1.0EXECUTIVE SUMMARY
The marketing plan includes the fundamental for the introduction of a unique and ingenious product known as iBangle by Apple Inc. The analysis of internal and external
TABLE OF CONTENTS
1.0 EXECUTIVE SUMMARY 2 2.0 COMPANY DESCRIPTION 2.1 Vision Statement 2.2 Mission Statement 3 4 4 3.0 PRODUCT DESCRIPTION 5 4.0 SITUATION ANALYSIS 4.1 Industry Analysis 4.2 SWOT Analysis 4.2.1 Strength 4.2.2 Weakness 4.2.3 Opportunity 4.2.4 Threat 4.3 Competitors Environment 9 9 12 12 14 14 15 16 5.0 MARKETING OBJECTIVE 17 6.0 TARGET MARKET 6.1 Segment Identification 6.2 Segment Needs 6.3 Segment Trends6.4 Segment Growth Potential 6.5 Size of Segment (Population)
18 18 18 18 18 18 7.0 POSITIONING STRATEGY 19 8.0 MARKETING STRATEGY 8.1 Product Strategy 8.2 Price Strategy 8.3 Promotion Strategy 8.4 Place Strategy 21 21 22 24 26
9.0 FINANCIAL PROJECTION & EVALUATION 27
of the organisation, competitive environment enables the team to propose dynamic and constructive strategies for iBangle to fulfil the company’s objectives and strategic mission. The iBangle will be introduced as another innovation of Apple and marketed as mp3 player in portal music player (PMP) sector. This also will enable Apple Inc to penetrate and dominate the PMP sector and emerge as leader in innovation of unique products as well as successfully gain market share. The marketing strategies are outlined to gain market segment size of 102,665,043(targeted) male and 103,129,321(targeted) female of 15-64 years with forecasted sales growth average at 4.8% over next 3 years and profit of USD 8,229,000. The accomplishment and success of iBangle will be measured with the capture of market share in PMP sector, as well as penetrating geo-clustering targeted market in across the global.
2.0COMPANY DESCRIPTION
Apple Inc. was formed by Steve Jobs and Steve Wojniak in April 1976 and incorporated on 3rd January 1977. The organisation’s headquarter is situated at Cupertino,
California. The current CEO is Steve Jobs. Apple Inc. mainly involved in industry related to computer software, hardware, and consumer electronics. The organisation mainly design, manufacture and market product that varies from personal computer, portable digital music players, mobile communication devices and various related software, services, peripherals, and networking solutions. The main distribution channels are its online stores, retails stores, direct sales, and others. Moreover, the customers range from consumers, corporations, small and medium business, education, enterprise, governments and creative customers. The organisation currently has 35,100 employees and growth of 62.5%. According to fiscal year ending report of September 2008, Apple Inc. had generated the following revenue and shows growth of 35.5% for one year growth and about 38.3% of income
growth:-TABLE 1: Financial Data of Apple Inc. for 2008 1
2.1Vision Statement
1 Abstracted from http://finance.yahoo.com/q/is?s=AAPL&annual
• iBangle product will enable Apple Inc to establish as market leader in portal music sector
• Apple Inc can be a revolutionary organisation in providing digital lifestyle for customers
2.2Mission Statement
3.0
PRODUCT DESCRIPTION
• Apple Inc is committed to provide a futuristic and empowered music listening experience to the customer through iBangle.
• To capture share market of portal music player more than 55% and dominate the market.
‘iBangle’ will be future version of iPod product and will be positioned as the bracelet iPod that available in the market. It will be equipped with 2GB capacity and different sizes to accommodate customer’s wrist. The iBangle features and design as shown below2
The product will be able to provide exceptional music listening experience and have multifunction as mp3 player as well as hand accessory (bangle). The product also marketed as funky and matchless alternative device for portal music device and packaged as unisex outlook that be suitable to be worn by men and women. The product is made of aluminium.
4.0SITUATION ANALYSIS
4.1.1 Usage
Apple Inc. has sold 22.1 million iPods during 2008 holiday season compared to 4580 unit in 2005. The sale of 21.0 million units in Q1 of 2007 also shows 50% higher than Q1 of 2006. This shows steady growth of iPod since 2005. Moreover, it increased about 383% from 2005. This projects strong value of brand position in the customers. Therefore, we strongly believe that iBangle can penetrate the usage trend since this is a variant of iPod.
Chart 1: iPod Unit Sales3
4.1.2 Trends
In 1960, 8-track player was introduced and followed by personal cassette player in 1979 and later with walkman, walk disc player, until MP3 player and MP4 player. The taste and trend of portable music players
change tremendously among customers. The factors that influence the evolution in the trends
are:-a. Customer preference to better sound quality
b. The sizes of iPod and mp3 players are more compact and easy to carry.
c. The storage capacity is bigger and customers can opt for different sizes compared to other devices.
d. The introduction of storage format like mp3, acc, and wma enable to customer to store more music compared to earlier version.
