Analyzing the Apple iPhone Market - Case Study Example

Table of Contents Executive summary 2 Introduction 2 Situation analysis 3 Apple Iphone SWOT analysis 6 Strategic actions 10 Conclusion 11 References: 11 THE APPLE IPHONE Executive summary Formerly known as apple computer s inc., Apple inc. is a company based in the United States that mainly deals with consumer electronic goods as well as computer software. Some of the company’s most widely known hardware products include the Macintosh computer, the iPod and the iphone. On the other hand, the software products include iTunes, Mac operating system among others. This report is aimed at analyzing the apple iphone market with an aim of coming up with a market plan. In so doing, the report carries out a situation analysis as well as a SWOT analysis on the iphone. The situation analysis is carried on various aspects of the environment affecting the trading of the apple iphone. Such aspects include political situation, economic, social cultural and technological environment among others. The report also identifies some of the strengths and opportunities that marketing of iphone has which could be utilized to enlarge its market (Baig, 2007). Some of the threats and weaknesses identified include competition as well as its high pricing. In conclusion the paper identifies some of the strategic actions to be taken in order to boost marketing of the apple iphone. It is hoped that the iphone market and hence sales revenue will greatly improve on implementation of the strategic actions with the realization of the situation as well as the condition of the market in which the iphone is traded. Introduction The apple company was established early in 1976 by Steve Jobs, Steve Wonziak and Ronald Wayne with an aim of selling the Apple 1 computer kit that had been developed by Wonziak. The kit was sold as a motherboard slightly less than what is today known as a desktop computer. The company was known for creating the desktop publishing market owing to their highly innovative programs such as page maker as well as laser writer. One of the greatest successes by the company is the introduction of the IPod portable digital audio player in 2001 where more than one million units were sold. In 2007, the company changed its name from apple computer incorporated to Apple Inc. The company also introduced the long waited iphone that is a combination of the iPod and an internet enabled smart phone. This was later followed by the iphone 3G which added support for 3G networking as well as assisted GPRS navigation (Bales and Gluck, 2000). Presently, the company aims on the satisfaction of personal consumer needs as opposed to mere fulfillment of a demographic requirement and also improvement of performance as well as stability as opposed to introduction of new features when introducing newer versions of any products. The apple iphone target markets are consumers that need to store information as well as communicate and people who want entertainment at all places at all times. The segments would include students, entrepreneurs, corporate users as well as health care workers. At the moment, the market for high-end phones such as the iphone is still small. Few people are willing to buy internet, PDA and video features in a single device owing to the high prices. The market for the iphone is therefore relatively small compared to the general phone market. However, with the lowering of prices and greater power as time goes, the market is rapidly increasing. Situation analysis i) Political situation Although apple Inc. is an American company, the Iphone is traded in many countries across the globe and hence it’s affected by varying rules and regulations depending on the country it’s being traded in. governments also charge varying amounts of taxation and hence in market iphone, Apple ought to consider taxation country by country in planning their profitability and pricing strategies. Furthermore, countries’ stability varies from country to country and hence each country should be studied individually in deciding where to market iphone. However, it is worth noting that generally importing laws across the world favor trading and hence there is a very large market for iphone across the world. ii) Economic situation Economic growth world wide is recovering from the late last decade’s recession and hence iphone is expected to perform better in the world market owing to the fact that iphone market has the highest potential than any other in the telecom sector. iii) Social cultural situation Generally, the world population is experiencing growth. This will lead to expansion of the telecom sector as more and more people embrace the use of cell phones and hence a bigger market for the apple iphone. This is more so because mobile communication has become part and parcel of today’s life and more and more people depend on mobile communication. The market for apple iphone is also set to increase due to the following reasons; -increase in educational growth world wide -the people’s cultural perception of technological devices has been positive worldwide and more and more people are acquiring cell phones. However, apple needs to consider the following factors that are likely to affect its iphone market negatively; -although literacy and illiteracy levels do not affect the use of cell phones, it affects the use of high technological cell phones such as iphone -in countries where there are local providers, penetration of imported products is less -existence of different social views that affect acceptance of products such as boycotting of American products by the Islamic world iv) Technological situation The technology level in the world is rapidly increasing world wide. The level of internet awareness as well as usage for individuals as well as industrial aspects is on the increase globally (McGonagall and Vella, 2002). New technologies in the cell phone market are also on the rise. In addition, future plans for technological connectivity between such institutions as cities, universities, colleges and hospital is on the rise and can now be linked through cell phones. The level of use of the E-technology is also high and on an upward trend. This in no doubt provides an ample opportunity for Apple inc. to expand its market owing to its experience in technological innovativeness. v) Competition situation There is need for continued improvement of the apple iphone if it is to remain relevant in the market. This is because there are more than 1600 mobile phone producers across the world with more than 20 big producers competing at the world market level. vi) Environmental situation There is increased global concern on global warming issues as well as other pollutants affects that concern packaging material as well as radiation of the cell phones (James, 2008). Therefore the demand for international environmental approval