Apple In The Technology And Music Industry Marketing Essay

Published Date: 23 Mar 2015

Introduction:

'Apple' a unique brand name in the technology and music industry. The history of apple fully concerns the up and downturn of the organization, the company is known for its highly innovative work that evolved a creative and successful image of organisation in minds of consumers which is a representation of its head, Steven Jobs CEO Apple Inc.

Apple has introduced wide range of products and services successfully which include Mac, iPods, iPhones and iTunes, Apple TV etc. This report mainly focuses Apples dominance over music delivery business. The report consists of the Macro environment and micro environment analysis which includes market position, political analysis, economic analysis, social analysis, and technology analysis, environmental analysis, and legal analysis with history of the industry and apple background. Swot analysis, porter 5 analysis. The report has also focussed and analysed the apple iTunes with Ansoff Model and there after explained the futuristic approach. And finally concluded the report.

The history:

In ancient time the music was given equal importance, so as god; it was worshiped but as time passed the worship became business and human greed converted it into parts i.e. musical composition, recordings and performances of music initially. Until 17th century the process of official composition & printing of music substantially happened mostly with the help of patronage from churches & upper classes.

In late 17th and early 18th century the composers and performers like Wolfgang Amadeus Mozart has started seeking the commercial opportunities for marketing their performances and music to general audience. Later in mid of 18th century Constanze Weber an renowned musician continued the commercialization of music to public through an unprecedented series of memorial concerts, selling manuscripts & collaborating with other musicians.

Whereby in late 19th and early 20th century the dominance level in music industry increased by sheet music publishers. Therefore by mid of 20th century the records had replaced sheet music as a biggest player in the music industry. Later on in 2000, the sales of live music substantially increased and created its own importance among the public, whereas recorded music demand substantially dropped off. The reason for the drop off of recorded music was the six "major labels" that dominated recorded music Universal Music Group, Sony Music Entertainment, EMI, BMG, PolyGram and Warner Music Group all of the organisations consist of many smaller music companies & provide services in different markets & region later the BMG, PolyGram merged in Sony music entertainment and universal music group respectively.

To give tough competition to live music industry Live Nation an Ex-subsidiary of clear channel communication a biggest promoter & radio station owner. Though there was other crucial music companies that incorporate are dominating players Creative Artists Agency (a management & booking Co.) & Apple Inc. (the world's biggest music store, iTunes Store, Apple TV and sells iPhones and iPod).

Probably, entrepreneurs involved in music industry have stretched industry models into different sectors i.e. folk music where the composition & performance has sustained for centuries specifically independent basis.

Whereby in 21st century, the company's strategies and innovation in music industry changed the pattern of consumers. Now, consumer spends much less money on recorded music in comparison of 90's. The total annual revenue for vinyl, CDs, digital downloads and cassettes have substantially declined from 14.6 billion dollars in 1999 to 10.4 billion dollars in 2008. This dramatic drop in the revenue has induced large scale layoffs within the music industry. This drove the retailers out of business & forced industry to seek effective and efficient new business models.

Earlier, 21st century the music record companies adopted aggressive action against illegal data access or file sharing. The good example can be successful shutdown of Napster Inc. in 2001 (the top leading online digital music sharing service provider) and intimidating legal action to thousands other individuals. The revenue is being slow and took a downturn due to this the public relation also declined. The legal downloading of digital music of iTunes were availed in market with the introduction of apple iTunes stores in 2003. The popularity of paid downloadable digital music increased rapidly which increased the sales, customer believe in iTunes and on the other side rapidly started incurring loss from CD's.

A violent disturbance in the music industry had changed the equilibrium among the record companies, promoters, artists, consumers and retail music stores. The top retailers of music business are known as Box stores like best buy, Amazon, Wal-Mart etc and have been replaced by individual music stores.

