Apple Inc. and Acer Inc.

Foreign Country Market: Taiwan

Marketing 415 Section 1 December 6, 2010

Group Members:
Lauren Blevins Dan Cunningham Viktoriya Ivanova Robert Koke Nick Sullivan

Table of Contents
(Click on a heading to jump to a section)

Section 1: Introduction! Section 2: Situation Analysis!

I. Political and Legal Conditions! II. Economic Conditions! III. Social and Cultural Conditions! VI. Demographic Conditions!

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3 7 9 11

Section 3. Global Marketing Strategies!

I. International Target Markets Analysis:! II. International Product Strategy Analysis! III. International Distribution Strategy Analysis! IV. International Pricing Strategy Analysis! V. International Promotional Analysis!

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12 13 17 20 21

Section 4: Conclusion! References / Works Cited!

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Section 1: Introduction
Apple and Acer are two of the world leaders in technological manufacturing, innovation and production. Both have to abide by government, legal and political conditions in a global environment. Additionally, there are economic, social, cultural, demographic conditions that both companies take into consideration when marketing their product lines globally. Apple and Acer both have distinct global marketing strategies, which include similar target market segments. Both companies have specific strategies for their international products along with methods of distribution, pricing and promotion.

Section 2: Situation Analysis

I. Political and Legal Conditions Taiwans political ideology is favorable to private enterprise and foreign investment, with even greater strides taken in recent years towards a more deregulated system. As a whole, Taiwan seems to be one of the best environments for setting up businesses in Asia; whether it is domestic private enterprise or foreign enterprise for that matter due to infrastructure established in the nation along with national/government support to back it up. In fact, the WEF (World Economic Forum) even listed Taiwan highly in a survey ranking 80 different emerging countries in terms of global competitiveness. Taiwan scored third in growth competitiveness index and 16th in domestic level competitiveness index among the 80 countries (Taiwan: Country Analysis Report 2). The metrics support the ever growing trend for Taiwans emergence as becoming a powerful international figure in the current, globalized world market. These recent steps have been tremendous towards the freeing and reliving of restrictions and policies of the Taiwanese government. In 2008-2009, government made large steps towards increasing private enterprise policies allowing greater

transparency and equality in government contracts and tax incentives to further the amount of foreign direct investment (4). In regards to political stability, Taiwans recent and brief history as an independent nation has been nothing short of rocky and tumultuous. Taiwan was a part of Japan until the end of World War Two, when Japan released the island from its control, creating the birth of Taiwan. However, much discrepancy was noted whether or not the nation was truly independent or part of mainland China. In 1947, Chinese nationalists headed by General Chiang participated in a massive killing of the Taiwanese people. These events led to a takeover by the Chinese Nationalists under martial law known as the Taiwanese White Terror. As a result, Chiang and his nationalist party established themselves in Taiwan while Communists moved into mainland China to hold control. Marshall Law of the island proved to be harsh with much political and social strife. However, a large economic growth also resulted, as the United States engaged in much international business with Taiwan. This was short-lived, unfortunately, and the initial growth soon dwindled with the United States switching to China for much of its business; as a result, Taipei lost United Nations support. However, the late eighties proved to be Taiwans rising as a nation. Martial Law was ended, resulting in a freer political landscape. Also, trade relations have become re-established with the United States and Taiwan has received more recognition as a national player in the recent years. A large milestone included an entrance into the World Trade Organization in 2002, where Taiwan was entered officially under the Separate Customs Territory of Taiwan moniker (32). Political risk on a firm-level is seemingly low; however, nation-wide corruption is a major factor that risks the entire nation and any entering country wishing to do business or investment with Taiwan. The corruption is quite debilitating towards the nation and there are many statistics used to support the severity of this issue. For example, Taiwan scored an index of 5.8 in 2010 for

