New Product Development is the Key to Apple's Marketing Success - Coursework Example

?New Product Development is the Key to "Apple's Marketing Success" Table of Contents Introduction 3 About Apple 3 Apple’s Strategies 3 Product Portfolio of Apple 4 People 5 New Product Development 5 Reasons for Launching New Product in the Market 6 The Boston Matrix of Apple 6 Product Development Strategy of Apple 7 Product Life Cycle of Apple 7 Factors Which Determine the Success of Product Development 10 Competition 10 Unique Selling Proposition (USP) 10 External Factors 11 Marketing Mix 11 Conclusion 12 References 13 Introduction About Apple Apple is one of the most valuable brands, which deals in consumer electronics products. It is a “publicly traded corporation” which is listed in NASDAQ. The company was initiated by Steve Jobs and Steve Wozniak in the year 1976. The company is reputed for developing innovative products such as computers, multimedia devices and software applications among others. One of the most innovative products of Apple was iPhone which was considered as one of the best-selling products. The business operations of Apple are expanded in almost all geographical nations (Apple Inc, 2012). Apple’s Strategies Apple seeks to apply its idea of being a digital heart in the field of electronic products because customers demand stylish and cohesive digital devices. Apple always attempts to distinguish itself from other brands so that it can put premium rates on their products. The business strategy for Apple is to find the accurate equilibrium between customer satisfactions and cost because this blend is vital for raising the product price for customers and thereby increasing profitability. In the consumer electronics market, Apple is known for premium price products because it invests huge amount of funds on new product development and innovation activities. The product differentiation is a major competitive strength for Apple as it can successfully increase the perceived value of its products and help to generate more revenue in spite of premium cost (Iiiev & et. al, 2004). Quality products and innovation through wide practise of research and development (R&D) is the other key reason behind the success of Apple in the market. The main objective of Apple is to expand its customer base (Iiiev & et. al, 2004). Product Portfolio of Apple Traditionally, Apple manufactured and developed software applications and computer products; however, after the introduction of iPod as one of the preferable MP3 players for people, several new product lines have been included in product portfolio of Apple. The old and new product portfolios of Apple are described in following table: Product Portfolio Product Lines Software and Computer iOS, Mac Operating System, Professional and Business Application Programmes, Personal Computer Hardware Products Desktop Computer, Laptop Computer, iMac, Mac Pro, Mac Mini, iBook iPhone Mobile Phones, iPods, Digital Devices, iPads iTunes Music, Applications, Bookstore iCloud Cloud Services Application Software iLife, iWork Display and other Fringe Products Printers, Storage Devices, Digital Cameras, Apple TV Source: (EDGAR Online, 2011). People Apple has a bureaucratic organisational structure where CEO is in the top position of hierarchy. The CEO and Vice Presidents gather reports about company’s business operations from both line and staff managers. Apple is highly dependent on manufacturing representatives on whom it has no direct influence. The positions of Apple in the organisational hierarchy are described below: Source: (Apple Inc., 2012). New Product Development New product development is all about introducing new product in any industry. It is a process for developing a product in order to certify progress or survival in the market. The aim of new product development is to strengthen or transform the strategic direction. An effective new product can help an organisation to add a new product line under the product portfolio (Takeuchi & Nonaka, 1986). Reasons for Launching New Product in the Market Developing new product signifies relocating or cannibalising the existing products (Karol & Nelson, 2007). New product development is recognised as a fundamental strength of Apple’s success. Developing new product helps Apple to become a leader in the consumer electronics market. Besides, new product development assists Apple in getting the first mover benefit. As a result, it leads to higher return on investment in R&D. The most significant example is introduction of iPod, which helped Apple to move aggressively in the digital music segment. New product development of Apple is often conducted in the form of developing existing products. Therefore, Apple constantly develops their Macintosh computers in order to reposition and target new customer segments. New product development is meant for gaining competitive advantage for Apple over other competitors (Iiiev & et. al, 2004). The Boston Matrix of Apple Stars iPhone iPod Question Marks Mac Operating System Mac Software Apple TV Cash Cows iTunes iPhone Personal Computer Dogs Mac Pro Mac Mini iCloud Source: (Riaz, 2011). Product Development Strategy of Apple Product development indicates the innovation of new and improved products with the intention of exchanging existing products. Apple’s leadership in new product development strategies is well-matched to take advantage of any opportunity to gain higher market share. Apple pursues the differentiation strategy which is associated with new product development, because only new products can help to gain unmatched characteristics which are not present in the product offerings of other competitors. There are three aspects which impact on the strategies of Apple, which are requirements of customers, target customer groups and individual experiences. Apple’s business strategy influences the special capability to design and develop their own operating system, hardware appliances, software applications in order to provide customers with new products, and solutions with superior convenience, all-in-one combination, and with innovative design. The products of Apple appeal towards the sensibility of customers’ requirements and consequently they become highly enthusiastic to pay premium prices for the products (Iiiev & et. al, 2004). Product Life Cycle of Apple When a new product is developed and introduced in the market, it goes through several stages. First, the new product starts gaining the attention of customers and then it stabilises and becomes mature. After running through, maturity phase, it is replaced by introduction of better and more advanced products, either from competitors or from the company itself. This phase indicates the decline phase of the old product. With respect to Apple, iTunes which is