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Apple Stores
Case Analysis Professor : Dr Mehdi Zahaf

Elaborated by:
Hana Kammoun
Hiba Labidi
Nadiya Hedhili
Rahma Mkawar
Salma Mahdhi

Mediterranean School of Business

11/03/2018
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Apple is an American multinational technology company offering different products. It worked on

different strategies and plans since its launching to reach its principal objective: increasing profitability and
market share while offering differentiated products.
The market in which Apple operates is highly competitive. To ensure its position in it and to make it better while
evolving, the company is choosing to work on differentiation even in its mix marketing strategies. In fact, it
worked on differentiating its products through innovation offering to its costumers very different useful
electronic devices. In addition, it offered special designs and established tactics to create good and special
costumer relationship so that they detect their needs, respond to them and control their digital lifestyle. What
makes Apple different from its competitors is that they have innovative stores. In other words, this company
worked on each detail in it. They are located in streets or malls with big number of visitors to increase visibility
and prepare the basis of its combined push and pull promotional strategy. Apple is trying to offer an “Apple
experience” to its customers through its place and especially through its employees by giving great importance to
experiential marketing. In fact, they have to respond to very strict criteria to be able to establish a good customer
relationship. Apple thinks that they are the basis and the key of their success.
Apple worked on gaining customers, increasing market share and making profits. It worked on
positioning the company and capturing value from its customers through a differentiated marketing mix;
different place, stores, innovative product, new promotion ways (direct and indirect) and higher price.
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In 2001, the leader in the digital industry was Dell with a percentage of 14 percent of market share. To
increase its market share, Apple decided to directly attract its customers. The strategy behind this new concept
was based firstly on understanding the consumers’ needs and wants. The second reason was relied on
constructing a whole strategy to deliver their message properly and directly to consumers. The third purpose of
Apple’s plan is building relationships with their customers hoping to gain their satisfaction. The aim of the
whole process is adopted to create profits and to compete over leadership in the market.
Opening over 25 new stores helped Apple increase its customer’s involvement with different products. So, Apple
changed the microenvironment through adopting new ways of channel distribution, customers markets and
publics.
In fact, this concept was supported by the marketing mix analysis. Therefore, Apple decided to place
new stores in malls since they have always been known as places with high traffics. Moreover, they succeeded to
target customers through segmenting the digital market according to a careful assessment of their customers
‘lifestyles.
Spreading several stores in different regions helped not only Apple expanding its business but it helped
also people experience the products with their senses. Therefore, they are able now to live the whole experience
by their own which will be absolutely fun and memorable for them. Moreover, people henceforth are able to
interact directly with employees to get additional information and clarifications. In addition, the fact of meeting
consumers helped Apple to convey properly their devices, plus, to raise awareness over their devices ‘quality
and features. Apple was able, through this strategy, to build some highly strong relationships with its customers.
This approach was useful to foster customers ‘loyalty.
The store is one of the main differentiating elements of Apple from its competitors. Apple broke all
standards to become one of most mega companies in the world by an innovation that went beyond expectations,
it is a new perfectly studied retail experience which disrupt the concept of shopping for customers but also the
concept of retailing for competitors. It is the first hybrid technology company combining selling products and
serving. Different factors are behind this success, starting from an established sensorial marketing strategy: the
architecture of the stores, they are all identical worldwide, with a transparent window inviting to the open area
store, extreme brightness and light color interior appealing the customer’s sight offering a sense of
sophistication.
Globally the retail experience is based on simplicity, cleanliness. Customers are invited to ask question
and get help within few seconds thanks well-chosen sellers. They are experienced in services fields, passionate
and loyal to Apple.
Added to that, an enhanced sensory marketing strategy is adopted and this by showing posters featuring
customers’ experiences encouraging potential customers to buy their products and also by giving them liberal
use of products in stores.
Apple has a unique setting of the store which is divided into four main areas:
The most exciting side of the store is the genius bar targeting people having issues with their apple products, this
side of the store is the key of success of the entire strategy. Apple by establishing this genius bar, overcame
problems that most people are sick off when it comes to managing the product itself, such as the pain of calling
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after sale service to solve a technical problem or worst like sending the customers the steps to repair a problem.
The company came with this brilliant idea reinforcing the relationship with the customer.
The solutions area and the products areas are the most important elements of the store; the right side of
products part represents what people are the most looking for, put in the front to make easier to reach and it is
also a key to attract people passing by the store when they see a crowd on new products and push them to
discover. Since Apple offers specified products for professional users, the left side is dedicated for them to create
a sort of met up spot to share their passion, thought by the company in order to stimulate them to buy additional
products and get more passionate and involved.
The center half, the solution area is the fun part of the store and the biggest one because the number of
people visiting the store to discover and try to experience the products is the highest since the company emphasis
on the sensory marketing as mentioned below.
As for the theater, it is the one non-successful element of the Apple stores, it had no impact on the customers
experience, did not generate any particular profit and did not even increase the market share.
Basically, Apple is combining a push and pull strategies. The first presented through the unique stores,
interesting packaging and very experienced sellers. The second presented through establishing a strong customer
relationship management.
It is a smart and not expected move from the company since it is relying on its unique iOS and innovation. This
specific detail created a sort of high barriers to its competitors to imitate her, even for Dell which is ranked Top 1
in the industry. If Dell tend to open stores, she need to come up with a more exciting experience for customers
and re-establish its whole brand image. This decision will surely be costly and may have a negative on the profits
because the key of success of Dell is its simplicity and accessibility.
According to Apple financial analysis, we noticed that net sales decreased in 2001 by 32.82% compared
to the previous year. This situation ended to a loss in profits certainly with its high operating and non-operating
costs due to the increase in stores and in number of employees. Although this can be a strategy that may derive
profits in long term, but we still think that Apple should control its costs to prevent having negative net incomes.
So, we recommend that Apple focuses more on actively engaging customers to further encourage them buying
their products. Moreover, Apple should eliminate the theater element in its stores knowing that it is costly and
had no positive effect on visitors.
In addition, Apple should work more on attracting customers ‘curiosity. Employees, devices or even the store’s
environment should pull visitors who pass by the shop without asking about information or without trying to use
some devices. The way of captivating their intellectual curiosity should be improved to make sure their total
spiritual engagement with the products. Therefore, customers would absolutely memorize these experiences.
Consequently, high percentage of visitors would come back and certainly buy these devices. This whole
procedure would obviously increase sales.
Finally, we are certain that our recommendations would help Apple even to increase its market value that has
decreased by 37% in 2001 compared to 2000 and by 46.54% compared to 1999. This situation shows that
Apple’s share value is decreasing year after year. Many factors may be after this decline such as new competitors
and others new inventions. Consequently, investors may abandon Apple because of this status. To stop this
steadily declining, Apple should increase its sales and decrease its costs.
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SWOT Analysis:
➢ Strengths:
 Very good locations of the stores
 Innovative stores that evaluate the product: like a showroom
 Flagship stores: the lightening
 A feel fact when entering the store
 Well-trained and passionate employees
 Modern designs in line with the ideology of the products
 A very high traffic which lead to increase the sales
 The number of fans is growing
 The devices which are exposed in the stores include a wide range of applications and are connected to
the internet, the customers can use it freely
 Brand name
 Decrease in account receivable by 51.1% in 2001 compare to the previous year => Apple is collecting
money which can help it invest them in further businesses.
 Decrease in current liabilities in 2001 by 21.47% compared to the previous year (exhibit 1).
 Increase in full time employees by 12.08% which explain the increase of the expertise quality at apple
stores (exhibit 1).