Now-a-days recording artists trust on live performance and thus the major part of income they earn from this. This has made artists more reliant on music promoter's i.e. GMG Radio and such companies which govern tour sponsorship and possess a large number of music venues for such artists. Recording companies are increasingly reliant on the "360 deal" to get benefits from artist's income. Such a new business relation has been initiated by EMI and Robbie Williams in 2007 can be threat to apple iTunes.

Record companies can offer distribution deal by giving a high percentage and incentives to artists. Generally a newer artist doesn't see any record deal as a essential part of their business strategy. High quality music could be created in a bedroom & distributed it through internet globally to worldwide public through inexpensive technology and software's, which has made it possible by apple iTunes. This has caused problems for record producers, recording studios, audio engineers.

Therefore, According to Los Angeles Times reports that more than half of the recording conveniences in the city have been unsuccessful. The revolutionize in the music industry have given customers a large variety of music access at easy price. It is worth to note that over the last decade, customer expenses over music related hardware and software has augmented significantly. It also endow with a valuable new stream of income for technology and music companies such as Apple iTunes etc.

SWOT:

The Environmental leverage for any organisation is possible unless the opportunities are properly identified and when identified the decision against the opportunity is taken effectively and efficiently by the responsible. Therefore the crucial task is to evaluate the internal and the external environment efficiently in response to the strength, weakness, threat and opportunity of the desired organisation. An actual opportunity exists whereat the close relationships between resources, value and environment of organisation. The beauty of Swot is reduce the weakness the strength automatically increases similarly to reduce threat don't lose opportunity. Therefore in case of Apple iTunes the report has focused on the main aspects of the dominance of apple iTunes over the music industry with SWOT analysis:

Strengths

ITunes Music Store is an excellent source of revenue, especially with the iPod and iPhones and the availability on Windows platform.

Apple's niche audience provides the company with some insulation from the direct price competition

Low debt-more maneuverable in terms market analysis of iTunes.

Web technology can be used to improve product awareness and sales.

Excellent brand loyalty.

Technical savvy: The apple iTunes are well advanced in terms of technology and user friendly.

Financial vitality: Robustious financial reserves and sound image despite of tough competition.

To reduce the competition and market pressure apple started strategic alliances for securing major distributors in support of apple iTunes.

Innovative: the apple iTunes could be failure due to the in compatibility feature while accessing in non apple device but later some changes made the weakness was resolved.

Weaknesses:

Weak presence in business arena: The apple iTunes services are strong and sound in America, Europe, Australia and parts of east but poor in Asian regions India, Pakistan etc.

Dependency on new product launches.: the main problem is weather iTunes will be compatible or not in new device as rivals use to change techniques

Weak presence in markets other than education and publishing.

Slow turn around on high demand products like iTunes is easily available in UK and US but not in Asia.

High price

Opportunities:

Huge part of population (Gen X&Y) which are enormously individualistic and brand conscious.

Internet Downloadable digital music, MP3 players etc are highly marketable.

Innovative Stake in mobile phone industry example like iPhones venture in the mobile phone industry.

Sound enough to enter in emerging markets like Asia- India, Pakistan, North America etc.

Threat:

Companies not seeing Apple iTunes as compatible with their products.

Increasing competition with internet music downloads.

In Recession-the prices of Apple iTunes are higher.

Universal Music Group, Sony Music Entertainment, EMI, Warner Music Group are the major competitors

PESTEL Analysis

The evaluation of macro environment is very crucial to recognize the factors affecting the demand supply level and cost tactics of an organisation.

The PESTEL plays an important role in the existence of any organisation as it is part of strategy in any organisation that assists to interpret market position, growth, potential etc. The PESTEL analysis is helpful at time of entrance in new market whereas, commencement of new business or expansion at domestic or international level. PESTEL guarantees the efficient and effective run of the business; therefore significantly the apple iTunes also followed the PESTEL approach and focused all the above points by evaluating political, economic, social, technology, environment and legal factors briefly:

Political Factors

The Political aspects that Apple iTunes may have to retain at the debut of a new product or service or new market entrance i.e. Laws and regulation like the competitive regulations, taxes, Consumer protection Law, terrorism, inter-country relationships, government structures and Employment law.

