Business Strategy of Apple Inc - Case Study Example

Business Strategy: Apple Inc Name: Tutor: Course: Date: Executive Summary Apple product differentiation is a strong marketing strategy that involves creating distinct changes in its products that made it stand out from others in the technology market. The company holds to horizontal differentiation in which the goods differ, but their prices remain the same. The customers do not make of the difference between tablet, laptop and smart phones (Griffin 2007). Product differentiation is a marketing strategy used by Apple to distinguish the iPads and iPhones from competitor products like Blackberry, Android, Nokia, Toshiba and Samsung which have similar offerings on the market. The experience of both Apple.com and retail locations have stood out from its competitors (Lamb et al 2008). They provide a one-on-one support even in the case of site challenges. The store has knowledgeable employees who engage customers in a way not provided for by the answer and question page. The information provided is faster from the company to its customers. The recommendations are; Apple should continue employing product differentiation strategy to stand out in the market. The company must regularly monitor and evaluate changing customer needs through market research. The company should capitalize on invention and innovation to become a leader and not a follower. It should build an image around itself since reputation is very important where sustainability and continuous advancement is desired. Apple needs to commit resources in developing a culture of change through regular trial of newer versions of products. The company should employ advertising and promotional tools like price cuts and giveaways to promote online and retail store sales. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Competitive Strategy: Apple 4 Developing a Competitive Position for Apple 7 The essence of using differentiation is to create value since Apple is able to focuses on the cost value of its iTunes, iPhones and iPad products against other similar products on the market like blackberry and Android. It develops a perceived value among its existing and potential customers. A strategy focusing on value highlights the durability or cost savings of a product in comparison to other products in the technology industry (Amason 2010). 8 Apple is able to gain from non-price competition by enabling to compete in areas not confined to price. For instance, Apple differentiates its products from other brands in terms of connectivity and function. It also differentiates its line of laptops as a status symbol or image enhancer when other firms in the industry are focusing on cost savings. The company is also focusing the differentiation strategy on the quality and design of its Mac and App store products thus gaining market competitive advantage without decreasing their price (McGrath 2000). 8 Conclusion 9 Recommendations 10 Reference List 12 Introduction Differentiation across the industry is any company’s key competitive strategy. Innovation is what Apple prides in than any other company owing to its unique top of the line products. The company is leading in the industry by using differentiation, in the event retaining higher profit margins compared to the average in the industry. The attitude of innovation is what has made Apple to command a long history of success (Bach 2007). For instance, Apple pioneered the PDA software market with the Newton Company in 1993 and also led in adoption of an easy-to-use iMac in the year 1998. Integrating software and hardware was first used by Apple as a way of product differentiation. By doing so, it was possible to differentiate Macintosh Computers from other PCs manufacturers than just making the hardware since it ran on Windows operating systems. Competitive Strategy: Apple Product differentiation was the beginning of Apple’s competitive advantage since the company was able to gain control and develop great user experience (Beath & Katsoulacos 2001). An example of Apple’s differentiation strategy was in the launch of iTunes in the year 2001. It marked the start of Apple’s new strategy to create a hub for the Mac in ‘digital lifestyle’. From then on Apple had transformed from being a software company to a digital asset oriented company due to ownership of iTunes. The company opened its own stores in which iTunes became the largest global digital retailer. The iPod was later introduced hence helping revolutionalize the way people listened to music (Steinhardt 2010). The superior design quality of Apple differentiates its products from the competitors. With their first home computers, the company was able to develop a public association with high quality design which was easier to use (Chapman 2005). The iMac computer line was the first to rid off the floppy drive considered as mandatory. The success of the model showed that it was designed to be ahead of the pack. The philosophy behind design was based in minimalist perspective and developing great user experiences (Ferrell 2012). The iPod was Apple’s next great success of differentiation since it founded the digital music and media players all working with iTunes (Thomson & Baden-Fuller 2010). As opposed to other players who work with other third party players, Apple was able to offer its own accessories and also those compatible with third parties by way of retail stores and online sales (Stead & Stead 2013). The iPod was able to win the market through differentiation through possible control of music playbacks and VoiceOver technology that enabled customers to hear artists, song titles and playlist names. It was also portable hard drive based video and digital music player. The company has also been able to differentiate through better quality and excellent service delivery. It developed the Mac App Store which enabled customers to download, discover and install applications of Mac products. This feature has a broad range of applications from games, education, lifestyle, productivity, utilities, education and other categories (Hill & Jones 2012). For example, these software are iOS and Mac OS X operating software where the former is Apple’s mobile operating system serving a as a basis form iOS