Successful Products and Strategies of Apple Company - Case Study Example

Rough Draft Apple Company Summary Apple Company is one of the companies that succeeded in their marketing strategy,which catapulted them to greater heights. Apple introduced new technology that was user friendly and very interactive. They also set the price and the expectations level high due to the marketability of their products. Apple became front runner in customer appeal as people waited in line overnight to buy the new phone because of the differentiation that the company introduced in the mobile phone industry. Unlike any other mobile phone or Smartphone at that time, but like some of the other Apple products were already popular thus enhancing its sale high customer loyalty. Graphics-intensive user interface and intuitive menus and user options were very essential in promoting sales. Although Apple had limited sales initially, they gradually increased their availability through differentiation versions and lower price. Service providers have been able to access markets and increase their market base such as AT&T because of its relationship with Apple. Apple achieved an amazing turn around due to its increased commitment to innovativeness that most people refer to as the new digital economy making its success to have generated from having successful products and strategies, not by chasing metrics. Apple has also successfully engineered products such as tablets, Smartphone into a uniquely beautiful, efficient, and user friendly way that have made its products marketable and lovable by users. Introduction Steve Jobs and Steve Wozniak founded Apple in 1976 and Apple’s personal computers were amongst the best but later experienced a decrease in sales after the high competition in electronics began. Apple Company then started to produce new product iPod that largely enhanced her revenues. Apple and Samsung are undeniably the fiercest competitors in the consumer electronics in the market with very large loyal fan bases particularly in their flagship products including the iPhone 5s and the Galaxy S4. Apple has clawed its way to smartphone market dominance though in a very different way compared to other players in the market especially in the way it releases new products. Apple company enjoys multitude of fan sites and blogs, which cover them thus making it difficult to grasp at any fact or figures available to claim advantage to one side or the other in the market place by a competitor or even superiority for one side over the competitor. Apple is doing very well despite having a large number of competitors that they have several things in common such as Samsung. Moreover, Apple prides herself on innovation and is known for taking 8 years to develop a single product before releasing it to market. Apple’s culture is to release products that are not perfect and once released, they make major updates hardly, confident that their original work is the best. This technique ensures a fascinated tech press and awed public, which compels a certain level of security as well as secrecy that segregates the company from attaining valuable market feedback prior to launch. This further raise the stakes of every product launch to the market changing and checking on any of their recent launches such as iPhone 5 and iOS7, it is nearly impossible for Apple live up to the demand for their products. Apple has managed to keep R & D and cost of revenue expenditure relatively low through outsourcing most of their hardware piece in their component and hardware production. Apple’s margin is kept high by concentrating on a few designed premium priced products that effectively display her highly featured, proprietary software architecture. Demand for Apple products is skilfully stimulated through the leading edge advertising and sales promotion that has attracted the cooperation’s retail outlets and reseller counters that is quibble with Apple business model. Discovery The US market was dominated by Nokia with the market share of 37.8%, followed by Motorola at 14.3%, Samsung at 13.4%, Sony Erickson 8.8%, LG at 6.8% and finally RIM which was less than 2%. Initially, the mobile phones popularity was high and they were less expensive. However, blackberry was very well established and dominant as a smartphone for almost a decade, but expensive and appealing to the business niche. The Smartphone generated sales and interest even though there was enough room at the high end of the market allowing for entries and expansion. There was wide market product for affluent power-users and newer-users over wide age. How Apple Changed the Market Apple introduced new technology that was user friendly and very interactive and further set the price and the expectations level high due to the marketability of their products. Apple became front runner in customer appeal as People waited in line overnight to buy the new phone because of the differentiation. Unlike any other mobile phone or Smartphone at that time, but like some of the other Apple products were already popular thus enhancing its sale high customer loyalty. Graphics-intensive user interface and intuitive menus and user options appealed to buyers. Although there was limited sale initially, increasing availability, differentiating versions and lower price emerged. Apple joined in Partnerships with wireless service providers and introduced relatively short product life cycle about every year on average. Apple entered into a great partnership with AT & T which benefited the two companies in different ways. AT & T experienced several benefits including the iPhone’s tripling of carriers volume of data traffic in cities like New York and San Francisco. It also explored new products and services such as mobile banking by taking advantage of the iPhones capabilities. On the other hand, Apple engaged AT&T into spending millions of dollars and thousands of man-hours to create a new