                                                                advantage.11

                                                                                  •         Hewlett-Packard

                                                                                                      o Robust market position

                                                                                                                               Hewlett-Packard (HP) has a robust market
                                                                                                                position in most of the product segments it
                                                                                                                serves. The company leads the global PC market
                                                                                                                in terms of shipments. HP managed to take
                                                                                                                market leadership from Dell in the global PC
                                                                                                                market in 2006 and sustain the position through
                                                                                                                2008. In 2008, the company had over 18%
                                                                                                                market share of the global PC market followed
                                                                                                                by Dell (14%), Acer (11%) and Lenovo (7%). In
                                                                                                                the global server market, the company was a
                                                                                                                leader with over 30% share in 2008. Further, in
                                                                                                                the blade servers segment of the server market,
                                                                                                                the company was the leader with a market share
                                                                                                                of 47% of shipments in 2008, followed by IBM
                                                                                                                with over 26%.
                                                                                                                               Further, HP continued to lead the global
                                                                                                                world printers market in 2008, with a market
                                                                                                                share of over 40%. It was the second largest
                                                                                                                player in the storage market behind EMC in
                                                                                                                2008. HP is also one of the major IT services
                                                                                                                companies in the world. It further strengthened
                                                                                                                its position in the IT services market through the
                                                                                                                acquisition of EDS in 2008 to become the
                                                                                                                second largest player.
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
11	
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c7c7ed9ce94d%40sessionmgr10>	
  



                                                                                                                                                 	
  
                                          Walter 32

         Robust market position in various market
   segments provides economies of scale for the
   company, besides increasing its chance of
   winning customers.

o Significant brand recognition

        The company has significant brand
   recognition. The HP brand is recognized by
   various rating and ranking agencies. For
   instance, HP was ranked 12 in the list of top 100
   Best Global Brands 2008 ranking by Interbrand,
   an international brand consultancy. HP brand
   was valued at $23,509 million, an increase of
   6% over 2007. Further, HP was listed on all four
   FTSE4Good Index lists including the US,
   Global, the UK and Europe. It was also ranked
   10 globally and 1 in the US in Environment,
   Social Impact Ratings by The Economist.
        Significant brand recognition provides a
   competitive advantage to the company and
   allows it to penetrate new markets with ease.

o Successful inorganic growth

        Over the years, HP has been successful in
   growing through large deals. The company’s
   major mergers and acquisitions in recent past
   include Compaq Computer Corporation in 2002,
   Mercury Interactive in 2006 and Electronic Data
   Systems Corporation (EDS) in 2008. These
   large acquisitions have allowed the company to



               	
  
                                                                                                                                                                                                                           Walter 33

                                                                                                                gain scale and expand its capabilities in related
                                                                                                                areas.
                                                                                                                               The merger with Compaq allowed HP’s
                                                                                                                revenue to scale up from $48.8 billion to over
                                                                                                                $87 billion, and made it one of the leading
                                                                                                                players in the IT market. Further, the company’s
                                                                                                                acquisition of Mercury Interactive at a value of
                                                                                                                approximately $4.5 billion strengthened its
                                                                                                                portfolio of IT management software and
                                                                                                                services.
                                                                                                                                  Moreover, the company’s acquisition of
                                                                                                                EDS in a transaction valued at $13.9 billion
                                                                                                                created a leading player in IT services market.
                                                                                                                The acquisition, by value, was the largest in the
                                                                                                                IT services sector and the second largest in the
                                                                                                                technology industry, following HP's acquisition
                                                                                                                of Compaq in 2002. The company’s successful
                                                                                                                inorganic growth allows it to increase its
                                                                                                                competitiveness both through scale and
                                                                                                                expanded portfolio of offerings. This would
                                                                                                                create value for both investors and customers of
                                                                                                                the company.12

                                                                                  •         Acer

                                                                                                      o Robust market position

                                                                                                                               Acer has robust market position in the
                                                                                                                global PC and notebook markets. In 2008, the
                                                                                                                company was ranked as the third largest player
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
12	
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1dbefb66de89%40sessionmgr11>	
  



                                                                                                                                                  	
  
                                           Walter 34

   in the global PC market with a market share of
   12.8%. Acer was ranked the second largest in
   the global notebook market with a share of
   19.6%.
        According to industry sources, Acer
   reported 57.9% growth in PC shipments in 2008
   compared to 2007 and was the highest among
   the top 5 vendors. In addition, Acer was ranked
   the third largest player in the US in PC market
   and notebook markets with a share of 13.6%
   and 16.8% respectively, in 1Q2009. The
   company was ranked the second in Europe,
   Middle East Africa (EMEA) PC market with a
   share of 19.1% in 1Q09. It was the top player in
   EMEA notebook market with 26.6% market
   share as of 1Q09. Acer also holds 7.3% and
   13.9% of Asian notebook and PC markets
   respectively, as of 1Q09.
         Furthermore, Acer was named "Gold"
   Computer TrustedBrand in Asia for tenth
   consecutive year in the 2008 Reader's Digest
   TrustedBrand survey. Acer’s strong market
   position in the PC and note books market
   provides it with a competitive advantage.

