Adopting Customer Relation Management of Apple Inc - Case Study Example

Competitors Analysis According to Marshall N (2010),The main competitors of Apple Company are Black Berry, Nokia and HTC due to their smart phones which have the same features and functions as compared to the iPhones. But more specifically, the main competitors of Apple’s iPad1 are HP, Dell and Acer who have been great competitors of Apples iPad. Before Apples, iPad, there was Amazon’s product Amazon kindle, Sony reader and Nook similar to the iPad but this e-reader was not as famous as iPad was. Apple Inc gained popularity very fast in January 2010 and it was launched in April the same year in US, UK and subsequently all over the world. The Sony reader was launched in November 2006 in US. It was the first to allow downloading of books via connection to a PC. The Amazon Kindle, the Nook then followed the lead. One other distinct Competitor is the Orphan Electronic of China who launched iPed and even has a camera a feature that is not found on the iPad. However, its screen is much smaller than that of an iPad, a lower resolution and even other applications which is an advantage on the side of the iPad. As Apple has been able to control both its Operating system as well as its hardware designs for the iPad, it is therefore able to achieve efficiency which the other manufacturers have not been able to do. This efficiency is more eminent in terms of the memory and the battery which has made it to achieve cost advantages, space saving, and performance as compared to the other competitors. Nook was launched by the Barnes and Noble book chain in October2009 and was a direct competitor of Amazon’s Kindle. It allowed readers access to a catalogue of books. iPad offers more than just an E-reader as compared to the other readers. As an iBook app, I Pad is faster has beautiful images in full colour, has larger screen as compared to the other e-readers but it is a bit expensive, is much heavier and has a shorter battery life. According to Carpenter & Sanders (2010), Apple Inc can also adopt Customer Relation Management (CRM) for its iPad device to help them establish, develop, maintain and optimize long term mutually valuable relationship with their customer. The diagram shows how Apple Inc can adopt CRM model There are three key major phase in this model which include; Customer Acquisition This process involves attracting iPad customer for the first time they purchase this device. Through customer acquisition, Apple Inc. will identify potential customers through market segmentation. Through his market segmentation, the company will be in a position to target their customers based on social class and demographic. Customer retention It is important for ipad to maintain its customer and encourage repeat buying. This will be done through innovative IT,market orientation, as well as value creation. Customer extension The customers of ipad will be coming back to purchase products of ipad and therefore there is the need to introduce new features in the ipad to keep the loyal customers coming. Marketing Orientation This is basically focusing the organization as a whole towards the needs of the customer. The needs of the customers are taken care of under three levels of the ipad products so whereby, beside Apple Inc offering the physical product (ipad) it offers other benefits such as Warranty cards and after sales service. Internal Analysis According to Sanders and Carpenter (2010), internal analysis is the organization’s capabilities, and resources which give the core competencies for the organization to attain competitive advantages over its competitors and earn above average returns. Apple Inc. internal environment will be analyzed through its value chain and SWOT analysis. Apple SWOT Analysis Strengths Strong brand name Apple’s products are so much appealing design, is also easy to use Financial vitality – Cash reserves remains robust and stable despite stagnant market share growth in the computer hardware and software arenas Customer loyalty Effective distribution channels Innovation and Improvements- innovation and capability of improvements its products are the strength of Apple, which can be seen as 6 times upgrading its iPod and recently launched a revolutionary device iPad table Weaknesses Market share – Apple has historically been strongest in the US geographical and educational vertical markets. With the educational market facing tightening budget constraints and the US approaching a PC saturation point, Apple may need to burn cash more quickly and succumb to market cost pressures on its products without a strategic innovation, integration, or divesture Price-Apple Inc products are often very expensive Faulty products such as its Ipod Nano product Threats In the publishing industry, Apple is facing very strong competition from Dell, HP, Amazon, Sony and Toshiba Media piracy where ipod users illegally download music for free instead of purchasing at iTunes Economic recession which has influenced Apple’s sales Its product expensiveness threatens Apple being undercut by low-cost imports Opportunities Introduction of new products Better quality control implementation