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1.

INTRODUCTION OF APPLE

Apple, Inc originated from the friendship and mutual interests of Steve Wozniak and Steve Jobs. The Two collaborated in the development of the Apple! in the earl" #$%&s. The Apple I was a step ahead of most computers of the time featuring a use of aT' as a displa" s"stem and a cassette interface for recording programs. After obtaining financing for the development of Apple II, the Apple (omputer (ompan" was formed in #$%&.As the growth of home computer use grew, Apple grew with it. In #$)& the compan" issued its initial public offering of investment stock. Apple ne*t introduced the +acantosh (omputer in #$), during the Super -owl. The computers desktop publishing features provided the foundation for future innovations that have become standard for the compan". Toda" Apple, Inc has more than ,,,&&& emplo"ees and revenues e*ceeding ./ million dollars.

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1.2

HISTORY OF APPLE

In #$%# Steve 0Woz0 Wozniak designed a device called the 0-lue -o*0. It allowed 11 of course illegal 11 phone calls free of charge b" faking the signals used b" the phone companies. 2is friend Steve Jobs instantl" realized that there must be a huge market for something that useful. 2e bought the parts for 3.&, Woz built the bo*es and Jobs sold them to his fellow students at the 4niversit" of (alifornia in -erkele" for 3#5&. To demonstrate the 0product0 to some students, Woz once posed as Secretar" of State 2enr" 6issinger and called the 'atican. Allegedl" he pla"ed his role so well that the" told him the pope was sleeping but if he re7uested the" would awake him. Woz got nervous and hung up.

8ne of Wozniaks biggest dreams was that he wanted to have his own computer. In +arch #$%5 the first meeting of the 9Amateur (omputer 4sers :roup9 1 better known as the 92omebrew (omputer (lub9 1 took place in a garage in +enlo ;ark. The number of interested computer freaks 7uickl" increased to several hundred and the" moved their meetings to the auditorium of the Stanford <inear Accelerator (enter =S<A(> in ;alo
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Alto. Woz and Jobs regularel" attented these meetings and discussed with fellow computer nerds how to use chips and design boards and build computers. Woz, a true electronics genius, designed his own computer using a 3/& +8S Technolog" ?5&/ processor. (ontrar" to all the other designs which circulated at this time, Woz computer had a standard @WABTC ke"board as an input device instead of eight little switches for each bit of a b"te and it used a standard T' set for output instead of an e*pensive printer or monitor. Woz was /? "ears old at that time.

8nce again Steve Jobs realized the potential of Woz0 computerD 9Steve didn0t do one circuit, design, or piece of code, but it never crossed m" mind to sell computers. It was Steve who said 0<et0s hold them up in the air and sell a few0, Woz recalled later. Woz worked at 2ewlett1;ackard at that time and Jobs was emplo"ed b" Atari. Eirst the" tried to sell Woz0 design to 2; or Atari, but both companies declined. To scrape together the mone" to produce the printed circuit board, Jobs sold his 'olkswagen bus for 3#5&& and Woz sold his programmable 2; calculator for 3/5&. It turned out to be a good investment.

(ontrar" to common belief, Apple (omputer (ompan" had not onl" two founders but threeD Steve Jobs, Steve Wozniak and Bonald :erald Wa"ne signed the partnership contract on April #st, #$%?. Wa"ne was /& "ears older than Jobs and Woz and worked as video game maker at Atari. 2e created the original Apple (omputer logo which showed Isaac Fewton, sitting beneath an apple tree. Bon Wa"ne soon realized that he 9either was going bankrupt or the richest man in the cemeter"9, according to 8wen <inzma"er0s book Apple (onfidential /.&. -oth Jobs and Wozniak had no mone" and Wa"ne knew that the contract imposed unlimited personal liabilit" for an" financial failure of the compan". Therefore he left the compan" on April #/, #$%?, less than two weeks after its