The market trend is expected to show prolonged growth and future products of portable players that have sophisticated design, features and benefits like iBangle can gain customer interest as well as market demand
4.1.3 Profitability & Future Growth Potential
Apple had gain revenue of 48% from iPod Business Division in first fiscal of 20074, meanwhile other music related products contributed 4 Extracted from
9% of total profit. We estimated that growth of average of 4% in sales based on forecasting projection by year 2012 and expansion of 18.3% in population by 2015.
5
4.2
SWOT ANALYSIS
5 Extracted from
4.2.1 Strength
4.2.1.1 Brand Position
Apple Inc. is one of the most progressive and established IT brand in the IT industry. The organisation had managed to create strong brand value position among its customers. Apple products often associated with concept of fun, energetic,
sophisticated, and quality and it generated loyal and enthusiastic
customers that support Apple brands. The supremacy loyalty of customers shows that Apple managed to gain customers as well as sustain them. The sales of 22.1 million iPod show the customers consumption of Apple products. The customers subscribes to services and products that offered by Apple and willing to come back for more Apple products lines. This can create opportunities for Apple to market iBangle more proficiently.
Apple Inc have stable and strong financial factor in the IT industry. The organisation managed to generate net income of USD 4834.0 million in 2008 and USD 2,523,000 of Cash flow6. This shows that the organisation have capabilities to invest sufficient amount to design, manufacture, and market iBangle in the targeted market.
4.2.1.3 Innovation and Improvement
Strengths of Apple are innovation and the capability of improving its product in diminutive period. This can be seen in the 6 times upgrading of classic iPod models since been introduced. There are 6 generation of ‘Mini/Nano’ model since 2004. This will enable the organisation to develop iBangle and improvised in short time and capture market demand whenever the opportunities rise.
4.2.1.4 Product diversification
Apple Inc also managed to manufacture and market products that varies from PCs, personal notebook, mobile communication, hardware, software, portable music players to peripheral devices. This has enabled them to penetrate wider market. Therefore, it also contributed to revenue of Apple. This can help Apple to launch and market iBangle in all level of market without compromising the revenue much.
4.2.2 Weakness 4.2.2.1 Price
The prices of apple products are often expensive and only can be afforded by certain group. Most of its products are ranges from USD 200 onwards for its Mp3 and Mp4 compared to other
brands like Samsung, Creative. Therefore, many customers from lower income group could not afford Apple products and opt for other brands.
4.2.2.2 Faulty products
Some of Apple products also face problems such as iPod Nano faces faulty screen whereby the screen can easily break under impact, and early iPods faced problem with faulty batteries. This had force the company to replace all the faulty items and had incurred more cost.
4.2.2.3 Lack of quality Control
The products like iPod Nano faced problems and shows that Apple Inc had faced lack of quality control.
4.2.3 Opportunity
4.2.3.1 Better quality control implementation
The Apple Inc also can increase its quality control sector to be able to provide more enhanced and quality product to its customers.
4.2.3.2 Introduction of new products
Apple had been massive designing, and manufacturing new products for its customers compared to the competitors like Sony, Samsung. Therefore, Apple can penetrate PMP field with new products like iBangle efficiently.
4.2.3.3 Brand awareness
The Apple has developed strong brand awareness among customers and in the international market. Therefore, Apple Inc can create market opportunity for iBangle more efficiently because the customers are more perceptive and easily accept Apple
products compared to other brands due to brand awareness. Moreover, the recognition of Apple brand in the international arena also can generate international market opportunities for iBangle.
4.2.4 Threat
4.2.4.1 Strong Competition
Apple Inc also faced competition in today’s global oligopoly market since the industry is been influenced by several major competitors such as Sony, Samsung, HP and others.
4.2.4.2 Financial Crisis
The inconsistency of global financial stability and world stock market can induce crisis and problems for Apple Inc during introducing new products to the market. The financial crisis can force customers to retreat and not support any new products due to personal financial problems.
4.2.4.3 Political Unstable
One of major crisis that the organisation will face during launching iBangle is political instability in some countries in the world. This can cause by few factors such as internal political power struggle, transition of ruling power and others. These dilemmas can affect launching of iBangle in certain countries such as South Africa, Thailand, Philippine, and others even though
there is vast market opportunity.