Consumer electronics – With the startling success of the iPod and iTunes, Apple entered the consumer electronics market. By expanding the iTunes concept to downloadable mobile phone features and movies (podcasts), the door is now open to develop new and potentially profitable strategic alliances with peripheral component manufacturers and media transmission giants Source: Author (2012) Value Chain Analysis To examine where Apple Inc has developed distinctive capabilities, porter’s generic value chain model provides a systematic framework for identifying Apple’s utilization of resources. The primary activities for Apple Inc include product design, customer service, sales and marketing, technology and legal services. Apple ipad Value Chain analysis Stakeholder’s analysis Apple Inc ipad does not operate on its own but it is a system which interacts with so many factors who are its stakeholders including its customers, employees, suppliers, shareholders, investors, the government and the employees. the diagram below shows iPad stakeholders analysis. Source : Author 2012 Customers: The Apple ipad mainly targets the e-readers. The customers expect to get high quality good for the products that are sold to them by Apple. Employees The employees of Apple ipad have a stake in the company in that they would like to see the profitability of this product which will assure them of job security. Suppliers The suppliers of the iPad raw materials also need to be assured that the product is performing well in the market so that they can be able to bargain for more competitive prices for their materials. Shareholders The shareholders of Apple iPad have an interest in the profitability of this product as this way they get value for the money they have invested in this company Investors Potential investors of a company will normally look at the performance of the company before they make the decision of investing in that company. Therefore, if more investors are to join Apple ipad, then the company will have to keep working hard on its performance Government The government has a stake in the operations of Apple Inc and if Apple is to continue operating, it has to obey all the Government laws and regulations of the land. The profitability of the company is also of interest to the government for purposes of taxation. PEST Analysis This analysis assists to determine the current situation of Apple Inc., identifying potential influences of the economic, political, social and technological sectors and also have a glimpse into the future of this company Political influences In 2010, 41% of Apple’s sales were from outside USA which was down from 52% in 2009. Poor international relations, terrorism and war has influence Apple’s sales in a huge way since Apple has no ability to control these factors and since Apple Inc produces many of its products and parts outside the U.S, like China, Ireland and Cork. Political conflicts between these countries and the U.S may have awful outcome for Apple Inc. Economic Influences The global economic recession has had great impact on Apple Inc. the unemployment rate has increased; the inflation rate is high, while customer’s income has not significantly changed. As a result of this economic deprecation, there has been less spending by consumers especially on luxury products as Apple products are viewed. Social Influences Globalization entails the interaction of citizens worldwide, for which technology plays a major role. The world cannot be imagined without technological devices such as mobile phones and computers. Due to its strong brand name, Apple Inc. has been globally viewed as the king of technology, not because of most usage but design and quality. The music industry is another big social influence which over the last decade has virtual popular and set its market to the cyberspace and Apple having developed the biggest virtual media store, iTune, the company is well ahead of its major competitors. Technological Influences The computers and mobile phones technology market has become big, adding more competition in this industry. Moreover, technology innovation and change are almost as quick as lightening resulting to very short products lifecycle. Apple Inc. has invested largely in Research and product Development so as to be on the top of the market in relation to innovative products. Customer analysis The Apple iPad has been targeted towards several customers. To begin with, it is a good solution for all those prospective Amazon Kindle as it is a device that one can leave right on their living rooms for fast access of emails, music without having to turn on their laptops or their desktops as it is an perfect supplementary for the laptop or desktop. It targets those people whose computing tasks are mainly around the multimedia or the internet and due to its portability and multitouch features, it suits this audience perfectly. The iPad is also targeting the student and their professors especially due to its ability to download books from the internet and with the additional keyboard dock it are a great tool for the students. The ipad is also targeting the older generation for two main reasons. To begin