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founding. 2e couldn0t know at this time that he 0walked awa" from half a billion dollars0. The Apple I turned out to be a smash hit. In #$%% the Apple II was introduced and the Apple I was discontinued about half a "ear later. The Apple II was another masterpiece of Steve Wozniak and a tremendous success for Apple. Woz and Jobs and a few other people involved with Apple became ver" rich in a ver" short time. Woz bought a turbocharged single engine -eechcraft -onanza A,?T( for 3/5&,&&& and got a ;rivate ;ilots <icence. With onl" 5& hours flight e*perience Woz crashed the plane due to a pilot error and was seriousl" inGured as well as three of his friends which were on board. This scared him so much that he took an e*tensive leave of absence from Apple and did other things like e.g. organizing two rock music festivals on which he lost about 3/& million but nevertheless considered them as ver" successfulD 9It0s amazing that we were able to pull those festivals off and great fun was had b" virtuall" all. I run into more people that thank me for those festivals than thank me for Apple. Cou had to be there to know how wonderful it turned out.9 When "ou read about Woz "ou0ll get the impression of an amiable, generous and probabl" a little bit naive gu" who Gust enGo"ed electronics and having fun and never reall" was interessted in becoming rich. 9A person like him shouldn0t have that much mone",9 said his father after finding 3/5&,&&& of uncashed checks l"ing around in his sons ;orsche =which b" the wa" had the licence plate 0A;;<A II0>. Eollowing the Apple II a computer model named 0<isa0 was introduced, which was a disaster as it was wa" to e*pensive. It was an amazing machine, e7uipped with an operating s"stem with windows and pull down menues and ever"thing else +icrosoft eventuall" copied from Apple. To be fair one has to mentioned that Apple also was 0inspired0 b" a machine named 0Hero* Alto0, designed at Hero* (orporations ;alo Alto Besearch (enter =Hero* ;AB(>. If "ou0re interested in this stor" I would like to recommend 8wen <inzma"er0s e*ellent book Apple (onfidential /.& to "ou.

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After <isa failed, man" people at Apple realized that the" need a computer with all the user1friendliness and the neat features of <isa at a much much lower price. This eventuall" led to the +acintosh. 8ne can often hear that the +ac was Steve Jobs idea. This is not true. In the beginning Jobs even tried to kill the +ac proGect. The real father of the Apple +acintosh is Jef Baskin. If "ou are interested in his version of the creation of the +ac, please read this article. Erom Jobs point of view the +ac was a threat for his bab" 0<isa0 =pun inteded, Jobs actuall" named the computer model after his first daugther <isaI>. 9<isa is going to be increcibl" great9, Jobs said, 9It will sell twelve thousand units in the first si* months and fift" thousand in the first "ear. We0re prepared to live with <isa for the ne*t ten "ears.9 -ut it didn0t work out. In total onl" ?&,&&& units were sold and <isa had a live span of onl" two "ears. Jobs was furious. 9Cou gu"s reall" fucked up. I0m going to have to la" a lot of "ou off9, he said to the <isa developers at Apple. Soon he realized that the +ac proGect, which he was opposing so far, could indeed become the success he had hoped <isa would become, so he tried to take over the +ac group. The +ac was basicall" Jef Baskins idea who was working with a small group on its design. Jef Baskin remembersD 9JJobsK would tr" to push himself into ever"thing. Fo matter what "ou were doing, he had to have something to do with it. Fobod" at Apple wanted him involved with their proGects. I had started the +acintosh team and we didn0t want him either. The standard wa" JJobsK operated was picking "our brain. 2e would immediatel" poo1poo the idea, then a week later, he0d come back and sa", 02e", I0ve got a great ideaI0 The idea that he gave back to "ou was "our own. We called him the Bealit" Listortion Eield.9 The product name 9+acintosh9 was invented b" Baskin. 2e intentionall" misspelled the name of his favourite Apple variet" 0+cIntosh0. When Steve Jobs asked venture capitalist -en Bosen about his opinion concerning the product name 0+acintosh0 he answeredD 9Throw 3,& million of advertising at it and it will sound great9.

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MARKETING MIX

According to ;hilip 6otler +arketing +i* is the set of controllable variables that the firm can use to influence the bu"erMs response!. The controllable variables in this conte*t refer to the . N;Ms Jproduct, price, place =distribution> and promotionK. Aach firm strives to build up such a composition of .N;Ms, which can create highest level of consumer satisfaction and at the same time meet its organizational obGectives. Thus, this mi* is assembled keeping in mind the needs of target customers, and it varies from one organization to another depending upon its available resources and marketing obGectives. <et us now have a brief idea about the four components of marketing mi*.