4.3
COMPETITORS ENVIROMENT
Apple Inc.’s main competitors in IT industry are Sony, Samsung, IBM and HP. However, top competitors that have capabilities and financial strength to produce similar products with Apple are Sony and Blackberry especially for products like MP3 and MP4. Sony had been veteran in portal music device
circle and later entered by Apple. Apple managed to capture 50% of marketing share since 2005 but Sony also progressively gain market share of 20% in 2006 and 30% in 20077. It shows that Sony has capacity and resources to design, manufacture product that have similarities with iBangle.
5.0 MARKETING OBJECTIVE
The marketing objectives of iBangle for Apple Inc as
follows:-7 Source from
• To establish as market leader in creating and manufacturing innovative products in IT industry
• To enable Apple Inc to satisfy, fulfil and equipped the consumer’s personality and lifestyle needs as well to increase Apple popularity as an icon in digital lifestyle product
• To establish as market leader in portal music player sector by increasing market share
• To enable Apple Inc to monopoly the portal music device sector share by 75% by year 2012
• To enable the Apple Inc revenue from iPod Business Division to increase to 63% by year 2015
6.0TARGET MARKET
6.1 Segment Identification
iBangle is a version of MP3 player that can be worn on wrist to be launched within the portable music player (PMP) sector in U.S.
6.2 Segment Needs
iBangle will be a device that accommodate social needs of customer such as it will be perceived as one of tools of digital lifestyle, fun and cool device and sense of belonging within peer group, brand that need to be owned, cultural lifestyle and others needs. It also cater personal needs such as for customers that want to experience music without tangled with wires when they performing the daily activities, luxurious activities such as exercise, jogging, surfing and others activities.
6.3 Segment Trends
The current trend shows transcend from wired and bulky PMP to light, easy, compact in size, more capacity, less wired or wireless and multifunction players like MP3 players. The trends also change towards wireless player, brand conscious and digital lifestyle. Therefore, market opportunity for iBangle is far vaster due to trend transformations.
6.4 Segment Growth Potential
According to statistic report, the segment growth can be projected increase of 18.3% over next 5 years (2015) for 21 years and above subsets. Meanwhile, the segment for 14-17 years old, anticipated growth is 0.93% and 19-24 years old is about 10.52%.8
6.5 Size of Segment (Population)
According to statistics report of CIA, the size of segment 15-64 years old consists of 102,665,043 male and 103,129,321 femalei.
7.0POSITIONING STRATEGY
Apple has been enable to create and revolutionised the portal music player sector by adapting to visceral design, and manufacture creative, innovative, and cool products such as iPods. Moreover, iPod managed to became measurement against any portal music 8 Refer to Appendix 2,
players since its penetration into the market. 9 Therefore, iBangle player will be adapting strategy by being the ultimate must have mp3 player in the perception of customers. The organisation will be adapting strategy of product differentiation in marketing iBangle in the market. Moreover, Apple also will be providing quality and excellent customer service for iBangle customers.
Apple will be developing unique selling proposition (USP) for iBangle by differencing iBangle from other mp3 player through its designs, features, and benefits that shown
Even though iBangle main function is mp3 player, it also will be marketed as hand accessory. Apple has strong brand personality (image differentiation) among its customers and worldwide can enable them to market iBangle to the targeted market more efficiently. The features, benefits, and unique design of iBangle can aid the company to create impression of must have mp3 player in the cognitive mind of customers. The success of iPod in 2000 as shown below is an example of people acceptance of Apple products10.
9 Source : http://www.scribd.com/doc/8688101/Cultural-Marketing-Analysis-Why-iPod-A-Case-Study 10 Source: http://www.tuftsdaily.com/2.5512/ipod-nation-1.599109
• Benefits positioning: listen to music without tangles of wires and wear it as
accessory
• Features: include multi-track touchpad, wireless ear headphones, customised
according to wrist size, better music quality, and download music via Bluetooth
• Product Positioning: the shape of bangle enable customer to wear at wrist, portray
cool look, personalised mp3 player (other people might not notice the player) and the first mp3 player in the world designed as bangle.
• User Positioning: iBangle as the most suitable and coolest trend for digital lifestyle
8.0MARKETING STRATEGY
8.1 Product Strategy
8.1.1 The core
iBangle is mp3 player that worn at wrist equipped with wireless ear headphones to listen to music.
The design of mp3 player is unique and innovative by Apple and be worn wrist. It also can function as hand accessory. As for banding, Apple logo is embedded on the bangle and the colour for iBangle is silver to cater for unisex customer as well as to establish as stylish bangle.
The trade name is iBangle™, an Apple product. The brand personality adapted for this product consist of stylish, cool, trendy,
originality and think different. The iBangle also equipped with 1
year warranty and customer service.