o Successful integration of acquisitions

        In the recent periods, the company has
   successfully integrated its acquisitions. In
   September 2008, the company completed
   acquisition of 100% ownership of E-Ten




               	
  
                                                                                                                                                                                                                          Walter 35

                                                                                                                Information Systems, a handheld device
                                                                                                                company based in Taiwan. The acquisition
                                                                                                                helped the company to strengthen its position in
                                                                                                                handheld devices, including smartphones and
                                                                                                                GPS devices.
                                                                                                                               In 2008, Acer completed the acquisition of
                                                                                                                Packard Bell. The company also acquired
                                                                                                                Gateway, one of the largest PC companies in the
                                                                                                                US, in 2007. The successful mergers of
                                                                                                                Gateway and Packard Bell helped the company
                                                                                                                to strengthen its presence in the US and enabled
                                                                                                                deeper penetration into the European and Asian
                                                                                                                markets. These acquisitions helped the company
                                                                                                                in generating increasing revenues from non-
                                                                                                                Taiwan markets. The revenues from non-
                                                                                                                Taiwan markets reached TWD523,185.6 million
                                                                                                                ($166,11.1 million) in FY2008, representing a
                                                                                                                compounded annual growth rate of 31% for the
                                                                                                                period 2006-2008.
                                                                                                                                 Successful integration of acquisitions
                                                                                                                helped the company in expanding its reach and
                                                                                                                enhancing its financial performance.13


                                                                       Weaknesses of Competition

                                                                                  •         Dell

                                                                                                      o Lack of strength in certain product segments

                                                                                                                               The company lacks strength in certain
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
13	
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                                           Walter 36

   product segments. As Dell stands on a
   competitive platform with other major players
   like IBM and HP, its portfolio of offerings lack
   competitiveness in certain segments. For
   instance, the company lacks any significant
   software product or IT service, compared to
   competitors such as IBM and HP. Moreover, in
   recent years, IBM has been concentrating on
   high margins solutions business, while HP has
   expanded its technology services business
   through the $13.9 billion acquisition of EDS in
   2008. Further, the company’s storage offering
   are dependent on its relationship with EMC.
        However, the company is making strategic
   moves to strengthen its position in these
   markets. For instance, it is improving storage
   products and services through acquisitions, such
   as EqualLogic, one of the leading providers of
   high-performance storage area network
   solutions.
        Lack of strength in certain product
   segments could affect the growth prospects of
   the company in future.

o Product recalls

        The company had to recall several
   products in the recent past owing to quality
   issues. In August 2006, the company announced
   the recall of 4.1 million notebook batteries
   owing to fire risk. These Dell-branded batteries




                	
  
                                            Walter 37

   were based on cells of Sony. According to the
   company, there was a risk of overheating of
   batteries, which could result in fire. Earlier in
   December 2005, the company offered
   replacement batteries for some models of Dell
   Latitude, Dell Precision, and Dell Inspiron
   notebook computers owing to quality issues.
   The company also recalled several other
   products during previous years owing to quality
   problems, including AC Adapters (2004),
   printer (2004), Auto-Air PowerAdapter (2004),
   and battery (2000 and 2001). Frequent product
   recalls reflect poorly on the quality function at
   Dell. Additionally, in October 2008, Dell
   updated its battery-replacement program based
   on additional information it received from
   lithium-ion battery supplier, Sony. According to
   Sony, 300 batteries manufactured by Sony on
   November 9, 2004 and April 11, 2005 and
   supplied to Dell may present a fire and burn
   hazard. As a result, Dell announced that it
   would voluntarily replace these batteries at no
   charge.
         Consistent product recalls could
   undermine the faith of consumers in the
   products, benefiting the competitors of the
   company.

o Relatively weak R&D capabilities

        Dell has relatively weak research,




                	
  
                                        Walter 38

development and engineering (R&D)
capabilities compared to its major competitors.
The company employs a collaborative approach
to product design and development, where it
works with a network of technology companies.
It uses original design manufacturing (ODM)
partnerships and manufacturing outsourcing
relationships for manufacturing. However, it
undertakes essential manufacturing processes
including assembly, software installation,
functional testing and quality control. As a
result, the company’s R&D spending has been
lower than its competitors. Dell’s R&D
expenses were $663 million, $610 million, and
$498 million, respectively, FYs 2009, 2008 and
2007. By contrast, its competitors such as HP
reported R&D spending of $3,543 million,
$3,611 million and $3,591 million, respectively,
in FYs 2008, 2007 and 2006; and IBM reported
R&D spending of $6,337 million, $6,153
million and $6,107, respectively, in FYs 2008,
2007 and 2006. Furthermore, the company’s
R&D spending as percentage of total revenues
was 1.1% in FY2009, compared to HP (3%),
IBM (6.1%) and Lenovo (1.4%).
     As a result, the company had lesser patents
than its competitors. At the end of FY2009, it
had a worldwide portfolio of 2,253 patents and
additional 2,514 patent applications pending. By
contrast, HP had a worldwide portfolio of over
32,000 patents, and IBM achieved over 4,000



            	
  