the Transparency International Corruptions Perceptions index. Even though this figure is a borderline number, one must consider to stance Taiwan is trying to engage in with freer business laws and alleviation of taxes. The corruption will only serve to thwart their stance as becoming a powerful nation in global business. Trade relations are quite complementary between the United States and Taiwan in recent years, and both countries seem to benefit quite well from the relationship. Barriers to trade seem to be quite low because of the wealth of trade between the two countries. For instance, in 2009, a total of US$46.8B was traded between the two countries in form of commercial goods. Furthermore, Taiwan stands as the 10th largest trading partner, the 15th largest export market, and the 9th largest source of imports for the United States (Taiwan-U.S. Relations). However, some trade-barrier pressures still exist between the United States and Taiwan. Some firms still report difficulties in certain sectors, particularly services. Complaints of lengthy, non-transparent approval processes seem to woe the industry. Protection of intellectual property rights has been less than ideal, but has seen some improvements in recent years. These improvements in protectionism were even noted by the United States Trade Representatives Office in January of 2009 (Country Commerce 33). As a result, Taiwan was removed from the watch list for intellectual property offenders list. However, the problem still exists, most readily via internet.. As for other political and legal conditions, there are different types of product standards, packaging/labeling requirements, and restrictions on promotional activities, especially in the electronics industry. First, Taiwan houses a comprehensive system of promoting greater product standards and making sure national and international companies alike are adhering to them. The Bureau of Standards, Meteorology, and Inspection (BSMI) under the Ministry of Economic Affairs

(MOEA) is responsible for the design of these standards (Doing Business in Taiwan 57). Goals of the BSMI include national standards, international standards, and the harmonization of the two (58). As of 2008, harmonization has increased from 46% to 71.4% in 2002, allowing for greater efficiency and international selling opportunity (58) Packaging and labeling requirements for Taiwan are also quite comprehensive and succinct. Packaged goods, in general, must be displayed in metric units or at least contain metric equivalents (56). In addition to general guidelines, Chinese labels and manual instructions must be available on goods due to Taiwans Consumer Protection Law (56). In terms of imported cargo, certain requirements are in place for record-keeping purposes by customs. Cargo coming into Taiwan must bear marks of distinctive design, a set of three or more letters, or a combination of design and letters indelibly stenciled, stamped, or burned on the packing or on the cargo itself (56). Furthermore, goods inside cargo must have a separate number that cannot be repeated for two years (56). Lastly, there are certain requirements specifically for food product labeling to protect and inform end-users (i.e., Taiwanese consumers). In 1995, an amendment to the Law Governing Food Sanitation went into effect in Taiwan to establish these protectionary laws (56). Included provisions were requirements of Chinese labeling, name and address of manufacturer or importer, expiry date, list of food additives, and weight, volume, and/or quantity of ingredients for food sold at retail; with labels being affixed to the products prior to customs clearance (56). Lastly, there are certain promotional activity restrictions. However, these pertain mostly to vice-products (i.e., tobacco and alcohol). Less government intervention has opened Taiwan to full major media use in comparison of surrounding countries such as the PRC (China). In addition, cable network advertising was legalized in 1994 (Taylor and Raymond 9). However cigarette promotion is restricted solely to magazines, as other channels such as point-of-sale and television

advertising remain restricted (10). Also, alcohol has certain advertising restrictions in Taiwan. Television media are allowed, but only during certain hours to hopefully curb young viewers from underage use (10). II. Economic Conditions When analyzing Taiwan political and legal conditions are important, but the economic conditions in the country is also important. Since the latter half of the 20th century, Taiwan has made ample economic progress. Considerable economic reform occurred, starting around the late 1950s, as the nation shifted toward a more industrial era. Before this time, Taiwan exported mainly agricultural products; today, 98% of Taiwanese exports are industrial goods. This massive shift is known as the Taiwan Miracle, and established the nation as a manufacturer, created jobs and catapulting the economy into the 21st century. The gross national income per capita was $16,400 in 2009, ranking Taiwan 41st in terms of GNP by the CIA World Factbook. Its nominal GDP and GDP per capita were $734.3 billion and $32,000, respectively, in 2009 as well, with an unemployment rate of 5.9%. While it is not a member of a free trade area, Taiwan engages in bilateral agreements with its biggest import nations, such as the Trade and Investment Framework Agreement (TIFA) with the United States. Other economic memberships include the World Trade Organization (WTO), Asian Development Bank, Asia-Pacific Economic Cooperative (APEC) forum. Taiwan also remains an observer of Organization for Economic Cooperation and Development (OECD). The inflation rate in Taiwan is -0.9%, and the Treasury Reporting Exchange Rate as of September 30th 2010 was $1 US Dollar/$32.035 New Taiwan Dollar. During the past 90 days, the TWD has appreciated by $2 TWD since August against the U.S Dollar overall. Over the past year, the USD/TWD exchange rate remained overall constant around $30-$33 TWD. Today, the foreign