one of the highest selling products is in the growth phase. This phase is denoted by high level of income and also requires high advertising expenses. The remuneration in this phase is to create brand awareness to take advantage of future market prospects. The more people know and connect with the iTunes network the greater it will acquire reputation in the market (Iiiev & et. al, 2004). With respect to iPod, it is at present positioned in the growth stage, because it is expected that digital music industry will grow simultaneously in future period. Therefore, iPod which is supported by various music formats has a chance to mature more in the music industry. Apple can earn high revenue from iPod by successful promotion and additional development. The other product of Apple named iMac and iBook are in maturity phase, which is characterised by minor prospect of changes and developments. The following graph will describe the products of Apple in different life cycle phases: Source: (The Irish Times, 2006). Factors Which Determine the Success of Product Development Competition The market of Apple’s products is extremely competitive and the company faces tough rivalry from every part of business. The consumer electronics market is characterised by numerous product improvement and prompt technological innovations which significantly impact on the success of new product development of Apple. The competitors of Apple which deals with mobile phones, personal computers on the basis of other operating systems can aggressively decrease their product costs and reduce the product offerings in order to achieve more market share. The major competitive factors which can negatively impact on the success of new product development of Apple are low price, attractive new features, superior quality, consistency, third party software and corporate reputation (EDGAR Online, 2011). Unique Selling Proposition (USP) Though the competitors of Apple rely on satisfying the customers through their products, the success of Apple depends on its strategy to satisfy the customers by developing innovative products. The Unique Selling Proposition (USP) of Apple is its constant emphasis on the innovation which leads to products with distinctive functionalities which is desired by most of the customers. The competitors of Apple have been generally observed to not provide major attention on the aspect of customers’ desires; instead they try to heave their product features to the customers by assuming their requirements. On the other hand, the innovative strategy of Apple never vacillated from its original beliefs of new product development through innovation. Apple’s tactical philosophy of introducing new products not only makes the customers pleased, but also makes them loyal. This USP of Apple has helped to develop successful products such as iPhone and iPad which had been ignored by other competitors (Apple Inc, 2012). External Factors Apple performs in high-tech sector which is highly affected by any transformation in technology. In the external business environment, Apple has much opportunity not only for producing new software and hardware products, but also for targeting the other consumer electronics market through innovation. The consumer electronics industry is characterised by high level of entry barrier, which make it a safe paradise for Apple to securely develop new products in the niche market though innovation. Due to its highly capable products, Apple can call for premium prices on its products (Iiiev & et. al, 2004). Marketing Mix Marketing mix is a significant aspect for success of any new product in the market. Every organisation needs to consider the elements of marketing mix (product, price, place and promotion) before introducing a new product in the market. Product: Apple had effectively planned and developed its products by considering the requirements and desires of people along with the marketing trends, which were the main reason for the success of its high selling products such as laptop PCs, iPod, iTunes, and iPads (Iiiev & et. al, 2004). Price: Apple’s products are generally available in high prices due to its differentiating features. Its high price is one of the significant barriers for new product development in mass market and it restricts the company from achieving high market share (Iiiev & et. al, 2004). Promotion: In order to promote the products, Apple usually relies on commercial advertisements which help to display the unique image of its products (Iiiev & et. al, 2004). Place: The retail stores of Apple are located in high traffic venues and in reputed shopping malls in urban areas. The main objective of Apple’s distribution strategy is to inspire new customers and expand its marketing base by converting them to use Apple’s products (Iiiev & et. al, 2004). Conclusion From the above discussion, it can be stated that, the new product development is a significant aspect for Apple’s growth in the consumer electronics market. It helps to gain competitive edge and differentiation of products from other competitors. It is the strategy of Apple to differentiate its products from other rivals in order to gain higher reputation and sales. Differentiation through new product development helps Apple to effectively market their products and maintain its unique brand image in the minds of customers. References Apple Inc., 2012. Stock Info. Investor Relations. [Online] Available at: http://investor.apple.com/stockquote.cfm [Accessed February, 04, 2012]. Apple Inc., 2012. Executive Profiles. Apple Press Info. [Online] Available at: http://www.apple.com/pr/bios/ [Accessed February, 04, 2012]. EDGAR Online, 2011. Filed 10/26/11 for the Period Ending 09/24/11. Apple INC Annual Report. [Online] Available at: http://files.shareholder.com/downloads/AAPL/1673934376x0xS1193125-11-282113/320193/filing.pdf [Accessed February, 04, 2012]. Iiiev, V. & et. al, 2004. Apple Computer Inc. Strategic Audit. Dublin Institute of Technology. [Online] Available at: http://www.andreaslindinger.net/downloads/strategicmgmts-lindingeretal.pdf [Accessed February, 04, 2012]. Karol, R. & Nelson, B., 2007. New Product Development for Dummies. John Wiley & Sons. Riaz, M. A., 2011. CM704 Business and Marketing Strategy. London College of Business. [Online] Available at: http://www.scribd.com/doc/75212531/BCG-MATRIX-APPLE-INC [Accessed February, 04, 2012]. Takeuchi, H. & Nonaka, I., 1986. New Product Development Game. Harvard Business School Publishing. [Online] Available at: http://hbr.org/product/new-new-product-development-game/an/86116-PDF-ENG [Accessed February, 04, 2012]. The Irish Times, 2006. The Product Life Cycle Concept. Business 2000. [Online] Available at: http://www.business2000.ie/pdf/pdf_9/cadbury_9th_ed.pdf [Accessed February, 04, 2012]. Read More