For instance, in few countries three is age restrictions for people to get employed. The individual can't be employed till the age of 14 years in India but in other country the age limit may vary. Moreover few countries insist to employ local person than the foreigner. The example of political influence on Apple iTunes happened in china:

The case was that Apple added few applications about the expatriated Buddhist leader Dalai Lama. The application consists of Dalai Lama's inspirational Quotes, prayers and teaching of Buddhism. These applications were removed only from Chinese iTunes stores as this act was consider wrong in china and apple have the political pressure which resulted in unwillingly modification in application (Athow. 2009).

Economic Factors

The Economic aspects are influenced by the political and the government policies as it influence the government decisions mainly. The issue that may influence the organisation like Apple the increase or decrease of currency exchange rates. Change in the policies music or entertainment industry, sudden change in taxation policies etc though there are abundance of factors that may influence the Apple iTunes in which the govt. decision will indirectly or directly would emphasis the organisation as it includes both threats and opportunities.

Whereby the economic aspects and government policy has interrelation which influences the other environmental forces that affects the organisation. Taking an example of Apple Inc. (iTunes) that how the economic aspect affects the business. Overall global economic crunch had deeply impacted worldwide which has slowed down the every business weather online music, iTunes store etc. the crunch has affected the pockets of normal consumer which resulted in less spending for luxurious goods and service weather online music purchase or vehicles. Whereas the consumer is facing risk of unemployment which will influence the apple retail an iTunes stores.

Another example for economic factor influence on apple iTunes is that price difference issue in European countries. The Apple iTunes operate their service in three countries of Europe i.e. UK, Germany and France. The issue is that Apple iTunes consumers of UK pays 79 pence to download a song, whereas in Germany and France only 99 cents and 68p respectively. The issue was later solved by the apple officials reasoning that it's an currency exchange disturbance which concluded in favour of apple.

Social Factors:

The socio cultural atmosphere encapsulates tastes and demand that varies as time passes, the income, trend etc of market changes which provide both threat and opportunities to the business. As time passes need, demand, quality, features of all type of product or services change in market due to which internal and external strategies have to be changed. The organisation has to be alert about the change in the market environment as well as the consumer pattern.

This can be successful if organisations work somewhat socially. The social influence over organisation may reduce significantly. Seeking Apple iTunes example by analysing the influence of social factors on Apple iTunes. The apple iTunes will integrate social features in media player through social networking sites facebook, Twitter, hi5, orkut etc. secondly iTunes can make money by curbing piracy. Another example can be like if any one visiting facebook and got interest in listening song than he can listen as trial and if want to download should pay amount and purchase it (Klurfeld, 2009).

Technology Factors:

The technological aspect is a crucial factor that plays vital role in strategic management of any organisation. The influence can be like shift from an old era of music industry i.e. recording studios live music, stage performances etc. to new era of music i.e. digital music, online music like Apple iTunes.

This aspect basically focuses on the competitive advantage in particular industry, the more the new technology more the competitive pressure on opponents. Therefore the life of any new product is short due to frequent up-gradation in technology affects the organisation performance as to maintain the pressure and innovativeness companies have to invest bulk amount in research and development to maintain the decorum and brand value.

Similarly Apple iTunes have to frequently update the version of their product and services for better compatibility and run in the market. Whereas the another example of Apple iTunes facing technical problem is the malicious and virus attacks i.e. fake online music files downloads and online sales in the name of Apple iTunes.

Environmental Factors:

The environmental aspect concerns about the corporate social responsibility of an organisation. The Apple iTunes influence over this is that the launch of iTunes drastically decreased the demand and supply of recorded music in CDs. The affect of this was 30% decline in manufacture of CDs i.e. decrease of pollution. The CDs are manufactured through plastic which releases harmful gasses at time of production process.

