EXECUTIVE SUMMARY
An informed and mobile customer base has been changing means, mode and manner in which they shop. This has been possible only because of the advancement in technology, globalization and new channels of shopping. Retailers have been riddled with a unique demand to deliver their products and services right at consumers’ door steps in past decade. Close to 2 million New Zealanders shopped in market space and expected spending were close to $ 3.19 billion in 2012. Online spending is expected to reach 5.3 billion by 2016 (Wade, 2012). Customer experience becomes pivotal in any organization’s success as we move away from marketplace to market space and the need to study consumer experience is more than it has ever been.
This report is focused on studying the consumer experience of Apple Inc. in New Zealand market. The company has a fully functional e-commerce website. Apple deals in consumer electronics, computer software and personal computers. Company has been in business for close to 4 decades. However, company registered a widespread success only in the last decade. Apple enjoys huge brand loyalty. Company has been ranked number 1 in terms of brand value and consumer perception rank of 11 across all organizations in 2012. Apple uses retail stores, e-commerce, brand alliance, resellers and wholesalers for sales of its products. The report studies the efficacy of Apple’s online retail store, its consumers’ experience and shift between maeketplace to marketspace. The study has been carried out based on three exploratory interviews from interviews of different age, occupation and gender.
Apple’s website has been designed to accommodate the needs of both hedonic and utilitarian motivation. Apple actively engages in co-creation using multiple platforms to create value. Apple enjoys a widespread brand loyalty however; there are some concerns which require attention and they are:
- Usage of Consumer Forums
- Increased software competition
- Tradeoff between Marketplace and Marketspace
The report outlines a brief analysis of Apple’s business. Business Introduction section talks about company’s history, current products and services and various stakeholders.
Under customer experience a process map for online consumer interaction has been laid out which is followed by Apple’s promised experience, different stages of customer experience and various consumer behaviors.
Consumers’ experience of real virtuality talks about the theoretical and managerial implications of consumers experience with real-virtual interaction based on company’s process map which is followed by conclusion.
COMPANY BACKGROUND
Company Introduction
Apple Inc. is headquartered in Cupertino, California. It develops, designs and sells consumer electronics, computer software and personal computer. The company was founded by Steve Jobs, Steve Wozniak and Ronald Wayne in 1976. First computer made by the company was Apple I. By 1980 company had launched Apple III and started competing with companies such as IBM and Microsoft in Business and corporate computing markets. By late 1990’s company had launched Macintosh and its first PDA device named Newton. Company returned to profitability in early 2000’s. These years witnessed the advent of a new era in Apple’s journey and saw the launch of revolutionary products and services such as IPod, IPhone, ITunes, Mac App store, ICloud and I Pad (Glen, n.d)
Apple Inc. is renowned for innovation in its products, based on which company registered a widespread success in late 2000’s. Apple has expanded its product range which consists of IMac (desktop computers), Mac portables (laptops), IPhone, I Pad, IPod, External displays, Apple TV, Wi-Fi routers, a variety of related software, services, peripherals, networking solutions and third party digital content and applications.
Apple has presence in more than 126 countries and sells its products via its retail stores, online stores, and direct sales force, as well as through third party cellular network carriers, wholesalers, retailers and value added resellers. The target market for the company is worldwide consumers, small and mid-sized businesses, educational institutions, enterprise and government customers. Apple’s presence in New Zealand market is governed by a fully functional e-commerce website, cellular network carriers and value added resellers. In the absence of Apple retail stores this market is certainly disadvantaged (About apple, n.d).
Industry
Apple’s strength is in both hardware and software. Apple leads the market for tablet products. PC sales for Apple have been steady and company looks poised to become the third largest by sales after Lenovo and HP. A highly diverse product line aims to deliver a cutting edge and integrated software experience with the help of innovative products. However, company faces tough competition in mobile phone industry, hand held devices and as well as personal computers. With more than 80% market share, Microsoft’s windows and Google’s android continue to be the top competitors in personal computer and smart phone domain respectively. Hardware components of Apple’s product range faces competition from industry giants such as Dell, HP, Lenovo, Nokia and Samsung (Apple holds upper, 2013). Widespread use of MS Office across the business organizations puts Apple at disadvantage as it makes Apple computers dependent on Microsoft developed software.
