Introducing Apple iPhone 3G in the UK - Case Study Example

Introducing Apple Iphone 3G According to the report of Gene Munster, the future strategic direction of the iphone 3G for Apple stakeholders, is basedon the revenue share changes, unit growth and shifts in strategies that may be used as iPhone 3G goes to the international market like United Kingdom where local dynamics are complex with its model working with single carrier. At the same time, the 45 million iPhones 3G in 2009 is very aggressive. Apple is also expecting to offer an entire family iPhones by the early part of 2009, hopefully in lower price (Macworld, 2008). The price will be between $200 and $300 targeting a more sensitive price of the market. Apple is expecting a decrease from $489 in 2007 to $365 in 2008 to $314 in 2009. This trend would represent the direction taken by Apple as it established the iphone family, where there is a slow but stable expansion Apple saw in lowering their price with their new amendments once they enter U.K (Macworld, 2008). On the other hand, Apple noted that the unit growth curve is steeper more than the iPods, noting that iPhones sales in two days are bigger than iPod sales. The sales of Iphones in 2007 grew up to 409%, iPhone units profits grew slower at 304% between the financial year 2008 and 2009, although there were some uncertainties as to how fast Apple releases cheaper model units. Apples forecasts to have continuous global rollout especially in U.K. which they think will be twice the target market for iphone yearly until 2010. There were 3.7 million iPhones old from 2007 up to present. Munster's estimates also take into account the continued international rollout of the handset, which he believes will double the addressable market for the device every year for the next two years. With 3.7 million units having been sold through December via 6 carriers (who combined for a subscriber base of 153 million), he estimates the iPhone's penetration into this addressable market to be just 3 percent. The early publicity of the launch of iPhone has able Apple to gain steep profit contributing agreements for the "must have" mobile phone from the leading providers such as AT&T, O2 and T-mobile. iPhone is expected to be a major player in the mobile phone market in U.K. There were competitive offers available. Apple iPhone in U.K. Critics said that it is a suicide for Apple to launch iPhone 3G in the mobile market of U.K. market. Some says that they are purchasing it because of many reasons. According to these critics, Apple will kill their U.S. launch; will alienate their consumers and many other factors. It is also reported that it is so ambitious to launch iPhone in U.K. because Vodafone and T-mobile have their own mobile phones. The Strategic Directions of iPhone 3G in U.K. iPhone's strategic direction is to become the undefeated mobile phone leader all over the globe, not just based on size, but in how it utilizes that size to attain its mission. It has already established its foundation as global leader in mobile phone/PC with an influential combination of abilities and resources that offers an objective for providing strong growth in present fast changing mobile phone industry (Aaker, 2000 and Teece and Shun, 2002). The establishment as the global leader in the mobile phone industry resulted to the strength of the company. The company's efforts to develop such mobile units of the iPhone family and their market research helped them establish this foundation. But it does not stop there. To adhere the company's mission to be a global leader in the mobile phone industry, they would still like to penetrate the mobile phone industry of U.K. Even though they are aware that the competition in U.K. is very steep, the core competencies of Apple are based on its drive to help people globally by continuously enhancing, unraveling and discovering new technologies. In analyzing Apple iPhone 3G's penetration to the mobile phone industry in U.K. it is better to use the aid of the strategy clock of Cliff Bowman (Amoruso et al, 2000). It is the most appropriate way to examine competitive position as compared to comparing competitors. Compared with Porter, Bowman is more focused on competitive advantage such as low added value or low price which is incline to specifically segment, low price that gives a possibility of price war, hybrid, low cost reinvestment and cost base, differentiation without price premium, viewed as added value by the user, market share advantages with a price premium, distinguished added value adequate to bear price premium; centered differentiation (recognized added value to exacting segment' meriting a premium price); amplified price/standard (bigger margins if competitors do not worth follow/risk of losing market share); raised price/low value (only possible in a monopoly circumstances); low value/standard price (failure of market share). Apple's strategy for expansion is according to the support of new and present products, amplification of the product channel, increasing the company's production of new products and achieves cost savings approaches. Apple took notice of its rivals and a competitor in the mobile industry in U.K. that is marketing strategies is boosted for its growing market. Apple gives importance to their consumers and their needs. Apple believes that they can penetrate U.K by offering the consumers with good products and services at sensible and