8.1.3 Based on life product life cycle, iBangle is new product to the market and currently no imitation products. Therefore, proactive and comprehensive marketing campaign can enable iBangle to be recognised immediately and sales of the product will be accelerating progressively.
8.1.4 The unique design of iBangle will enhance its’ differentiation among existing portal music players and generate advantages to the product. Moreover, Apple is known to produce award winning innovative products as stated below11.
8.1.5 The other factors that create differentiation for iBangle is the Apple managed to create emotional benefits12 for its users. Therefore, iBangle also can provide emotional benefit to customers in form of maintaining simplicity, stylish design, easy to use and constructive customer service.
11 Source : http://www.scribd.com/doc/3936101/A-study-of-ipods-product-design
12 Source: : http://www.scribd.com/doc/8688101/Cultural-Marketing-Analysis-Why-iPod-A-Case-Study
Apple had worn eight iF (International Forum) Product Design Awards at CeBIT 13 2008 show in Hanover, Germany for out of nine products that were submitted for consideration.
8.1.6 The iBangle also considered ‘green’ product since the main component to manufacture iBangle is aluminium. Aluminium is one of the most recyclable materials.13 This enable iBangle to gain status as ‘eco-friendly product’ and infiltrate environmental concern oriented customers.
8.1.7 The iBangle product has another distinguish advantage that is the brand name of Apple. Apple had become one of the most powerful icons14 in the IT industry due to its visceral design, unique products, quality and features. Therefore, branding Apple logo on iBangle will increase its value and perception among the customers.
8.2 Price Strategy
As for pricing strategy for iBangle, there are several factors should be considered as such consumer demand, product lifecycle and potential substitutes. The price of iBangle will be at USD 390.00. This is because at initial introduction, only 10,000 units will be produced and marketed in U.S.A. The profit margin is 30%. Apple Inc should given important aspect toward customer demand.
Since Apple had be able to portray themselves as icon of PMP sector through introduction of iPod generation, iBangle is can create massive demand among customers due to its unique design and features. The skimming price strategy will be adapted to market iBangle to the customers. The price will be set at USD 399.00 at introduction stage and price will be reviewed at later stage of product lifecycle.
The organisation also has advantages such there is no substitute or imitation product like iBangle that available currently on the market. However, potential substitutes produced by competitors is possible, therefore Apple have to establish 13 Source: http://ezinearticles.com/?Why-is-Aluminum-So-Recyclable?&id=2277133
as market leader for iBangle. This can create market demand for iBangle since it has unique characteristics.
One of the examples of successful pricing strategy can be seen in sales of iPod in the market and it shown in Chart 215.
8.3 Promotion Strategy 8.3.1 Objectives
• To create strong awareness about iBangle throughout the target customers (14 to 29years old) as well as parents
• To penetrate and increase market shares in portal music player sector and override competitors
15 Extracted from
One of the promotional important outputs is to portray iBangle as ‘the futuristic mp3 player and the coolest product for everyone’.
The media selection for promoting iBangle is varies for the selected customers group. However, one of the most powerful media is Internet media. The internet usage in United States is about 223 million in 200816. It shows creative advertisements via online can penetrate the target customer faster and more efficient. Moreover, online store also can boost the sales of iBangle.
Moreover, Apple also will be using electronic media as advertisement arena to launch iBangle to the world. Apple is knows for creating innovative, and unique advertisements to promote their products such as in using slogan ‘Think Different’, use famous ‘free thinkers’ like Pablo, John Lennon, Mahatma Gandhi 17and others to shows that Apple product is unique and different from others. Therefore, unique advertisement such as constant advertisement about iBangle at prime time TV shows, radio shows can create brand awareness among the customers.
Other than that, Apple also will be using idols and international stars to promote iBangle. Apple is planning using teen idol Hannah Montana as teen ambassador to promote iBangle to teenagers group. Furthermore, in order to penetrate the current trend and culture, iBangle will be attached to celebrities such as Beyonce, Missy Elliot, and Jason Marz. The product will be worn by these stars in the video clips and photography session for magazines and events. The personalities from sport arena such as Cristiano Ronaldo, and S. McGee also will be recruited to promote iBangle. The celebrities spotted with iBangle can create brand awareness among customer more massively. Apple will be running advertisement on iBangle during important events like Super bowl games, NBA, and World League. This is to target sport oriented customers.
Apple also will sponsor prime time TV shows like ‘Leverage’ and ‘C.S.I’ to promote iBangle for the young adults customers. The advertisement of iBangle will be aired during the Showtime to capture young adults’ attention on iBangle.
