Life-Cycle Case Study: Apple

What factors helped Apple out of period of overall decline and transformed it into compamy it is today?

Apple started out as any company. When Steve Jobs and his friend came up with the new computer, it was declined by the major companies. However, couple of years later, Steve Jobs became the riches person in the world thanks to his company; the Apple.

Apple uses many strategies to keep its customers. Probably the main reason they are as sucessful as they are is because of the strong customer loyalty they develop. In stores, they have special technicians that help you. As I personally noticed, I always get asked what my name is and then the workers always make sure to use my name when speaking to me and say "what a great evening we had" after they are done patiently explaining about the product. Nice treatment, knowledge and free help makes Apple very attractive to the consumers. The whole idea of the "Apple cult" is to keep people coming back for more. Therefore new generations and new models are made. Months before the new product is released, Apple advertises it and makes people excited, making them be among the first ones who get it. As new products are being released, the older ones get a little cheaper, so even if a person can't afford the new one but still be "cool" as everyone else (because "cool" and "sophisticated" became the definitions of the Apple brand) they can get one of the older models. This psychological strategy makes people believe that if they are owners of Apple products, they are part of something bigger and better which perfectly satisfies their yearning for belonging. Apple constantly develops new models. Originally they started out as a Mackintosh company making computers, but nowdays they make technology that varies all they way from Macs through iPods and iPads to earphones and computer cases. Apple also has contract and "coproducts" with other companies, such as Nike. A particular example is an iPod case for arm when the concumer runs, so he doesn't have to hold the iPod while excercising. This kind of symbiosis helps both companies because it promotes both brands and appeals to more kinds of people.
The technologically aware people knew longer before that keyboards don't have future, yet Apple was the first one to develop the touch screen. This fancy technology appeals to the consumers and by this beat the competition for a while. Among the biggest Apple competition is Android.
The overall feel of the Apple products is a very sophisticated, style that promotes beauty in simplicity of usage.

Branding: The Story of Coke

Source: Coca Cola: The Real Story Behind The Real Thing

Coca cola started out as a new, unfamiliar drink that became an international sensation in about 123 year of its production. Today, it is sold in 206 countries around the world, still making their way to the potential customers, 90 million just in Africa.

1) What did coke do in early years to appeal to consumers?

Rober Woodrif, considered the best leader of the Coca Cola “army” came up with the six pack. However it was at first a fountain beverage, it made people feel good because it reminded them of their childhood.

2) What made Coca Cola different from competition?

When there were riots and problems in Africa, all of the foreign companies withdrew their support and availability. Coke made a very risky decision and stayed, making the people of Africa love Coke and make it seem like a very progressive company. Now days, there are 85 thousands of  2 liter bottles of coke sold in South Africa per day. In the villages where violence and poverty are high, on paydays Coke is seen as the “extra dose of optimism”. Also, essentially said everyone who gets their hands on the bottle, drivers, store owners etc., are ensured to get money, which means that Coke ensures their jobs. 

Also, Coke was sent to soldiers during the war only for a nickel, no matter what it cost the company and gave the soldiers sensation of “what they were fighting for”.

3) What factors have helped Coca Cola to become an internationally successful brand?

The Coke Company makes sure they get advertised as much as possible at the vents where there are many people. A great example is the 2010 soccer World Cup in 2010. They spent 100 of millions to present the logo. Also, in South Africa soccer is the sport that everybody plays, no matter what social class they are in. The fact that they relate this product to what everybody loves and everybody does makes them extremely popular and likable. Another great example is a soccer commercial of the “super underdogs”. In this commercial, young boys play perfectly while performing amazing stunts and winning the game, thanks to Coca Cola.

Most of the things bought in store are bought on impulse. Therefore Coke’s placement and advertising is thoroughly thought out.

Coke constantly tries to appeal to all social classes.

4) What are some things Coke has done to make its brand recognizable?

Coke was at first a fountain drink. Then after some people who bought the Coca Cola concentrate were making more money than the Coke Company who sold the concentrate to them, Coke started to be concerned. Therefore they started to bottle their own product. However, Pepsi emerged as a drink that offered twice as much liquid for the same price as Coke and that won over many consumers. Coca cola started to make a King size Coke, which gained consumers back. Later on a test was made whether people preferred Pepsi or Coke more, and Pepsi won again. As a response, Coke changed its formula after 99 years. This outraged some people not because the new Coke tasted worse, but because they were “toying with their youth”.  Since people made an emotional connection to the old Coke, Coca Cola made a comeback as Coca Cola Classic and unintentionally proved that there’s nothing better than the original Coke which gave them another economic boost.