Product
;roduct refers to the goods and services offered b" the organisation. A pair of shoes, a plate of dahi1vada, a lipstick, all are products. All these are purchased because the" satisf" one or more of our needs. We are pa"ing not for the tangible product but for the benefit it will provide. So, in simple words, product can be described as a bundle of benefits which a marketeer offers to the consumer for a price. While bu"ing a pair of shoes, we are actuall" bu"ing comfort for our feet, while bu"ing a lipstick we are actuall" pa"ing for beaut" because lipstick is likel" to make us look good. ;roduct can also take the form of a service like an air travel, telecommunication, etc. Thus, the term product refers to goods and services offered b" the organisation for sale.

Pric
;rice is the amount charged for a product or service. It is the second most important element in the marketing mi*. Ei*ing the price of the product is a trick" Gob. +an" factors like demand for a product, cost involved, consumerMs abilit" to pa", prices charged b" competitors for similar products, government restrictions etc. have to be
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kept in mind while fi*ing the price. In fact, pricing is a ver" crucial decision area as it has its effect on demand for the product and also on the profitabilit" of the firm.

P!"c
:oods are produced to be sold to the consumers. The" must be made available to the consumers at a place where the" can convenientl" make purchase. Woollens are manufactured on a large scale in <udhiana and "ou purchase them at a store from the nearb" market in "our town. So, it is necessar" that the product is available at shops in "our town. This involves a chain of individuals and institutions like distributors, wholesalers and retailers who constitute firmMs distribution network =also called a channel of distribution>. The organisation has to decide whether to sell directl" to the retailer or through the distributorsOwholesaler etc. It can even plan to sell it directl" to consumers. The choice is guided b" a host of factors about which "ou will learn later in this chapter.

Pro#otio$
If the product is manufactured keeping the consumer needs in mind, is rightl" priced and made available at outlets convenient to them but the consumer is not made aware about its price, features, availabilit" etc, its marketing effort ma" not be successful. Therefore promotion is an important ingredient of marketing mi* as it refers to a process of informing, persuading and influencing a consumer to make choice of the product to be bought. ;romotion is done through means of personal selling, advertising, publicit" and sales promotion. It is done mainl" with a view to provide information to prospective consumers about the availabilit", characteristics and uses of a product. It arouses potential consumerMs interest in the product, compare it with competitorsM product and make his choice. The proliferation of print and electronic media has immensel" helped the process of promotion.

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2.1

MARKETING MIX OF THE APPLE

2.1.1 PRODUCT MIX OF THE APPLE

Port"%! Co#&ut r' P including +ac products such as +ac -ook ;ro, i+ac, +ac-ook Air, +ac +ini, Hserve S r( r' P including Hserve, Hsan, +ac8S H Ser, +oble+e. Acc ''ori ' P including +agic+ouse, 6e"board, <ed (inema Lispla". )i*+i ,"' d St"tio$' 1 including Airport A*press, Airport A*treme, Time (apsule. D ( !o& r P including Leveloper (onnection, +ac ;rogram, i;hone ;rogram. iPod P including i;od Shuffle, i;od Fano, ipod (lassic. iP-o$ P including i;hone,:S, i;hone,:, i;ad. iTu$ ' P including movies, T' shows, audio books, games. P ri&-"! &roduct' P including ;rinters, Storage devices, digital videos and cameras

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I;hone is introduced as the core product in the mass market as compared to other smart phones when it first launched. The brand of the i;hone, Apple, is often a threat to its mass market and its competitors. Beviewers in all corners of the electronic device world hail i;hone as setting a benchmark for sleek and innovative design, as well as its integrated cell phone and +;,Ovideo pla"er =iTunes>. It is onl" sold in tandem with ATQT service and other selective shops. Thus, customers can onl" get i;hone from limited places such as the epicenter in Singapore. +ost consumers of i;hone are lo"al supporters of Apple, the" will not accept substitutes as the 7ualit" of Apple products is usuall" incomparable. As for the une*ampled consumers who make the infre7uent purchases, the" would need e*tensive search and longer decision time in pursuing i;hone. Thus, i;hone is classified under specialt" goods.