Products and Services
Apple offers a wide variety of products to choose from. These are niche products known for ease of use, smart designs, best performance and latest technology. Apple uses Macintosh operating system for its personal computer range which includes Mac Book Air, Mac Book Pro, Mac pro, Mac mini and IMac. IPod offers selection from Shuffle, Nano, Touch and Classic. IPhone 5 is available in the market with one of the most advanced operating systems. I Pad is available in two sizes and offers multiple configurations to choose from. Apple stores also sell select third party products and accessories along with in-house products.
ITunes is Apple developed proprietary media played which can be used to organize, play and download audio and video files. The files can be downloaded from ITunes store which is the biggest music vendor in the world. This store offers a wide selection of music, Podcasts, Audiobooks, Videos, Games, IBook and Applications. ITunes store has been a great success for Apple. Music section alone has sold more than 25 billion songs by February 2013 (ITunes store sets, 2013).
Apple offers cloud storage for all Apple products called ICloud. The service allows users to store data and synchronize all their devices to maintain consistency in terms of contacts, mail, calendar, reminders, photo stream and data backup (Set up Icloud, 2013).
Apple makes hardware, software and other applications. Hence, its products are fully integrated. Products offered are best in class and built for high performance. Apple offers paid technical support and hardware warranty for customers’ piece of mind to increase post sale experience for customers. Apple offers technical support by industry best trained professionals. These service and support options are called AppleCare protection plan, Apple Care + and Pay per incident (Service and support, 2013).
Apple actively engages in co-creation to increase the customer experience via Apple user groups, product reviews and Apple discussion forums. Apple user groups are consumer forums designed to promote various consumer interactions among Apple user in a particular area. Product reviews space allows users to comment on product range. Apple discussion forums are a discussion space where users post their experiences and issue resolution steps to help others. Together these co-creation spaces help users create an excellent customer experience by helping each other. Apart from these activities, Apple engages in comprehensive support articles on its website to ensure an exceptional customer experience for using Apple products (About apple, n.d).
Apple provides easy financing for all customer types such as home consumers, business consumers and educational institutions. While home consumers get an option to get easy finance, businesses and educational institutions are given options for lease too. Apple provides maximum flexibility to meet the needs along with free financial, technology and IT planning services to educational institutions (About apple, n.d).
Environmental Responsibilities
Apple has taken a comprehensive approach to environmental responsibility and makes a constant effort in order to ensure its progress every year. Apple uses renewable energy for all its data centers powered by solar, wind, hydro and geothermal energies. Apple plans to make all its facilities run on renewable energy entirely. Apple tracks company’s carbon footprints at every stage from manufacturing to recycling to minimize the impact of its growth at the environment. Apple looks to make its entire product range more energy efficient, increase in product recyclability and ensures responsible recycling.
Apple Stakeholders
Apple Inc. is a global brand and hence has multiple stakeholders. Listed below are Apple’s most prominent stakeholders:
- Apple is a public company and hence there are numerous shareholders across world who has invested in Apple.
- Apple has more than 50000 people employed worldwide and close to 550000 in other companies in fields such as engineering, manufacturing, software development and customer service. The majority of these employees are located in United States however; Apple has substantial manufacturing, marketing, sales and support organizations worldwide (Apple Inc., 2013)
- Apple has a robust developer network. These developers help create applications and resources for Apple’s software platforms. The membership is a paid subscription and makes the developers eligible for a direct support from Apple engineers.
- Apple has more than 200 suppliers across the globe. All of them are required to meet the highest standards for all goods and services, quality standards and social responsibility.
- Apple has more than 166 million customers and supporters. They are constantly increasing.
- Another stakeholder for the company is music industry. Apple has the largest online music store and hence has big contracts with music industry leaders.
Today’s high tech company called Apple Inc. was started by Steve Jobs and Steve Wozniak in a residential garage nearly 4 decades ago. Apple’s achievement is a result of relentless innovation and successful products over the years. Launch of category defining products and services such as IPod, iTunes, iPhone and I Pad marked the company’s expansion beyond personal computing into digital marketplace. Mac app store and iTunes store together hold more than 850,000 applications for its users. Apple’s brand value has increased many folds with the success of IPhone and I Pad. Forbes 2012 report estimates Apple’s brand value at USD 87.1 billion making it rank 1. This widespread success is a clear evidence of providing an exceptional customer experience over the years, time and again (Apple tops list, 2012).