➢ Weaknesses:
 They can’t measure efficiently the feedback and satisfaction of the customers about apple experience.
 The Theater concept was not helpful to attract customers

➢ Opportunities:
 Possibility of expansion of the stores.
 Diversification of the products: cars

➢ Threats:
 The Computer and Smartphone market is getting larger
 Aggressive competition
 Imitation
 Departure of Steve Jobs which can cause a huge harm to Apple.
 Theater failure.
 Decrease in net sales in 2001 by 32.82% compared to the previous year.
 Decrease in inventory => risk of shortage (exhibit 1).
 Operating income is negative in 2001 => Loss: it explained by the high Cost of Goods Sold (exhibit 1).
 Net Profit is negative in 2001 => Loss explained by high operating and non-operating costs (exhibit 1).
 Decrease in “the stock price high” and in “the stock price low” => decrease in the products ‘value
(exhibit 1).
 Decrease in the market value at the end of 2001 by 37.03% compared to the previous year (exhibit 1).
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PESTEL Analysis:
Social
High status lifestyle
Different consumer behaviour
Thinking differently

Technological
The computer become as tool of communication
Consumer wants to control their digital life and integrate their product
Develop easy and effective solution to address issues that apple face on computer incompatibility
Innovation as a driving force to compete

Economic
Purchase power of the consumer (target higher income people)
Control employee (more mature employee base, highly qualified and well trained)

Political-legal
Design Patent to protect innovation
Copyright to protect computer software
Trademark right
Laws protect consumer safety and health

Environmental
Invest in product environmentally responsible (ecological product)
Respect environment laws and regulation

Porter five forces:

Threats of new entrant: low
 Low barriers to entry
 Dynamic competition in the computer industry
 When IBM enter the market apple’s shares declined rapidly
 Basic and Minimum features required to enter the market
 Consumer used the computer as productivity tools and word processing

Threats of substitutes : high

 Consumer look for simple and easy computer software and think that apple is complex to use.
 Dell “easy to buy easy to own”
 Compaq, Gateway, IBM and HP
 Commoditized industry all consumers follow the same logic and don’t think differently
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Power of buyers: High

 Lack of brand awareness
 Buyer believe that apple product was not compatible with other PC products
 Two third of Computer consumer do not consider apple
 Low switching cost

Power of supplier: mid

 Unique service and product

Rivalry among existing competitors:

 Innovation especially when computer became a communication tool
 Enrich consumer lifestyle
 Market share and profitability
 Some competitors have the same features of a computer