Apple – An introduction to Marketing Strategy

This company almost needs no introduction.  Although I am not really a fan of their products, there is no denying the huge success of Apple: the technology company now has the highest market capitalization in the world at $573 billion, which is more than Microsoft and Google’s valuation combined; the firm is the most admired company in the world; and the Apple brand value is worth $153.3 billion alone.  The list is simple endless…

Having only briefly spoken about Apple before, this post will show how the firm’s success is based on simple marketing concepts.

The Product Life Cycle (PLC)

Apple’s iPod is a textbook example of how to manage the PLC from introduction through to decline.

The PLC consists of 4 stages: New Product Development, Introduction, Growth, Maturity, Decline.  But it is the introduction and maturity stages where Apple’s marketing ability really shows.

What sets Apple apart from every other technology company is how it utilises its Apple stores to create over-the-top product launch events and generate free publicity.  Every time Apple launches a product (not just iPods), all employees make an effort to ensure each customer is congratulate the new owners.  It is simple but effective:  thousands queue outside – even camping out for several days – just to experience a product launch by Apple.  This is entirely unique to Apple – one cannot even imagine consumers showing the same amount of passion for a Microsoft product.  The stores are simply great for free PR.

As the maturity stage is the most profitable time of PLC, it is crucial to extend this period to be as long as possible and delay a decline in sales.  This is very much true with the iPod.  The iPod has already experienced massive growth; now sales are stagnant and predicted to decline.  Hence, Apple continuously roll-out extension strategies, updating the iPod with more features, more colours, larger memory, faster processors, a smaller size – anything to keep on getting a short-term sales boost.  The cumulative effect of these short-term updates is that, combined, they actually increase long-term sales – see this great infographic on how the evolution of the iPod has grown sales.

Apple also recognise that decline is inevitable – one day they will have to stop selling the iPod.  But they are more than prepared for this – the iPhone is almost a direct substitute for the iPod, while the Apple Store is becoming more and more orientated to iPad and iPhone users.

Product Development

Product development is just one of the growth options in Ansoff’s Matrix, but perhaps the most effective for global brands.

As you can see (above), product development involves launching a new product to the firm’s existing customers.  If you, like Apple, already have a global presence, in major markets, and understand your customer inside-out, it arguably offers the best trade-off between risk and reward.  By launching the iPad, iPhone and operating systems to the same audience Apple builds up integrated customer relationships across multiple platforms and therefore creates brand loyalty.  This increases the likelihood of new products being a success.  Conversely, Google’s innovations have high failure rates.

The effect on sales of this product range filling strategy has had a cumulative effect on Apple’s sales growth:

The Boston Consulting Group Matrix/ Product Portfolio Management

The famous BCG matrix classifies a firm’s product portfolio into four strategic business units (SBU): Stars, Question Marks, Cash Cows and Dogs.  Within each SBU, there are again four potential strategies to take: build market share, hold market share, harvest (reduce investment) and divest (phase-out).

Star:  This would be the iPad because it has a high share of the rapidly growing tablet market.  As the iPad is in its growth phase of the product life-cycle, the product is beginning to lose its first-mover advantage as other manufacturers begin to launch their own tablet devices.  Hence, Apple should invest heavily into marketing the iPad in order to grow sales to maintain their share (sales need to grow at the same rate as overall market sales to maintain market share within a growing market).  But in the future, when market sales become stable, Apple should harvest the product to turn it into a Cash Cow to fund other SBUs.
Question mark: Despite Apple’s best attempts, PCs with Microsoft operating systems still continue to dominate the PC market.  Much of this is down to strong business-to-business marketing and high switching costs for businesses and consumers, alike.  Apple could potentially used three strategies for their Mac software:

1) Divest – this could allow Apple to devote more time on their most profitable products, but it is highly unlikely as the Mac is part of the firm’s brand identity.

2) Build – Apple could potentially invest lots and lots of resources to try to turn Macs into a star, however even with Apple’s huge cash pile, it is questionable if it is even possible to beat Microsoft-powered PCs.

3) Hold – this is the most likely strategy.  Apple will probably continue to develop new Macs and support existing customers, however investments will be kept at a minimum and be target towards the iPad.

Cash Cow: Apple’s source of steady flows of income are clearly the iPhone and the iPod; both the MP3 and mobile phone market have reached saturation and Apple has a high share of both these markets.

