A STUDY OF STAKEHOLDER RELATIONSHIP MARKETING AT APPLE INC. PDF

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A STUDY OF STAKEHOLDER RELATIONSHIP MARKETING AT
APPLE INC.
Dr Kennedy Amadi, PhD
Lecturer, The Great Lakes University of Kisumu
2019...

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A STUDY OF STAKEHOLDER RELATIONSHIP MARKETING AT APPLE INC. Dr Kennedy Amadi, PhD Lecturer, The Great Lakes University of Kisumu 2019

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Apple

CONTEXT: Apple. Inc which is the 12th largest company in the world was established on April 1st 1976 and incorporated on January 3, 1977 by two college dropouts named Steve Jobs and Steve Wozniak (Pethani, 2018). Size of Apple Apple is headquartered in Cupertino, California, United States and has its branches in 25 countries all around the globe (Apple, 2019). As showed by statista (2019), Apple had over 130,000 employees worldwide in 2018 and the number is rapidly increasing. Main Markets The top 5 markets of Apple are North and South America (gains more than 33% of Apple’s sales), Europe (22% of apple’s sales), China (17% of sales), Japan (11% of sales) and Asia Pacific (7% of sales) (Mattera, 2019). Although it is stated by Dudovskiy, J (2019) that Apple targets customers who are in the range of 18-30 years and 20-45 years, but its products are mostly used by young adults (teenagers- both male and female) and bought by customers with high income and who live luxurious lives. Products and services Refer to appendix 1 Apple offers a wide range of products & services and these consists of; iPad, iPhone, iPod, Mac, Apple TV, Apple watch, Professional software applications, iPhone OS (iOS), OS X and watchOS operating systems, iCloud, Apple Pay and a variety of appurtenances and services (Editorial, 2019). Key competitors According to Eskify. (2019), Apple’s top ten competitors include, Samsung, PayPal, Tesla Motors, Amazon, Dell, Hewlett Packard, Sony Mobile, Fitbit, Bose, Google and Microsoft (Google and Microsoft being the 2 main competitors).

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Table of Contents INTRODUCTION ............................................................................................................................................. 4 1.0 The main stakeholders of Apple ............................................................................................................. 5 Mendelow’s matrix ................................................................................................................................... 5 2.0 Stakeholder relationships ....................................................................................................................... 8 3.0 Building customer loyalty...................................................................................................................... 11 Developing a stakeholder audit .................................................................................................................. 13 Internal stakeholder: .............................................................................................................................. 13 External stakeholder: ............................................................................................................................. 14 CONCLUSION............................................................................................................................................... 15 REFERENCES ................................................................................................................................................ 16 APPENDICES ................................................................................................................................................ 19

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INTRODUCTION Apple, Inc., is a one of the world’s largest technology company which is head quartered in Cupertino, California, and has a market value of 926.9 billion dollars. The multinational company’s mission is to provide its customers with the best personal computing experiences. Below I have identified the primary and secondary stakeholders of Apple and by using the Mendelow’s matrix I have analyzed the needs and the level of power of each stakeholder in the company. I also used a strategy known as Six Market Model to assess the relationship between Apple, Inc. and two of the company’s primary and secondary stakeholder groups. Also, I briefly explained the meaning of customer loyalty and the importance of customer loyalty and building customer retention within Apple. Lastly, I elaborated a stakeholder audit for one internal and one external stakeholder using the stakeholder audit and planning stages.

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1.0 The main stakeholders of Apple A stakeholder is any individual or group that has an interest and can be affected either negatively or positively by the organization’s decisions (Yourdictionary, 2019)

Mendelow’s matrix: As reported by Eriksen-Coat, F. (n.d.), this is a tool that is used to examine stakeholders in terms of their power—capability of affecting the company’s policies or project resources— and interest— the level of interest they have in the company or the completion of a project.

According to Monir, A. (2013), the two types of stakeholders include: Primary stakeholders: is an individual or group that is directly related to the business failure or success for example, shareholders, customers, suppliers and employees. Employees: Employees can influence Apple because, according to the Mendelow’s matrix of Apple, the employees are the “keep informed” as they have low power and high level of interest in the organization. Although they can directly affect the success of the organization through the efficiency and the productivity in the day to day activities that they carry out, but they are not involved in the key decision making in Apple as it is said to be a very secretive organization (Business Insider, 2019). Wileman, L. (2019), states that, the employees of Apple in China are powerless to an extent that in order to get improved working conditions more than ten workers committed suicide while protesting in 2010. Similarly, more than a hundred workers threatened to commit mass suicide in January 2012 but luckily the people were able to convince them to descend from the roof of their building.