Customer Experience
Customer experience is the sum of all experiences a customer has from awareness, attraction, interaction, purchase, use and advocacy over the duration of relationship between the customer and an organization. A company’s ability to provide an excellent experience sets it apart from the rest in the eyes of a customer and increases brand loyalty. Apple promises the best personal computers in the world powered by OS X, Ilife, IWork and professional software while being an environmentally responsible company. Apple promises shipping for all in-house products within 24 hours. Apple provides free shipping to all customers direct to their doorsteps along with a tracking number to find out the progress on all orders. Also, the returns are free within stipulated time and under term and conditions. Apple provides toll free number to place orders whenever customers need. Company provides complimentary phone support for 90 days and a year’s manufacturer warranty on all apple in-house products. There are dedicated websites to more than 126 countries, 400 retail stores and countless resellers and wholesalers. Although apple’s claim is to produce the best computers and media device, consumer interactions are generally targeted to provide best solution for the customers’ needs rather than a flamboyant display of salesmanship.
Consumer Experience Process Map: Apple Inc.
Apple website has been designed to provide an outstanding consumer experience to all customers. Website is laid out very intuitively and is extremely user friendly. Any customer interested in any products can find the product categories on the home page and the customer experience starts right from there. Website has an alliance with multiple credit card companies, electronic appliances, software developers and other intermediaries.
Users can approach the apple products and their network right from the home screen. All products have detailed information on features and technical specifications. Users can lead themselves to various product designs or can navigate through services. After selecting a product or service, users interact with product selection and configuration tile. This further leads to a payment gateway to finalize the purchase. After payment realization the product is dispatched via courier companies and delivered at consumers’ doorsteps. All in-house products are shipped within 24 hours.
Following process map explains in detail how a perceived user experience will look like in during a consumer’s interaction with the website.‑
Consumer Interaction: Key Stages
Key stages of consumer interaction with apple product and services can be expressed as two components and they are
- Virtual Component
- Real Component
Virtual component of the interaction is dominated by the use of technology and is targeted at recreating the physical scene of an actual retail store. These are external information inputs consistent with user’s goals and objective which help to create an image of expected experience in consumers’ mind (Davis et al., 1999). Virtual interaction starts at the point when a consumer enters the website and ends when the purchase has been made.
Virtual interaction is formed by following four steps:
- Initiation: This is the point when a consumer thinks of browsing the website or online store. The need can be utilitarian or hedonic.
- Product/Service Information search: After the initiation consumers start searching for the specific information on product/services in sight. In apple’s case it can be a plan to buy a new tablet product. Depending upon the need consumer’s state of mind can vary between highly attentive to actively seeking information. Here consumers collect all the necessary information about the product/service in sight such as key attributes, quality and price.
- Product/Service Evaluation: After collecting the information the customer start looking into product/service comparison if there are more than one alternative available. Apple provides multiple choices in terms processor, space or connectivity for majority of its product range. Evaluation stage should be quite common with apple consumers.
- Purchase Decision: Last step in the virtual component of the interaction is when customer decides to buy. After evaluating the alternatives, consumers finalize the purchase and fix that by providing payment details and delivery address.
Real component of consumer interaction begins when the consumers actually receive the product/services. In case of apple the real interactions start as soon the products are delivered at the consumers’ doorstep. Post purchase use of the product and feeling together define the consumer experience. As argued by Costabile (1998) the level of satisfaction depends upon the expectations and product/service perceived performance. High level of satisfaction occur when actual real experience is greater than the expected virtual experience which further results in developing trust and consumer motivation. This combination of real virtual experience creates a symbolic image or resource in consumers’ mind and is known as brand. This provides a mechanism for both retailer and consumers to interact and form long term relationships (Davis et al., 1999).
Customer Behavior
Consumer behavior is affected to a great extent by achievement of flow. There are a number of behaviors a consumer can reflect while interacting with computer mediated environment. These behaviors can be outlines in two broad categories and they are:
- Goal directed
- Experiential
Goal directed behaviors are generally based on situational involvement. Consumers reflecting this behavior are interested in task completion rather than recreation. AS their involvement is situational, benefits related to their activities are of utilitarian nature and motivation is extrinsic (Hoffman and Novak, 1996). Apple’s website is filled with information on information technology and product knowledge. Apple’s website is fully equipped with features to support customers’ who reflect goal oriented behaviors. Every product and service introduction is followed by an embedded link to complete purchase in a quick and easy manner.