exchange rate hovers around $1 US Dollar/$30.20 New Taiwan Dollar. As of the end of November 2010, Taiwans foreign exchange reserves held by the Republic of China (Taiwan) amounted to $379.26 billion US Dollars. Taiwan is an export-oriented nation, depends heavily on world trade, and is henceforth sensitive to dynamics of global market and fluctuations in global economic conditions. It exports almost all industrial goods, and its biggest export products are computer-related. It imports mostly raw materials for manufacturing purposes. Taiwan is considered a leader manufacturing outsourcing, especially among its geographic region; it is referred around the world to as one of the Four Asian Tigers alongside the developed economies of Singapore, Hong Kong and South Korea. The United States is now Taiwans third-largest trade partner, receiving 11.6% of its exports and supplying 10.4% of its imports. According to the U.S. Bureau of East Asian and Pacific Affairs, as Taiwan's per capita income level has risen, demand for imported, high-quality consumer goods has increased, and Taiwans reputation for reliable consumer electronics fulfills international demand. Within the computer industry, Taiwan is also considered a leader in personal computer manufacturing. Its electronics sector is the biggest recipient if United States foreign investment, despite the nations overall underdeveloped bond market. Locally, there are many small competitors in the computer industry. However, Taiwan-based Acer dominates the market, owning the largest franchised computer retail chain in Taipei, is one of Forbes Fab 50 companies, and is the second largest computer maker in the world (#1 is Hewlett-Packard). Globally, there are fewer, larger competitors. Taiwans top global competitors include Dell Inc., Hewlett-Packard Company and Lenovo Group Ltd. (based in China).

Taiwans local infrastructure certainly makes it a market of interest. Transportation channels are constantly improving, especially in the West; Taipeis rapid transit is currently being doubled, and is expected to finish by 2013. Population is dense in Western urban areas, making for logistical ease in transporting products and materials. The countrys highways are well-developed, include tolls, and are being expanded to the less-populated East coast. Various marketing intermediaries in the United States assist in partnerships with Taiwan enterprises, and are mostly independent marketing and consulting firms. In terms of advertising, inaccurate and/or misleading information is common, which has caused legal nightmares; pursuit of advertising in Taiwan should therefore be approached with caution. Communication of promotional messages is done mainly on billboards and store signs on buildings, in print, or over the internet. Television media exists, but only broadcasts during certain hours. English is often incorporated in advertising messages, and is thought to become increasingly included in them as diplomacy between Taiwan and English-speaking nations continues, and as Taiwan continues to thrive and develop in a global market. III. Social and Cultural Conditions In addition to economic conditions, Taiwan has distinct social and cultural conditions. There are a number of different languages spoken in Taiwan, but Mandarin Chinese is the official language. Min-nan is also widely spoken because many Taiwanese are of southern Fujianese decent. Some of the older population of Taiwan can also speak Japanese. This is because they were subjected to Japanese education before Taiwan was returned to Chinese rule in 1945. English is the most popular foreign language in Taiwan and is part of every day school curriculum (Taiwan - Language).