As the iPod is reaching the decline stage of the PLC, Apple is beginning to harvest the product.  That is, slowly reducing investment in marketing iPods to increase their profitability; by generating more cash, further investments can be made into question marks or stars.

In the future, Apple will probably only maintain their market share of the iPhone. It is a highly profitable to generate sales from existing customers from upgrades, which can be almost guaranteed after a consumer invests heavily in downloads from the app store.

Dog: Lastly, Apple TV – a device that allows media files in iTunes to be played on a TV – has never really caught-on.  By launching a second and third generation, Apple have shown they are committed to building sales.  However, unless the overall market for digital media receiver grows, it could be more profitable to divest the product.

Competitive Positioning

Apple have a clearly defined premium strategy: they offer more benefits for a higher price.  According the Value Proposition Matrix (above), any of the white squares are competitive strategies.  But, I personally believe a ‘more for more’ position is perhaps one of the more effective.  This is because it is highly profitable and hard for competitors to copy a premium identity.

Developing a premium, or luxury image, is incredibly hard for both new and existing brands.  Hence, it is highly unlikely any of Apple’s competitors will risk undertaking an upward brand stretch and gain a premium status.  Moreover, this type of branding allows a premium price tag to be attached to any product – regardless of the quality – with an Apple logo, allowing the firm to make huge gross margins.

This heavily links into Micheal Porter’s famous generic strategies:

A firm’s scope can be either to target a niche market (narrow scope) or a mass market (broad scope); and their strategy can be based on low-cost, or differentiating themselves, with additional benefits, from their competitors.

Apple has been very clever with their choice of strategy, depending on the product.  Initially – and for a long time – the firm used a Differentiation Focus strategy while Apple only sold Mac computers.  The firm was very niche and was targeting Innovators and Early Adopters:

According Everett Roger’s Diffusion of Innovations theory and Kotler, those who adopt new technological products act as opinion leaders and brand evangelists who spread word-of-mouth promotion about your product.  This then attracts the Early Majority, where the bulk of sales comes from.

After Apple used a Differentiation Focus strategy and masses of consumers where becoming more aware of the Apple brand, the firm has moved towards a pure Differentiation strategy.   This is seen by the iPod and iPhone that are used by wide range of consumers.

Many firms make a mistake these days of not targeting the Innovators and Early Adopters – they try to immediately win huge sales.  Seth Godin (and I) believe this is a poor strategy:

Branding – Corporate Branding / Family Branding

If you have read my previous post on Proctor & Gamble, I am a very strong believer in the power of corporate branding.  This is where a single brand image of the firm is used to promote their range of products, rather than developing a brand for each product category.  Apple is a great example of this.

Apple’s own brand values – innovation, simplicity, style – have been consistently emphasised across all of their products.  These have even been personified by former CEO Steve Jobs’ personality.

This is highly beneficial to the firm because it makes new product launches much more likely to be successful; it seems that Apple could launch an iWhatever and consumers would buy it.  Moreover, Apple customers have been so conditioned to Apple brand values that it is naturally assumed a new Apple product will be any of the above brand values.

Further to this, Apple also benefits from something called the ‘Halo Effect’.  This is where a customer purchases/likes one product from a firm and is then interested to try out other products the same company has to sell.

As the graph shows, after a big rise in iPod sales in 2003/4, Mac sales also started to pick up more significantly.  Many think this is down to the Halo Effect – consumers enjoy their experience so much with their iPods they decided to fully ‘make the switch’ to Mac computers.  It has been found by Apple Insider that almost 20% of Mac sales have come from once PC owners who first purchased an iPod.  More recently, the same Halo Effect is occurring because of the iPad

To reiterate: it is because Apple has such a good corporate brand that consumers believe if they like one product by the company, they will like all of their products.

Services Marketing

Although I have already blogged about the Genius Bar, it is worth mentioning it again here as it provides a good lesson in services marketing.

Ever since the end of WW2 services marketing has been given growing attention by businessmen and academics.  Now, in the 21st Century, offering additional services to a product has become a major source of competitive advantage and brand differentiation.  Apple, for example, achieves differentiation from other technology firms through having retail outlets that allow them to provide superior customer service.

The Genius Bar, offers Apple customers face-to-face technical support; a very welcome change to poor after-sales service provided by their competitors.  This helps augment their products and support their ‘More for More’ competitive positioning, hence it is an important way to add value to Apple products.

