Germany is located in Central part of Europe. It is located between
Poland and Netherlands. Its population is approximated to be more than
80 million. Germany capital city is Berlin. It has a federal government
headed by Angela Merkel. Though English language is highly used, Germany
official language is German. Its location and its growth potential is
quite an appealing destination for marketing goods and services.
A PEST analysis will be conducted on the target market, examining the
macro-economics aspects of Germany and a conclusion will be done to
identify marketing opportunities. Germany produces nearly a quarter of
the EU’s Gross Domestic Product and nearly a third of the Gross
Domestic Product of the euro currency area. It is the third largest
economy after United States and Japan. Therefore, marketing IPAD4 in
Germany might be a successful venture for Apple.
Overview of Germany
The target market (Germany) is an open economy with a strong base for
businesses to thrive, producing most of its Gross Domestic Product for
export. The country constitutes Europe’s largest economy, and
dominates the decision making in the EU. Unlike France or the UK,
Germany is a highly decentralized federal state, and has a better
understanding of the compromises necessary to make a federal Europe
work. While much of the debate about the euro in the UK or France has
been conducted along the lines of sovereignty and national identity, for
Germany the question has been largely an economic one. In recent years,
there have been signs of a more aggressive stance on reform. The
‘Agenda 2010’ program of structural reforms implemented in 2004
included reductions in benefit entitlements for the unemployed and other
changes to social programs aimed at improving labor market performance.
P.E.S.T. Analysis
Economic environment. Germany Economic Performance
Consumption demand
shock Price setting curve high
real exchange rate.
Therefore, the shifts in aggregate demand, if they are persistent, can
move the economy to new constant inflation unemployment rates. If there
is a period of sustained weakness in aggregate demand, unemployment
rises but inflation ceases to fall once real consumption wages have
fallen to a level consistent with wage-setters’ behavior at higher
unemployment (point B in Figure 3). Conversely, in the case of a
positive aggregate demand shock in the open economy, the closed economy
mechanism, through which rising inflation at lower unemployment leads
the central bank to raise the interest rate and induce contraction back
to the original unemployment rate, is circumvented by the fact that real
consumption wages can rise.
Every business is rooted in a particular macro environment. In light of
this, an instrument that is necessary for scanning the macro environment
can be said to be the P.E.S.T analysis (Andler 2008 p. 197-198). Thus
this analysis will be conducted in consideration of the political
environment, economic environment, technological, and social
environment. The focus will be directed to the Germany electronic
Economic Environment
The acceleration in the economic activity has benefited the labor market
and the unemployment rate declined from 10.3% in the 2005 to 8.2% in the
third quarter of 2006. The German GDP growth improved in 2004 with the
economy posting a 1.6% growth. Overall, during 2000-2005, the German
economy recorded a CAGR of only 0.8%, one of the lowest among the G8
The dampened economic performance has affected the labor market. In
2005, the unemployment rate in Germany stood at 10.31%, one of the
highest by OECD standards. Moreover, more than half of the unemployed
population had been looking for a job for more than one year, as
compared with less than one third, on average, in the OECD area.
Rising domestic demand has led to an upsurge in the construction
activity in the second quarter of 2006. The economy has also benefited
from rise in the export demand. In October 2006, the German trade
surplus was at its highest since its unification in 1990. The US is the
most significant non-European market, accounting for 8.8% of total
exports, making it Germany’s second most important export market.
Spain absorbs 5.1% of Germany’s exports. Trending exchange rates of
Euro-US$ for a span of 7 years were as follows.
Year Exchange
Source: Datamonitor, World Resources Institute 2006,
Earthtrends D A T A M O N I T O R
, Euro-US$, 1999-2005 (annual average)
Political environment
While efforts have been made, no clear mandate in the September 2005
election has led to the formation of a coalition government with rival
groups coming together. This has raised concerns regarding the execution
of the economic reform initiatives being currently undertaken. The
present government is however committed to continue with the reforms.
The key reform areas identified by the government include healthcare
insurance and the social welfare system. The government also plans to
reform the corporate taxation system in the coming years. Many areas of
the economy are still highly constrained by regulation and restrictive
practices. For instance, the retail sector faces some of the most severe
restrictions on opening hours in Europe.
Germany legislation has been left behind by economical and technological
development in terms of mobile business. Germany’s broad structure
acts as an impediment to quick adaptation to the market requirements
Social Environment.
The elucidations regarding the converging technologies and the
explanations concerning the economical factors may emphasize the major
role of internet. Keller (1997, p. 13-16) emphasized that roughly 60 %
of German citizens surf the internet.