                                                                                                                                                                                                                          Walter 39

                                                                                                                patents only in 2008.
                                                                                                                               Although, the company’s business model
                                                                                                                was not highly dependent on R&D over years,
                                                                                                                changing industry dynamics with increasing
                                                                                                                competition and commoditization of PC market
                                                                                                                call for differentiation though innovation.
                                                                                                                Further more, the company’s relatively weak
                                                                                                                R&D makes it depend on licenses for third-
                                                                                                                party patents, and could affect its ability to
                                                                                                                introduce innovative products.
                                                                                                                                 Dell’s relatively weak R&D capabilities
                                                                                                                affect its competitiveness as well as make it
                                                                                                                dependent on third parties for patent licenses.14

                                                                                  •         Hewlett-Packard

                                                                                                      o Lack of significant presence in various
                                                                                                                market segments

                                                                                                                               The company lacks significant presence in
                                                                                                                various segments of the IT market when
                                                                                                                compared to its major competitors. For instance,
                                                                                                                the company’s portfolio of offerings lack
                                                                                                                significant software product or manage
                                                                                                                consulting services when compared to its major
                                                                                                                competitors including IBM, Accenture and
                                                                                                                EMC, among others. Moreover, the company
                                                                                                                depends upon other vendors to complement its
                                                                                                                offerings.
                                                                                                                               Further, increasing number of IT
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
14	
  Datamonitor <http://web.ebscohost.com/bsi/pdf?vid=7&hid=3&sid=bccf4bad-8bf7-45e8-941e-
c7c7ed9ce94d%40sessionmgr10>	
  



                                                                                                                                                 	
  
                                                                                                                                                                                                                           Walter 40

                                                                                                              companies are establishing management
                                                                                                              consulting divisions in order to provide a more
                                                                                                              comprehensive and integrated range of services.
                                                                                                              Both IBM and Accenture have strong
                                                                                                              management consulting practices. Indian
                                                                                                              companies such as Infosys Technologies have
                                                                                                              also added management consulting practice to
                                                                                                              their technology services in order provide better
                                                                                                              breadth and depth of services.
                                                                                                                               However, HP has been continuing to
                                                                                                              enhance its portfolio. For example, the
                                                                                                              acquisition of EDS was an effort to strengthen its
                                                                                                              IT services offering.
                                                                                                                                  The company’s lack of significant
                                                                                                              presence in various areas, could affect its
                                                                                                              competitiveness and makes it dependent on
                                                                                                              others for providing complementary offerings.15

                                                                                  •         Acer

                                                                                                      o High dependence on Europe

                                                                                                                               Acer is significantly dependent on Europe
                                                                                                                for its revenues. In FY2008 and FY2007, the
                                                                                                                company generated around 51% of its total
                                                                                                                revenues from Europe.
                                                                                                                               The company’s principal market, Europe is
                                                                                                                experiencing a slowdown in the recent periods.
                                                                                                                The European market (primarily comprising the
                                                                                                                Euro region and the UK) is forecast to
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
15	
  Datamonitor <http://web.ebscohost.com/bsi/pdf?vid=4&hid=3&sid=9ca6ed6a-df54-4fc2-8f3b-
1dbefb66de89%40sessionmgr11>	
  



                                                                                                                                                  	
  
                                                                                                                                                                                                                          Walter 41

                                                                                                                slowdown. Euro region slowed down from 2.7%
                                                                                                                in 2007 to 0.9% in 2008, and is forecast to
                                                                                                                contract by 4.2% in 2009. The UK economy is
                                                                                                                forecast to be weak in the coming years, with its
                                                                                                                GDP growth rate declining from 3% in 2007 to
                                                                                                                0.7% in 2008 and forecast to contract by 4.1%
                                                                                                                in 2009.
                                                                                                                                 The company’s high dependence on
                                                                                                                Europe makes its operations vulnerable to
                                                                                                                fluctuations in Europe economy.16


                                                                       Marketing Activities of Competition

                                                                                  •         Dell

                                                                                                                Dell’s advertising campaign in the early 2000s
                                                                                            featured actor Ben Curtis playing the part of Steven,
                                                                                            who comes to the assistance of confused computer
                                                                                            purchasers. Each ad ends with Steven’s catch phrase
                                                                                            “Dude, you’re getting a Dell!”

                                                                                  •         Hewlett-Packard

                                                                                                                HP’s advertising campaign “The Computer is
                                                                                            Personal Again” was introduced in 2006. The
                                                                                            campaign’s ads feature well-known personalities such
                                                                                            as Jay-Z and Shaun White. The ads all show a neck-
                                                                                            down view in which the endorser, aided by graphics,
                                                                                            visually shows how they use HP products.