Experiential behavior contrary to goal directed behavior is reflected by the consumers who reflect enduring involvement in their interest areas. Their interactions are based on intrinsic motivation and hedonic benefits. Search pattern for such consumers are non-directed and can revolve around several products or services. They tend to build an information bank on products and services (Hoffman and Novak, 1996). Their activities are guided by the process rather than the goal or the outcome. Website presents an equal opportunity for customers with experiential behavior to build their knowledge around various products and technologies. Website content has information on state of art features of the products, their technological specifications, ease of use and endless articles on varied areas of interest such as product usage procedure, industry standards, energy ratings, consumer reviews and self-help information on products.
Consumer Experience of Real Virtuality
Theoretical Implications
Customers’ experience of real virtuality is somewhat dependent on achievement of flow. Technological innovations, internet and their acceptance across societies have made it possible for the organizations to go about creating such websites that allow the consumers to experience real virtuality. Castells (2000) defines real virtuality as “A system in which reality itself is entirely captured, fully immersed in a virtual image setting in the world of make believe, in which appearances are not just on the screen through which the experience is communicated, but they become the experience”. Apple customers feel confident while shopping online and are satisfied with the outcome of their interactions. This signifies that ease of use is high and perceived risk is minimal. Hence, both real and virtual component of the promised experience by Apple is being fulfilled. This is evident in the responses to use of website by customers:
Marben, a trainer with a multinational company feels very confident in shopping on Apple’s website and has the following view:
“I have used an apple online store myself as well and I feel it was very easy to use. You can pick the product you want and you can configure the Mac how you wanted as well or you can just buy stuff and then in a few days’ time, you get the product shipped to your door. And you also get a little shipping (details), they call it notification so it tells you where it is so you can check the status for your order so you can see how far long it is”.
Jennifer Chin, a PhD student echoes the view
“I have purchased on ITunes and Mac App store. Experience was okay and it was easy to buy. Once you plug in then you purchase the thing and then it’s all good”
Number of customer shopping online is increasing constantly for varied reasons such as ease of use, convenience, time constraints, easy product comparison, exhaustive product related information and user reviews. Majority of the customers are able to achieve a state of flow which is defined by Hoffman and Novak (1996) as a state that occurs during network navigation, characterized by a seamless sequence of responses facilitated by machine interactivity, intrinsically enjoyable, accompanied by a loss of self-consciousness and self-reinforcing. This formalizes and extends to a sense of playfulness. This is evident by the responses from Jennifer, Erika and Marben respectively:
“It is easy to look through. It is nice and lots of pretty pictures. I can read about devices at my leisure which is generally not the case at stores”.
“Website is fairly easy to use. You can view products you are interested in upfront and check their features and specifications. However, I like speaking to people as the information on the websites is more about standard usage”.
“I think it was very easy. It was fairly straight forward like on the top you have a lot of product to choose from I knew what I was after and I clicked on that I saw all the information I need”.
Hoffman and Novak (2009) argue that the achievement of flow in virtual worlds is followed by a development of exploratory behavior, increased learning and a sense of control. High level of playfulness and greater extent of use are what follows. This is reflected in response from Marben who does a fair bit of research before buying and as a result has familiarized himself to support articles and user groups:
”I knew exactly what I was after and so I was able to find the information that I needed and then order it straight through. I mean if you didn’t know what you wanted; it will be a really good way to sort of browse the website and everything like that. I do a fair bit of research on the product I before I buy. So for me it was really easy so I knew like where to go. It’s very straight and laid out very intuitively”.
“I find that the apple support page in itself is very very robust and has most of the things I am after. I use the discussion boards mostly for the really really weird sort of thing when I am trying to do”.
Davis et al. (1999) argue that the user’s interaction can be enhanced through use of technology to recreate physical scene and emphasis upon the cognitive process of the users’ experience which leads to a relationship of trust in virtual-real interactions. Apple has successfully crated that relationship of trust with its customers as evident in following responses:
“I mean you got the world’s biggest online music store and they have been storing customer’s data for years so I have no issues you know in putting my credit card details into the apple website because if they weren’t doing the right thing in terms of privacy they would not be around anymore”
Apple takes co-creation very seriously and has developed multiple platforms for co creation. Apple provides recognition to select application developers for its operating systems who earn by selling their applications on apple created platforms. Apple is benefitted by abundant availability of applications for its users. Apple has platforms for discussion forums and user groups where Apple customers’ come together and create value for the company by helping each other. There are customers who do not wish to indulge in such forums for reasons such as unauthenticated content and incorrect advices which potentially do more harm than good:
“I once saw someone advising a kid to rub his hard drive against a magnet and that could potentially have messed up all his data and even the hard drive. So, no more forums. I have seen those reviews and discussion forums. I don’t really trust them and may not be that helpful coz it’s not from Apple.”