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Taiwan is a country that has a number of different religious beliefs. Although there are currently thirteen registered religions practiced by nearly half the residents of Taiwan, Buddhism is the most dominant as it is practiced by almost 4.9 million people. Taoism is the second leading religion and is followed by 4.5 million people. Other religions include Protestantism, Catholicism, Islam, Hsuan-yuan Chiao, Li-ism, Tenrikyo, Bahai, Tienti Teachings, I-Kuan Tao, Tien Te Chiao, and Mahikarikyo (Taiwan -Religion). Taiwan puts a lot of emphasis on education and because of this, the island enjoys one of the highest literacy rates in the world. In 2008, 97.78% of people ages six or older were estimated to be literate. Since 1979, 6 years of elementary school and 3 years of junior high have been required for all children. About 95% of junior high graduates continue their studies in either a senior high or vocational school. Taiwan has a comprehensive higher education system with 162 institutions of higher learning. In 2010, about 147,500 students took the entrance examinations to enter universities and colleges; about 76% of the candidates were accepted by a college or university (Education). Also, many students travel abroad to pursue higher education. Sociological and cultural conditions have affected the way the Taiwanese consume products. Local products were dominant in Taiwan until the mid 1980s. There were multiple trade restrictions that didnt allow foreign products to enter the country. The United States demanded that Taiwan remove the trade restrictions and the Taiwanese government listened. Since then, Taiwan has reduced or removed a considerable number of trade barriers, thus allowing foreign products to compete with local products in the domestic market (Taiwan International). The alleviation of import restrictions in the 1980s brought an influx of foreign fast food, cosmetics, and other items and by the end of the decade, convenience stores started to enter Taiwan. Today the island boasts the worlds highest per capita density of 7-Elevens. Foreign supermarkets were

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the next to arrive and beginning in the mid 1990s, supermarkets like Carrefour and Costco followed. Over the past 30 years, the Taiwanese have become much more aware of foreign products. VI. Demographic Conditions Furthermore, analyzing the demographics of the foreign market is essential to making educated decisions about choosing the right target segment when entering a new market. Having more demographic information allows company managers to better tailor the Four Ps (price, promotion, product, and place) to meet the wants and needs of customers. The population of Taiwan, as estimated in July 2010, is 23,024,956. It is ranked in 49th most populous nation in the world. Furthermore, it has low infant mortality rate and high life expectancy. Ranked as 50th in the world in this category, the Taiwanese enjoy an average life length of 78 years about 75 years for men and 81 for women. The countrys population is considerably evenly distributed between males and females: the sex ration for those less than 15 years old is 1.08 male per female, 15-64 years: 1.02, and for those over the age of 64 it is 0.92. Similar to most countries in the world, Taiwan is an aging nation with a median age 37. The age structure is as follows: 17% under the age of 14, 72% fall under the category 15-64 years old; and 11% are over 65. Overall, the country is one of the slowest growing nations in the world. Its low population growth, 0.213%, places it in 183rd place in the world in this category. The slow population growth is due to the fact that the nation has seen improvements in education systems and job opportunities which have led young people to put off marriage and having children until later in life. Furthermore, in the past two decades the country has transformed into a more industrialized nation which has increased the population density in urban areas. The average population density of

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Taiwan is quite high: 1,730 /sq mi. In 2007, Taiwan was ranked in second place as most densely populated country. Population density is highest in the nations large cities since 70% of the population prefers to live there. Some of the most populous areas are Taipei, Keelung, Kaohsiung, and Taichung. The reason for these cities to be so populous is that they offer more economic and commercial opportunities. From these demographics, it can be inferred that a good target market in Taiwan for companies such as Apple and Acer would be those between 15-30 young adults and young professionals. Also, the larger cities provide a better market since those living there are typically better educated and are more likely to have the means and desire to purchase Apple and Acer products.

Section 3. Global Marketing Strategies

I. International Target Markets Analysis: The cultural, economic and political elements of each national market segment certainly affect how products are made and who the product is made for, as well as how it is promoted. Once a unique marketing mix is assigned, the market segment evolves into a responsive international target market. In terms of the market for personal computers, the overarching target market strategies Apple and Acer employ are similar in nature, although the adaptations for international markets that each multinational enterprise incurs do differ, namely in their identification of target markets and unique selling propositions. Apples target market for personal computers consists of creative and professional adults around the ages of 18 to 35 years. The biggest Apple consumers reside in developed countries, where people in that society have more established tastes and preferences than those of developing countries. The Apple target market seeks simplification and streamlining of complex tasks, and values a pleasant aesthetic appearance. Consumers have access to simplified functions, and mainly