In addition to enhancing their value proposition, it gives Apple an unrivaled chance to practice interactive marketing – engagement between employees and customers.  Where as other technology firms often only practice external marketing, Apple can use interactive marketing to enable customers bond with the firm.  This is helped by the fact that employees are – or at least perceived to be – brand ambassadors that truly believe in what they are selling.

Marketing Communications

Lastly, there is no point in doing any of the above unless consumers know about it.  However, it is hard to say what makes great campaigns.  But one thing is sure: they have to be original.  There is no real strategy or science behind it, but Apple have managed to get it right on so many occasions:

I hope I have managed to cover the main theories, and used Apple to help explain these, but if I have missed anything out please let me know in the comments below.  I also hope I have highlighted how important the Apple stores are to the firm’s success as I feel this is something that is often overlooked by other business writers.

And thank you for reading the whole post!

© Josh Blatchford, author of Manifested Marketing, 29/03/2012

M&M’s – Brand Engagement

The confectionery conglomerate Mars – who produce the Mars Bar (as expected), Snickers and cat food Whiskers (not so expected) – have just opened their London flagship store for their M&M’s sweets.  The store is part of  a £10 million marketing drive to improve the brand awareness of M&M’s in the U.K. to the similar levels in the U.S.A, where their sweet characters are more widely recognised.  The store serves three purposes: a shop, a tourist destination and, last but not least, to allow consumers to engage with the brand.  It is the last purpose I will focus on.

I think this is a great way to improve brand awareness.  The best form of developing relationships with customers – the essence of marketing – is through communication and interaction.  But all too often companies simply roll out a new ad and subject their consumers to boring messages.  Not only is this actually innovative, it is simply far more effective.  Attractions such as chocolate walls, M&M chandeliers and the ability to customise your own sweets will easily create more of a buzz.

The real reason why this improves brand awareness is that it makes consumers want to engage with the brand.  Visitors to a retail outlet actively choose to enter and are free to explore a great range of merchandise.  Whereas other forms of communication with consumers are normally initiated by the company.  This is similar to something marketing guru Seth Godin calls ‘Permission Marketing’ – the best marketing is welcomed by the consumer and not forced upon them.  The benefits of this are clear: Mars marketing director Alex Brittain claims that visitors spend an average of 40 minutes browsing the store.

All the while, consumers are having fun and developing their relationship with the brand.

 

The only issue with this strategy, inevitably, is the cost.  A city central location for any retailer racks up some serious rent.  And, albeit merchandise normally have huge profit margins, a vast majority of visitors will not actually even spend any money.  That, however, is irrelevant.  I am confident the long-term benefit of creating an effective brand will easily pay long-term dividends that justify this great idea.  It is just a question of measuring the return on investment that will prove to be a challenge.

Do you think it worth opening a whole store for M&M’s?  A cheaper alternative may be to sell the merchandise through Selfridges and set up a pop-up store instead, like Marmite.  Leave a comment below.

© Joshua Blatchford, author of Manifested Marketing, 13/07/2011

Soreen – Customer Relationship Marketing

Soreen is the bakery that is responsible for producing ‘Malt Loaf‘, a quirky snack that is akin to fruit-bread.  I am not expecting many of my readers to be overly aware of Soreen’s malt loaf, however, there is a very good reason why I am compelled to blog about the company today: customer relationship marketing (CRM).  CRM is essentiantially marketing activities that create emotional attatchment between the customer and the firm.  This, in turn, creates customer loyalty and therefore enhances brand equity.  Hence, the key aim of CRM is to generate sales from existing customers, instead of by finding more customers.

A few weeks ago I noticed on Soreen’s website that an online store was due to open, dubbed the ‘Sticky shop‘.  I was delighted to see that one of their future products was to be running tops; I rang up customer service and asked if they had any idea of when the shop would open as I was desperate to place an order.  Although this is not what has induced me to write about Soreen, selling merchandise is a great way to build brand equity by allowing consumers to visually express their love for malt loaf – can you think of a more effective method of word-of-mouth advertising?   Unfortunately, they were unable to tell me when the store would be open and took down my contact details.  I thought nothing much of the phone call.

But, yesterday I arrived home from university to a rather nice surprise: a package from Soreen.  Inside: a cotton t-shirt, two free pens and a key ring.  Most significantly, however, was a hand-written letter from the company; they apologised to me that they had no running shirts delivered yet, the store was not open and thanked me for enthusiasm for malt loaf.  It doesn’t matter that the t-shirt does not fit, that I do not need yet another key ring nor do I the pens; still, this is the best CRM I have experienced.  It is the emotional bond that is created from the hand-written letter that makes this effective CRM.  As Marks and Spencers know, CRM is highly beneficial for a company and its brand; my obsession for the product is now matched by admiration for the company behind the product.