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Shareholders: Investors are basically the key players in the organization as they have high power and high interest in the organization. Apple’s investors are focused more on increasing the earnings on their investment (Panmore Institute, 2019). Based on the report of Robins, M. (2015), the shareholders have become more powerful since Apple allows them to assign 20% of the board members (but only if they have held shares for more than three years and possesses shares worth more than 3% - $18 billion). The shareholders can increase these earnings by increasing revenue, this is the reason why Apple keeps launching new and developed products each year. When it launches new products, the prices of the old products fall which is a win-win situation for Apple because the luxury class customers will buy the latest products and the middle-class customers will buy the old products as the price falls (The Motley Fool Singapore, 2019). Customers: The mission statement of Apple states that “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings” (The balance small business, 2019). The customers of Apple are the “key players” according to the Mendelow’s Matrix, as they have high power and high interest in the organization. Apple takes its customers’ needs very seriously and has ranked them as their top stakeholders and this has generated customer loyalty which ensures long term financial success (Panmore Institute, 2019). As highlighted by The Guardian. (2019), In 2017, Apple admitted that between February 2015 and 2016 it misled over two hundred customers about an “error 53” and told them that they can no longer fix that problem if their device had been taken to a third party for repairing. In April 2017, The Australian Competition and Consumer Commission took legal action declaring that Apple had deceived customers about their warranty (assurance) rights by continuously denying to fix or even examine the defective devices, therefore Apple was slammed by the federal court and had to pay a hefty fine of nine million dollars. As reported by BBC News (2019), Apple became the first public company worth one trillion dollars in August 2016 and this shows that the high prices will not matter if the products and services are of high quality. Suppliers: Suppliers will require product patterns and trends, new product advancement timelines and plans and high level of synchronization to production schedules. The suppliers of Apple are “key players”, this means they have high interest band high power because if the suppliers cannot levy their demands (for example, high selling prices for raw materials) on organizations like Apple and gets a better offer from other customers the suppliers can switch to them (Panmore Institute, 2019).

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The Nikkei staff writers Wantebe, N. and Hosokawa, K. (2017), specify that the Japanese suppliers took more orders than expected when other suppliers were not able to meet the volumes requested by Apple. Apple convinced them to lower the prices as the order was huge and this led to increased costs for the suppliers and they decided to switch to other customers. Secondary stakeholders: is an individual or group that is indirectly involved in the company’s decision making, success and/or failure for example, the general public. Government: The government usually falls in the “keep satisfied” category as they have high power but low interest in the organization and will only get involved when they need to (Stockmarketandbusinessguide, 2019) The government of Ireland has both high interest and high power because Newcomb, A. (2017) specified that, Apple dodged to pay the required amount taxes from 2003 to 2014. After a thorough investigation in 2015 by the Brussels-based European Commission it was shown that Apple was gaining advantage from dodging taxes and paying less than other companies therefore slamming them with a tax bill of $15.4 billion.

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Stakeholder relationships Stakeholder relationships: Singh, D. (2013), clearly highlights that, the Six market model is a strategy that assists an organization to learn about the significant key market areas and stakeholders. The organization can use this model when it wants to grow because analyzing the six markets relates to both the internal and external environment and it will help the organization to identify opportunities in each market.

(Money Matters | All Management Articles, 2019) The Six markets model: 1. Internal markets: As specified by Singh, D. (2019), this market relates to the employees and customers and it shows how these stakeholders must have synchronization between them for the company can achieve its objectives by working together. The internal stakeholders should understand how their relationships affect and support the company’s goals and solves conflicts of interests. Patel, N. (2019), states that Apple takes its customers’ needs very seriously and understands them better than any other company. It focuses on finding new and improved ways to attract customers. When some customers go to the Apple retail store, they tend to stay there for a long period and ask the employees or what they call the “geniuses” questions about the devices. Apple has made sure that the employees are welcoming and persuasive which therefore, encourages the customers to buy the device. 2.

Supplier markets:

This market is the link of the company that distributes raw materials, products and services to the company. Over the year’s organizations have realized how important it is to maintain a close and mutual relationship with their suppliers to get benefits such as original and better-quality raw materials, faster distribution and availability of discounts (Money Matters | All Management Articles, 2019). Apple maintains a good relationship with the suppliers as long as they understand Apple’s culture and vision (which is mainly innovation) and for this, suppliers must learn about what the company expects from them. Apple expects its suppliers to be committed to quality assurance and commitment to assure high levels of social responsibility (Apple, 2019).

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3.

Employee markets:

Singh, D. (2019), also highlights that, this market assists the company to hire the employees that are experienced, skilled, loyal, creative, productive and talented. The internal stakeholders directly affect the profitability therefore, the organization needs employee those who share the values of the organization, can improve production and add value to the business. In the opinion of Painter, L. (2019), Apple does not just randomly pick its employees; it examines plenty candidates to select the perfect employee; therefore, the employees need to be exceptional. The company seeks for applicants that can associate with people on a personal level and provide the best customer experience. 4.