16 Source: https://www.cia.gov/library/publications/the-world-factbook/geos/us.html#Econ 17 Source: http://www.scribd.com/doc/2648710/iPod-The-Marketing-of-an-Idea
Table 2 shows the selection of media that used for iBangle promotion
8.4 Place Strategy
Other than that, the company will be choosing distribution channels such as
a. online stores b. retail stores c. direct sales
One of the most established distribution channels is Apple retails stores. Therefore, iBangle will be launched and marketed at all Apple retails stores
across the country for the success of iBangle. Apple managed to gain USD 1.45 billion from 208 stores in 200818 ensure that retail store is one of the most successful distribution channels. Moreover, online stores also another important distribution channel that can aid the sales of iBangle and will be able to penetrate geo-clustering segment more proficiently.
9.0
FINANCIAL PROJECTION & EVALUATION
.
Average-Cost Pricing
A. Calculation of Planned Profit
if 10,000 B. Calculation of Actual Profit if Only 10,000
items Are Sold items Are Sold Calculation of Costs: Calculation of Costs:
Fixed overhead expenses $200,000 Fixed overhead expenses $200,000
Labor and materials 700,000 Labor and materials 700,000
Total costs $900,000 Total costs $900,000
"Planned" profit 3,000,000
Total costs and planned profit $3,900,000
Calculation of profit (or loss): Calculation of profit (or loss):
Actual unit sales x price (below) $3,990,000 Actual unit sales x price (below) $3,900,000
Minus: total costs 900,000 Minus: total costs 900,000
Profit (loss) $3,090,000 Profit (loss) $3,000,000
Calculation of "reasonable" price:
Expected total costs and
planned profit $3,900,000
Planned number of items to
be sold 10,000
TABLE 4: Cost for iBangle Production
Based on Table 3 and Table 4, the price of iBangle for introduction stage will be USD 390.00 will margin profit of 35%.
Cost Classifications for an iBangle
Components
Total
cost Variable Fixed
Operating expenses Direct labor $180,000 $180,000 $0 Direct supervision 50,000 50,000 0 Social Security 20,000 150,000 0 Materials 110,000 110,000 0 Operations overhead 0 0 85,000 Subtotal $360,000 $490,000 $85,000 Non operating expenses Advertising $35,000 $0 $35,000 Promotion 20,000 0 20,000 Field sales 15,000 0 15,000 Product management 15,000 0 15,000 Marketing management 20,000 0 20,000 Product development 50,000 0 50,000 Marketing research 20,000 0 20,000 Customer service 70,000 50,000 20,000 Testing 50,000 0 50,000 General & administrative 0 30,000 Subtotal $295,000 $50,000 $275,000 Total $655,000 $540,000 $360,000
Based on Table 5, projection profit contribution of Ibangle
Based on Table 5, projection of profit margin is 30% and iBangle profit contribution to Apple revenue by 2010 is USD855, 000.
TABLE 5: Contribution Margin Statement for iBangle
Product: iBangle
Income Statement
31-Dec-10
Revenues (no. of units x price) $3,900,000
Variable costs
Direct labor $180,000
Direct supervision/clerical 50,000
Social Security 150,000
Sales force commissions 100,000
Customer service 70,000
Materials 110,000
Operations overhead (plant, etc.) 75,000
Total variable costs $735,000
Contribution margin rate (percent) 30%
Contribution margin amount $1,170,000
Fixed costs Operations overhead $10,000 Advertising 35,000 Promotion 20,000 Field sales 15,000 Product management 50,000 Marketing management 20,000 Product development 15,000 Marketing research 20,000 Customer service 50,000 Testing 50,000
General & administrative 30,000
Total fixed costs $315,000
Based on break even analysis projection, the sales force need to sale minimum 1071 units of iBangle and gain break even at USD 417,857.
Break-Even Analysis
Break-Even Point (units) = 1,071 Break-Even Point ($'s) = $417,857 Total Fixed Costs TFC = $360,000 Formulas:
Variable Cost per Unit VCU = $54.00 BEP (units) = TFC/(SPU-VCU) Sales Price per Unit SPU = $390.00 BEP ($'s) = BEP (units) * SPU
Unit Increment x-axis 400 Graph Data:
Total
Units TFC TVC TC Sales Profit
0 360000 0 360000 0 -360000 400 360000 21600 381600 156000 -225600 800 360000 43200 403200 312000 -91200 1200 360000 64800 424800 468000 43200 1600 360000 86400 446400 624000 177600 2000 360000 108000 468000 780000 312000 2400 360000 129600 489600 936000 446400 2800 360000 151200 511200 1092000 580800 3200 360000 172800 532800 1248000 715200 3600 360000 194400 554400 1404000 849600 4000 360000 216000 576000 1560000 984000
© Copyright, 2009, Jaxworks, All Rights Reserved. ($500,000) $0 $500,000 $1,000,000 $1,500,000 $2,000,000 0 400 800 1,200 1,600 2,000 2,400 2,800 3,200 3,600 4,000 TFC TVC TC Sales Profit
11.0CONTROL MECHANISM AND EVALUTION OF
EFFECTIVENESS
Moreover, the marketing team also have to implement effective control mechanism and evolution of effectiveness method in order to ascertain the launch of iBangle is successful; the marketing strategies are efficient and progress constructively according to projection especially in sales and penetrating targeted market. The suggested apparatus had been designed to aid the department to evaluate the effectiveness of iBangle marketing plan and objectives are shown
below:-a. Constant market survey and research such as questionnaire method, observation on consumer behaviourism will be implemented in order to evaluate the acceptance of iBangle among its customers.
