Identification and Evaluation of Five Marketing Strategies of Apple Inc. and iPhone - Essay Example

Apple Inc. and i Phone Summary of Company and Product Apple Inc. is a popular U.S. based multinational organization. It is a publicly traded concern and its primary headquarters is located in Cupertino, California. The most popular hardware products of the company are its Mac line computers, iPhone smartphone and iPod music players. Consumers can conduct different types of internet based activities through such smart mobile gadgets. Apple had launched its first iPhone in 29th of June 2007 (Apple Inc. “Financial Information”). Over time, Apple has launched several other models of iPhone such as iPhone 2, 3, 4, 5 and 6 (Apple Inc. “Financial Information”). iPhone is one of the most popular products of Apple in the global electronics market. The phones are unique in terms of color, finish, weight, dimensions, display, software chips, iSight camera, video recording and connectivity (Apple Inc. “Financial Information”). However, Apple’s iPhone has also become popular because of the growing demand of smartphones in the global market. Identification and Evaluation of Five Marketing Strategies Product Apple Inc. conducts its business in a highly competitive market and experiences threats of monopolistic competition in business (HSC “The International Business Cycle”). In order to acquire a greater share of market demand and gain superior core competencies, the organization tries to offer qualitatively unique non imitable products (Porter 87). Apple Inc. implements differentiation strategy in business for offering electronic hardware products such as iPhone. However, across all its international marketplaces, Apple offers standardized iPhone models. The technological features used in iPhone are authentically patented by the company. These Smartphone’s manufactured by the company are run through Apple’s own customized software, iOperating System (Apple Inc. “Financial Information”). iPhone is well known all over the market for its bigger screens, strong battery life and unique design. No other market rivals of the company can exactly imitate the internal and external features of iPhone. Product differentiation strategy helps to augment the brand value of Apple Inc. in the global forum. Consumers prefer to purchase iPhone because of its rare features and non comparable applications. Production Strategy Apple Inc. procures most of its hardware electronic products from the Asian economies. These semi-finished products are acquired by the company through the process of outsourcing. Some raw materials are obtained by Apple from its OEM trading partners (Apple Inc. “Financial Information”). Through an automated receiving system, Apple Inc. effectively manages the stock of its inventory. The organization utilizes environment friendly means of production for ensuring low generation of toxins during its manufacturing process (Porter 160). Many by-products formed from the production process of Apple are recyclable in nature. The production amenities of the company aim to offer zero landfill facilities. AKM Semiconductor Inc., AAC Technologies Holding Inc and Delta Group are some popular suppliers of Apple (Apple Inc. “Financial Information”). The organization utilizes both direct and indirect distributional channels with its outbound logistics. Product packaging wastages are lowered by the company through specialized engineering and designing experts. Apple’s iPhone models are designed and manufactured through non imitable innovative technologies. Price Apple Inc. settles the prices of its electronic hardware and software products through the premium pricing strategy. Under this regime, the company charges high prices for its produce, in order to capture the demand created by the upper middle and rich income customers in the market. The impact of Veblen and conspicuous consumption effect is highest for Apple (Tucker 150). Buyers prefer to consume the products of the company because of its high prices (HSC “The International Business Cycle”). By purchasing such expensive products, these consumers desire to portray their status in the society. Furthermore, some individual’s perceive that the company charges high prices for its products because of its superior qualitative features. The first model of iPhone was launched at approximately $ 499 price value. The offer price of the product at that point of time was much higher than the industry average price value of a standard smart phone. Place . The mobile was introduced in the markets of the U.K., Germany, France, Portugal, Ireland and Austria by the end of 2007 (Apple Inc. “Financial Information”). Being a multinational organization, Apple Inc. offers its products in almost all the major economies in the world. However, some popular product lines offered by Apple, such as iPhone are sold from the official internet websites of the company. Apple’s iPhone is available in its physical as well as digital retailing outlets. However, large retailers such as WalMart and Tesco also sell Apple’s iPhone in the market. The company first launches its new iPhone models in western developed economies such as