Another recent example of apple iTunes is that it is collecting funds through online sales of the music and conducting online events for the fund through joint venture with other companies too for Haiti disaster. Therefore Apple also performs CSR activities through its primary business that is apple computers. Now a day's apple is manufacturing green products which are not hazardous to environment for this event apple was rewarded by green peace.

Legal Factors:

The legal aspect concerns about the specific legal system followed by the music industry so as by the Apple iTunes. The current online music industry is being developed fully lawless nature. There are numerous organisations like Apple iTunes and legal factors indulged among internet governance. It doesn't matters weather the issues is on cybercrime, e-commerce, freedom of expression, intellectual property rights (IPRs), consumer rights the laws therefore applies the same which can be treaties, industry standards at national or international level. The following law is considered (Baxter, 2006), (Li, 2008).

AHRA (Audio Home Recording Act of 1992): It states about individual who desire to protect the customer's right to create copies of music with performers, songwriters and record companies who wants to confirm this ability of copying doesn't cripple the music business. The Act immune's customers against any law suits for makeover of non commercial digital music copies. So, in our case, we're using a computer and therefore we cannot fall under the Act

DMCA (Digital Millennium Copyright Act of 1998): This act states that the DRM technologies of copyright goods is illegal to circumvent The DMCA doesn't explicitly forbid circumvention by user for Fair Use. Whereas Apple DRM technology restricts total recorder and deny the conversion of iTunes files.

FAIR USE: this policy states that if legal purchase of digital music, therefore the doctrine of fair use grants the individual to convert in any format on clause of non sharing. Example in case of Apple, by applying Total Recorder we were able to "space-shift" the songs we bought from iTunes store in a format which would facilitate to listen songs on various players.

Thus, the above were the legal factors which influence the music industry weather Amazon, Sony or Apple iTunes.

Michael Porter's Five Forces Analysis for Apple iTunes:

The porter five analyses is a tool for strategic analysis of external environment of an organisation in this report we are going to assess the Apple iTunes. The Apple Inc. is the well known company in computer, software's and music industry, which incorporate online music service, MP3 players and mobile phones etc. While Apple is well known company this provides online digital entertainment products and services. Therefore, now we will be focusing on major segments of Apple i.e. MP3 players, online music services in table below: (Baxter, 2006)

Threat of Entry:

The Google is considered a new strong entrant. The Google is an experienced player in field of video music distribution like YouTube. They also raise fund through advertisements by providing free downloads.

Omnifone launched its more than thirty music station worldwide in collaboration with handset makers Samsung, Sony, Nokia etc. The music station provides economical rate of music than Apple iTunes.

When Apple introduced new Nano iPod, it gave the opponent tough competition in market which resulted in windup of competitors like Olympus & Rio.

The Economies of Scale of Apple iPod has occupies 80% share in market.

Product Differentiation: Apple consists of own music stores the iTunes that allows consumers easy download of music and avails the complete range of Apple products and services.

Cost Advantage: The share of Apple iTunes declined in European countries due to price war. (Li, 2008)

Threat of Rivalry:

The apple faces tough competition through the competitors like Universal Music Group, Samsung, iRiver, Sony etc. then after Apple occupies 80% of share in European.

Innovativeness in products and services by Apple is priority as the same product and service are availed in low price by other competitor (Li, 2008)

Threat of Substitutes

The Existence organisation at alternate place ceiling prices that could be charged. A few music files like mp3, Palm, PDA player endow with alike functions & enhanced price performance. Therefore It is not much stiff for companies like Apple to occupy good share in future.

The replacement for MP3 music player could be MD player, radio, CD player etc.; but cheaper and easier access to MP3 files has been making customers leave from the other music players.

Threat of Suppliers

There are basically two types of Suppliers i.e. content supplier: niche vendors & Record labels:

The suppliers for raw resources & labour could be a threat, though the main hold of music supply is in hands of singers, recorder and writer. If all three exists by an organisation it can be threat to competitors. Example Apple iTunes, Google, Amazon etc.