b. Quality Control mechanism also will be introduced in order to monitor the quality of iBangle since this is the debut to the market. This will enable the team to capture any defects, faulty parts that can occur after the customer purchase and use the product.
c. Customer Service and technical support team will be established to aid the customers regarding any problems, defects, technical problems and others. This can ensure the quality of iBangle will not be compromised.
d. The department also will generate and implement comprehensive plan to monitor the sales of iBangle, the re-evaluate the market needs, and prepare marketing strategies to gain more customers in the future. e. The department will conduct customer survey to obtain report on the
customer’s satisfaction toward iBangle to gather suggestion improvements that might be needed to enhance the second generation of iBangle in the future.
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APPENDIX 219
APPENDIX 3
Median income levels
Households Persons, age 25 or older with
earnings Household income by race
All households Dual earner households Per household member
Males Females Both sexes Asian
White, non-Hispanic
Hispanic Black
$46,326 $67,348 $23,535 $39,403 $26,507 $32,140 $57,518 $48,977 $34,241 $30,134
Median personal income by educational attainment
Measure Some High School High school graduate Some college Associate's degree Bachelor's degree or higher Bachelor's degree Master's degree Professional degree Doctorate degree Persons, age 25+ w/ earnings $20,321 $26,505 $31,054 $35,009 $49,303 $43,143 $52,390 $82,473 $70,853 Male, age 25+ w/ earnings $24,192 $32,085 $39,150 $42,382 $60,493 $52,265 $67,123 $100,000 $78,324 Female, age 25+ w/ earnings $15,073 $21,117 $25,185 $29,510 $40,483 $36,532 $45,730 $66,055 $54,666 Persons, age 25+, employed full-time $25,039 $31,539 $37,135 $40,588 $56,078 $50,944 $61,273 $100,000 $79,401
Household $22,718 $36,835 $45,854 $51,970 $73,446 $68,728 $78,541 $100,000 $96,830
Household income distribution Bottom 10% Bottom 20% Bottom 25% Middle 33% Middle
20% Top 25% Top 20% Top 5% Top 1.5% Top 1%
$0 to $10,500 $0 to $18,500 $0 to $22,500 $30,000 to $62,500 $35,000 to $55,000 $77,500 and up $92,000 and up $167,000 and up $250,000 and up $350,000 and up
Source: US Census Bureau, 2006; income statistics for the year 2005
Dennis Gilbert, 2002 William Thompson &
Joseph Hickey, 2005 Leonard Beeghley, 2004
Class characteristicsTypical Class characteristicsTypical Class Typical characteristics
Capitalist class (1%)
Top-level executives,
high-rung politicians, heirs. Ivy League education common. Upper class 1% Top-level executives, celebrities, heirs; income of $500,000+ common. Ivy league education common. The super-rich (0.9%) Multi-millionaires whose incomes commonly exceed $350,000; includes celebrities and powerful executives/politicians. Ivy League education common.
The Rich (5%)
Households with net worth of $1 million or more; largely in the form of home equity. Generally have college degrees.
Upper middle class [1] (15%) Highly educated (often with graduate degrees), most commonly salaried, professionals and middle management with large work autonomy Upper middle class [1] (15%) Highly educated (often with graduate degrees) professionals & managers with household incomes varying from the high
5-figure range to commonly above $100,000 Lower middle class (30%) Semi-professionals and craftsmen with a roughly average standard of living. Most have some college education and are white collar. Lower middle class (32%) Semi-professionals and craftsman with some work autonomy; household incomes commonly range from $35,000 to $75,000. Typically, some college education. Middle class (plurality/ majority?; ca. 46%)
College educated workers with incomes considerably
above-average incomes and compensation; a man making $57,000 and a woman making $40,000 may be typical.