the U.S. and the U.K. Eventually, the product is launched in the less developed economies around the world. Promotion Apple Inc. utilizes effective promotional strategies in business. The organization implements primarily two types of promotional strategies in trade. Advertizing is one popular promotional strategy of Apple Inc. The company spends large of money for making interesting advertisements (Jackson, Joshi and Erhardt, 801-830). The commercials of the company are shown through popular means of communication such as internet and television. Personal selling is another popular promotional strategy used by Apple Inc. Young, talented and experienced sales representatives of Apple promotes the intrinsic good features of its iPhone models to the consumers. Through special selling expertise, these professionals help to increase the aggregate revenue and profitability of Apple in the market. Thus, advertising and personal selling are the two primary promotional strategies used by Apple, for selling its iPhone models in the market (Apple Inc. “Financial Information”). Future Marketing Strategy Recommendation Product iPhone and other electronic products offered by Apple Inc. are manufactured according to the norms of differentiated product manufacturing strategy. However, there are some problems associated with Apple’s iPhone models. Some consumers claim that that the wi-fi connectivity and post battery life of iPhone’s are weak (Stampler “Apple iOS 8 Users Complain About Wi-Fi and Battery Problems”). Such outcomes prove iteration of the company’s operating system. Such problems are lowering the benefits accrued from the company’s product differentiation strategy. This is because; large number of iPhone applications becomes useless when the actual battery life of such smart gadgets is weak. Research reports have shown that the consumers are facing problems with i OS 8 that is used in the latest iPhone models (Stampler “Apple iOS 8 Users Complain About Wi-Fi and Battery Problems”). These problems are primarily related to fast battery draining issues. Thus in the long run, Apple must try to improve the quality of the existing operating systems in iPhone. The company might not introduce further product differentiation in its iPhone models in the long run (Stampler “Apple iOS 8 Users Complain About Wi-Fi and Battery Problems”). Many consumers avoid paying high prices for a new model of iPhone because the product soon loses its popularity after the launch of the next new iPhone model. Apple should implement a quality enhancement strategy in its product manufacturing process. iPhone will drastically lose its popularity from the market, if the issues relating to its weak battery life and connectivity are not resolved. Furthermore, Apple can offer slightly differentiated iPhone models in each of its international markets. Such product differentiations can be established by the company according to the demand trend of each market. For instance, the company can introduce less costly iPhone models with fewer product features across its weaker markets (Nadiri and Tanova 33-41). Such product oriented strategy changes will help to enhance the market competency of Apple Inc. Production Apple Inc. primarily procures its semi finished hardware products from some Asian economies such as China. The innovation related activities are conducted in the native or traditional western markets of the country. In the long run, Apple Inc. should try to establish its innovation hubs in the emerging economies of the world (Mankiw and Taylor 120). This initiative of the company will be termed as its ‘reverse innovation’ procedure. The currency value and exchange rates of some emerging economies such as Indonesia, China, Brazil and India are low (“The World Fact Book”). Operational and innovation oriented activities conducted in these markets can significantly lower the manufacturing cost experienced by Apple Inc. Lower cost will increase the profitability of the company. Such profits can be used to finance the new investment plans of the company in future. Thus, for cost cutting reasons, Apple Inc. should shift most of its production facilities in the less expensive economies of the world. Price Apple should change its premium pricing strategy in the near future. Figure 1: Market Competition of Apple (Source: Zhang “How are domestic brands positioned in the market”) The above perpetual mapping diagram shows that Apple conducts its business in a highly competitive market. Sony, HTC, Samsung and Blackberry are the most popular business rivals of Apple. All these companies offer their own smartphones in the global forum and such products are close substitutes of Apple’s iPhone models (Mankiw and Taylor 55). Increased competition has lowered the switching costs of the consumers in the market. Many buyers prefer to purchase less expensive smartphones sold by Samsung and HTC from the market. Lower real income and increased market uncertainties have forced to diminish the demand for premium priced products of Apple. The reports of Global Smartphone Sales 2013 stated that the demand for Samsung’s Smartphone’s have increased by 32% from 2012 to 2013 time (Zhang “How are domestic brands positioned in the market”). On the other hand, Apple’s iPhone’s demand has increased only by 12% during the same span of time (Zhang “How are domestic brands positioned in the market”). Thus, Apple Inc. should introduce competitive pricing strategy to sell its iPhone models in the market. This strategy will make iPhone affordable to a larger strength of consumers and hence increase the global share of its market demand. In order to make iPhone models more competitive in the market, Apple Inc. can introduce penetrating or competitive pricing strategies in business. Place Apple Inc. first launched its products in its native U.S. market. Eventually, the company distributes its new produce in other western European and North American nations (Shaer 222). At the end, newly invented products of the organization are offered in different emerging markets. However in the long run, Apple should introduce some of its new iPhone models first in the emerging economies of the world. After globalization, the booming economies are experiencing increasing demand for consumer good products and services. Such outcomes are experienced by these developing countries because of increasing per capita income thresholds, experienced by the growing middle income group of customers (“The World Fact Book”). The discretionary spending power of the individuals in such countries is improving over time. Thus, Apple’s newly launched iPhones will become popular in these markets. By launching new products in the emerging economies, Apple can experience normal profit in business, within a very short span of time. Promotion Apple Inc. primarily utilizes personal selling and advertizing as the two major approaches of product or brand promotion. In order to increase the market popularity and sales of different iPhone models, Apple Inc. can introduce new types of promotional strategies in business. The company can conduct some promotional activities through social media. The internet penetration rate in both developed as well as developing countries is significantly increasing over time. Social media sites such as Facebook and Google+ are utilized for both business-to-business and business-to-consumer deals in the modern world. Apple Inc. can promote its iPhone models through such sites (Nicholson and Snyder 145). Under this regime, the company will be able to market its products to a larger strength of customers, cost effectively (Mankiw and Taylor 110). Other promotional techniques such as end-cap marketing and point-of-sale promotion can also be utilized by Apple Inc. for enhancing the sales of its iPhone models in the global forum business (Alonso-Almeida and Rodríguez-Antón, 1455-1463). These are convenient and impulsive promotional approaches. Such marketing activities of the company will be conducted from its authorized moving stores such as company kiosks. Implementation of One Recommended Strategy The concerned research paper will elaborate the implementation plan of the recommended pricing strategy for Apple iPhones. Apple Inc. should try to offer some of its iPhone models at lower prices in the market. The organization can utilize the penetrating pricing strategy in trade. Under this regime, it should offer the new iPhone models at relatively competitive or low prices in the market. Eventually, on grounds of differentiation, the company can increase the price of the launched product after it becomes popular among the consumers. This strategy will make the product affordable to a larger strength of consumers. The company can generate greater revenue from its iPhone sales, with the help of the new pricing strategy. The traditional pricing strategy of the company offers targets the rich or high income group of consumers. However the new pricing strategy will be targeted for the middle and upper middle income consumers. The revised pricing strategy will make iPhone affordable to a larger strength of consumers (Mankiw and Taylor 130). The strategy should be implemented by the company within a span of 1 year from 2014. Aim: Apple Inc. will amend its existing iPhone pricing strategy. The company will shift from premium to competitive pricing strategy. Purpose: The Company can successfully materialize and introduce the new pricing strategy in business with the help of the implementation plan. Activity Objective External and Internal Situation Analysis For analyzing the requirement of the new strategy and estimating the internal strength of the company to establish the strategy change Appointing appropriate Human Capital These recruited workforce will be able to successfully execute the entire implementation plan Indentifying the Primary Objectives of the Plan The objectives will elaborate the primary tasks to be executed through the implementation plan Evaluating the Plan Requisites To analyze the resources that the company should possess for executing the plan Introducing an Efficient Communication Plan The company will be able to popularize its new pricing strategy through the communication plan Establishing New Pricing Standard To settle the revised prices of Apple’s iPhone models Popularizing the New Product Prices To ensure that the