Apple Brand Analysis - Case Study Example

Apple Brand Stretching Apple seems to have known that the computer industry is about the consumer rather than the enterprise and have always remained focused on the consumer (Wikipedia, 2006). Therefore their strategy seems to work with elements of ‘fit’ since they appear to be designing and selling products for a specific group of consumers just as BMW or Mercedes are doing (Edwards, 2005). However, based on the analysis of the external environment Apple is also crafting solutions for a particular need. The five forces model shows that Apple has a significantly strong position in the market for some of its products e.g. the iPod and the iTunes Music Store but for others it is positioned on rather weak footing e.g. personal computers. Though the marketing for many of Apple’s products has been nothing less than stellar, it often helps to create the brand identity more than the product value (Scott, 1991). In the MP3 player market, Apple has a very strong brand identity and a massive advantage in terms of switching costs over its rivals. Apple also has strong links with music distributors and has a proprietary product in the shape of the iPod which creates strong barriers to entry (Beckman and Hirsch, 2001). The threat of substitutes to iPod is very high since quite a few MP3 players can play music and even offer better functions than the iPod. However, the threat is mitigated by the fact that the iPod is the only player to work with iTunes (Deutschman, 2000). Therefore the final analysis shows that the threat of substitutes to Apple’s media package is quite low. In the music business, the position of the suppliers was improved due to the fact that they owned the copyrights to the music being sold on the iTunes store. However, it was also weakened because Apple becomes the best middle man to use if their music is to be sold legally (Beckman and Hirsch, 2001). On the other hand, when it comes to buyers in the home entertainment market, the buyers have a very good position since they can get their products from other suppliers such as sony, Panasonic and Toshiba who have an established history of performance and quality. The buyers have to be offered a very good deal by Apple in order to lure them away from alternatives. Similarly, in the home entertainment business, competitive rivalry is intense since many companies want a significant market share position. Although there are niche products produced by exclusive sellers such as Nakamichi or Bang and Oulefson, however they often compete for the audiophile level of the market and Apple would rather be a mainstream competitor in all fields of technology (PC Magazine, 2006). Apple lost the war in terms of market share for the computers business, however, they got the first prize when it comes to the portable media market and it remains to be seen if they can do the same in the home entertainment segment. For this purpose, the most important asset with Apple is the quality human resources that they have and the individuals who design and develop their products (Smith, 2006). They also have a mythic industry figure like Steve Jobs who has continually given Apple top notch products for many years and taken apple from a failing company to a success story (Edwards, 2005). Essentially, it is the products and the product design which stands out for Apple amongst others. To stretch their brand, apple has to offer customers the ability to buy music from the internet and create a broader location for their music store. Even though they are limited in terms of where and how they sell computers, Apple certainly has a high street image with a culture of being cool since their retail outlets are nothing less than designer boutiques. As Apple has complete ownership of the Apple store and direct connections with music labels, the competitive advantage in the music industry is certain sustainable (Beckman and Hirsch, 2001). However, it does not have a sustainable competitive advantage of high end stores since other manufacturers can also emulate their success in the retail industry. Apple must also consider the Socio-cultural factors to be important for the music related computer industry as well as Technological and political factors. Apple has become a very important brand for the youth culture and the iPod is more of a fashion icon than a productivity tool as other portable computer devices can be. This means that a culturally positive image must remain associated with Apple. Technologically, Apple must remain on the lookout for additional supportive technology which can help the company retain its advantages and deny any advantages to the competitors. Politically, Apple needs to come to music distribution terms with other countries where the iTunes music store is causing issues with legislators (Wikipedia, 2006). Even though the additional value to the brand image of Apple may seem lucrative, both the computer industry and the music distribution industry are unattractive markets to enter into since margins are so low and the competition is extremely high (Beckman and Hirsch, 2001). Mergers and acquisitions within the industry have shown that economies of scale are essential for survival in this mature industry therefore entry into the market would require a significant investment. The strength of Apple is their product design, ease of use and the value which they provide to their customer. Their weakness in the computer business is a lack of enterprise level acceptance of their hardware and software but they seem to more than make up for it with their market share in the consumer based music player industry. The most significant threat comes from a competitor who can create a better home entertainment integration product than Apple. Apple can also look into the opportunity of providing movies and other media content from different distributors on the iTunes store. It could also look into distributing its operating system to work with Intel or AMD based machines for a broader footprint in the market or even embedding the Mac OS on different home entertainment related machines. At the same time, entry into the home entertainment market is important for Apple since the company needs to enter into more business and diversify itself from technology towards other related fields. However, this must be controlled with Apple’s traditional level of quality and product design since Apple in general and Steve Jobs in particular like to maintain a lot of control over how their products are designed, sold and even used (Forbes, 2006). Additionally, Apple should look towards creating partnerships with other manufacturers e.g. Bose such as the one it had with HP for the distribution of the iPod. The total strategy for Apple should be implemented with a mixture of functional and holding strategies since Apple is presently using the functional strategy. In the long term, it seems that the differences between Apple and the competition will become more obvious as Apple starts getting more and more of their revenue from the distribution of media and entertainment devices rather than the sale of computer technology. While Apple may remain in the computer industry as a manufacturer for many more years to come, it will probably remain a secondary player in the market while the dominance of other manufacturers continues unchallenged. Of course, its dominance of the home entertainment market must be proven beyond doubt before such a future can be seen by the shareholders. Works Cited Beckman, D. and Hirsch, D. 2001, ‘Mac Is Back in Town’, ABA Journal, vol. 87, no. 8, pp. 70-72. Deutschman, A. 2000, ‘The once and future Steve Jobs’, Salon.com, [Online] Available at: http://archive.salon.com/tech/books/2000/10/11/jobs_excerpt/index.htm Edwards, C. 2005, ‘Rewards for innovative thinking’, Electronics Systems & Software, vol. 3, no. 2, pp. 2-3. Forbes. 2006, ‘Steven Jobs’ Forbes.com, [Online] Available at: http://www.forbes.com/lists/2006/10/HEDB.html PC Magazine. 2006, ‘Low-Cost Apple laptop is very enticing’, PC Magazine, vol. 25, no. 13, pp. 31-32. Scott, L. 1991, ‘“For the Rest of Us”: A Reader-Oriented Interpretation of Apple’s “1984” Commercial.’, Journal of Popular Culture, vol. 25, no. 1, pp. 67-81. Smith, D. 2006, ‘The non-stop revolutionary’, The Guardian, [Online] Available at: http://technology.guardian.co.uk/opinion/story/0,,1697348,00.html Wikipedia. 2006, ‘Apple Computer’ Wikipedia.org, [Online] Available at: http://en.wikipedia.org/wiki/Apple_computer Read More