with, it is bringing the iPad’s operating System has been proven to be easier to learn and secondly, the iPad allows physical interaction via its multitouch feature that makes computing easy for the older generation. Therefore an iPad will be a good solution for the elderly who would like to use computer services but find computers too complicated. The last target audiences of iPad are those people who travel frequently or the home theatre gurus who rather than their carrying their iPod Touch on the airplanes or taking their laptops on the airplane for movies, the iPad is able to resolve this two problems with the power of a battery. Industrial analysis using the Porter’s five forces According to Investopedia (2012), porter’s model is a technique which is used to analyze an industry as well as competitors in it. The publishing industry is growing fast each and every day with innovative products getting into the market everyday ranging from online newspaper and the e-readers. However, it is worth noting that the iPad has had a permanent effect on the publishing industry. Its ease to access the favorite magazines right from the living room is slowly killing the old way of publishing. The iPad has affected the offline publishing industries as it has made it possible for the thousands of offline newspaper readers to upload this items easily over the internet. The main competitors in the market are HP, Apple, Acer, Sony E-reader and Dell. Threat of new entrants Apple Inc. has been able to keep a very good image and it has made it very hard to imitate their marketing strategy. There are very high entry barriers as a result of standardization in the PC components and the high financial demand. If at all a new entrant are to join this industry, they will have to come up with a differentiating strategy completely different from the already existing companies. Also, there is a high learning curve. This means that customers take a lot of time to get acquainted to new innovations. The already existing brand names have made it very difficult for a new company to join the industry. Bargaining power of Suppliers The bargaining power of thee supplier in this industry is very high as there are very few companies like Microsoft and Intel that deal in Operating System and microprocessor. The threat of forward integration by the suppliers is very inherent as the supplies are very sophisticated and the components parts like disk drives, keyboards and memory chips needed in production are very hard to imitate. Threat of Substitutes Substitute products are readily and cheaply available and although customers look for strong brand names and quality products, some of these components they are searching for are readily available from substitute companies at a lower price. For instance, if a customer finds an Apple iPad too expensive, then they will go for cheaper offline newspapers and magazines . Rivarly There are many companies which are developing low cost strategies to attract their customers as well as to compete with the already existing manufacturers. This has created rivalry among the companies. Companies like Amazon and Sony reader are competing on the basis of cost with Apple. Bargaining power of customers As buyers are not highly concentrated, they have less bargaining power for the models and the prices. Buyers have less switching cost which discourages customers from switching to other suppliers. However, there are several substitutes that are available which makes the consumers to be powerful in that they can choose from the available options for instance the offline newspapers, Amazon and the Sony reader   Source: Author (2010) Market Analysis According to Evans J, (2010), by April 2011, Apple Inc Was set sell up to 40 million iPads in 2011as it increased its supply to meet its increasing demand. The diagram below represents the staggering sales in apple Inc iPad over the last few years. Source : Evans (2010) From the diagram above shows that Apple made sales of between 32 and 34million iPads in the financial year 2010 -2011. Financial Analysis Fiscal year is October-September. All values USD Billions. 2007 2008 2009 2010 2011 Sales/Revenue 24.01 32.48 42.6 65.07 108.6 Cost of Goods Sold (COGS) incl. D&A 15.85 21.33 25.75 39.5 64.08 COGS excluding D&A 15.54 20.56 25.02 38.47 62.63 Gross income 8.15 11.15 16.85 25.57 44.52 Net Income 3.5 4.83 8.24 14.01 25.92 EPS 4.045.48 4.04 5.48 9.22 15.41 28.05 From the above analysis, the revenue of Apple Inc has been increasing year by year from24.01 in 2007 108.6 in 2011. The gross income of the company too has been increasing from 8.15 in 2007 to 44.52 in 2011. This has been the same trend for the Net Income which has increased from3.5 to 25.92 in 2011. The Earnings per share of the company has increased from 4.04 to 28.05 in 2011. This increased can be attributed to increase in sales after the launch of the ipad in 2010 which has contributed greatly to increased sales revenue. As the company is doing well, the investors has been able to get more value for the money they have invested in this company which is the reason why the Earnings per share has been increasing year by year. Read More