The illegal music downloads through internet and individual sharing. Convenient and cheap access music could encourage market, therefore it could threat to Apple iTunes.

Threat of buyers

An example to explain the bargaining power of buyers the case happened on 29th June when huge line can be seen out of the Apple stores awaiting outside to buy the new blockbuster iPhones. Whereby few months later, the downfall in price of Apple iPhones recommended not only in increased bargaining power of buyers. A few could be: lack of memory expansibility, low storage capacity, non-replaceable battery etc. The frequent increment in the buyers has increase the demand of innovative product and services (Baxter, 2006).

The day by day increase in technology as in increased internet speed and development of easy availability of music in environment by the providers like Apple iTunes.

The Apple has comparatively loyal consumers.

Higher price sensitivity.

Futuristic approach

The environment in the music industry has become much more flexible for consumers after the influence of downloading on the recorded music. But on e problem to this is that consumers may start making their own playlists, compiling their own tracks from the albums that already exist and due to this consumers will drop out the idea of listening to the whole album of songs. This can turn out to be dangerous if consumers start ignoring the challenging tracks from the album but it does not mean that they can escape through the filler tracks. The technology is advancing it is not only downloading music through computers at home, it is advancing .The digital music has come up,it is on the move and has opened new doors of accessing music.

Apple has the opportunity to t make the iTunes available to the customers through mobile phones formats. Apple iTunes .Apple iTunes has the scope of entering new markets as it has not discovered the untapped potential in markets like Peru, Pakistan, Bangladesh and many other countries. It has the prospects of joining hands with big companies like Disney, Sony and Nokia .Apple iTunes can collaborate with broadband and provide video as they only provide audio which will be available to consumers at a very high speed. (Business Week, 2007), (Baxter, 2006)

Ansoff Matrix

The environment in the music industry has become much more flexible for consumers after the influence of downloading on the recorded music. But on e problem to this is that consumers may start making their own playlists, compiling their own tracks from the albums that already exist and due to this consumers will drop out the idea of listening to the whole album of songs. This can turn out to be dangerous if consumers start ignoring the challenging tracks from the album but it does not mean that they can escape through the filler tracks.

The technology is advancing it is not only downloading music through computers at home, it is advancing .The digital music has come up,it is on the move and has opened new doors of accessing music. Apple has the opportunity to t make the iTunes available to the customers through mobile phones formats. Apple iTunes .Apple iTunes has the scope of entering new markets as it has not discovered the untapped potential in markets like Peru, Pakistan, Bangladesh and many other countries.

It has the prospects of joining hands with big companies like Disney, Sony, and Nokia .Apple iTunes can collaborate with broadband and provide video as they only provide audio which will be available to consumers at a very high speed. There is a opportunity. Apple has a bright future as it has got a lot of opportunities. Apple has got its each and every product as eco-friendly which can be recycled at the end of its life cycle. So people like top buy products which are eco-friendly and they have a good scope (Smith, 1994).

Conclusion:

Music Industry has witnessed continuous changes with the passage of time displaying newer ways of supplying music to the masses. Apple has emerged as a pioneer in the proceedings giving a new meaning to the industry. Its superior resources, tactics and operations placed it as a dominant ruler of the market. After analyzing its macro and micro environment in UK, it is quite evident that it has successfully battled against all the industrial, competitive and organisational pressures employing effective strategies to stand victorious in the UK market.

Entry of new and emerging competitors is a potential threat to its standing. These rivals are attempting to outclass Apple any which way and adopting all the means to overpower Apple in the UK music industry. Thus, Apple needs to take care and devise new strategies and tactics depending upon the changing environment. It must forsee the future in advance and develops counter approaches to fight against all kinds of competitive pressures. It will thereby, act as a fuel in helping Apple sustain its dominance in the market.

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