External & Internal Influences Paper Learning Team A Christopher Avery, Kristi Jordan, Matthew Land, Jeffrey Nelson, Misty Roberts, Karla Rendon University of Phoenix MKT/435 – Consumer Behavior Thomas O’Brien February 6, 2009 Introduction Understanding the mind of a consumer is a puzzling process. It is important to consider that no single factor explains why consumers behave as they do. Rather, there are external and internal factors in addition to environmental factors that contribute to and help solve the puzzle.
According to Perner (2008), consumer behavior is “the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. ” When marketing products, it imperative that Apple analyzes the impact of external and internal influences on consumer behavior and marketing strategies to connect with its target market. Team A will illustrate external and internal influences faced by Apple, and analyze the impact that these influences have on the Apples marketing strategy.
Team A will also identify environmental factors that could influence consumer’s perception of Apples marketing strategies. To market its products more effectively, it is essential that Apple uses its resources to better understand consumer behavior. External Influences The external factors or influences on consumer behavior and marketing strategy that shape Apple’s marketing strategy for the iPhone are those of cultural, economic, and demographic. External factors are not directly under the control of the company, and must be taken into consideration by Apple to market and sell their products successfully.
Examining the impact of external influences, reveals fundamental data on consumer behavior, that influences the techniques, tactics and marketing strategies of Apple. Cultural Developing effective marketing strategies, requires companies to concentrate on several aspects of culture,. According to Hawkins, Mothersbaugh, and Best (2007), “culture is the complex whole that includes knowledge, belief, art, law, morals, customs, and any other capabilities and habits acquired by humans as members of society. To market products globally, companies should consider the varying values and beliefs that occur in different societies, within the area of culture. Apple needs to consider the varying acceptable social practices and customs in different cultures, to avoid marketing or promoting the iPhone through methods, which can be interpreted as culturally offensive. Additionally, Hawkins, Motherbaugh, and Best (2007) points out that, “there are sub-cultures across different societies based on common factors like the global teenage market. ” The Apple iPhone appeals to many consumers globally ranging from teenagers to those in their 30s or 40s.
The common appeal of the iPhone culturally is a consequence of consumers growing interest in technology, new cell phones trends, and ability to access the Internet from remote locations. Economics The next area of external influence on consumer behavior and marketing strategy is that of economics. Matters of economics are not under the control of the organization or the consumer, but affect both parties and influence the marketing decisions of companies. According to The Times 100 (2010), economic factors “relate to changes in the wider economy.
A growing economy provides greater opportunities for businesses to make profits, so businesses welcome rising living standards. ” The area of greatest impact with regard to economics would be that of pricing. Apple should pay particular attention to the consequences that economic conditions have on consumers, and create acceptable price points to maximize sales. As pointed out by Krazit (2010), Apple may have made a mistake in dropping the price of the iPhone by $200 only three months after its introduction. As Krazit (2010) also suggests, Apple has been known for charging the most possible for its products.
This practice was abandoned because of a drop in iPhone sales and has remained consistent because of poor economic conditions worldwide. Demographics The third external influence on consumer behavior and marketing strategy is demographics. Hawkins, Mothersbaugh, & Best (2007), states that, “demographics describe a population in terms of its size, distribution, and structure. ” Using demographics allows a company to better segment populations to target smaller groups based on common characteristics such as age, income level, occupation, or other areas.
The area of demographics allows marketers to determine purchasing patterns or trends based on these characteristics. For example, Apple may determine that consumers of a given income level range or age range or most likely to purchase the iPhone. This data allows Apple to target those segments in its marketing efforts. As Hawkins, Mothersbaugh, and Best (2007) points out, “marketers frequently segment markets based on a combination of two or more demographic descriptors. ” This means the most likely iPhone consumers fall under a given age bracket as well as certain geographic areas.
Additionally, the study of demographics may reveal other correlations in consumer behavior that were otherwise not noticed allowing Apple to better understand and target interested consumers. By gathering demographic information and comparing this with other available data, Apple is able to match their marketing efforts in areas and to individuals where success is likely. Internal Influences Technology When Steve Jobs and Steve Wozniak started Apple Inc. they had a vision of bringing new technology to businesses and families (jrank. om, 2009). Jobs and Wozniak never envisioned that the original boxes, designed to place free long distance calls, would evolve into a mobile phone that can surf the Internet, play music and videos, and enrich consumer convenience through numerous downloadable applications. In each of its product lines, Apple faces rigorous competition. Vertically, the landscape is extremely challenging with the risk of new entrant’s products being the main threats to Apple’s business. The rivalry among existing competitors is high.