feature, so-called visual voicemail, and to reinvent the time-consuming in-store sign-up process. Apple further retained complete control over the design, manufacturing, and marketing of the iPhone. It is undeniable that Apple has got symbiotic relationship with its service providers since both the service provider benefits from the revenues and other benefits such as differentiation that is led by Apple. The service providers have been able to access markets and increase their market base such as AT&T because of its relationship with Apple. The revenues of the apple’s service providers have also largely increased due to the increased sales volume of the Apple products. Furthermore, its service providers as well as proper management of operating expenses have adopted the innovativeness and differentiation of the Apple Company. In 2009, Apple’s total profit from the iPhone exceeded the total profit made by Nokia from all its mobile phones and it achieved this with smaller number of mobile phones sold compared to the number of mobile phones sold by Nokia. High wholesale prices, and tight cost controls have all combined to propel the iPhone to the top of the chart in earnings. Apple introduced Smartphone that were unique and introduced a phone that generated buzz such as an iPhone that offered competition to Nokia and were much preferred despite their high prices thus increasing their profitability. Operating profits from Apples iPhone 3GS and 3G were higher compared to other competitors such as Nokia mobile phones in the US market due to their high prices and marketability. By considering Samsung as another stiff competitor, it is worth noting that Samsung is a vast industrial conglomerate that manufacturers several things such as refrigerators and semiconductors, most people identifies it with smartphones, which is actually powering her growth. The company’s stunning fourth quarter results saw her profits rising to 87%. It is apparent that the phone division contributed to half of the profit and it does not break out smartphone revenues. In 2011, Samsung sold almost 63.5 million in the quarter of which 40 million came from Samsung Galaxy S3 although the market seem to reach saturation in developed countries and the competition is high in developing countries. In the last quarter of 2011, Apple saw a remarkable profit of $13bn, which included 48 million of iPhones outpacing the Samsung Galaxy S3. Apple is even more dependent for profits for profits on smartphones compared to Samsung and Apple still takes a vast share of the mobile phone industry’s profit. Samsung vs. Apple’s smartphones, tablets and other cloud access devices rivalry is inflaming and the struggle has greatly changed the two companies’ business models. Samsung is really biting into Apple’s share of the smartphones, tablets and PC markets which has led to the series of Apple’s lawsuits. Both the companies vie for similar prize using different business models with Apple using a classic virtual integration while Samsung uses vertical integrated supplier in the electronics market. Apple utilizes a bigger percentage of the inputs for her products sourced from external suppliers while Samsung is focussed on building price performance competitive via internal development and supply of key component inputs. In 2001, Apple had net sales of $5.63 billion and a net loss of $37 million. In 2009, Apple had net sales of $36.5 billion and net income (profitability) of $5.7 billion. The next year in 2010, Apple had net sales (revenue) of $65.22 billion and net income (profitability) of $14 billion, making it the most profitable company in the world. In the following year 2011, Apple achieved revenues of $108.6 billion and profitability of $25.9 billion. The market capitalization of Apple (number of shares of stock outstanding multiplied by the price per share) of Apple exceeded that of Microsoft and Intel combined for Q4 2011. Apple achieved an amazing turn around due to its increased commitment to innovativeness that most people refer to as the new digital economy making its success to have generated from having successful products and strategies, not by chasing metrics. Apple has also successfully engineered products such as tablets, Smartphone into a uniquely beautiful, efficient, and user friendly way that have made its products marketable and lovable by users. Apple has also maintained excellence in their products’ design by employing high standard and very talented engineers responsible for high quality product design thus giving it competitive advantage in the industry. In 2010, Apple spent about $1.7 billion on research and development Apple was seen to be spending enough on R&D unlike other competitors such as Nokia that did not have much to show for their R&D efforts simply because they shifted their expenditure on demand generation to increase demand for their products. Moreover, Apple spent more on software development and other advancements in core technologies to next generation iPhones and iPads by largely relying on user interface and ways of interaction. Analysis Apple has made focus a virtue and it gets almost all her revenues from cloud access devices as well as other associated peripherals and services compared to other competitors’ business models. For instance, Samsung’s business model is more cautious compared to the Apple’s high risk business model. Moreover, Samsung’s component sector feeds multiple downstream product markets and their electronic strength depend on flat panel displays, plus memory, logic, sensors, LED light sources and lithium ion batteries. Their strength in their components will further drive her expansion into new fields including medical electronics as well as data centre hardware. Apple used $3.6 billion while $20 billion on capital expenditure versus $10.4 billion for Apple in 2012 and in selling and administrative costs, Apple’s $10.3 billion in the year 2012. Read More