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Albeit it is this special treatment that I received that is effective CRM, the reason behind the company success is based around a top-notch product and consistency.  I just love how the company constantly stresses keywords: sticky, healthy and fruity.  According to David Taylor, this goes to show that effective branding begins with a good product, which is then augmented by emotional extras such as CRM.  Moreover, they have not messed around with the original recipe – god-forbid – that brought them success.

What personal experiences have you had with companies – big or small, known or unknown, English or foreign – where you felt that you were treated exceptionally well?  Or have you ever been put-off by a bad experience to never purchase from a firm again?  Please let me know in the comments.

P.S. If you haven’t already, I urge you to try malt loaf for yourself!

© Joshua Blatchford, author of Manifested marketing, 06/06/2011

Procter and Gamble – Corporate branding vs multi-branding

Procter and Gamble (P&G) is the American, fast-moving consumer goods company behind many brands you are likely to have lying around your house: Ariel, Bounty, Pringles and Gillette – just to name a few. These brands are probably familiar to you. Hence, their strategy to date of promoting multiple brands to target different market segments has been highly effective. However, this has hitherto been at that expense of promoting their corporate brand. Thus, P&G have reviewed their promotional mix; now, the company plans to promote their corporation’s environmental credentials through T.V. advertising in the U.K . Their belief is that if consumers perceive P&G to be a green company, then they will actively seek out their brands. This coincides with the lauch of their new environmental sustainability vision.

Simply, P&G are moving away from a mutli-brand strategy to a corporate branding strategy. But surely there are advantages and drawbacks of each approach?

Firstly, what has made P&G so successful? As mentioned before, effective multi-branding is the answer. This allows P&G to tailor different features that appeal to different consumers – note in the picture above: they manufacture both Head & Shoulders and Pantene shampoo. As a result of this, the company can take a differentiated approach to marketing. Thus, long-term relationships are developed with customers by closely satisfying their wants and needs with products that have a competitive advantage over their competitors. Although P&G have overcome the most common drawback of using a multi-brand strategy – that each brand may only obtain a small market share – they do suffer from a lack of corporate publicity.

Unlike P&G, Unilever and Reckitt Beckinser, their major competitors ,have already started to promote their corporate brand – as opposed to their products’. Unilever distinctively display their logo on their advertisements; while Reckitt Beckinser has started to raise their corporate publicity among students to highlight the graduate job opportunities they offer. So already P&G are playing catch-up with their micro-environment.

This means that above-the-line promotion is needed, in the form of advertisements, to quickly raise their corporate profile. This would account for the creative advertising, below, which has already been aired in the U.S.

Take note of the ending: although they highlight the relevant product range to Mothers – a key market segment – the main emphasis is on the company, P&G. This is an indication of how they aim to undertake corporate branding in the U.K – sponsorship of the 2012 olympics that emphasises their environemtal sustainability and healthy living ethos. Thus, like how Mothers in the U.S. may seek out products from various P&G product lines, health and environmental concerned consumers in the U.K. will theoretically look out for P&G products.

Moreover, I believe that this corporate branding strategy will provide even more longer-term benefits for P&G, that may not even be a part of their marketing objectives. Namely, as consumers trust and recognise P&G, the more willing they may become to try new brands they launch. For instance, Heinz’s traditional labeling has become synonymous with high-quality food products. This develops deeper consumer relationships. If P&G can achieve a similar brand positioning – in the minds of their consumers – then product development becomes less risky and, therefore, innovation becomes more effective.

However, in order for corporate branding to be a success, the company must have a good reputation – a slightly obvious observation I know. But still, a poor reputation is a major weakness. As such, Kraft Foods – unlike others mentioned so far – are still emphasising their product brands other their corporate identity following the consumer backlash over their unethical behaviour during the takeover of Cadbury Chocolate.

Ultimately, I believe a corporate branding strategy will work for P&G – albeit it being implemented a little late. However, I do not feel that it will be sufficient to promote their apparent environmental considerations; environmental impact varies so much on a product-to-product basis. Hence, each one of their products has different degrees of sustainability – it is the brand of the product that will prevail over the brand of the company on ethical issues. But, more importantly, corporate branding is likely to be a huge success for the P&G in terms of making consumers more receptive to the high-quality innovation that the firm has yet to receive credit for.