Working class (30%)
Clerical and most blue collar workers whose work is highly routinized. Standard of living varies depending on number of income earners, but is commonly just adequate. High school education. Working poor (13%) Service, low-rung clerical and some blue collar workers. High economic insecurity and risk of poverty. Some high school education. Working class (32%)
Clerical, pink and blue collar workers with often low job security; common household incomes range from $16,000 to $30,000. High school education. Lower class (ca. 14% - 20%) Those who occupy poorly-paid positions or rely on government transfers. Some high school education. Working class (ca. 40% - 45%)
Blue collar workers and those whose jobs are highly routinized with low economic security; a man making $40,000 and a woman making $26,000 may be typical. High school education.
Underclass (12%)
Those with limited or no participation in the labor force. Reliant on government transfers. Some high school education. The poor (ca. 12%)
Those living below the poverty line with limited to no participation in the labor force; a household income of $18,000 may be typical. Some high school education.
References: Gilbert, D. (2002) The American Class Structure: In An Age of Growing Inequality. Belmont, CA: Wadsworth; Thompson, W. & Hickey, J. (2005). Society in Focus. Boston, MA: Pearson, Allyn & Bacon; Beeghley, L. (2004). The Structure of Social Stratification in the United States. Boston, MA: Pearson, Allyn & Bacon.
1 The upper middle class may also be referred to as "Professional class" Ehrenreich, B. (1989). The Inner Life of the Middle Class.
50 -View: Annual Data | Quarterly Data All numbers in thousands
PERIOD ENDING 27-Sep-08 29-Sep-07 30-Sep-06
Total Revenue 32,479,000 24,006,000 19,315,000
Cost of Revenue 21,334,000 15,852,000 13,717,000
Gross Profit 11,145,000 8,154,000 5,598,000
Operating Expenses
Research Development 1,109,000 782,000 712,000 Selling General and Administrative 3,761,000 2,963,000 2,433,000
Non Recurring - - -
Others - - -
Total Operating Expenses - - -
Operating Income or Loss 6,275,000 4,409,000 2,453,000
Income from Continuing Operations
Total Other Income/Expenses Net 620,000 599,000 365,000 Earnings Before Interest And Taxes 6,895,000 5,008,000 2,818,000
Interest Expense - - -
Income Before Tax 6,895,000 5,008,000 2,818,000 Income Tax Expense 2,061,000 1,512,000 829,000
Minority Interest - - -
Net Income From Continuing Ops 4,834,000 3,496,000 1,989,000
Non-recurring Events
Discontinued Operations - - -
Extraordinary Items - - -
Effect Of Accounting Changes - - -
Other Items - - -
Net Income 4,834,000 3,496,000 1,989,000
APPENDIX 6
Balance Sheet of APPLE INC
PERIOD ENDING 27-Sep-08 29-Sep-07 30-Sep-06
Assets
Current Assets
Cash And Cash Equivalents 11,875,000 9,352,000 6,392,000 Short Term Investments 12,615,000 6,034,000 3,718,000 Net Receivables 6,151,000 4,811,000 3,452,000
Inventory 509,000 346,000 270,000
Other Current Assets 3,540,000 1,413,000 677,000
Total Current Assets 34,690,000 21,956,000 14,509,000
Long Term Investments - - -
Property Plant and Equipment 2,455,000 1,832,000 1,281,000
Goodwill 207,000 38,000 38,000
Intangible Assets 352,000 382,000 160,000
Accumulated Amortization - - -
Other Assets 641,000 1,051,000 1,217,000 Deferred Long Term Asset Charges 1,227,000 88,000 -
Total Assets 39,572,000 25,347,000 17,205,000
Liabilities
Current Liabilities
Accounts Payable 8,558,000 6,230,000 6,471,000
Short/Current Long Term Debt - - -
Other Current Liabilities 5,534,000 3,069,000 -
Total Current Liabilities 14,092,000 9,299,000 6,471,000
Long Term Debt - - -
Other Liabilities 746,000 67,000 14,000 Deferred Long Term Liability Charges 3,704,000 1,449,000 736,000
Minority Interest - - -
Negative Goodwill - - -
APPENDIX 7
Cash Flow APPLE INC
PERIOD ENDING 27-Sep-08 29-Sep-07 30-Sep-06
Net Income 4,834,000 3,496,000 1,989,000
Operating Activities, Cash Flows Provided By or Used In
Depreciation 473,000 317,000 225,000 Adjustments To Net Income 170,000 332,000 227,000 Changes In Accounts Receivables (785,000) (385,000) (357,000) Changes In Liabilities 7,517,000 3,245,000 2,907,000 Changes In Inventories (163,000) (76,000) (105,000) Changes In Other Operating Activities (2,450,000) (1,459,000) (2,666,000)
Total Cash Flow From Operating Activities 9,596,000 5,470,000 2,220,000
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures (1,091,000) (735,000) (657,000) Investments (6,760,000) (2,312,000) 1,032,000 Other Cashflows from Investing Activities (338,000) (202,000) (18,000)
Total Cash Flows From Investing Activities (8,189,000) (3,249,000) 357,000
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid - - -
Sale Purchase of Stock 483,000 362,000 (37,000)
Net Borrowings - - -
Other Cash Flows from Financing Activities 633,000 377,000 361,000
Total Cash Flows From Financing Activities 1,116,000 739,000 324,000
Effect Of Exchange Rate Changes - - -
Change In Cash and Cash Equivalents $2,523,000 $2,960,000 $2,901,000
APPENDIX 9
APPENDIX 10
Wednesday, April 23, 2008 6:30 PM/EST
Apple Q2 2008 by the Numbers
second-quarter revenue and earnings ever. How's 43 percent revenue growth?
