Apple Support from All Sides - Term Paper Example

Apple Inc. [The of the will appear here] [The of the id will appear here] [The of the will appear here] [The of the course number will appear here] Introduction Apple Inc. is a company that has been able to develop a perception of innovative products and technology. Apple’s products have developed a strong positioning among the consumers and it continues to bank on this positioning for new products. One example is the iPhone. When iPhone was launched in the market in 2007, the average consumer perceived it to be the most innovative smartphone partially because of its innovative features and partly because of the brand image that Apple had developed (Grady, 2009). In this paper, Apple Inc. will be analyzed with respect to its smartphone, iPhone. The smartphone industry would be analyzed along with the position that Apple enjoys in the industry. Considering the analysis, potential strategies would be presented using the Ansoff Matrix. In the end, recommendations would be made for Apple Inc. and more specifically iPhone. Industry Competitiveness In order to analyze the competitiveness of the industry, Porter’s Five Force Model would be utilized as an appropriate tool. This model allows an organization to understand the profitability of a particular industry using the impact of five forces: the buyer, the suppliers, new entrants, substitutes and rivals (Ahlstrom and Bruton, 2009). For this paper, the industry competitiveness for Apple Inc. would be evaluated using the Five Force Model for smartphones. Threat of New Entrants The threat of new entrants in the industry is low. This is because of a number of factors. Firstly, developing smartphones requires technological investment and strong research and development. This is compounded by the fact the competition in the industry is quite intense and big players in the industry dominate the market. These include Samsung, HTC, and Sony etc. who have been able to develop a strong and positive brand image among the consumers. Even among its existing competitors, iPhone has been able to develop a competitive edge with its highly innovative product and strong brand appeal. Consumers perceive the brands as status symbols and would not be willing to invest in new companies. Other factors that make threat of new entrants low are the presence of patents, copyrights, government policies, high capital investment, and distribution access. Threat of Substitute Products The threat of substitute product is medium to high. The industry is marked by a growth stage where substitute products are entering the market every day. New versions of smartphones with updated features are constantly flooding the market, making the customer feel that their product is quickly becoming obsolete. However, Apple is able to manage this threat through its strong marketing and its ability to release new versions in the market periodically. Bargaining Power of Buyers The bargaining power of the buyers is medium to high. This is because the industry is in its growth stage where competition in the industry in increasing with the increase in demand. There are many products in the market that provide almost the same product and buyers can easily switch to other smartphones because there is no startup investment for this product. However, Apple is able to considerably bring down buyer power because of its focus on innovation. Apple’s iPhone has developed an image of the most innovative smartphone and users continue to buy Apple for the image that is offers them. It is because of this perception that Apple is able to charge a higher price for its iPhone as compared to the rest of the industry. Bargaining Power of Suppliers The bargaining power of the suppliers in the industry is quite low. This is because most smartphone manufacturing companies including Apple has outsourced the manufacturing of their products to emerging economies such as China. Even while doing so, the company retains the design development in its headquarters in California and outsources production in China. This production is divided into many companies where Apple imposes stringent rules on the company to prevent it from gaining power. By keeping designing and assembling in California, the company has the advantage of changing suppliers whenever it needs. Also the company does not depend on one supplier which furthermore decreases supplier power. The suppliers also do not pose any direct competition to the company since they cannot access the customers directly because of strong brand appeal of Apple and iPhone. Rivalry Considering the above, the rivalry in the industry is strong. However, Apple has been able to develop a strong position in the industry by developing a high bargaining power over the buyers and keeping supplier power low. It is able to achieve this through its strong marketing and its distribution channels. Strategic Positioning As defined by Dahlen, Lange and Smith, 2010, Strategic Positioning is ‘establishing and maintaining a product/market space in the target market segment and a mind space in the consciousness of the target audience’. In other words, strategic positioning refers to the image the product has in the minds of the consumers. This image is built with respect to quality, cost and other benefits offered. Apple’s iPhone is positioned as the high end product. The product is offered at a comparatively higher price than its competitors. Apple faces direct competition from Samsung Galaxy smartphones, HTC X one and Sony Xperia. Apple’s Phone is priced between the ranges of 149-743 dollars while other smartphones are below the range of 143 dollars. Apple is able to charge a higher price of its iPhone because of the actual and perceived qualities of the smartphone. Apple claims to be the leader in smartphone technology. Apple is able to make this claim based on the fact that Apple Inc. has the hardware and software expertise over other smartphone companies. It has been able to sync this expertise in its smartphone allowing consumers to benefit with a total experience (Shaughnessy, 2013). Apple has been able to reinstate this position through its marketing. Apple has marketed iPhone has a highly innovative product. The perception that iPhone has with the consumers is that the smartphone is better than any other smartphone offered in the market. The smartphone is also designed to provide consumers with a good perception of the product. IPhone is considered to be most aesthetically designed product with its sleek and polished look (Saviolo and Marazza, 2013). Furthermore, unlike its competitors, Apple has strongly focused on one brand with respect to its smartphones. This allows the company