devices. Mac OS X was UNIX-based. The company also differentiates through product segmentation where it has target markets in Americas, Japan, Europe, Australia, Asia pacific, Middle East and Africa. These operating segments have common software and hardware products. The consumers in these markets are able to purchase products through Apple.com or Apple’s many retail locations (Canzer 2009). The hyper-connected techie is a masterpiece for an intriguing and bright storefront. The primary products of Apple provide for a consistency, support and innovative shopping experience with a clean layout. The sales team has set an example by communicating using iPads in front of customers (Gitman & McDaniel 2008). This face to face interaction has enabled the support team to specialize in meeting specific requirements. Apple.com is an amazing shopping solution with simple, rich and detailed designs. The web platform promotes strong white space allowing users for rapid navigation of lots of information. The experience of both Apple.com and retail locations have stood out from its competitors (Lamb et al 2008). They provide a one-on-one support even in the case of site challenges. The store has knowledgeable employees who engage customers in a way not provided for by the answer and question page. The information provided is faster from the company to its customers. Apple has developed good old fashioned customer service and technologically driven culture. Apple Company was able to differentiate itself by having multiple products integrated as one. This is witnessed with first time Apple customers who happen to be Mac computer buyers in the recent past (Hitt, Ireland & Hoskisson 2006). The company has been able to work on a simple multiplier factor in which purchase of one set of product triggers the same customers to buy other products like a laptop computer or an iPhone (Katie 2013). The company has taken many years of seamless focus on applications and hardware with integrated operating system. The applications run on one product as they can run on others. Many Apple customers now fail to tell the difference between a laptop, tablet and smartphone since they operate with similar platforms with regard to connectivity (Zylla-Woellner 2013). The company continuously updates customers lives with basic plug-ins which are similar. The iPhone evolution and iPad launch has seen Apple close in on market domination in the laptop, smartphone and tablet experiences. For instance, in 2012, Apple was the leader in tablet space by producing the popular iPad while selling more than 9.5million iPads in barely a year (McGrath 2013). Developing a Competitive Position for Apple Apple product differentiation was found to be a strong marketing strategy that involved creating distinct changes in its products that made it stand out from others in the technology market. The company holds to horizontal differentiation in which the goods differ, but their prices remain the same. The customers do not make of the difference between tablet, laptop and smart phones (Griffin 2007). Product differentiation is a marketing strategy used by Apple to distinguish the iPads and iPhones from competitor products like Blackberry, Android, Nokia, Toshiba and Samsung which have similar offerings on the market. For Appple, product differentiation strategy provides a competitive advantage in the mobile phone and computer market dominated by other dominant companies like Samsung and Toshiba (Mintelburg 2005). The differentiation strategy used by Apple is based on business uses of the products observed through the target segments of the market. The connectivity aspect of Apple laptop, tablet and smartphones communicates a message that the products are positively different from all other similar products present in the market (Lee & Quella 2010). Product differentiation is an effective way of enhancing customers' responsiveness by providing them with a wide array of products or services in the market. Apple develop unique products like iTunes, iPhones and iPad to respond to customers' preferences and tastes, as opposed to one homogenous product. The company has been able to provide customers from diverse market segments with a wide variety of technology products to choose from. For instance, the market has a variety of Apple peripherals and hardware with different functionalities compatible with those of various companies. The essence of using differentiation is to create value since Apple is able to focuses on the cost value of its iTunes, iPhones and iPad products against other similar products on the market like blackberry and Android. It develops a perceived value among its existing and potential customers. A strategy focusing on value highlights the durability or cost savings of a product in comparison to other products in the technology industry (Amason 2010). Apple is able to gain from non-price competition by enabling to compete in areas not confined to price. For instance, Apple differentiates its products from other brands in terms of connectivity and function. It also differentiates its line of laptops as a status symbol or image enhancer when other firms in the industry are focusing on cost savings. The company is also focusing the differentiation strategy on the quality and design of its Mac and App store products thus gaining market competitive advantage without decreasing their price (McGrath 2000). Differentiation in Apple has enhanced innovation and creativity so as to survive in the global competitive market. The company continuously invents new products like iCloud in 2005 using multiple iOS devices enabling it to remain relevant for some time. The firm competes to develop unique products that fulfil customer demands by way of differentiation. The company improves on current products by making them more attractive and effective. For instance, the Apple provide instant retail services at a higher price or an option of going online and browse its site and pay less. In another case, Apple customers may decide to purchase laptop, smartphones or iPad tablet at one go. In essence, product differentiation engenders superior products that stimulate growth in the economy (Smith & Flanagan 2006). Conclusion Apple has a successful product