Competitive prices, new product launches, product innovation, and technology are the main factors that Apple has to focus on, to remain competitive with other industry global players. Fast moving technology and rapid changes in consumers’ trend had made Apple more competitive, remaining a leader in the industry. Apple’s reputable brand and consumers loyalty is one of the main advantages for its business sustainability. The buyer’s bargaining power is high in this industry because competitors offer a wide range of similar products with competitive prices.
To overcome these obstacles, Apple positions itself from other competitors with its superior product design and technology. Apple Inc. has developed high-end consumer electronics during the past decade like MacBooks, iPods, and the iPhone. Apple designed the new MacBooks to operate on the Macintosh Operating System (MAC OS), which is acclaimed to be remarkably efficient and impermeable to viruses. Microsoft’s operating system Windows, is MAC’s primary competitor, and has cloned a number of MAC’s features in the past several years. Apples remarkable launch of the iPod, had a tremendous effect on consumers.
Apple has introduced multiple upgrades to its iPod, which has set the standards for all MP3 players and iPods available on the market. The revolutionary idea of an mp3 player was only the tip of the iceberg for Apple. Apple created iTunes, to allow consumers to purchase and transfer music, videos, and books to their portable devices. Although the iPhone has revolutionized the mobile phone industry with its touch screen, numerous applications, and high quality MP3 player. The goal of Apples innovative technological advances is aimed at revolutionizing the consumers’ media entertainment within home.
Apple just announced the release of the fourth generation iPhone, and it is projected to hit the market by the summer of 2010 (Apple, 2009). Leadership Steve Jobs was one of the founders of Apple Inc. in 1976 (jrank. org, 2009). After dropping out of college, Jobs and Steve Wozniak designed and engineered a gadget; to make free long distance calls (jrank. org, 2009). After multiple successful launches of the Macintosh, Jobs lost his position as CEO of Apple Inc (jrank. org, 2009). Jobs started another electronics company that was bought by Apple in 1996 (jrank. org, 2009).
Jobs later rejoined Apple as a consultant, and eventually promoted to CEO, eight months after rejoining Apple Inc (jrank. org, 2009). Steve Jobs saw the threat of the plummeting profits and vowed to change Apple into a lean company (jrank. org, 2009). Jobs remained focused on consumers, and led Apple to extreme growth, based on his lean thinking and ability to foresee consumer’s desires. To this day, Jobs is leading Apple to bountiful profits, success, and the reshaping of the personal electronics market. Strategy Lean thinking has transformed Apple into an industry leader.
In the beginning, Apple was struggling in a market predominantly dominated by Microsoft. Lean thinking guide Apples movement to reduce cost, within the organization. The first change was to cut employees, manufacturing plants, and streamline manufacturing processes (jrank. org, 2009). Sticking with the lean philosophy, Apple became more proactive to the market and technology in general (jrank. org, 2009). The research and development leaders specified plans that strengthened the core of the organization and found what consumers wanted next.
Based on consumer research and strategic plan implementation, Apple’s development team has revolutionized the personal electronics industry. In this industry, the threat of substitution in the products and technology is always high. Knowing this, Apple has been aggressively focused on its R&D to be innovative to overcome this threat. Apple (2009) confirmed that, “the company believes continual investment in research and development is critical to the development and enhancement of innovative products and technologies. Developing effective marketing strategies is essential to profitable organizations. Apple (2009) acknowledges that their marketing strategy includes, “expanding its distribution network to effectively reach more of its targeted customers and providing high-quality sales and post-sales support experience. ” Environmental Factors Environmental factors are factors that pertain to the physical and social characteristics of the consumer’s world (Peter & Olson, 2005). Such environmental factors, including location of stores and social influence, play an important role.
Large-scale considerations, like the economy, the political environment, climate, and general landscape, culture, subculture, and social classes, shapes marketing strategies (Hawkins, Mothersbaugh, & Best, 2007). Social Cultural values are widely held beliefs that affirm what is desirable. One of three broad forms of cultural values is environmental-oriented values. Environmental-oriented values prescribe a society’s relationship to its economic and technical as well as its physical environment (Hawkins, Mothersbaugh, & Best, 2007). Apple’s task is determining what values are present and how the existing environment affects the market.
Does the culture value performance over family status? Answers to this question will determine how Apple markets its products in such an environment. Apple understands the affixation with the latest and greatest technology as the launch of the iPhone propelled the company to stellar performance during one of the worst economic downturns in history. Apple’s revenue grew in every region in the United States and Europe, while reporting growth in retail outlets worldwide (Toronto Star, 2009). This growth may not possible in cultures that value traditions, and are opposed to change.
Cultural differences affects Apple markets, its products, and target market segment. iPod sales were off as the company’s iPhone cannibalized the product adopting many of its features that consumers look for a single device to provide. Some societies value owning the latest and greatest technology as strive to belong “the know” group, an esteemed position in social class status. The “know group” ranks above the family one is from or other social status ranking symbols. Physical The non-human elements of the product are found within the physical environment considerations of the marketing strategy for products.