© Joshua Blatchford author of Manifested Marketing 31/12/2010

Barclays – Sponsorship

Barclays, the british bank, has been a long-term and well-known sponsor of the football Premier League. More recently, however, Barclays has become the sponsor of the city of London’s new cycle hire scheme and cycling ‘superhighways’ that aim to ease congestion, look after the environment and promote healthy living. The program will involve cyclists renting one of the 6,000 Barclays branded bicycles from any of the city’s 400 docking stations, which are connected together by blue-coloured cycle lanes. All for the cost of £1 – providing their commute is over within 30 minutes. Although there is a degree of goodwill in the sponsorship, there is a marketing advantage to gain; financial services are becoming increasingly difficult to differentiate as their complexity increases and banks’ reputations are in tatters.

The main reason behind sponsorship is to align a brand with typical values or an ethos; their lion logo, for instance, connotes British heritage and tradition – qualities that evoke trust from customers that, combined with an effective promotional mix, can be seen as customer relationship marketing. But in this case, the quirky sponsorship deal shows creativity, which is what really produces brand awareness. Brand awareness, for Barclays in particular, is critical to success given that they sell an intangible service. Therefore, to gain recognition and loyalty, their brand needs to be symbolised and synonymous with familiar, visible objects. Moreover, this can be seen in the blue cycle lanes – Londoners will forever be reminded of Barclays’ omnipresent dominance in the world’s banking capital. It will be those continuous, albeit small, prompts in commuters’ minds that creates brand awareness.

However, as a form of below the line promotion – within a wide-ranging promotional mix that is needed in a competitive market – sponsorship often produces returns that are hard to quantify: how do you measure the benefits of moving, untargeted advertisements and the correlation between this and brand awareness? This problem only compounds when trying to figure out if the sponsorship is recognised as goodwill for the sake of good, or goodwill for the sake of marketing. Despite the cycle lanes being painted blue before the sponsorship, many Londoners see the branding as intrusive and excessive – this  deal, perhaps, affects too many stakeholders, who’s collective needs are very rarely satisfied. Further, there are issues with the name ‘Barclays’ cycle hire’: its boring and uninspiring. What happened to the innovation that hitherto had been the backbone behind the strategy?

Overall, when assessing whether this will be an effective marketing strategy, the results depend very much on the success of the sponsored entity; sponsorship, much like celebrity endorsements, can be double-edged swords. As banking is not seen as an ethical industry, the goodwill from enviromental and health benefits is likely to be limited. Also, upon hearing reports of bikes being too slow and the logistics of the scheme complicated, there is plenty of scope for error: the Barclays brand may become identified by bicycle collisions, theft and road-rage.


© Joshua Blatchford author of Manifested Marketing 06/08/2010

Johnson and Johnson – Brand Repositioning

Liquid petroleum is low-value, mass-produced and has a wide variety of uses; there is huge potential for mass marketing. So why, one must ask, was and how a niche found – then the strategy revised?

The market name for this substance has been long known as Mineral Oil, used primarily for health and medical uses. But US pharmaceutical and fast-moving-consumer-goods manufacturer Johnson and Johnson bridged the gap between the initial R&D and the market-ready innovation by defining a baby-care niche: Johnson’s Baby Oil was born. This extended their ‘baby’ product range, which later also included ‘No more tears shampoo’. These products demonstrate the benefits and drawbacks of a ‘Focus’ strategy – as the consequential brand repositioning shows, operating in a niche has its limitations.

The branding of their baby oil and shampoo has highly effective in defining their niche: happy babies in above-the-line advertising, pink packaging and a trusted producer sends out all the right connotations; mothers know that these products will never harm their babies. As a result of this, Johnson and Johnson can differentiate themselves from the competition – which is the essence of what a brand should aim to do – that seduces a female-orientated target market to ignore generic competitors. This may have been key to success as Micheal Porter’s Five Forces demonstrates, Johnson and Johnson has less power than their customers – the supermarkets – who are also trying to sell their own-brand alternatives. Hence, branding to create a niche is a competition-driven objective.