I;hone is currentl" at its introduction stage but moving on to its growth stage as there is change from sales grow slowl" to a rapid increase in sales. At its introductor" stage of the product life c"cle, Apple0s marketing obGective is to create consumer awareness and stimulate trial. Thus, during that period, advertising and promotion e*penditures are made to stimulate primar" demand. As more competitors introduce their smart phones into the market, i;hone moves along its life c"cle. Apple will then focus on creating selective demand, the preference for a specific brand. I;hone uses the skimming strateg" during its introduction stage and thus the price of i;hone is kept high during this period of time. In terms of Apple0s product line, it has man" different product lines such as i;od, +acs, i;hone and i;ad.

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2.1.2 PRICE MIX OF THE APPLE

Apple is a premium brand computer that does not attempt to compete on price. The compan" has reduced prices after some initial product launches. It uses skimming and preimuim pricing strategies.

The Applei;ad is priced at a minimum of 3.$$. The Apple i;hone costs begin at 3$$. The Apple i;od (lassic is priced starting at 3/.$. The Apple i;od Fano costs 3#.$. The Apple +ac -ook costs 3$$$. The Apple +ac-ook ;ro is priced at 3##$$ The Apple @uicktime ;ro for Windows costs 3/$.$$ Apples i;ad pricing strateg" includes the fle*ibilit" to lower the prices if consumer response dictates such action. This would be consistent with a similar 3/&& price cut on the i;hone in /&&%.

In /&&$ Apple announced a reduced cost pricing structure for iTunes 1 songs will cost ?$ cents, $$ cents or 3#./$. 2e said the 9vast maGorit"9 of the songs will cost ?$ cents. (hanges are said to be a response to a slower pace of music downloads.

Since i;hone is a specialt" good, the price is usuall" ver" e*pensive. Apple uses skimming pricing strateg" to price its products as their products are considered as undifferentiatedO specialt" good.

Apple uses demand1oriented pricing approach which weighs factors involving underl"ing e*pected customer tastes and preferences more heavil" than factors like cost, profit, and competition when selecting a price level. Thus, Apple utilises the process of price skimming to price their goods. It is b" setting the highest initial price that customer reall" desiring the products and is willing to pa". Skimming pricing is an effective strateg" as Apple has enough customers who are willing to bu". Eurthermore,

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the high initial price will not attract competitors and customers interpret high price as high 7ualit" of products.

Their pricing strategies are developing marketing strateg", make marketing mi* decisions, estimate the demand curve and understand environmental factors.

The" perform marketing anal"sis, segmentation, targeting, and positioning. The" also define their products, distributions, and promotional tactics. 4nderstand how 7uantit" demanded varies with price. Avaluate likel" competitor0s actions, understand legal constraints.

Such constraints are in terms of its demand. 4suall", the higher the demand for a product, the higher the price it can be charged. This becomes an advantage to Apple as the" can earn as much as the" can. In addition, the newer the product, the higher price it can be charged making it the second constraint. The third constraint will be single product versus a product line. As for Apple, the" have a product line for their pricing. Thus, the" do not need to Gust focusing on one product like iphone, the" can also have laptop, mp,...etc. Therefore, with a wide range of products, the price of individual items must be consistent with the others based on features provided, and meaningful price differentials must communicate value to consumers. The e*ternal constraint will be the t"pe of competitive market Apple need to face. In terms of pure competition, Apple0s competitor for an e*ample from (hina, had followed the features of an original iphone but not with the same 7ualit" and also had priced it about the same as the market price of the original iphone. Apple can also have a pure monopol" as it started to be the onl" seller that comes out with the iphone and also who had set the price for that uni7ue product.

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2.1.. PLACE MIX OF THE APPLE

Apple, Inc 2ead7uarters are located at is located at # Infinite <oop, (upertino, (alifornia. The Apple (onsultants Fetwork includes independent professional service providers and technolog" consulting firms that specialize in Apple and third1 part" solutions. (ertified on Apple technologies, these providers deliver on1site technolog" services and support to home users and businesses of all sizes.

Apple service providers are certified technicians, who complete regular Apple training and assessments, and offer repair services, and e*clusive access to genuine Apple parts.