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use an Apple personal computer for its internet and multimedia capabilities, such as film editing. Apple capabilities are generally used for either work and school or social media purposes. Acers target market, however, consists of work-oriented, professional class adults generally in urban areas, reflective of the fact that Taiwans professionals are clustered in populated cities. Consumers are less emphatic about needs for aesthetic appeal and sleekness of design; the target market seeks a fair price and considerable quality, and values efficiency. Acer personal computers are used by the target market mainly for work and school purposes. Both Apple and Acers target marketing strategies for personal computers are nearly homogeneous. Thus, they implement undifferentiated target marketing strategies. While there is little variation in the description and needs of global markets, as well as the product offered, local adaptations and adjustments are introduced as needed. The biggest reasons to adapt a product for local needs are transportation facilities and especially language; in this case, the keyboard, labels, and software language capabilities would be tailored to each national target market. While their strategies are the same, Apple and Acer differ in their unique selling propositions. Acers primary USP lies in price/quality positioning, as its market seeks a reliable, reputable device for a fair price. Apples USP lies in product class and product use, since their price points, innovation and positioning reflect leadership in consumer electronics. Additionally, new uses for consumer electronics are unveiled with each product launch, and creative and recreational uses are promoted, whereas Acers product promotions emphasize efficiency and reliability. II. International Product Strategy Analysis Apple and Acer have a wide international product mix. Apple and Acer both have an assortment of product lines that are targeted to its international consumer and business target markets. These international product lines offer a variety of goods, yet they all fall under the same

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product category. According to Apples website, the company markets desktops, laptops, netbooks, music players, smart phones, servers, monitors, software, tablet computers, and television box sets. According to Acers website, the corporation offers desktops, laptops, netbooks, music players, smart phones, servers, monitors, projects, external hard drives, software, tablet pcs and televisions. Acers product line is a bit more diverse compared to Apples, yet both international companies offer an abundant amount of products. Both Apple and Acer have a variety of related productbrands produced and sold in the same product category to international customers. Acer and Apple market to similar customer segments across all product lines. Most of the people Acer and Apple target are similar. For example, Apple targets middle and upper income people who are willing to pay more for a better user experience. Typically, Apple markets their product as one that can be fun and deliver high performance. This type of creative and high performance qualities are consistent and deliver similar attributes across all of Apples product lines. (Inside CRM, 2010) In contrast, Acer targets consumers who are looking for a fast and reliable experience at a relatively inexpensive cost. This specific product brand positioning defines the target market segments for both Apple and Acer. (Lapasia, 2008) Apple positions its product lines as a high quality, high cost with distinct advantages over the competition such as multi-touch glass track pads, light up keyboards, touch screen devices, and a high quality user experience. (Ray, 2010) On the other hand, Acer positions their product line as a lower cost option that still provides adequate quality and efficient products. (MarketLine, 2009) Although, Acer may not have the precise detail and uniform design as Apple, the company targets the low cost, with sufficient quality market. According to Computer World Magazine, Acer recently acquired Gateway and hopes to expand its market in the United States. Acers professional business division is slowly

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loosing revenue, along side their new acquisition of Gateway, Acer plans on slowly eliminating or drastically changing their professional business target market. Both companies rely upon a strong brand image to market their product lines. According to the research firm Branding Asia, Acer Computer has always spent huge sums of money on research and development, and in this respect, tends to follow the Japanese technology companies. [Acer] believes in "innovalue"-using innovation to create value in the design and production of cutting-edge products-and leading the industry. Apple and Acer had entered the digital camera, personal digital assistant markets and discontinued the devices. Apples Newton was too ahead of its time according to PC Magazine, while Acer could not reach maximum market potential and was loosing profits on their version of the PDA. Apples Digital camera was called QuickTake and was only marketed for three years before it was discontinued in 1997. Apple acquired a joint venture with Kodak and Fujifilm. These cameras were only compatible with Apple Desktops and Laptops, which limited the market segment to a small portion of the population, since at the time Apple had a very small segment of the personal computer market. Other companies such as Canon and Nikon entered the digital market with brand names that consumers already associated with photography. Naturally, the product was discontinued since the product line was not growing in 1997. Steve Jobs, Apples CEO, made the executive decision to stop manufacturing digital cameras. This was done in part to streamline Apples operations and Apple discontinued other non-computer products including the Newton PDA and Laser printers. (PC Magazine) Apple produces similar products worldwide. There are slight modifications for certain software applications and hardware. For example, Apple changes the keyboard layout and modifies power cords and wattage standards depending on where the product will be used. (All