Another feature of Coke are its bottles, that are inspired by the woman’s body and increase its sale by million per week. This bottle is authorized and no other drink has it besides of Coca Cola.

5) How is Coca Cola organized to ensure their product availability?

The Coke products are distributed almost everywhere in the world. In places where it’s not available directly in the local store, people walk miles to get it. An example is Africa where truck divers wake up early in the morning, move the bottles to some villages, where then store owners go through the dirt roads and even raw sewage just to buy Coke products and bring it to their stores, that is many times the front porch of their house.

Coke gives small gifts such as refrigerators with their logo to small businesses in exchange for brand loyalty.

6) What innovations is Coca Cola beginning to use?

One of the newest innovations is the Free Style machine. It is a new technology with touch screen, using brands and flavors to make Coke beverages according to buyer’s taste. First, the customer chooses one of the Coke brands such as Coca Cola, Sprite, Minute Maid and many others. Then they add flavor if they desire such as vanilla or grape. This machine then sends information how much of which product was sold and what combinations were made. Each brand is bought at least once a day, but the original flavors are still in the lead.

Coke tries to purchase “the next big thing” before I becomes a phenomenon. Therefore the leaders are thinking of what people will like in 5 or so years. Today, Coke owns 70 different brands in the US and 500 drinks around the world including teas, juices and flavored waters.

Culture and International Business

Geert Hofstede came up with six dimensions of international marketing that are important to consider.

1. Power Distance

This concept represents the "distance" between equalities of workers and the head of business. 

Some cultures practice low power distance which means less formal relationships, more democratic and friendly environment between the leaders and the employees. 

High power distance cultures give importance to the hierarchical positions which causes unequal distribution of power and more autocratic environment.

2. Uncertainty Avoidance

This aspect relates to the near future and the changes. people who work in high uncertainty environment tend to be more stressed, emotional and have hard time adapting to changes. This is a result of many strict rules and being tight up. People with  low uncertainty environment have as few rules as possible which leads to more friendly, less stressful and easily adaptable environment.

3. Individualism versus Collectivism

Individualism represents people who have larger number of loose relationships but in fact it is a everyone-for-himself way of achieving goals. Collectivism requires tight relationships and teamwork with benefit for all.

4. Masculinity versus Femininity

This aspects focuses on the quality of life vs quantity of life loved. Masculine features consists of more competitive, assertive and materialist behavior while femininity is represented by feelings, reason and maintenance of good relationships.

5. Long Term versus Short Term Orientation

Long term focuses on the future of the company, giving importance to persistence and  savings. Short term orientation focuses on the present and past and highlights traditions, tries to reach favorable return and therefore fulfills social obligations.

6. Indulgence versus Restraint

This concepts relates to the natural human drive to enjoy life. Indulgence represents fulfilling obligations while enjoying life whereas resistant approach represents repression of this optimistic drive to fulfill higher expectations.



Japan
Japan is known as the most masculine country in the world since people fiercely compete for sucess. This is related to the long history of samurai.
At the same time, it has moderately high power distance that is believed to be right by the Japanese, deriving from its long history and traditions. Yet the member of the same company is almost thought as of a member of the family.
Individualism is seen in Japan, however, people are concentrated in smaller groups to which members they are very loyal. 
High score of uncertainty can be seen in the many protocols and rules that are always used to avoid making mistakes and changes.
The Japanese have long term orientation that sprouts from their attitude towards the work: persistence, sense of shame and loyalty to their group. They therefore focus more on the bigger picture with outcomes that are more worth it.




 Australia
Low power distance in Australia is seen when the managers and other leaders rely on individual employees. At the same ime communication is informative and direct, yet friendly.
High individualism is represented by people who are expected to look after themselves and very close families. The promotions are given based on what one can do and his abilities alone.
This masculine society believes into "the winner takes it all" attitude, whether in school or at work.
People are relatively accepting to the new ideas yet do not show emotion much, which shows the border on the uncertainty avoidance scale. 
In Australia people look for quick results, give importance to the traditions and therefore focus on short term orientation.
  