The" are located in AsiaO;acific, Africa, the +iddle Aast Aurope and <atin America. Apple has over /&& retail stores worldwide including the 4S, 46 and (anada. Apple recentl" opened a new retail store in Shanghai (hina

Apple uses indirect mean of distribution. Apple distributes its iphone to local communication service provider such as Singtel and Starhub to sell to its comsumers. Apple also set up its own shop in Singapore to sell its products such as the iphone to the customers. Apple also distributes its iphone to small firms and individual selective shops to increase its sales and area of distribution. (onsumers are also able to purchase Apple iphone through online purchasing. -" visiting Apple0s website, customers are able to order iphones without going down to Apicenter or local communication service providers.

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In Apicenter, Apple is able to satisf" all bu"ers0 re7uirements. <arge amount of information is given on broachers and there are sales staffs around to entertain all en7uiries. Apicenter is located in most shopping malls where customers are able to visit convenientl". With large variet" of iphone applications available that is meant for man" different occasions and functions, Apple is able to attract a large amount of techno perusing customers. (ustomers are also able to order iphones from the internet, this allow Apple to have a larger target market, thus increasing its sales and revenue.

2.1./ PROMOTION MIX OF THE APPLE

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Apple, Inc offers special discounts on refurbished +acIntosh computers, i;od Fanos, and the ):- i;od Touch. In each case a # "ear warrant" is included on the all products.

Apple, Inc authorized Training (enters are located throughout the 4.S. each provides instruction in +ac s"stems, +ac 8S H, and AppleMs professional applications. A wide range of certification e*ams and courses offer innovative learning opportunities for IT and creative professionals, educators, and service techniciansRdelivered e*clusivel" b" Apple (ertified Trainers.

The Apple (onsultants Fetwork website provides a search tool allowing visitors to locate nearb" certified +ac product consultants in the 4.S, (anada, and a number of international locations.

The online Apple Store offers free shipping for orders over 35&. The online Apple store offers iTunes gift cards. Apple provides a 3#&& rebate when "ou purchase a +ac or specific printers from the online store. Apple has packaged back1to1school offers, including some aimed at college students.

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STP ANALYSIS

S 0# $t"tio$

+arket segmentation is the process of dividing the total market into relativel" distinct homogeneous sub1groups of consumers with similar needs or characteristics that lead them to respond in similar wa"s to a particular marketing programme. A market segment is a portion of a larger market in which the individuals, groups, or organisations share one or more characteristics that cause them to have relativel" similar product needs.

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S 0# $t"tio$ 1"ri"%! '

T"r0 ti$0
Instead of aiming a single product and marketing programme at the mass market, most companies identif" relativel" homogeneous segments and accordingl" develop suitable products and marketing programmes matching the wants and preferences of each segment.

Po'itio$i$0
;roduct positioning is a decision reached b" a marketer to tr" to achieve a defined brand image relative to competition within a market segment. ;roduct positioning decisions are strategic decisions and have an impact on long1term success of the brand. (ommon bases used for positioning includeD

Eeatures -enefits 4sage ;arentage +anufacturing process (ountr" or geographic area (omparison ;riceO7ualit" ;roduct class Andorsements
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STP ANALYSIS OF THE APPLE

Apple ' 0# $t' its target market in terms of their demographic characteristics, geographic characteristics, ps"chological characteristics, usage rate and product features. In terms of the Lemographic characteristics, Apple is targeting the :eneration H and C cohort. :eneration H consists of mostl" working adults, while most have alread" established a successful career. Therefore the" are earning high and stead" incomes, enabling them to afford Apple0s e*pensive and sophisticated devices. Thus, the high income working adults of generation H would definitel" be satisfied b" the sophisticated and high1tech Apple products. The" would also bu" Apple products as these are seen as prestigious and therefore reflect their perhaps high social status, leading to more sales for the compan". :eneration C would consist of mostl" teenagers and the "oung adults. :enerall", the modern generation nowada"s is becoming more and more materialistic and modernistic. The advancement of technolog" has attracted bu"ers from generation C that are interested in the newest technolog". The increased interest in customers is an opportunit" for Apple, as that would mean that more customers would bu" i;hone, as it is one of the most advanced phones currentl", which is also ver" popular among teenagers and "oung adults. These teenagers in general want to be hip, chic and cool, and love to follow the latest trends and popular products. Therefore, the" would want to own the latest Q7uotS(oolQ7uotS devices, perhaps used b" their friends or famil". The" might even be influenced b" peer pressure to get an Apple product as well. As societies in general become more affluent, the parents would be able to indulge their children in these e*pensive gadgets. The "oung working adults are usuall" not "et married and therefore do not have to support an" famil" or childrenS therefore the" will have a lot of discretionar" income to spend on these lu*urious devices. Apple would be able to target this group of customers, as in terms of income the" are not financial1bounded, and do not usuall" have commitments like providing for a famil", or pa"ing for their children0s education, as most would not be married "et. As for teenagers, although most do not work and earn a stead" income, the" would be able to convince their parents would earn