	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
16	
  Datamonitor <http://web.ebscohost.com/bsi/pdf?vid=4&hid=3&sid=b4387afb-bc04-4df0-ab9f-
47ac6073303a%40sessionmgr14>	
  



                                                                                                                                                 	
  
                                                                                                                                                                                                                                          Walter 42


                                                                                                                            Distribution

                                                                                                                                                 •                   Apple Retail Stores

                                                                                                                                                 •                   Apple Online Store

                                                                                                                                                 •                   1-800-MY-APPLE

                                                                                                                                                 •                   Third Party Wholesalers and Resellers


                                                                                                                            Pricing

                                                                                                                                                 •                   13 inch— $1199 and up

                                                                                                                                                 •                   15 inch— $1699 and up

                                                                                                                                                 •                   17 inch— $2499 and up17




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
17	
  Apple <http://www.apple.com/macbookpro/>

	
  


                                                                                                                                                                                                                                   	
  
                                                                                                                                                                                                                                                                            Walter 43


                                                                                                                                                                    Communications Strategies/History

                                                                                                                                                                                                                           Apple’s longtime advertising agency TBWA\Chiat\Day is
                                                                                                                                                                    responsible for Apple’s advertising campaigns for Mac computers.
                                                                                                                                                                    Lee Clow, the creative director of TBWA\Chiat\Day, works along
                                                                                                                                                                    side Steve Jobs, the chief executive of Apple, to create advertising
                                                                                                                                                                    campaigns for Macs. Together, Clow and Jobs have created
                                                                                                                                                                    extremely successful ads for Apple. In the early 1980s, Clow
                                                                                                                                                                    helped to create Apple’s path breaking “1984” television
                                                                                                                                                                    commercial introducing the Macintosh. The “1984” ad ran only
                                                                                                                                                                    once, during the 1984 Super Bowl, but it has never been forgotten.
                                                                                                                                                                    In 1997, the remarkable “Think Different” campaign identified
                                                                                                                                                                    Apple with figures like Martin Luther King Jr., Albert Einstein,
                                                                                                                                                                    and Bob Dylan and featured actor Richard Dreyfuss reading the
                                                                                                                                                                    “Here's to the Crazy Ones” speech.18 The campaign was used to
                                                                                                                                                                    re-establish Apple in the market. TBWA\Chiat\Day went on to
                                                                                                                                                                    create the 2002 “Switchers” campaign, which captured real
                                                                                                                                                                    computer users describing why they switched from their PCs to
                                                                                                                                                                    Macs. In 2006, Clow proposed the extremely successful “Get a
                                                                                                                                                                    Mac” campaign to encourage PC users to switch to Mac.19 Apple
                                                                                                                                                                    advertises Macs primarily through television commercials. The
                                                                                                                                                                    “Get a Mac” campaign is also viewable through Apple’s website.
                                                                                                                                                                                                                           Apple’s total advertising budget for 2008 was $486 million.
                                                                                                                                                                    Apple’s advertising budget for 2007 was $467 million. Apple’s
                                                                                                                                                                    advertising budget for 2006 was $338 million. Advertising costs
                                                                                                                                                                    make up approximately thirteen percent of Apple’s overall
                                                                                                                                                                    budget.20

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
18    BusinessWeek <http://www.businessweek.com/technology/content/apr2009/tc20090415_602968.htm>	
  
19    NYTimes <http://www.nytimes.com/2009/08/30/business/media/30ad.html?pagewanted=1&_r=1>
20	
  <http://edgar.sec.gov/Archives/edgar/data/320193/000119312508224958/d10k.htm>




                                                                                                                                                                                                                                                  	
  
  Apple MacBook Pro




                                     !
                   !
                   !
                   !
                   !
                   !
                   !
Advertising and Media Strategy
                   !
            Susanna Walter
    Advertising Management, 355.01
             Professor Stack
          24 November 2009
                   !
                                                                Walter 2


                                                 !
                                                 !
                !   Table of Contents

                      Marketing
                               Positioning Statement
                               Target Market Description
                               Marketing Objectives
                                     Product
                                     Price
                                     Place
                                     Promotion
                      Advertising
                               Advertising Objectives
                               Advertising Strategy
                                     Media
                                          Media Strategy
                                               Media Mix
                                               Media Vehicles
                                          Media Schedule
                                     Creative Strategy/Brief
                      Budget
                               !!!!!!!!   !      !     !
!   ! ! !   !
!
!
!
!
!
!



                                                           !
                                                                 Walter 3


Marketing


    Positioning Statement


           The MacBook Pro will be positioned as the most advanced
    notebook on the market. It will be positioned as the epitome of
    precision engineering and advanced technology. Several aspects
    that will be highlighted in the campaign include the fact that the
    MacBook Pro is designed to provide the best computer experience
    possible; everything works, and everything works together because
    Apple makes the hardware, the software, and the operating system;
    and only Apple could make a notebook like the MacBook Pro.
    The MacBook Pro will be positioned as the next generation of
    notebooks. The positioning of the MacBook Pro will convey that
    all of the consumer’s needs and wants in a computer can be
    satisfied by the MacBook Pro.


           An important aspect of the positioning of the MacBook Pro
    will be to convey that Mac computers are superior in almost every
    sense to Windows based PCs. Another important aspect of the
    positioning of the MacBook Pro is to clarify that a Windows based
    PC of similar quality to a MacBook Pro would actually be much
    more expensive than the MacBook Pro. So the MacBook Pro is
    not only a higher quality notebook, but it is also a better value than
    Windows based PCs of similar quality.