Slovakia
In Slovakia, people whow their pover, not necessary in a negative way but they draw a clear line between the various ranks which shows high power distance.
This is an individualistic society yet very close to the middle which shows that people work for themselves yet work hard on not being rude and still somwehat work in groups.
High masculinity score shows thatt people strive for winning and success. 
Uncertainty is close to the middle, where people try hard to avoid uncertainty.
Importance is giving to analytical thinking and focuses on present which shows short term orientation.





Sources:
- http://geert-hofstede.com/dimensions.html
- http://en.wikipedia.org/wiki/Hofstede%27s_cultural_dimensions_theory
- http://geert-hofstede.com/slovakia.html

International Marketing

Why has international marketing grown so much in recent decades? 

Global marketing reaches customers, markets and advertising beyond the borders of domestic region. The more a culture spreads, the more its products do. Since traveling is a lot easier as it used to be, people from different cultures visit different countries. Better communication, transportation and freer international markets are signs of globalization. These aspects lacked in the past and while it used to be risky, international marketing is in many cases a necessity for businesses.




 What are some of the factors that has allowed this to happen more easily now than in the past?

Improved communications, transportation and businesses that are too big for their own market.

Identify five reasons why companies may decide to sell their product or service in foreign markets.

Home markets may be too saturated, meaning that the product is already maximized in given market and there is no more space to sell it anymore.

Foreign markets also offer potential profits while it still emerges, this result in rapid sales at low costs.
Spreading risks to different places.
Poor trading conditions may contribute to market globalization.




What considerations must a company have in these areas when undertaking international marketing?

Ø     Political differences
Changes in the government or political instabilities, like riots or terrorist activity, increase the risk of business failure. For example civirl wars in Nepal, Sri Lanka and Sudan dramatically decreased businesses.
 

Ø     Economic differences
One must take in account the GDP as well as the rates of taxes, age structure of population and interest rates. The GDP vary from country to place to place, like Luxembourg that has GDP of $78 559 and Burundi that stands on $160.
 

Ø     Social differences
Products to be sold are also effected by cultures that also include the importance of marriage and the role of women in the society. For example, IKEA's advertisements that had a happy women in nicely designed kitched in a European country, lacked the woman in the picture in an Arabic country.
 

Ø     Legal differences
Legal differences have huge impact of foreign businesses and affect them in many key ways. For example: product safety and labeling are much stricter in European Union than in America, children under the age of 12 cannot be directly advertised to, guns are legally sold in the USA but are illegal in other countries.
           
Ø     Cultural differences
Unrecognized cultural differences may have crucial impact. While laws are written down, traditions and culture are hard to measure. If a business doesn't recognise , for example, the roles of women in the society, uses an unfortunate word in its translation or uses different colors (ex. in far East, white is a mourning color), the business will fail.  

Ø     Differences in business practices
Setting up a business, the formalities and paperwork that come with it take different amount of time in different parts of the world. For example, this process may take few days in the UK but may take up to a year in Sierra Leone.

 

Source: Business and Managemrnt for the IB Diploma by Peter Stimpson and Alex Smith
              http://www.helium.com/items/1010632-political-risks-in-international-trade

Distribution Arrangements

Distribution is an important part of business's success, since the product must also be present when it needs to be sold. The types of distribution are intensive, selective, exclusive, integrated.

Intensive Distribution

Advantages
This type of distribution takes advantage of the intensity of the product distribution. Businesses are trying to get as many retailers and shelf space as possible. The advantage is that wherever people go, they will see the product and therefore to be reminded to buy it.

Products that are most likely effected
This distribution concerns mainly everyday products that have to be routinely replaced. For example, soap is made in a factory but a common brand can be found in any grocery, retailer store like Walmart, gas stations or drug store. Among items that use intensive distribution belong chewing gums, cigarets, soaps, shampoos, deodorants and soft drinks.

Issues that must be considered
Retailers may give little shelfspace to the product, don't advertise it or make price too high.

Things to be considered about choosing a channel partner

Selective Distribution

Advantages 
Selective distribution means that a product is sold only to some retailers covering specific geographical area. Fewer intermediaries means less money spent for retailers.
 
Products that are most likely effected
Few retailers carry specific product, these are usually of specific brand or designer products.
 
Issues that must be considered
Since only few retailers in the same geographical area are selling this product, manufacturer must consider money issue such as having higher prices and how to make people come to the store where his product is sold.