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business.com) Similarly, according to the Harvard Business review, Acer sells a homogeneous product line with slight modifications for different regions around the world. Acer modifies the software that is pre-loaded on desktops and laptops to fit the specific regions in which the product is being sold. Moreover, the product branding strategy for Apple and Acer varies. Apple has created several brand names while still maintaining the Apple brand name that everything else falls under. For example, there is iTunes for their music player and store, iMac for their desktops, MacBook for their portable notebooks, iPad for their tablet device, iPhone for the wireless telecommunication device and smart phone brand, and iPod for their music players. Acer has several brand names and recent acquisitions such as Gateway, Packard Bell, and eMachines. Unlike apple that uses their Apple brand name for almost all of their products, Acer omits their umbrella brand name for several products including the Gateway, PB and eMachines. Both companies implore a global product branding strategy, with minor modifications throughout different regions of the world. Apple is in the early maturity phase of the international product life cycle. The company continues to grow and has moved production to developing countries and imports to the home countries and countries around the world. In 2004, Apple shut down their production plant in California and moved production to a plant in China. This reduced costs and increased production to meet the demands of the growing demand for Apple products. (Sacramento Bee) According to ComputerWire International in 1998, the article states Acer has built production facilities in Mexico and Wales, creating 1,000 jobs. Although for some components of their product lines Acer produces themselves, the majority is outsourced. Acer outsources the majority of its manufacturing. In addition to Acer-branded equipment, the company oversees the Gateway,

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eMachines, and Packard Bell brands. Acer gets about half of its sales in Europe according to Acers annual report. According to Apples website, the company produces similar packaging globally with an emphasis on the environment. Apple is concerned about the environment and has received an EPEAT Gold rating for decreasing their footprint. Apple changes the advertisement, packaging and labels according to certain regions and government restrictions. III. International Distribution Strategy Analysis Another important factor into a companys global success is its international market distribution strategy. This analysis refers to the performance of all activities by marketing agencies related to providing utilities for industrial users and final consumers in international markets. The central point behind this analysis is looking at the distribution channel structure. How are marketing agencies making Apples and Acers products available for use worldwide? To answer this question it is best to look at the manufacturer-distributor-dealer relationship, and types of marketing system used by each company. Customer service and support activities as well as logistics are also important in the analysis. Apple Inc. has a multichannel distribution structure. The lengths of the channels vary. For example, the product can reach the customer directly from the manufacturing facility or online stores. This distribution channel is the same domestically and internationally. Another direct way of distributing Apple products is through Apple retail stores. These stores are authorized retailers owned by Apple Inc and are used by the company control its brand image. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. This small number of foreign retail stores is an example of exclusive international distribution. Lastly, the product can reach the customer indirectly through Apples authorized

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dealers resellers that have the right to sell Apple products. From this information, it can be concluded that Apple uses a contractual vertical marketing channel it has made contractual agreements with select few companies. In the USA, examples of Apples distributors are AT&T, Best Buy, Wal-Mart. Concluding, the companys preferred methods of international market distribution are joint venture channels and direct investment channels and its chosen type of intermediary is merchant middleman distributors and retailers. Apple provides excellent customer service and support. For example, the companys website has an entire section dedicated to support which includes manuals, tech support, easy to reach apple representatives, and news in support as well. It is the companys goal to keep a positive relationship with suppliers and distributors which is the reason to work closely with them to benefit all parties. For example, the company is part of the Electronic Industry Citizenship Coalition (EICC) to ensure fair treatment of workers. The last part of the international distribution strategy of Apple Inc. is looking at logistics. It has outsourced all of its manufacturing processes to original equipment manufacturers (OEM) in China. Its two largest OEM partners are Foxconn and Hon Hai Precision Industry. Moreover, the company has adopted an automated receiving system to ensure speedy receiving process and to reduce storage space requirement. Furthermore, the company has found a way to reduce shipping costs by using eye-catching packaging that takes up less space and weighs less. Finished goods are delivered directly using third party logistics companies to apple retail stores around the world. Two examples of third party logistics that the company uses are Nippon Express and SembCorp Logistics which offer air and ocean freight forwarding. Lastly, apple.com online orders are shipped directly to consumers from storage facilities in China. This minimizes inventory buildup in the USA where warehousing is more expensive.