Time is the single largest influence on consumers in today’s market place (Peter & Olson, 2005). The iPhone markets its hundreds of applications to consumers on the go and without the time to sit and open a PC. People want to network socially through Twitter, Facebook, and other social mediums. Understanding this aspect of the market has enabled Mac to position the product against the competition. Marketing The marketing environment includes the effects the marketing strategy has on physical and social elements of the environment. Environmental impacts, such as disposition of old product may impact how Apple brings new products to market.
An estimated 1. 5 to 1. 9 million tons of e-trash end up in landfills each year (Ellman, 2009). Nextworth. com is an example of companies trying to capitalize on this phenomenon while attempting to extend the life of viable, yet older, cell phones and other e-products. With increasing awareness of the environment, Apple, and others will need to address the impact on landfills in which they undoubtedly contribute with increasing quickness of new product development. This one aspect alone could lead to new market opportunities for those concerned about the environment and less expensive upgrades into used smart phone equipment.
Conclusion The analysis on Apple’s external and internal influences provides a clear understanding of the company’s strengths, weaknesses, the opportunities of its industry and how to differentiate itself from competitors. Apple had created its own competitive advantages to sustain its business, and has remained an industry leader. In alignment with Apples vision, it easy-to-use products enable consumers to use the product, straight from the box without any consumer hassle. Apple has built its own customer groups through brand loyalty.
In addition, reputable global brand and high-quality consumer’ perceptions, has boosted the sales of Apple’s products. The most challenging concept in marketing deals with understanding why buyers do what they do (or don’t do). A strong understanding of buyer behavior helps shed light on what is important to consumers, and also points out influences that affect customer decision-making. It is important to identify external and internal factors that affect consumer purchasing decisions. Every person in the world is different, and it’s impossible to have simple rules that explain how buying decisions are made.
Experts have spent years analyzing customer activity, which provides useful “guidelines” in how consumers decide whether or not to make a purchase. Customer satisfaction has many definitions like “making the customer happy”, “leaving the customer satisfied”, or “going out of your way. ” Customer Satisfaction takes into account the extent to which a company’s business effort matches or exceeds the expectations of the consumer. Consumer satisfaction is critical to businesses, marketers, and investors because it is the backbone of a profitable organization.
Without customers, business would cease to exist. Consumer satisfaction is vital for an organization to remain healthy and profitable. Apple effectively markets its products by focusing on meeting the needs and demands of consumers worldwide, and investigating internal and external influences on consumer behavior. By providing consumers with high tech gadgets that offer multiple convenience factors, it is no wonder that this multimillion dollar company has taken the technology era by storm. References Apple Inc. (2009) Form 10-K. Retrieved on February 2, 2010 from http://phx. orporate-ir. net/phoenix. zhtml? c=107357=irol-SECText=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS94bWwvZmlsaW5nL Ellman, G. (April, 2009). Gadgets: A new way to cash in on your old electronics. McClatchy – Tribune News Service. Retrieved on February 7, 2010, from ProQuest Newsstand. (Document ID: 1683644271). Hawkins, D. , Mothersbaugh, D. , & Best, R. (2007). Consumer behavior: building marketing strategy 10th edition. The McGraw-Hill Irwin Company. Retrieved on February 2, 2010, from University of Phoenix, rEsource, , MKT/435 Consumer Behavior Website. jrank. rg (2009). Apple computer inc. , business information, profile, and history. Retrieved on February 1, 2010 from http://companies. jrank. org/pages/271/Apple-Computer-Inc. html Krazit, T. (2010). The ecomica of iPhone pricing. cnet. Retrieved on February 2, 2010, from http://news. cnet. com/8301-13579_3-9774958-37. html Mac sales power Apple profits past forecasts; Competitive advantages cited in troubled economy that has hurt rivals selling less expensive products. (2009, July 22). Toronto Star, B. 3. Retrieved on February 7, 2010, from Business Dateline. Document ID: 1799028451). Peter, P. & Olson, J. (2005). Consumer behavior and marketing strategy, 7th edition. The McGraw-Hill Companies, Inc. Retrieved on February 2, 2010, from University of Phoenix, rEsource, MKT/ 435 Consumer Behavior Website. Perner, L. (2008). CONSUMER BEHAVIOR: THE PSYCHOLOGY OF MARKETING. USC. Retrieved on February 2, 2010, from http://www. consumerpsychologist. com/ The Times 100. (2010). External influences. Retrieved February 6, 2010, from http://www. thetimes100. co. uk/theory/theory–external-influences–363. php