globally aggressive prices (Bassington and Pettitt, 2005). Most importantly, these new information technologies also involve new deployment strategies that will bring broadband internetworking applications to the domestic mass market (Johnson et al, 2005). As part of these new methods of interactions between humans and computers, more individuals have been dependent on the electronic creation, storage and transmittal of personal, financial and other confidential information which demands highest security (Peteraf, 2001). People rely mostly on computers because it provides them with complete access to time sensitive data, regardless of physical location. These devices includes mobile phones, office PCs, and home entertainment system that helps humans to access that information and work together in one seamless, integrated system. 1. Differentiation without price premium - The main goal of the company is to increase the company's share of its global market share. In order to achieve this, the company's strategy is to attract as many new customers as possible (Jupiter Research, 2008) by diffrentiating the product in terms of software and hardware without pricing it too high (Gerry Johnson). The company is highly confident in attracting new customers. The reason is that for a potential first time customer of the iphone 3G, the model offers the amazing v2 software. The major features of this software are "Exchange sync, the application store and lots of little improvements (Jupiter Research, 2008)." In addition to these new features and high-end software, the exchange support and the app store also help in opening the appeal of the new iphone 3G to a wider range of audience. The new model's hardware is also an attracting feature that helped the company to rope in new customers. The first and foremost advantage of the new hardware is its download speed. Apart from this, there are a pile of other benefits too that customers can experience. To be specific, unlike other models that are popular in the market, the iphone 3G allows a user to take a phone call at the same time when the customer is trying to access the internet in the background without losing connectivity. This feature is not offered by many popular phone models in the market. "HSPA offers better latency, which combines with that faster headline speed, to improve the web browsing experience (Jupiter Research, 2008)." When compared to the 2G networks, the new 3G network offers a much better voice quality and network coverage even in the busiest locations of a city. 2. Low Price - The Company's pricing of the new iphone 3G models in the United Kingdom is significantly low when compared to other phone models of competitors which do not match with the sophisticated software and hardware of Apple iphone. In most parts of the United Kingdom, the iphone 3G is available for free on a plethora of tariffs. For instance, an 8GB iphone 3G is priced at just 100 UK pounds which was earlier priced at 269 UK pounds (Jupiter Research, 2008). The pricing strategy of the company is also one that helped the company to taste success in the United Kingdom with respect to the launch of the new iphone 3g. 3. No frills - Another major strategy on which the company cashes upon is the positive word of mouth that it generates. The early and initial customers spread a positive word of mouth about the product and this helps the company in attracting new customers and their by boost its sales in a particular geographic location, in our case it is the United Kingdom. The company was initially segment specific in generating positive word of mouth which was possible through its existing customers. 4. Increased output of the device - In addition to the above stated strategy of low pricing, the company also adopted an alternative strategy of boosting the production of the model. "The initial report indicates that Apple chose to increase production on the iphone in tandem with its decision to cut prices on the product as it anticipates increased sales (MacWorld, 2007)." According to certain other industry sources the company has also raised its manufacturing target in order to cope up with the demand which according to the company would result in increased sales. 5. Tie-up with one network per country - One more strategy that the company adopted with relevance to the launch of its new iphone 3G in the United Kingdom is that it had tied-up with one major and popular network of the country. This way the company ensures that the model is available all over the country on a non-exclusive basis (The R Zone, 2008). The advantage that the company gains by adopting this strategy of tying-up with popular network dealers is that these kind of exclusive deals are anticipated to push and boost the sales of the product on a wide range and at the same time meet the increasing demand generated from customers on the competing networks who wish to access the Apples' new hot product - the iphone 3G. In particular, the company Apple Inc. has opted to achieve long term objectives by adopting the single strategy of price challenge i.e. though the model was highly sophisticated in terms of both hardware and software, the company priced it very low and profited to the maximum. Apart from this, the company also aimed at adopting multiple strategies like profitability, improving productivity, sustaining its competitive position and maintaining its technological leadership. All these