Technological environment.
Although the German education system is focused on employment-relevant
skills training, insufficient wage differentiation has reduced
incentives for skill acquisition. As a result, despite mass
unemployment, skill shortages are widely reported across the economy.
Moreover, inappropriate wage differentials have held back investment in
new technology. Strict labor laws related to hiring and firing have
prevented firms from taking on more workers during the economic growth.
Other issues include investment in Information and Communication
Technology (ICT), which lags behind the OECD average. In terms of
access to broadband, Germany lags behind its peers. As of December 2004,
broadband penetration was less than 9% (Datamonitor, 2006). The
following table shows the mobile phones penetration into the Germany
Mobile phones per 100 people in Germany, 1995-2004
Year Mobile phones per 100 people
% growth
1995 4.56
1996 6.73
1997 10.09
1998 16.96
1999 28.57
2000 58.65
2001 68.21
2002 71.80
2003 78.64
2004 86.52
Source: The World Bank, U.S. Census Bureau International
Database, Datamonitor Analysis D A
Mobile phones per 100 people in Germany, 1995-2004
Marketing mix
Marketing includes many interconnected and interdependent activities.
The marketing mix is the way in which the organization attempts to mix
these actions productively. Apple will focus on all the 7Ps in order to
deliver quality value and to increase its competitive advantage. Apple
has also mastered the art of cult marketing. The diagram below shows how
Apple has approached marketing over the years
Apple Marketing
Cult Marketing has been strengthening customer loyalty and the tools
that Apple has been using. Apple customers follow Apple’s products
like a cult, where in one instant, when Apple introduced iPad, its
customer had to camp at the Apple’s headquarters just to get this
Apple is an outstanding company. Its range of products is outstanding,
and the company’s CEO ensures the highest quality of products is
delivered to the customers. There is no doubt that the quality of IPAD 4
is excellent and will sell considerably well, bearing in mind that
Germany is one of the leading economies in the world.
Quality should be the basis for strategic orientation, and that the
implementation of quality practices in the whole organization is
directly linked to an increase in positive recommendations and a
reduction in negative comments of customers.
Promotion is a communication tool that Apple will use in marketing IPAD
4 in Germany, not only to notify customers but also to interact with
them for long-term benefits. The primary purpose of promotion is to
communicate with customers. While the physical product covers a wide
variety of variables such as brand name, quality of inputs, appearance,
and options, the intangible nature of services results in real-time
production and consumption). Sales receipts are physical proof of
consumer purchases of goods, and a physical communication tool for
retailers to use.
Price is the money paid by the customer to buy a product. It also
includes the cost in terms of time and effort spent. Since price is a
cost to the customer, organizations must understand how customers
analyze the price and what they perceive about the value derived from
the product. The best price that Ipad4 will be sold in Germany is iPad 3
16GB WiFi – PRICE: 479 EURO,iPad 3 32GB WiFi – PRICE: 579 EURO,iPad
3 64GB WiFi – PRICE: 679 EURO,iPad 3 16GB WiFi + 4G LTE – PRICE: 599
EURO,iPad 3 32GB WiFi + 4G LTE – PRICE: 699 EURO,iPad 3 64GB WiFi + 4G
Perceived Value
The issue of perceived value does arise because Apple must offer quality
IPAD 4 value for money. Customer perceived value is very high in the
case of products like IPods and iPhones due to their high quality
content and Company’s reputation. Almost 60 % of Germany population is
below 40 years, and most of them rely on internet for information and
Place is the location or distribution channel through which the service
is delivered. The location where the company wishes to sell IPAD 4 is
Germany. Due to high reliance of internet by most of the Germany
population, Apple’s sales receipt can be used to provide information
concerning the website that customers can use as an alternative to
physical shopping places.
Process is a particular technique of action or a sequence of procedures
normally involving several steps that repeatedly have to take place in a
defined cycle. Process plays a key role in the promotion of a particular
product. Germany population has a tendency of purchasing items, where
information such as return policy and guarantee service is offered.
Physical Evidence
The physical or tangible aspects of service which provide the proof of
quality of the service are called physical evidence. The intangible
services can be made tangible using physical evidence.
So what type of evidence will satisfy the consumers? The answer is
obvious the previous innovations of Apple have been of high quality. In
Germany there is no product that has been manufactured that can match
the IPAD4.
For a company to provide its service, it has to have in mind the right
people they are targeting for that particular product. Customers are
always the target market. For IPAD4 , anyone can be the target for
buying it as long as they can afford. Every customer has a right to be
given a chance to get the type of Ipad4 they want as long as it
satisfies their needs and directed well by agents selling the phones.