Things to be considered about choosing a channel partner

Exclusive Distribution

Advantages
In exclusive distribution manufacturer and one specific retailer make an agreement about selling the product. This retailer covers specific area and since this product is most cases special (and expensive) customer service is extra good.
 
Products that are most likely effected
As mentioned before, expensive products usually use this type of distribution. New technologies are very common to distribute its products in this way, for example Apple has agreement with AT&T to sell iPhones.

Issues that must be considered
Since only one retailer sells the product, the manufacturer has to get his money back. Also, the product is expensive and its manufacturing costs tend to be more expensive too. The final price of the product must be high enough to cover these costs yet appealing enough to the people.

Things to be considered about choosing a channel partner

Integrated Distribution
Advantages


Products that are most likely effected

Issues that must be considered

Things to be considered about choosing a channel partner

The Promotional Mix

How would the promotional mix change at different stages of the product life cycle?

Promotional Mix: (citing Mr. Dougherty's definition) is the combination of promotional techniques that a firm uses to communicate the benefits of its product to customers.

PLC: As product enters the market, it goes through various stages. This time period is called product life cycle (PLC) and consists of the Introduction, Growth, Maturity, Decline. The goal of businesses is to sell as much product as possible and therefore has its PLC as long as possible. In order to this, people use extending strategies to prolong maturity or limit decline.

 

Introduction
During this stage, company is trying to establish a customer base, which is crucial for the success of the product. For the sake of good impression and popularity, importance is given especially to advertising that undergoes many tests. Also because the product not popular yeat and lot of money is put into its introduction, the company's profit is negative.

Growth
In this stage, the product is well known. The profits starts to increase, but so does competition. Therefore, the owner starts to focus on brand preference and how to please the customers. Because of the increasing competition and the desire to keep customer's patterns in your business, you must invest money into advertising, which causes the profit to go down at the end of this stage.

Maturity
At this stage, product is very popular and the competition is huge. This leads to decline of product life and therefore most businesses try to extend the maturity of product. Mostly loyal customers buy this product and the businesses start to rely on promotion heavily. They offer loyalty based promotions such as membership cards and also care more about the placement of the product.Businesses encourage retailers to give more shelves to their product than the competitors.

Decline
During decline stage, product's sales go decrease due to unfavorable economy, changed customer's taste or may be also as a result of technological advancements. In this case it depends on the business's strategy. They can keep the product but reduce its cost and find new use to make it more attractive to the customers. 
 They can also sell this product as a very low price to the loyal customers until the profit is zero or discontinue the product completely by selling it to competitor's who want to continue this product. Another option is finding a successor of the product.






Sources:
http://notesdesk.com/notes/marketing/product-life-cycle-plc/

Case Studies in Promotional Marketing

Case studies are taken from this website: http://www.aptcoweb.com/news/casestudies.htm


Museum gets huge membership boost

Since museums are centers of education, it can be said that memberships are mainly aimed to attract people who either want to or have to get educated, for example students and families with kids.
As a promotion they used scratch-off cards with possible prices and therefore to "play the game". This type of technique is called the Game Technique and it is effective because it, in a way, gets the target addicted to the possibility of winning.


AMC butters up sports fans with popcorn offer

In the hometown of AMC, Kansas City, this company decided to attract the home entertained couch potatoes. Because many of these people are enjoying the football season, AMC decided to give away 10,000 key chains that, if presented at the cinema, enables the owner one free popcorn. This raised AMC's customers by 40%. This type of promotion was targeted at sport fans and home-entertained people and was very successful because people love the sense of getting free stuff (in reality they had to pay for the ticket).


Nike Incentive Program Boosts Attendance

Nike employs its workers all around the world and loosing them would mean a huge loss to the company. To improve the attendance of the workers, Nike created a one year plan, giving out specialized mugs particular to each quarter of the year and given to the workers with perfect attendance. This created a competition between workers and the desire to get the different mugs and other accessories that Nike gave out. At the end of the campaign all the Nike facilities reported perfect and improved attendance by over 200%.


Unexpected product works for Fitness Center

Usually fitness centers give out sport related gifts such as water bottles, sporting bags or towels. However, APTCO worker realized that the people attending fitness centers already have their own items of this nature. Some of them carry/wear them but most of them don't. Therefore she decided to give out a practical gift, an umbrella with the company logo. This gift attracts people who go to or want to start going to a fitness center. It is effective because umbrellas are always needed, since they are easy to use and the company logo will be therefore seen by all the people passing by the umbrella owner.