                                    !
                                                                                 Walter 4


                   Target Market Description


                          The target market for Apple consists of students,
                   consumers, creative professionals, businesses, and government
                   customers. The MacBook Pro family of notebook computers is
                   designed for advanced consumer users and professionals. The
                   target market for the MacBook Pro will consist of both males and
                   females, ages sixteen and older, with upper-middle to upper
                   income, who are educated. The target market for the MacBook Pro
                   will consist primarily of generations X and Y. The target market
                   will consist of those who can afford and are willing to pay
                   premium prices for a superior computer. The target market will
                   consist of consumers who are technologically savvy. The target
                   market will consist of those who value aesthetically pleasing
                   electronics. Consumers with advanced computer needs or desires
                   or a particular interest in photography, music, video, etc. are
                   certainly in the target market for the MacBook Pro, as are
                   professionals in media and design. The target market for the
                   MacBook Pro includes Windows based PC owners who are
                   looking to upgrade to a new, better computer. The positioning of
                   the MacBook Pro will convey that if consumers are going to
                   upgrade, they should upgrade to the best computer available—a
                   Mac, and that the MacBook Pro is actually a better value than a
                   Windows based PC.1




!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"!Claritas

<http://www.claritas.com/MyBestSegments/Default.jsp?ID=30&SubID=&pageName=Se
gment%2BLook-up>


                                                   !
                                                 Walter 5


Demographic Profile


 •   Males and Females
 •   Between the ages of 16-55
 •   Upper-middle to Upper Income
 •   Highly educated
 •   Live in urban or suburban areas


Psychographic Profile


 •    Individuals who value quality over price
 •    Technologically savvy individuals
 •    Individuals who value aesthetically pleasing
     electronics
 •    Individuals interested in photography, music,
     and video




                       !
                                                                                   Walter 6


                     Marketing Objectives


                             The goal of this marketing plan is to increase the total sales
                     of the MacBook Pro. Taking into consideration the current
                     economic conditions and the MacBook Pro’s relatively high price,
                     an increase in sales of 15% in our test markets is a fairly realistic
                     goal. Other aspects of the marketing objectives can be seen in
                     analyzing the four P’s of marketing: product, price, place, and
                     promotion.



                         Product

                                  The marketing goal in terms of product is to continually
                         improve the MacBook Pro. Apple constantly invests in
                         research and development in order to continually improve
                         every aspect of the MacBook Pro so that it is the most
                         advanced notebook on the market. Apple continues to
                         constantly develop and enhance the appearance and technology
                         of the MacBook Pro. Since Apple’s introduction of the
                         MacBook Pro in January of 2006, Apple has developed a
                         precision aluminum unibody enclosure, a full-size backlit
                         keyboard, a multi-touch track pad for precise cursor control, a
                         built-in iSight camera, built-in stereo speakers, and a built-in
                         omnidirectional microphone, among countless other features.2
                         In January 2009, Apple introduced the new 17-inch MacBook
                         Pro featuring a built-in battery that delivers up to eight hours of
                         use and up to 1,000 recharges for more than three times the
                         lifespan of conventional notebook batteries. Developing and

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2
   Apple <http://www.apple.com/macbookpro/specs.html>


                                                     !
                                                                                        Walter 7

                               enhancing the features of the MacBook Pro will not only attract
                               new customers looking for the most advanced notebook on the
                               market, but it will also further differentiate the MacBook Pro
                               from the competition.


                               Price

                                       The marketing goal in terms of price is to keep the
                               MacBook Pro’s price at the current retail listing. The three
                               options currently available to consumers are the 13 inch
                               MacBook Pro starting at $1199, the 15 inch MacBook Pro
                               starting at $1699, and the 17 inch MacBook Pro starting at
                               $2499.3 The MacBook Pro’s price is certainly significantly
                               higher than most of the competition, so it would not benefit
                               Apple to raise the price of the MacBook Pro. Nor would it
                               benefit Apple to lower the price of the MacBook Pro. Apple
                               chooses not compete in the low-end of the computer market;
                               they only make high-quality, high margin computers. Apple
                               therefore will not reduce the price of their products because
                               they will not reduce the quality of their products in order to do
                               so. Although Apple has a relatively low overall market share
                               of only 8%, their revenue share of the premium price market—
                               computers over $1,000—is an overwhelming 91%., which
                               means that nine out of every ten retail dollars that is spent on
                               computers that cost over $1,000 goes to Apple. By refusing to
                               make low quality, low cost computers, and continuing to make
                               only the highest quality, high margin computers, Apple
                               maintains their premium branding.


!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3
   Apple <http://www.apple.com/macbookpro/>
!


                                                           !
                                                        Walter 8


Place

        The marketing goal in terms of place is to make
consumers aware of the locations in which one can buy a
MacBook Pro, and to encourage consumers to visit Apple retail
stores and Apple’s website.


Promotion

        The marketing goal in terms of promotion is to promote
the MacBook Pro as not only the most advanced notebook on
the market, but also the best value for the money. This can be
achieved by offering the incentive of a free iPod or free printer
with the purchase of a MacBook Pro. Apple often offers either
a free iPod or printer as an added benefit of purchasing a Mac.
This promotion would make the MacBook Pro’s cost seem less
prohibitive because it includes an iPod or printer that would
normally cost hundreds of dollars.