If there is a U.S. economic crisis, Apple isn't yet feeling it. Fiscal second-quarter revenue reached $7.51 billion, up from $5.26 billion a year earlier. Net profit jumped from $770 million a year earlier to $1.05 billion, or 87 cents and $1.16 earnings per share, respectively.
Looking ahead, Apple predicted fiscal third-quarter revenue of $7.2 billion, up 33 percent year over year, and $1.00 earnings per share.
During the second quarter, Mac sales grew 51 percent year over year, the strongest Apple has seen in two decades. Apple sold 2.289 million Macs, with 1.43 million being portables. Mac revenue grew 54 percent year over year—61 percent for portables. Mac inventory increased about 60,000 units during the quarter, in part because of MacBook Air.
As expected, iPod units marginally gained year over year (1 percent) and declined sequentially (52 percent). Apple shipped 10.64 million iPods during the quarter. Shuffle sales declined, but bumped up following price cuts. Based on analyst numbers, Apple claims 73 percent of the U.S. MP3 market share. The company ended the quarter with four to six weeks of iPod inventory. Related: Apple ended the quarter with about 50 million iTunes customers.
Apple shipped 1.73 million iPhones during the quarter, but didn't realize all the revenue. Apple won't realize revenue or product cost on iPhones sold after March 6 until the release of iPhone 2.0 software, which is now expected at the end of June. The decision is one of those accounting things, related to Apple offering the software update for free. Apple announced iPhone 2.0 on March 6.
Apple claims that more than 200,000 developers have signed up for the iPhone SDK. One-third of Fortune 500 companies and 400 educational institutions have signed up for the iPhone Enterprise Beta program. Clearly somebody is interested in connecting the iPhone to Microsoft Exchange Server.
While iPhone sales declined 26 percent sequentially, Apple couldn't meet demand, particularly among its company stores. "We expected iPhone to decline more sequentially than it did," said Apple Chief Operating Officer Tim Cook on Apple's earnings conference call. He acknowledged inventory as being "low" in Europe and the United States. Despite the shortages, Apple executives expressed confidence that the company would sell 10 million iPhones by the end of the calendar year.
People have been buying phones from Apple stores with the intention of activating them later, Cook said. He described the shortages as a "proxy for the worldwide demand of the phone." That could be construed to mean that phones bought in the United States are ending up elsewhere, even unlocked. Cook wouldn't quantify the number of unlocked phones but acknowledged that it is "significant."
Apple retail stores posted a shockingly strong quarter. Direct sales, whether in-store or online, were 53 percent, up from 49 percent a year earlier. Retail store revenue rose 74 percent. Apple stores sold 458,000 Macs, a 67 percent year-over-year increase. Average in-store sales increased 48 percent. Apple stores had 33.7 million visitors during the quarter, up 57 percent year over year. The company claimed that 50 percent of customers were new to Mac. Be careful: That doesn't mean all those customers bought Macs.
Apple ended the quarter with 208 stores, 27 outside the United States. Apple plans to have opened 45 new stores during fiscal 2008. New stores are coming to Australia and China, among other countries.
Overseas Apple retail stores appeared to have little impact on broader international sales, which sequentially declined slightly to 44 percent of the quarter's revenue. That said, sales were strong in all Apple's geographies, in unit shipments up 45 percent or more year over year in every region.
Apple's Best Buy expansion briskly continued to 400 stores at quarter's end. Apple expects to be in 600 of Best Buy's nearly 1,300 stores by summer.
Education sales were up by 35 percent year over year in the United States, the strongest growth Apple has seen in eight years. Cook observed that the growth results come well ahead of the traditional educational buying cycle.
Apple's gross margins for the quarter were better than expected, 32.9 percent, but still down from 35.1 percent a year earlier. Apple generated $1 billion in cash during its fiscal second quarter, ending the quarter with $19.4 billion.