consumers in the market are aware of the new pricing strategy introduced by Apple Forecasting the Future Response of the New Strategy To estimate the actual benefits Apple Inc. will experience after implementation of the new pricing strategy External and Internal Situation Analysis Apple should understand that the political, economical, social, technological, environmental and legal state of affairs in the external business environment, demand for the new pricing strategy. Political authorities of most countries are introducing new rules to promote competition in the electronics industry. Many individuals have become economically rational after the global recession (Mankiw and Taylor 222). These consumers like to purchase less expensive products of good quality from the market. New technologies invented in the market can help to lower the manufacturing cost of Apple’s iPhone. Such external environmental factors call for the new pricing strategy of Apple. The company must offer iPhones at competitive market prices. Internally, Apple is experiencing high cost of innovation and lower profit margins in business (Alonso-Almeida and Rodríguez-Antón, 1455-1463). Thus, the new strategy will help to increase the profitability of the company in the market. Appointing appropriate Human Capital The new pricing strategy can be successfully implemented by skilful and productive human capital of Apple Inc. Thus, the organization must recruit an appropriate labor resource in business before materializing the new pricing program (Melvin and Norrbin “International Money and Finance”). Indentifying the Primary Objectives of the Plan Apple Inc. is a giant multinational organization and owns a wide scale of business operations. The company will not be able to materialize the new pricing strategy without estimating its primary objectives (Melvin and Norrbin “International Money and Finance”). Evaluating the Plan Requisites In order to turn up the new pricing strategy, Apple Inc. must possess adequate amount of productive resources in business. However, these resources will be primarily variable factor services in nature such as labor and capital (Melvin and Norrbin “International Money and Finance”). Introducing an Efficient Communication Plan According to the communication plan objectives, Apple Inc. must popularize its new pricing strategy through different means of communications such as social media, television, magazines and visual advertisements. Establishing New Pricing Standard The effectiveness of the new pricing strategy of Apple can be evaluated by the consumers, only after establishments of the new pricing standards. The buyers will be able to compare the old and new price differences through this (Snowdon and Vane 135). Popularizing the New Product Prices The communication plan of Apple Inc. will help to popularize its new product prices in the market. By enhancing the popularity of Apple iPhone’s new pricing strategy, the company will ensure greater sales and profitability in the long run. Forecasting the Future Response of the New Strategy Strategy revision or amendment related activities can be executed by the company through this forecasting analysis. The success of the entire strategy implementation process can be evaluated on the basis of the forecasting results (Melvin and Norrbin “International Money and Finance”). Apple Inc. has already started to implement the new penetrating pricing strategy for selling its new iPhones in the market. This strategy is largely utilized by the mass-market product producing companies such as airline service providing firms. When the company launched its new iPhone 6 model, the price of the product was $ 649 (Brustein “The $84.50 Reason Apple Wants You to Buy That Big iPhone”). Once the product became popular in the market, the company introduced the advanced iPhone 6 plus model that costs an additional $ 15.50 over the original price (Brustein “The $84.50 Reason Apple Wants You to Buy That Big iPhone”). The new model contains additional features in the form of camera and memory related features. The model is becoming popular among the elite class consumers. The new pricing strategy has helped the company park $ 84.50 as profit, from each unit of iPhone 6 plus model. Thus through penetrating pricing strategy, Apple iPhone can be sold to rich as well as middle income consumers. Work Cited Alonso-Almeida, María and José Miguel Rodríguez-Antón. "Organisational behaviour and strategies in the adoption of certified management systems: an analysis of the Spanish hotel industry." Journal of Cleaner Production 19.13 (2011): 1455-1463. Print. Apple Inc. “Financial Information.” Apple. Apple, 2014. Web. 24 September 2014. Brustein, Joshua. “The $84.50 Reason Apple Wants You to Buy That Big iPhone.” Bloomberg. Bloomberg, 2014. Web. 27 September 2014. HSC. “The International Business Cycle.” HSC. HSC, 2014. Web. 24 September 2014. Jackson, Susan E., Aparna Joshi and Niclas L. Erhardt. Recent research on team and organizational diversity: SWOT analysis and implications. Journal of management, 29.6 (2003): 801-830. Print. Mankiw, Gregory N. and Mark P. 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