is increasingly becoming a must for companies dealing with mass trading of cell phones such as apple iphone. vii) Sales The cell phone industry is one of the highest profitable industries world wide while the market is also on the increase. Apple Iphone SWOT analysis Strengths: i) Innovativeness The apple iphone ranks highly in terms of innovativeness. It has an innovative touch screen as well as many functions of other cell phones (mobile products) all in a single device. ii) Compatibility The apple iphone is highly compatible. It works with iTunes as well as other apple/Mac products and operating system software tools implying limitless potential for being upgraded. iii) Ease of use The iphone is very easy to use. It has an all new touch screen interface which recognizes multi finger gestures just as the human hand does. iv) Brand awareness The company (apple) is widely known for its cool essential products such as the iPods coupled with great technological innovations such as the original Macintosh. v) Pricing The apple iphone has been priced at a very reasonable price for its high value. vi) Quality The apple iphone is of very high quality with a scratch resistant screen that is also durable and light. It has a metallic finish while its software suite is resistant to computer viruses. Opportunities i) Increasing the demand and expanding to new target segments With the advance in technology and with smart phones getting cheaper, the company will have an opportunity to attract more consumers and get the iPod users upgrade to the iPhones. ii) Upgrading The iphone software allows newer and exciting features to be brought in that take advantage of the touch screen ability (Netmba.com. 2007). The company will also produce iPhones that are hardware upgradable in future. iii) Partnerships Apple Company has the ability to partner with many other powerful global mobile phone producers to flood the world market with iPhones thus reducing costs incurred in marketing and this will result in increased revenue through establishment of long term agreement deals. Weaknesses i) Brand image The apple iphone brand has not been targeted towards business people. Furthermore the brand does not have the reputation of compatible with the people /users in the corporate world. ii) Pricing The apple iphone brand is very highly priced. Apple iphone does not offer other lower priced models for consumers who have less to spend or those who are more cost conscious. iii) User interface The apple iphone user interfaces makes users suffer from a problem called “gorilla arm”. This is a side effect that one is likely to face when he uses touch screen for a long time since human hands are not adopted for holding their arms at waist / head height while making small or precise motions. After a short time, cramps can set in making hands movement painful as well as clumsy. Threats; i) Increased competition Smart phones have become easier to make than ever before. With the increased ease, the number of companies entering the market may increase and competitors and even some of the apple contractors are likely to maneuver around the iphone patents and create similar devices which they will release into the market thus increasing competition. ii) The downward pricing trend Although the apple iphone is a high-end, and therefore highly priced, its prices are most likely going to go down when other phone companies cut their prices far much below that of iphone. iii) Difficulty of expanding into Asian markets Smart phones are already known and widely used in the Asian market and therefore there is less hype and interest in th4e already congested market. iv) Competition The Palm Company has a very long history in the PDA market and therefore longer experience as far as developing software for mobile devices is concerned. The company is also a widely known brand for business persons/ corporate world. The existing software is therefore well established as well as compatible with most products for this market. The smart phone market is familiar with the palm products (Mba tutorials.com. 2009). Switching to an iphone from palm products would also imply significant switching costs. Palm also has the capacity of adding many similar capabilities to their products which match those of apple iphone and hence expand to wider market through offering of lower prices as well as higher power products compared to the apple iphone. Strategic actions The iphone is a widely known brand in the global market which is also highly innovative. This is the reason why it continues to be a preferred brand in the market even today long after its inception. However, with the increase in technological innovativeness as well as competition in the cell phone industry, the management needs to take actions that will cushion the company against the threat it faces from its competitors as well as minimize the weaknesses that iphone has. This way, Iphone will not only remain relevant in the global market but will also enlarge its market size and position. The strategic actions include; -carrying out massive TV campaigns on regular basis so as to maintain the public awareness. In so doing, iphone should be differentiated from other phones by capitalizing on its touch screen functionality. -apple needs to carry out massive rollout worldwide at all widely known retailers, showrooms, and all cell phone providers. Online trading of iphone should also be intensified. -coming up with a cheaper model and general lowering of iphone prices so as to establish market dominance soonest possible. The models should also be fitted with extra feature with minimal or no price increase. Such features will include larger disk storage capacity, reduced weight, thinner device and longer battery life as well as improved camera. Conclusion Despite the weaknesses and threats identified as facing the trading of the Apple iphone, the brand is still a very strong one. The company therefore ought to come up with ways of converting the threats and weaknesses into strengths and opportunities. The company should also take advantage of the strong brand awareness and features of the iphone in order to enlarge its market as well as the sales revenue. References: Baig, E.T. (2007).  IPhone’s fab, but Apple could make it even better.  USA Today 5(7), 25-29. Bales, C. C &, Gluck, F.G. (2000).  The business system: a new tool for strategy formulation and cost analysis.  The McKinsey Quarterly, 35-42.  McGonagall J. & Vella, C. (2002).  A case for competitive intelligence.  Information Management Journal, 36 (4).  Netmba.com. (2007).  Competitor analysis. Retrieved February 27, 2011 www.netmba.com Mba tutorials.com. (2009). Apple Swot analysis. Retrieved February26, 2011 http://www.mba-tutorials.com/marketing/273-apple-swot-analysis.html James, W.E. (2008). Introduction to marketing research. Oxford: oxford university press. Read More