                            !
                                                           Walter 9


Advertising

    Advertising Objectives

         •   To position the MacBook Pro as the most advanced
              notebook on the market in consumer’s minds

         •   To increase consumer awareness and knowledge of
              the unique features of the MacBook Pro

         •   To increase traffic in Apple retail stores and on
              Apple’s website

         •   To encourage Windows based PC owners to switch
              to Mac

         •   To encourage Mac owners to upgrade to MacBook
              Pro

         •   To increase sales of the MacBook Pro in the test
              markets




                                !
                                                         Walter 10


Advertising Strategy


    Media


         Media Strategy


                  This advertising campaign for the MacBook
        Pro will observe the sales of the notebook in two test
        markets—New York City and Los Angeles. A
        combination of television, magazine, and online
        advertising will be used in an attempt to attract
        members of the target market. Since the target market
        is particularly affluent, highly educated, and
        technologically savvy, this advertising campaign will
        place premium advertisements on the television shows,
        magazines, and websites that are preferred by the
        target market.


                  Television advertisements on shows that are
        preferred by members of the target market will be used
        in this advertising campaign. Television
        advertisements allow for high quality video and audio
        of the MacBook Pro and its features. Apple’s
        commercials are consistently received well by the
        target market and can be highly effective. While many
        television commercials these days are ignored because
        of clutter, many consumers enjoy Apple’s
        commercials so much that they make a point to pay
        attention to them. In fact, most of Apple’s
        commercials are so well liked that they are actually




                           !
                                               Walter 11

sought out by consumers. Apple places many of their
commercials on their website, and almost all of
Apple’s commercials are available on YouTube. This
means that anyone who wants to view Apple’s
commercials can do so any time, and Apple gets free
advertising as a result.


           Magazine advertisements on the back covers
(cover 4) of magazines that are preferred by the target
market will also be used in this advertising campaign.
Magazine advertisements allow for high quality, full
color images of the MacBook Pro. This advertising
campaign will only place advertisements on the back
cover of magazines because the glossy back covers
provide the highest quality images of the MacBook
Pro. Advertising on only the back covers of
magazines is also used for exclusivity. Apple prefers
to pay a premium price for premium advertising
placement so that it is not ignored along with the rest
of the clutter. Magazines are often passed along or
reread, so magazines can often provide increased
exposure to advertisements and reach a greater
frequency of the target market.


           Online advertisements on websites that are
preferred by the target market, which will be geo-
targeted in New York City and Los Angeles, will also
be used in this advertising campaign. Online
advertisements allow for high quality images and
video of the MacBook Pro. This advertising campaign




                    !
                                              Walter 12

will utilize interactive ‘home page takeovers.’ Home
page takeovers rearrange a website’s homepage so as
to incorporate an interactive advertisement into the
website, with no competing advertisements on the
page. Advertising through home page takeovers is
used for impact and exclusivity. Apple prefers to pay
a premium price for premium advertising placement.


          Radio, newspaper, and out-of-home
advertisements will not be used in this advertising
campaign. This campaign is a highly visual one, so
the use of radio would not be appropriate. Nor would
low-quality images in newspapers be appropriate.
Also, Apple prefers not to use low-cost media because
Apple’s competitors frequently place their ads in these
media outlets and Apple does not want to be part of
the clutter of competitors’ advertising messages.




                   !
                                        Walter 13

Media Mix




  • Television - Approximately 75% of the
     media mix for this advertising campaign
     is allocated to television advertising. This
     campaign relies heavily on television
     advertising for several reasons.
     Television advertisements allow for high
     quality video and audio of the MacBook
     Pro. Also, Apple’s television
     commercials have proven to be their
     most effective means of advertising.
     Apple’s commercials are consistently
     received well by the target market and
     can be highly effective.


  • Magazine - Approximately 15% of the
     media mix for this advertising campaign
     is allocated to magazine advertising. This




            !
                                       Walter 14

   campaign utilizes magazine
   advertisements for several reasons.
   Magazine advertisements allow for high
   quality, full color images of the
   MacBook Pro. Also, magazines are
   often passed along or reread, so
   magazines can often provide increased
   exposure to advertisements and reach a
   greater frequency of the target market.


• Online - Approximately 10% of the media
   mix for this advertising campaign is
   allocated to online advertising. This
   campaign utilizes online advertisements
   for several reasons. Online
   advertisements allow for high quality
   images and video of the MacBook Pro.
   Also, ‘home page takeovers’ are
   interactive advertisements that
   encourage consumers to click through to
   the Apple website. In addition, online
   advertising can be geo-targeted to the
   two test markets.




        !
                                      Walter 15

Media Vehicles


   Television


      •   House - House runs on FOX and
          averages 16,107,000 viewers.
          House’s audience tends to be
          affluent, educated, and
          technologically savvy, which
          coincides with the target market for
          this campaign.
      •   Grey’s Anatomy - Grey’s Anatomy
          runs on ABC and averages
          17,324,000 viewers. Grey’s
          Anatomy’s audience tends to be
          affluent, educated, and
          technologically savvy, which
          coincides with the target market for
          this campaign.
      •   The Office - The Office runs on
          NBC and averages 17,380,000
          viewers. The Office’s audience tends
          to be affluent, educated, and
          technologically savvy, which
          coincides with the target market for
          this campaign.
      •   Lie to Me - Lie to Me runs on FOX
          and averages 13,188,000 viewers.
          Lie to Me’s audience tends to be
          affluent, educated, and
          technologically savvy, which