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Acer uses different distribution strategy than Apple but the two have some similarities. Acer does not have a retail store and also it does not sell products through its website. Instead it sells all its products through merchant middleman intermediaries - its distributors and resellers worldwide. Its strategy is to cover as much as the markets as possible by picking dominant distributors in each country. For example, in the USA Acer products are distributed by stores such as Wal-Mart and Best Buy. The distribution channels are short. Similar to Apple, Acer outsources all manufacturing activities. The product reaches the customer in two ways it either shipped directly to the customer or the manufacturer ships it to the reseller who sells it to the customer. Furthermore, unlike Apple Inc, Acer uses a conventional marketing channel system manufacturers and intermediaries are independently owned. Lastly, the market coverage of the company is characterized by selective international distribution. Similar to Apple, Acer is well known for its excellent customer service. Its website provides information about the different products as well as contact information to certified professionals in the field who can be contacted 24/7. Furthermore, the website has a section dedicated to providing support to distributors and channel partners for which a username and password are needed. It also has a support section Acer branch offices. The last point of this analysis is the looking at Acers logistics. Finished products are shipped, air-expressed or directly shipped, by logistics service companies such as FedEx, UPS, TNT. The shipments are not made to Acers central warehouse, but instead to its distributors, and finally to their end customers. Products are shipped only when an order is received which minimizes inventory build-up. Overall, the company has very effective and efficient logistics operations. The delivery cycle from factory to end customers is calculated on days thus, the company can respond to the market change in a fast and flexible way.

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IV. International Pricing Strategy Analysis As Taiwans leading exporter and the worlds second largest computer manufacturer, Acer has proven itself as a major player in the international computer market and has done so by many evolutions of its business structure. The 1990s signified a major change in attitude towards Acers international business and sales. With the splitting of the companies into foreign subsidiaries, including Acer America Corporation, the Taiwanese business furthered its aggressive, market penetration pricing strategies. As a result, Acer hopes to gain higher sales volume, and thus, a larger market share among its competitors. In contrast, Apple Inc. has created a pricing strategy which differs largely from Acer. With the aid of its strong brand image, especially in the United States market, Apple is able to use market skimming price strategies to justify their products perceived quality among competitors. As a result, Apple is able to gain customers willing to pay a higher price for perceived quality among its competitors. Secondly, Apple is able to gain higher profits and recovery from intense development costs. Top competitors of Acer include Dell Inc., Hewlet-Packard Co., and Lenovo Group Limited (Acer Inc. Overview). Means of gaining leadership in their competitive landscape include price-reducing efforts and seeking large-scale selling opportunities. For instance, Acer has engaged in the streamlining of laptops and desktops in order to be attractive to large quantity buyers, such as schools, government institutions, and businesses (Acers Next Advance). Similarly, Apples top competitors include Dell Inc. and Hewlert-Packard as well, being in the same market. However, Apple competes with the Microsoft Corporation in addition (Apple Inc. Overview). The competition with Microsoft is largely accredited to Apples wide array of computers, computing devices, and software. Product offerings coupled with strong brand image

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and dedicated customers worldwide make Apple a much larger giant in the market; therefore, being able to compete with the equally-as-large Microsoft. In addition to pricing strategy and competitive differences, Acer and Apple also have different structures of price destination. First, Acer executes its international business with regional foreign subsidiaries around the world. For example, Acer America is responsible for Acers R&D, engineering, manufacturing, and marketing operations in the United States and Canada (Acer Inc. Overview). Acer America therefore engages in direct selling to markets such as government institutions, schools, and wholesalers/distributors. In contrast, Apples strategy differs from that of Acers: their international selling structure uses direct sales forces and third party wholesalers for its international reach. From there, these channels sell to retailers and ultimately, end-users (Zanco and Kassel 11). As a result, Apple is better able to control operations and pricing closer than Acer through a more consolidated, central distribution and sales channel. Lastly, different forms of exchange are used among either company. As a Taiwanese company, Acer uses the New Taiwan Dollar (TWD) as its currency of quotation. In contrast, Apple uses the US Dollar (USD). Unfortunately for Acer, a large threat towards the company is the volatility experienced by their currency New Taiwan Dollar in exchanging. In conclusion, Apple has a clear advantage over the stability of the hard-currency, US Dollar. V. International Promotional Analysis It is very important to have a successful international promotional strategy if a company wants to be relevant globally. International promotion is an essential part of an international companys marketing mix. Once a product or service is developed, priced, and distributed, the public needs to be informed of the products value and availability. The objective of international