However, while it was a competitive strategy, now-a-days the products are marketed to a wider, mass market – the ‘baby’ niche, which limited sales, has been ditched to pursue a new sales growth aim. This is essentially repositioning a brand. The baby oil and shampoo, it is argued, if soft and gentle enough even for babies, then surely new consumers can be attracted to use the product, which mirrors a form of market development. Predictably, more customers equates to more sales and therefore greater revenue; also, by increasing demand Johnson and Johnson can benefit from internal economies of scale to reduce average unit costs, which boosts profit margins. But this is easier said than done: very good marketing was needed to successful reposition their products. The critical decision, I believe, was in retaining the core values of their product by maintaining the association with babies – despite no longer being their target consumer – to use their reputation to transfer trust to new customers. Hence, overcoming any customer inertia. Ironically, therefore, the secret behind successful brand repositioning is not to change the branding to match the new consumer, but change the consumer’s perceived ‘needs’ to match the brand.

© Joshua Blatchford Author of Manifested Marketing 04/08/2010

Amazon UK – Product Development

US-listed online shopping giant Amazon, has now launched a new grocery section to their website. This is a great example of related-diversification, one of Ansoff’s Matrix’s strategies, which involves offering new products to new customers – current customers, however, are also likely to use the new service. Currently 22,000 different products are available online, which is more than ‘Ocado’ offer, and standard Amazon delivery charges or £49 for unlimited delivery per annum apply. Yet they face several difficulties that needed to be monitored and reviewed as part of their Marketing Plan.

Not only does Amazon face strong competition from Ocado, a rival online supermarket, the oligopoly-forming supermarkets of the U.K all offer their own online and delivery service. This is issue is moreover emphasised considering that Amazon can only offer deliveries within a working day, not within hours like rivals, which may be an issue when the Product sold is perishable; their distribution channels may need optimising. Also, there is an issue with branding. Although Amazon a diverse range of products, it may be hard for Amazon to associate themselves among consumers for food – there is a huge issue with trust and consumer relationships need to strengthened through effective PR. Thus, because their operations are heavily geared towards gifts and conventional goods, there is a high degree of risk associated with diversification; hence, an effective SWOT analysis is likely to form a vital element of their marketing plan.

However, Amazon do have several competitive advantages as a market-leader for online shopping, which leads to real advantages besides economies of scale. Customers may be attracted to Amazon, rather than competitors, for bulk-purchasing of specific products; niche’s can be found for customers quirky needs and non-perishable grocery goods like wine, for instance. Hence, their weaknesses – an inadequate distribution system – may become a strength because it is suited for bulk-buying. In addition to this, there is potential for cross-marketing of Amazon’s different shopping departments. This is what management are hoping for: customers who purchase a cookery book may now be encouraged at point of sale to buy any ingredients they are likely to need, thus boosting sales revenue. So, although Amazon are unlikely to alter the competitive structure of the market significantly and have little management experience, it is likely to provide yet another revenue stream – given that you can purchase almost anything online these days.

Overall, sales will be very slow and unlikely to pick-up significantly in the medium to short-term. But as technology becomes more and more accessible and integrated with day-to-day life, and if such change is anticipated and managed well, then in the very long-term sales will increase. Having said that, will it be Amazon’s sales increasing or the market size increasing? Competition is a major external influence on this strategy that may constrain success.

Moleskine – Branding

Branding is important for any business or product; the same can be said for Moleskine notebooks. Their notebooks, which carry a premium price tag, have emphasised the historical and cultural connotations of the company – as well as boasting high-quality acid-free paper – to justify the price and differentiate themselves from budget competition.

History and culture is the life and blood behind Moleskine’s branding. Before the company’s revival in the 1990s, similar leather books, which the current product portfolio is modeled after, were used by the likes of Ernest Hemingway, Vincent Van Goth and Oscar Wilde – those that symbolise heritage. And it’s because of this literary connection that its main distribution channels are bookstores. As a result of this, the company used to be unable to keep up with the huge demand that has generated among writers and has furthermore snowballed into communities devoted to sharing their beloved notebooks with one another; no other brand of notebook has seen a following quite like this. Although the brand may stifle risk-taking and innovation, the company has made good progress in extending its product range too – address books, special editions, ‘passion journals’ – all create a solid extension strategy. Not that this is needed. Due to strong consumer-relationship marketing, a vast proportion of revenue is generate from repeat custom.

However, albeit still going strong during the recession, modern-day business does pose several threats to Moleskine. The product is manufactured in China, which, despite a high-quality paper industry, does not immediately lead customers to infer that they are getting a high-quality product. Moreover, the cheap supply of labour makes their products pricing strategy look even more like profiteering. Having said that, these are operational issues that, in fact emphasise just how good their marketing is to over-come such issues; the various functional departments simply need to become more homogeneous.

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