          !
                                                                          Walter 16

                                              coincides with the target market for
                                              this campaign.
                                          •   CSI - CSI runs on CBS and averages
                                              16,552,000 viewers. CSI’s audience
                                              tends to be affluent, educated, and
                                              technologically savvy, which
                                              coincides with the target market for
                                              this campaign.4


                                      Magazine


                                          •   The New Yorker - The New Yorker
                                              combines a signature mix of culture
                                              and art, business and politics, fashion
                                              and design, science and technology
                                              attract an audience who come to The
                                              New Yorker to be informed, to be
                                              surprised, to laugh, and to be moved.
                                              The New Yorker attracts a quality
                                              audience of highly educated,
                                              successful and affluent individuals.
                                              These readers shape public opinion
                                              and turn to The New Yorker to learn
                                              and be inspired. A significant portion
                                              of The New Yorker’s audience
                                              coincides with the target market for
                                              this campaign.5

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
#!Nielsen <http://www.zap2it.com/tv/ratings/zap-nielsen-

season,0,7096762,results.formprofile?SortBy=cdb_01_num+%2Ccdb_05_txt+&PageSiz
e=50&Page=1&Query=*>!
5
   The New Yorker <http://www.condenastmediakit.com/nyr/circulation.cfm>


                                              !
                                                                                Walter 17

                                               •   Rolling Stone - Rolling Stone
                                                   magazine is a cultural icon. It's the
                                                   original, and remains the number one
                                                   pop culture reference point for young
                                                   adults. Its authoritative voice reaches
                                                   beyond music, with influential
                                                   perspectives on entertainment,
                                                   technology, fashion, national affairs,
                                                   and current events - everything that's
                                                   important, relevant, and newsworthy
                                                   to trendsetting young adults today. A
                                                   significant portion of the Rolling
                                                   Stone’s audience coincides with the
                                                   target market for this campaign.6


                                               •   The Economist - The Economist
                                                   offers in-depth independent analysis,
                                                   comment and a uniquely global
                                                   perspective on current events and
                                                   trends that affect the senior business
                                                   decision-maker. The
                                                   Economist's readers are affluent,
                                                   well-educated and influential. They
                                                   are also united by the way they think
                                                   about things, their hunger for
                                                   knowledge and their desire to be
                                                   stretched and challenged. A
                                                   significant portion of The



!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
6
   Rolling Stone <http://www.srds.com/mediakits/rollingstone/index.html>


                                                   !
                                                                                Walter 18

                                                  Economist’s audience coincides with
                                                  the target market for this campaign.7


                                              •   Wired - WIRED covers the people,
                                                  companies, technologies, and ideas
                                                  that are transforming our world.
                                                  WIRED's future-focused editorial
                                                  identifies trends within business,
                                                  culture, and technology via
                                                  authoritative reporting, incisive
                                                  analysis, and award winning design.
                                                  WIRED attracts an unduplicated
                                                  readership of the most important
                                                  people shaping our future—
                                                  educated, affluent leaders with a
                                                  passion for business, technology,
                                                  design and the latest trends. A
                                                  significant portion of WIRED’s
                                                  audience coincides with the target
                                                  market for this campaign.8


                                              •   Newsweek - Newsweek aims to be
                                                  provocative, but not partisan,
                                                  through insight, opinion and original
                                                  reporting. Newsweek's audience, the
                                                  ‘Thinking Person,’ consists of
                                                  professional, well-educated, affluent
                                                  consumers. A significant portion of


!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
7
   The Economist <http://ads.economist.com/the-economist/introduction/>
8
   Wired <http://www.condenastmediakit.com/wir/index.cfm>


                                                   !
                                                                              Walter 19

                                                  Newsweek’s audience coincides with
                                                  the target market for this campaign.9


                                         Online


                                             •    NYTimes.com - NYTimes.com
                                                  readers are educated, affluent and
                                                  influential. NYTimes.com has a
                                                  highly qualified audience that has a
                                                  spiral of influence - they get and
                                                  spread ideas. A significant portion of
                                                  NYTimes.com’s audience coincides
                                                  with the target market for this
                                                  campaign.10


                                             •    YouTube.com - YouTube.com users
                                                  are young and influential. Because
                                                  YouTube’s audience is so vast, they
                                                  utilize demographic targeting,
                                                  interest-based targeting, content
                                                  targeting, and buzz targeting to reach
                                                  specific target markets. Using
                                                  YouTube’s targeting methods, it will
                                                  be possible to reach this campaign’s
                                                  specific target market.11




!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
9
   Newsweek <http://www.newsweekmediakit.com/index.html>
"$!The New York Times <http://www.nytimes.whsites.net/mediakit/index.php>!
""!YouTube <http://www.youtube.com/t/advertising_targeting>!




                                                  !
                                                                                           Walter 20

                                                           •   Slate.com - Slate.com’s audience is
                                                               educated, affluent, and influential.
                                                               Slate.com’s audience tends to be
                                                               early adopters. A significant portion
                                                               of Slate.com’s audience coincides
                                                               with the target market for this
                                                               campaign.12




!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"%!Slate <http://www.slate.com/id/2078020/>!