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promotion is to inform and persuade the consumer to buy. A successful promotion mix includes activities such as advertising, sales promotion, personal selling, public relations, and publicity. Apple Inc. does a fantastic job of advertising its products around the world as they use non person communication across international borders via broadcast, print, or interactive media. They use a combination of TV, radio, newspaper, magazine, Internet, outdoor, and interactive media to inform the public about their products. Apple has a long history of exceptional advertising as they seem to have something that their rivals lack - that indefinable element of cool. Whether it be the Mac vs. PC commercials or the dancing iPod advertisements, Apple does a great job of making their products memorable which is the first step to building a successful image. Apple uses TBWA Chiat/Day as its advertising agency. It is the 15th largest advertising network in the world and has offices in 57 countries. TBWA Chiat/Day has a number of different clients including Nissan, Taco Bell, ABC Television, Absolut, and Energizer (Apple Announces). Although Acer isnt as successful as Apple when it comes to advertising their products, they still do an adequate job. In 1997, Acer launched a 20 million dollar print, cable TV, and Internet pitch for its commercial personal computers as they were frustrated at their difficulty in establishing a strong brand in the U.S (Elkin). In July of 2009, Acer announced that it planned on an enormous advertising drive for its Acer, Packard Bell, and eMachine brands as it looked to differentiate the three. A year later, Acer added AKQA as an advertising agency, which will be responsible for promoting their new platform, Alive (Acer Adds). Acer has worked with a number of different agencies on a global level including Leo Burnett. Agencies in local markets have also been hired; in 2008, the company awarded its $3 million Thai media and advertising business to McCann WorldGroup (Acer Adds).

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Sales promotion is sponsored communications to target consumer or trade segments that stimulate purchases or improve relationships with marketing agencies. There are two types of sales promotions: consumer and trade. Consumer sales promotion include free samples, coupons, product tie-ins, sweepstakes and contests. Trade sales promotion include trade discounts, trade shows, and sweepstakes or contests. Characteristics that describe a good sales promotion are their effectiveness to sell the product, capture attention, and maintain brand loyalty. Apple and Acer both use sales promotions to persuade members of a target market to respond or undertake their products. Examples include money back guarantees, lower purchase price, and rebates. Apple has a major advantage over Acer because of the Apple retail stores. Consumers are allowed to experience products and familiarize themselves with them. The stores are different from many other electronic stores because they display all of their products for consumers to experience hands-on. Apple also uses special consumer promotions, in which they target certain audiences. From July to September of 2010, Apple ran a promotion that entitled college students a free iPod or printer with the purchase of a Mac computer. This was a great promotion to capture attention, sell the product, and eventually create brand loyalty. Public relations and publicity go hand in hand and are two very important aspects of the promotion mix. Public relations works to protect an organizations reputation and effective public relations strengthens credibility, enhances image, develops goodwill and influences behavior. Publicity is an aspect of public relations, and is often referred to as free media. The goal of publicity is to gain attention through news coverage, articles, blog postings, etc; however, not all publicity is positive. For Apple, an example of negative publicity occurred in July, 2010 when iPhones were erroneously reporting signal strength via the number of bars displayed (As Apples). It was the responsibility of Apples public relations team to sort out the problem and assure the

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public that it would be fixed in a timely manner. Both Apple and Acer use methods such as news releases or letters, press releases, and company publications to communicate and generate goodwill among international groups that are essential to their respective companies.

Section 4: Conclusion
Overall, Apple and Acer are powerful companies with vast resources to create advanced technological products for the world. Apple and Acer are two of the worlds best computer companies and it is evident from their international marketing mix that both companies run an efficient businesses that deliver their product lines all around the world. Taiwan is a robust industrial developed nation where international and domestic business is growing and thriving.

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