Apple retail stores have been a success all across world and there are more than 400 of them. New Zealand market does not have any retail stores from Apple. As evident in the response most New Zealand customers do not know about the concept. Once familiarized, they believed that a physical store would benefit the company in New Zealand market:
“I did not know till few months ago that Australia has them too. As I said I love to speak to someone and see the product before I actually but. It would be so much better if it was as Apple store itself rather than some other salesman. I am sure that apple is losing out on that”.
“I guess some time when you go to people like Noel leeming; they have some people who know about stuff. But yeah may be New Zealand is disadvantaged”
There is another issue that requires company’s attention. As argued by Hoffman and Novak (2003) that the users’ skills and challenge during an electronic interaction must be evenly matched otherwise can lead to users getting bored. This is happening to Apple’s products users. Growing popularity of Android operating systems and abundance of available options using the same platform has started impacting Apple’s consumer base:
“I am using Samsung S3 an android phone. And I feel like android has more options so I could switch from HTC to Samsung very easily whereas I can’t do that other way around like I can’t switch from an apple to android that easily. I just like that there are more options than apple and you have more free application in android. You can do a lot more in android”.
Managerial Implications
This research has reflected that Apple’s online store is fairly accepted across customer base and they feel very confident in using its services. However, there are few questions that arise:
- Does Apple need to actively monitor consumer forums
- Does Apple need to increase functions and hence complexity in there operating systems
- Does Apple need to have marketplace along with marketspace
Apple discussion forums are the platform where consumers come together and share their experiences with regards to Apple products. They also happen to share processes which are not authenticated or allowed by company. However, this information is available on Apple’s web links and can potentially tarnish its image. Actively monitoring these forums would require resources and will take away freedom from consumers. Also, that would mean whatever is left available on the forum Apple acknowledges. Hence, it is a tradeoff between user’s freedom and their protection. I suggest that Apple should implement flagging and spamming of such content by other users immediately.
Ease of use of Apple’s products has been a unique selling point for its products. However, after a series of launching similar operating systems and widespread use, the users have developed enough skills and are getting bored. This is a strategy that is working very well for attracting new customers because of the ease of use but presents a challenge to existing highly intuitive customers who now demand more options and competitive operating system as Android. I suggest that Apple build some flexibility in their operating systems in order to stay competitive.
Apple physical retail stores have registered a wide spread success in all the markets they have been opened so far. New Zealand customers seem to like the concept of traditional retail stores especially when they are faced with a situation of purchasing Apple products for the first time. New Zealanders seem to appreciate the Apple personnel involvement in guiding their product selection as compared to third party re-sellers. On the other hand third party re-sellers constitute a major part of Apple’s sales force and opening an Apple retail store may seem to complicate internal competition. Apple must look forward to open retail store especially in densely populated areas in order to improve customer experience. Meanwhile Apple can look to provide toll free phone lines from select third party resellers to its call center network to better understand consumer needs and close the gap between resellers and its own stores.
Conclusion
Apple Inc. enjoys an enormous brand loyalty and has been ranked 1 in 2012 and 2013. Apple’s website is quite capable of providing a rich and healthy consumer experience to its customers. Apple is one of the leading brands in consumer electronics. Apple leads the tablet market with its proprietary software series names IOS. Apple holds a minor share in personal computer domain in terms of units sold. Consumer experience interview highlighted that customers have a strong faith in the brand and share a relationship of trust. However, company is facing a tough competition in its mobile phone sector which brought the company a widespread success. 80% of all smart phone devices are now powered by Android and the number is increasing by the day. Consumer experience survey also highlighted that customer skills have outpaced the challenges and options presented by the operating system. Consumers now demand more flexibility. The real-virtual customer interaction is delighting to the consumers in New Zealand markets but some of them would prefer traditional retail stores over website if given a choice. Future of the organization looks bright however, issues highlighted require timely action.
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Vipin Kumar 