Referral markets:

Based on the report of Singh, D. (2019), this form of marketing can be described as “word of mouth”, this is when something is bought after it is suggested by someone for example, friends or relatives. It is divided into two groups: customer and non-customer referral markets. Apple products are highly recommended by most people not only because of the quality of their products, but because of the outstanding customer service. A major example is that; when a customer goes to Apple to get a broken screen repaired, he/she leaves with a brand-new iPhone instead of just getting the screen repaired. Therefore, the customers will have no reason to be upset and they will recommend the product to their friends and/or relatives (Referral SaaSquatch, 2019) 5.

Influence markets:

Singh, D. (2019), states that, this market includes of people and organizations who have the capability to have a positive or negative impact on the marketing surroundings where the business competes. The influencers include stakeholders including competitors and the third party. For example, consumers that have bought a product, will give feedback to his/her friends, fans and/or relatives. For most organizations, customers are the influencers and when supply partners and retailers influence customers to buy products, they are known as value added influencers. Most of Apple’s influencers are celebrities on social media and Apple has really benefited from this as people tend to imitate what their favorite celebrities do. Refer to appendix 5. Social media networks such as Facebook, Instagaram and Twitter, have said to be the vital for social advertising (WIRED, 2019). One of the examples of a ground-breaking campaign to make people focus on the feature of one of Apple products (the iPhone camera) was the hashtag — #ShotOniPhone. Many people took part in this campaign and encouraged more and more people to upload a picture taken with there iPhones with the hashtag, this led to an outstanding achievement for the marketing Apple (Hawkemedia, 2019).

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6.

Customer markets:

As identified by Singh, D. (2019), this market consists of the individuals or the companies that buy the final goods/services the individuals can either be customers or intermediaries. This market directly affects the organization because if the customers are not satisfied with the product or service, the company will not be able to keep hold of them therefore the company must find innovative ways to attract new customers and retain the loyal ones. Apple retains its customers and attracts new ones because of two main reasons. Firstly, meeting the customer wants by the quality of the products because for apple, it’s about quality and not quantity. Secondly, establishing a long-term relationship by providing the best customer experience by coming up with creative ideas to make the retail stores more fun, for example a famous dancer known as Michael, performed in one of the Apple stores therefore, attracting more people (WordPress, 2019).

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3.0 Building customer loyalty Customer loyalty: is when a customer chooses to continue buying products and/or services from the same company despite of having alternatives (Market Business News, 2019). The benefits of customer loyalty and building customer retention within Apple: Martin, R. (2019), claims that, one of the advantages Apple gets from customer loyalty is, an unusual improvement in financial performance. Over the past number of years Apple became the world’s most valuable organization mainly due to their loyal customers. Also, the customer loyalty of Apple has given them a competitive advantage over their main competitor— Samsung and this is because customer loyalty means constant support; therefore, the customer is committed to the company and they will not shift to other companies that produce similar products. Contrary to Samsung, Apple has managed to keep the prices of their products artificially high as it affects the customers behavior towards the products (some customers think that products with high prices are of great quality), this encourages the customers with high income to buy the products of Apple; therefore, boosting the sales of the company. the customers of apple have such enthusiasm for the brand that has resulted them to positively publicize through word of mouth therefore, strengthening the company’s brand. Raybould, S. (2011), highlights that, Reichheld loyalty-based effect is a theory that focuses on building am extremely loyal customer base and maintain good relationship to gain long term customers; therefore, to retain high quality customers and/or employees, the company can reinvest cashflows after considering the economic effects of retention. Based on Reichheld loyalty-based effect, value creation (by providing better quality products and services) for customers results in customer loyalty and therefore, leading to profit and growth. In accordance with Reichheld loyalty-based effect, customer retention has benefits like; Sales growth, low operating and acquisition costs because of the fact that long-term customers have less demands; therefore, a company like apple can use that money to innovate its products and/or services. Customer retention involves the capacity of an organization to hold on to its customers for a particular period of time (Market Business News, 2019). Davies, J. (2019), claims that, although one of the ways that Apple uses to retain customers is the top quality and creativity, it also focuses on taking care of the customers by serving them with dedication and making them feel welcomed to encourage them to keep buying from them and this has led to Apple being able to achieve higher sales and it has created and maintained a recognizable and reputable name. Honen, M (2019), summarizes that, the service profit chain is a theory that states that employee satisfaction, employee capability, employee satisfaction, customer satisfaction, customer loyalty, growth and profitability are directly linked. For example, if employees are satisfied with their current work situations, they will work both, effectively and efficiently therefore, providing excellent quality services and satisfying the customers. This why Apple tries their best to treat their employees well and they have managed to provide the best services. The theory also reflects that, satisfaction and loyalty are directly linked, if the customers are satisfied with the product, they are going to be loyal to the company and the company will be able to retain customers. Apple trains its employees to serve their customers with dedication so that the customers feel welcomed and encourage them to come back again.

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Based on the reports of Bohata ALA. (n.d.), the human resource strategy of Apple is one of the reasons of the company’s constant growth and outstanding performance in the industry. When recruiting employees, the company focuses on whether or not the candidates have computer-based knowledge and they will recr...