SWOT Analysis
The SWOT analysis will be conducted and used as strategic planning tool
in evaluating the Strengths, Weaknesses, Opportunities, and Threats in
our target market (Germany) for new Ipad 4.
Overview of Apple.
Apple was founded in 1976. The co-founders were Steve Wozniak and Steve
Jobs (Sutherland 2012). Apple symbolizes innovation in personal
computing and digital media manufacturing. The company aims for a
revolution in designing, developing, and distributing its variety of
products. Apple’s products are varied and wide.
Its brand image is unstained over the years. Apple is one of the leading
manufacturers of computers and mobile phones in the world. The consumers
who have been using Apple’s products and services are a happy and
satisfied lot. Apple products have a tendency of providing the customers
with fun, good quality images and quality service. Apple can boast for
being the leading manufacturer of mobile devices in the world. Their
revenue level is high and its shares have multiplied recently. Its
iPhone has large number of users worldwide. Its presence is felt
Apple develops softwares that are user friendly. Their products are
consistent, interoperability, and a built-in help system that makes the
company productive. Apple has also helped in the advancement of computer
technology. Popularization of technology is their virtue, where it
created firewire for access of high speed data, and Wi-Fi for wireless
internet access. This makes the data move faster and without clutter of
wires (O’Grady 2009). Since the introduction of iPad 4 to June 2011,
Apple had hit 25 million mark in sale, and between June and October
2011, it had sold 11 million more (Lusted & Elmaghraby 2012 )
The price of most apple products is high, thus making only a large
number of people unable to buy them. This makes the products to have a
low return. The consumers opt for other competitors’ products which
are cheaper than Apple products. Previously, Apple had cases of faulty
iPod Namo which were designed with a screen which was easily broken.
IPAD 4 is a strong brand with a strong media content, which makes the
product attract even the first time customers. Apple customers have
ceased to be just customers, but they have also become loyal fans. The
strength of the brand makes marketing very easy. For Apple, it has
become very easy to market IPAD 4 in many countries such as China. This
should boost its chances of being successful in Germany.
With the migration of communication from being analogue based to being
wireless based, combined with the innovative ability of Apple will
provide a great success for IPAD 4 in Germany mobile market. In Germany,
the mobile market has reached what can be called “mobile
penetration”. The mobile market has grown tremendously over the years.
For a long time, there has been stability in the European government,
thus providing an exemplary environment for business. Nevertheless, the
company is unable to predict the trend in the market as the value of
pound and Euro keeps on fluctuating.
Strong competition arises from long established computer makers such as
Blackberry, Samsung, Nokia, and Commodore. There is also presence of
unstable global markets. In Germany, Apple is likely to face a slow
Euro-zone economy. Therefore, the product might sell at a very slow
European economy has been moving at a very slow pace and this poses a
great threat to IPAD 4. Previously the European Union had embarked on
implementing the standards and policies at multiple levels to ensure the
creation of a single European market for mobile phones. In 2009,
The company stands an immense opportunity of making gigantic profit if
it puts in place exemplary measures to make it compete in the market.
The report recommends that stores should be opened in every part of
Germany. This shall serve interests of a score of customers. Thus, Apple
can change this medium from being a mass medium to market medium for
IPAD 4. The company will need to estimate the likely purchasing power of
the online users. Although the online users are below the age of
majority, their parents and guardians have an income which is above
average. Therefore, the community becomes an extreme attractive target
Public opinion is extremely vital for the company. It is, therefore,
fundamental for the management of Apple to ensure that the public do not
have an unconstructive perception about the IPAD 4 as this will lower
their returns on the product. The company can employ the public relation
professionals who will always deliver the exemplary information to the
public. However, the company should deliver the right information in
time so that a score of customers cannot develop their downbeat
perception to the company as this will take a score of time to convince
It’s a fact that business models on focus are likely to be placed in
the intersection of online marketing and geo marketing, a core value in
view of technological aspect is the localization of customers. Apple can
identify three nodes for localization. The first one would be
localization through the local access to a network, the second one would
be by analysis of user sided hardware, and the last one would be by the
examination of the user’s service component.
The company has established a friendly environment in the global context
for a long time. It has developed gigantic stores worldwide that have
served its customers well. However, the company needs to expand its
presence in Germany. Additionally, the company should take time to
analyse the political, social, technological, and economic situation in
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Wage inflation, real inflation real consumption wage falls.