strategies have been used by the company and the company has also been successful in implementing these strategies and this fact is evident from the above mentioned discussions. Differentiation Strategy Apple focused more on the differentiation strategy which requires enhancement of iPhone 3G that provides unique features that are important to their consumers and that these consumers believe to be better than any other brand from the mobile phone industry (Johnson, 2005). These unique features of iPhone 3G permit Apple to charge a premium price. Apple is hoping the higher the price the more it cover the extra costs earned in providing the unique mobile phone. Apple can be considered successful in using differentiation strategy because of the following internal strengths: access to major market research, high abilities and creativity of their team of product development, powerful sales team that always been successful in communicating the strengths of the product and Apple's reputation in providing quality and innovation (Peteraf, 2001). Although, there were risks connected in using differentiation strategy that includes, imitation by rivals and dynamism in customer tasted. Moreover, different companies' focuses on differentiation will probably achieve their target market segments. Focus Strategy Apple also concentrated in focus strategy in order to narrow their market segment within that their target market in order to attain cost advantage (Reed and DeFillippi, 2003). The principle of this strategy is the needs of their target consumers in order for Apple to provide better service. Basically, the consumers who use iphones are the ones who need to be online every time and those who needs to check their e-mails and surf the internet (Teece et al, 2002). Iphone 3Gs feature is the ability to check the Internet using Safari as a browser and check emails using Safari and mail. iPhone 3G is also a big help in providing forecasts in stocks and even the weather. In doing so, Apple currently enjoying a high level of consumer loyalty and this established loyalty de-motivates other companies to compete with them directly (Kotler and Armstrong, 2001). Conclusions Even if there are many negatives opinions about the launch of iphone3G in U.K., this study strongly believes that Apple and the iPhone 3G will win the competitive edge. There is a possibility for Apple to have a big share in competitive advantage in the mobile phone industry in U.K because of the current condition of the industry. The first condition is that they focus on the resource that has to be used in their penetration in U.K. That is, it has got to provide the opportunity to make use of some environmental opportunities or counterbalance the few industry hazards. These resources are perceived to be valuable when they permit a company to invoke up of or put into practice these methods that benefit the firm's efficiency and competence in the market. It is also important to satisfy the major needs of their consumers. Furthermore, Apple iphone 3G's has exceptional characteristics. iPhone 3G will eventually own a great number of share in the mobile phone industry against their competitors or future rivals, they no longer correspond to a source of competitive advantage. In this context, Apple owning exceptional and inimitable collections of capacities and resources can accomplish a sustainable competitive advantage in the mobile phone industry in U.K. Third; there is an existing circumstance of imperfect mobility of resources in the mobile phone industry in U.K. Where resources are effortlessly traded among competitors, no competitive advantage can be preserved. The imperfect mobility of assets is a decisive feature in businesses as the consumers are the key assets in a lot of circumstances, and their high mobility recurrently results in the shortfall of accounts and the materialization of new competitive threats as in the condition, for instance, employed by Apple and eventually shifting to other companies that directly compete for the similar market. Finally, for an advantage to be maintained, Apple should acquire a superior position and receiving rents, forces have to be made that could limit competition for those rents (Peteraf, 1993). It was taken into account above that innovation such as the improvement of iPhone 3g's features like new software for iTunes or a new promotion approach by a creative department recurrently triggers a multitude of replications from competitors. For Apple to be in a situation to make use of an important and rare resource, there have got to be a resource position obstruction averting replication by other companies. Bibliography Aaker, D.A., 2000, "Managing Assets and Skills: A Key to Sustainable Competitive Advantage." California Management Review. Volume 31, Issue 1. 91-106. Amoruso, A., Brandon, D., Mueller, J., 2002, An Office in the Palm of your Hand. The CPA Journal. p. 12 Bassington, Frances and Pettitt, Stephen, 2005, Essentials of Marketing. Prentice Hall. Johnson, Gerry, Scholes, Kevan and Wittington, Richard, 2005, Exploring corporate strategy-8th edition, Prentice Hall. Jupiter Research iPhone 3G Strategy and Prospects [Online].- July 10, 2008.- Spetember 28, 2008.- http://weblogs.jupiterresearch.com/analysts/fogg/archives/2008/07/iphone_3g_revie.html. Kotler, P & Armstrong, G 2001, Principles of Marketing, Prentice Hall, London. 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