                                                               !
                                             Walter 21

Media Schedule


          The media schedule for this advertising
campaign for the MacBook Pro will consist of a
twelve week period in which advertising will be
steady throughout, with two peaks in the eighth and
twelfth weeks.


          This advertising campaign will take place
during the twelve week period starting on October 1st
and ending on December 24th. This period of time is
ideal for taking advantage of the holiday sales season
and the increased consumer spending that
accompanies this time period.


          Several television and magazine
advertisements will introduce the campaign in the
first week of October. Television and magazine ads
will run consistently throughout the remainder of the
campaign up until Christmas. In November, on the
week leading up to Black Friday, online
advertisements will run for one week in order to
create a sales push for Black Friday. In December, on
the week leading up to Christmas day, online
advertisements will run for one week in order to
create a final sales push.


          Television advertising in this campaign will
begin in the first week of October with commercials
on House, Grey’s Anatomy, The Office, Lie to Me,




                  !
                                             Walter 22

and CSI. One 30 second television commercial will
run during each episode of each of these television
shows that airs from the first week of October through
the last week of December.


         Magazine advertising in this campaign will
begin in the first week of October with an ad on the
back cover of The New Yorker. Ads on The New
Yorker will run once a month in October and
November, with two, one after another, in the first
two weeks of December. Ads on the back cover of
Rolling Stone will run once a month in October,
November, and December. One ad will run on the
back cover of The Economist in mid-October, one ad
will run on the back cover of Wired in November, and
one ad will run on the back cover of Newsweek in
mid-December.


         Online advertising in this campaign will run
only in the weeks leading up to Black Friday and
Christmas day. Interactive home page takeovers will
run every day on NYTimes.com, YouTube.com, and
Slate.com in both New York City and Los Angeles
during the week leading up to Black Friday and the
week leading up to Christmas day.




                 !
                                                    Walter 23

Creative Strategy/Brief


           This advertising campaign for the MacBook Pro
will convince the affluent, highly educated, and
technologically savvy target market that the MacBook Pro
is the most advanced notebook on the market, that all of the
consumer’s needs and wants in a computer can be satisfied
by the MacBook Pro, and that the MacBook Pro is not only
a higher quality notebook, but it is also a better value than
Windows based PCs. The support for this advertising
campaign will be the MacBook Pro itself. Consumers are
encouraged to go to an Apple store and try a MacBook Pro
so as to confirm the claims made in the advertisements
themselves. The tone of this advertising campaign will be
sophisticated and at times humorous.




                        !
                                                                            Walter 24


                Budget


                   Total Advertising Budget


                 Media Vehicle      Amount         Percent of Budget
                 Television         $8,475,732            75%
                 Magazine           $1,754,498            15%
                 Online             $1,200,000            10%
                 Total             $11,430,230           100%



                   Television Advertising Budget13


        Show               Period         Frequency           Rate       Total
    House                 October-            9x             $183,298   $1,649,682
                          December
    Grey’s Anatomy        October-            9x             $240,462   $2,164,158
                          December
    The Office            October-            9x             $191,236   $1,721,124
                          December
    Lie to Me             October-            9x             $128,105   $1,152,945
                          December
    CSI                   October-            9x             $198,647   $1,787,823
                          December
   Total                                                                $8,475,732




!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
13
    AdAge <http://adage.com/article?article_id=139923#sun>


                                                   !
                                                                                        Walter 25



                         Magazine Advertising Budget14


             Publication                 Edition                Type            Rate
           The New Yorker               October 5           Cover 4 (Color)     $139,137
           The New Yorker              November 2           Cover 4 (Color)     $139,137
           The New Yorker              December 7           Cover 4 (Color)     $139,137
           The New Yorker              December 14          Cover 4 (Color)     $139,137
           Rolling Stone                October 15          Cover 4 (Color)     $217,580
           Rolling Stone               November 12          Cover 4 (Color)     $217,580
           Rolling Stone               December 10          Cover 4 (Color)     $217,580
           The Economist                October 19          Cover 4 (Color)     $190,250
           Wired                        November            Cover 4 (Color)      $98,460
           Newsweek                    December 14          Cover 4 (Color)     $256,500
           Total                                                              $1,754,498



                         Online Advertising Budget


       Website    Period  Location                          Type         Rate         Total
     NYTimes.com November N.Y.C.                            Home      $50,000/day    $250,000
                  23-27                                      Page
                                                           Takeover
     NYTimes.com           December           L.A.          Home      $50,000/day    $250,000
                            20-24                            Page
                                                           Takeover
     YouTube.com           November          N.Y.C.         Home      $40,000/day    $200,000
                            23-27                            Page
                                                           Takeover
     YouTube.com           December           L.A.          Home      $40,000/day    $200,000
                            20-24                            Page
                                                           Takeover
     Slate.com             November          N.Y.C.         Home      $30,000/day    $150,000
                            23-27                            Page
                                                           Takeover
     Slate.com             December           L.A.          Home      $30,000/day    $150,000
                            20-24                            Page
                                                           Takeover
     Total                                                                          $1,200,000

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"#!SRDS <http://www.srds.com/cmas/main>




                                                               !

				
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