to build a strong brand presence for its smartphone and to improve quality consistently. The company keeps upgrading its iPhones to retain and improve market share in the industry. However, in the recent times, Apple Inc. has received bad publicity which has impacted the perception of iPhones. The company has been asked to reconsider its relationship with its suppliers. The company enjoys strong power over the suppliers, to the point of harming the suppliers. The main suppliers of the company are Foxconn and Inventec. These suppliers have harsh labor practices requiring employees to work for more than 60 hours a week and the lowest wages (Musgrove, 2006). Potential Strategies Ansoff Matrix is a widely used tool to develop strategies that a company can potentialy pursue. This matrix is based on existing market and existing products (Marketson and Pickton, 2010). The figure below illustrates the Matrix. Apple Inc. can pursue market penetration. It can do this by increasing marketing activities for its products within the same market. The company should focus on advertising its latest technology. It could allow new users to interact with the iPhone before actually buying it. This can be done in Apple Flagship stores. Apple can improve on its after sales service to attract more customers. Apple Inc. can also pursue market development. It has been able to develop a strong position with respect to its iPhone market. Apple is the second biggest smartphone provider after Samsung in UK and USA. In 2008, the company had only 9.8 percent share in the market which increased to 15.3 percent in 2013 (Darrell, 2014). This increase in growth occurred on behalf of increase in smartphone demand. It is expected that growth will continue in the coming years. Demand for smartphones in emerging markets such as Asia, Latin America, Middle East and Africa would increase in the coming years which China as the leading prospective buyer. Smartphone users in developed countries such as USA and UK are quickly becoming saturated and new phones are bought only to replace the old ones (McKendrick, 2013); while developing countries have yet to make the big change from traditional cellphones to smartphones. One strategy is to invest heavily in marketing and distributing in these potentially growing markets. Another strategy is to find a new target market in the same region. Right now users of smartphones are concentrated in the Generation X but older generations are increasingly buying smartphones. They had been using traditional cellphones previously but as they are becoming more tech-savy, they have started to adopt new technologies (McDonald, 2013). However, Generation X still faces challenges in understanding the new smartphones given their change in system. Apple presents more challenge since their operating system is more different than that of other android phones. This makes it difficult for the older generation because they took time in learning the Windows system and thus would not be willing to learn Apple’s iOS system. Conclusion and Recommendations Considering the industry situation and that of the company, perhaps the best strategy for the company is a combination of market penetration and market development. Apple should continue to market its product to its existing customers. This is because the industry is within its growth stages and demand for smartphones is on the increase. Apple should focus on capturing higher market share for its smartphone. It can do this by focusing on marketing and improving its services. Apple could allow customers to interact with their smartphones. This would allow users to interact with the phone and the company directly. Apple could allow users to use iPhones in their flagship stores. Apple representatives would guide the customers on how to use the iPhone. Customers who have issues with handling and maintaining their persona iPhones would also take help from these representative. Apple could launch an iPhone club for its iPhone users. This club would allow users to get access to tips for improving the performance of their iPhones. Also other features such as discounts could be offered to this customer for certain new games and other software. In terms of market development, Apple should focus on emerging markets. Emerging markets’ use of smartphone is expected to increase in the coming years and if Apple develops a strong position in these countries, it would be able to tap into these markets. However, since Apple is a luxury item, it may not be able to get a high market share in the emerging countries considering their economic position. However, iPhone has received a favorable impression in Middle Eastern countries and would continue to do so with better marketing and distribution. Apple Inc. has a strong brand image. The smartphone industry is also growing and with its growth, there is great potential for iPhone. Apple’s position in the industry is also strong in terms of its market position and relationship with the suppliers. Apple needs to pursue the same strategy and penetrate further in the same market. References Ahlstrom, D. and Bruton, G. 2009. International Management: Strategy and Culture in the Emerging World, Ohio: Cengage Learning Dahlen, M., Lange, F. and Smith, T. 2010. Marketing Communications: A Brand Narrative Approach, New Jersey: John Wiley & Sons Darrell, R. 2014, A Bidnessman’s Guide to the Smartphone Industry, Retrieved from http://www.bidnessetc.com/business/a-bidnessmans-guide-to-the-smartphone-industry/ Grady, J. 2009, Apple Inc., New York: ABC-CLIO Masterson, R. and Pickton, D. 2010, Marketing: An Introduction, New York: SAGE McDonald, C., 2013, Smartphone sales increase by 50%, Computer Weekly, Retrieved from http://www.computerweekly.com/news/2240208332/Smartphone-shipments-increase-by-50 McKendrick, J., 2013, Is the global smartphone market saturated? Retrieved from http://www.smartplanet.com/blog/bulletin/is-the-global-smartphone-market-saturated/27563  Musgrove, Mike (June 16, 2006). "Sweatshop Conditions at IPod Factory Reported". The Washington Post, Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2006/06/15/AR2006061501898.html Roger, S. C. (2009). The supply-based advantage:  how to link suppliers to your organizations corporate strategy. New York: AMACOM Div American Mgmt Assn Saviolo, S. and Marazza, A., 2013, Lifestyle Brands: A Guide to Aspirational Marketing, New York: Palgrave Macmillan Shaughnessy, H. 2013. Where The iPhone 5 Still Bests The Samsung S4, Forbes, Retrieved from http://www.forbes.com/sites/haydnshaughnessy/2013/05/19/where-the-iphone-5-still-bests-the-samsung-galaxy-s4/ Warren, K., 2009, Global Marketing, 4/E, New York: Pearson Education Read More