differentiation strategy which has created brand loyalty among its existing and potential customers. Similar strategy by Apple that gains market share through cost savings or perceived quality has helped create loyalty from customers. The company continuously delivers value or quality to consumers in retention of customer loyalty. It knows that in a competitive market, iTunes and Iphone product failure to maintain quality makes customers to turn to a competitor like Toshiba (Singh 2008). Currently, iTunes has no perceived substitute since it focuses on the design and quality of its App Store, iBook Store and iTunes Store. These products create the perception that there are no substitutes present in the market. Despite competitors having similar products, the differentiation strategy focuses on the design or quality differences not present in other products. Customers view its product as unique hence the business gains an advantage in the market (Van Bennekom & Goffin 2008). Apple knows that customers needs and tastes keep on changing with time, and it can only ignore this aspect at its own peril. Apple has a culture of re-inventing its products every three years to attract loyalty from customers. Product differentiation needs a lot of resources to undertake a market research which determines the product development, customer needs, launch, monitoring and advertisement. Apple customers eventually bear the burden of these costs by buying these products at a higher cost (Porter 2008). The limitation of product differentiation strategy is that it hinders market entry among new firms to make into an existing market owing to several barriers. One such challenge is product differentiation, which provides recognized brands a head start. Most Apple customers remain loyal to its well-known brands in the market and may not try out products manufactured by new entrants. Generally, when newcomers employ price differentiation to woe customers, well-established brands like Toshiba, Apple and Samsung launch a similar low-priced item to safeguard their market share (Porter 2006). Many firms attempting to enter the market find it difficult to subdue product differentiation, since they are devoid of resources to develop products that can successfully compete with current ones in terms of functionality and cost. Recommendations 1. Apple should continue employing product differentiation strategy to stand out in the market. Since it has a greater market share in the iPad market being the leader, it should maintain its position 2. The company must regularly monitor and evaluate changing customer needs through market research. This research should establish the advances among competitors and the current perceptions of Apple’s products. 3. The company should capitalize on invention and innovation to become a leader and not a follower. Incremental change is possible through allocation of substantial amount of resources to its Research and Development programs (R&D). 4. The company should build an image around itself since reputation is very important where sustainability and continuous advancement is desired. The company already has good reputation in the iTunes, iPad and iPhones business owing to service features like variety, application and connectivity. 5. The company needs to commit resources in developing a culture of change through regular trial of newer versions of products. The latest being Apple iPad mini, the company can look into a future of small but highly functional and portable product. 6. Apple should employ advertising and promotional tools like price cuts and giveaways to promote online and retail store sales. This will increase the annual sales to astronomical scales. Reference List Amason A 2010, Strategic Management: From Theory to Practice. Taylor and Francis. Bach B 2007, Implications of Enabling Technologies for Apple Inc. GRIN Verlag. Beath, J & Katsoulacos, Y 2001, The Economic Theory of Product Differentiation. Cambridge Univesrity Press. Canzer B 2009, E-Business: Strategic Thinking and Practice. Cengage Learning. Chapman, C S 2005, Controlling Strategy : Management, Accounting, and Performance Measurement: Management, Accounting, and Performance Measurement. Oxford University Press. Ferrell, O C 2012, Marketing strategy Text and Cases, 6th ed. Cengage Learning. Gitman L J & McDaniel C 2008, The Future of Business: The Essentials, Cengage Learning. Griffin R W 2007, Fundamentals of Management, Cengage Learning. Hill C W & Jones G R 2012, Strategic Management: An Integrated Approach, 10th ed.: An Integrated Approach. Cengage Learning. Hitt M A Ireland R D & Hoskisson R E 2006, Strategic Management: Competitiveness and Globalization. Cengage Learning. Katie J 2013, Critical marketing audit: The case of Apple Inc. GRIN Verlag. Lamb C W et al 2008, Marketing, Cengage Learning. Lee K M & Quella F 2010, ECODESIGN-The Competitive Advantage: The Competitive Advantage. Springer. McGrath M 2000, Product Strategy for High Technology Companies. McGraw Hill Professional. McGrath R G 2013, The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business. Harvard University Press. Mintelburg, J 2005, Manufacturing Strategy: How to Formulate and Implement a Winning Plan, Second Edition. Productivity Press. Porter M E 2006, Inter-brand Choice, Strategy, and Bilateral Market Power. Harvard University Press. Porter M E 2008, Competitive Advantage: Creating and Sustaining Superior Performance. Simon and Schuster. Singh M 2008, Strategic Management and Competitive Advantage, Global India Publications. Smith J L & Flanagan W G 2006, Creating Competitive Advantage: Give Customers a Reason to Choose You Over Your Competitors. Crown Publishing Group. Stead J G & Stead W E 2013, Sustainable Strategic Management. M.E. Sharpe. Steinhardt G 2010, The Product Manager's Toolkit: Methodologies, Processes and Tasks in High-Tech Product Management. Springer. Thomson, N & Baden-Fuller, C 2010, Basic Strategy in Context: European text and cases. John Wiley and Sons. Van Bennekom F C & Goffin D 2008, Problem Prevention Through Design for Supportability: Gaining Competitive Advantage from Customer Support. Customer Service Press. Zylla-Woellner J 2013, Corporate Strategy for Apple Inc Company. GRIN Verlag. Read More