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high incomes to bu" it for them, or resort to other means such as usage of Q7uotSang powQ7uotS or red packet mone" to bu" these e*pensive lu*uries. (onsumer incomes is a ver" important factor that Apple has to consider when identif"ing its target markets, the" should target consumers of specific income groups, especiall" the high income consumers like the matured working adults of generation H. Their tastes and e*pectations would also be of a higher caliber, which would be where Apple steps in, as the compan" provides these high tech and sophisticated gadgets, with various uses, functions, services and revolutionar" applications to suit and satisf" the consumer0s needs. The more affluent working adults would also be able to pamper their children with the latest Apple products, as since the" have a high standard of lifeS the" would want their children to enGo" these lu*uries as well. In terms of the :eographic characteristics, Apple is targeting on consumers living in mordernised, metropolitan and overall urban areas as citizens living there usuall" have fi*ed, stead" and ma"be high incomes, therefore the" have a higher purchasing power, compared to those living in rural areas, would might not have the fi*ed, stead" and incomes enGo"ed b" their cit" counterparts. In terms of ps"chographic characteristics, Apple targets consumer with the needs Q wants for entertainment. I;hone is built to be the ultimate gadget, which can not onl" function as a phone, but also a miniature and portable entertainment device as well. This results in customers bu"ing Apple products such as the i;hone for convenience sake. With the increase in consumers who are constantl" in need of entertainment, the i;hone0s versatile product features, functions and applications are their best choice. With the increasing trend of consumers who are into the newest technologies and products, the i;hone and other Apple products are the solution for their needs, to suit these tech1savv" consumers. In terms of the usage rate, Apple is also targeting the heav" and medium users, consumers like businessman, teenagers and working adults, as the" re7uire convenient mobile devices, which allow them to call, message and entertainment themselves at the simple touch of a button. Apple products are for consumers who are looking to find their own niche in terms of the products the" desire. Since Apple products are highl" specialized and have lots of useful functions and applications, it will suit the high1tech and tech1savv" consumer. 4nder consumer behaviour, there is the +aslow 2ierarch" of needs to consider. These needs consist of the consumer0s ph"siological needs, safet" needs, social needs,
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personal needs and self1actualisation needs, which are important to the individuals well being. ;h"siological needs consist of the individual0s needs for resources essential for life such as food, water, shelter and o*"gen. In this case, since Apple does not produce an" of these as the" are naturall" occurring, that factor does not affect consumer behavior and demand for Apple products. Safet" needs consist of the individual0s need to be free from harm and financial securit" as well. In this case, Apple is does not directl" affect these factors to a large e*tent, onl" minimall" such as regarding the overall safet" of their products and the customers not over spending to purchase their products. Social needs consist of the individual0s needs of friendship, belonging, love and companionship. In this case, the consumer might be influenced to purchase Apple products in order to have a Q7uotSSense of belongingQ7uotS and to perhaps feel more wanted and accepted b" their friends, and not being the odd one out if all of the person0s friends use apple products. ;ersonal needs consist of status, respect and prestige, and is the main influencing factor which Apple uses to convince its customers to bu" their product. (onsumers who are affluent and wealth" will want to purchase Apples e*pensive and Q7uotSAliteQ7uotS products, which the" consider as status s"mbols, to show how affluent or powerful the" are, and perhaps command more respect from others. Apple products are also seen as prestigious, therefore affluent consumers would bu" these to be seen as more prestigious, while others aspiring to be prestigious and wealth" would consider getting the compan"0s products as well. <astl", self1actualisation needs consist of self1fulfillment needs, such as an individual0s dreams, aspirations and personal agendas. In this case, the consumer would be influenced b" their own self1actualistion needs and thus purchase Apple products in order to fulfill them or otherwise.

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