Executive Summary
Apple, Inc. is a leading manufacturer of communication devices and computers globally. The company also specializes in digital music, software, and hardware solutions (Apple, Inc. 2010). Its product lines, particularly the Smartphones and iPads, are regarded as quality and innovative. The Apple brand image is strong in the market segments it operates. However, as Apple seeks to expand its operations into overseas markets, the company needs to capitalize on its strengths to create a sustainable competitive advantage. Its marketing strategies, especially the differentiation strategy, have enabled Apple to grow its market share and increase its market presence. This report examines Apple’s current market strategies to determine how Apple can overcome challenges and utilize opportunities in new markets. A market plan is provided that would help Apple remain competitive in the new markets.
Introduction
Apple, Inc., a California-based technology firm, revolutionized PCs with the launch of its Apple II and Macintosh computer in the 1980s (Apple, Inc. 2010). In recent years, Apple, Inc. has launched a wide array of innovative devices, including Smartphones (iPhones) iPads, iPods, and PowerMac G5 computer as well as software and hardware, which have propelled the company into a market leader position (Shen & Lin 2011). The company also has a strong online presence where it sells most of its products, including popular music (iTunes), audio books, and television programs (Gormley 2010). Consumers purchase its products from third-party agents (wholesalers), retail stores such as Wal-Mart, and online stores (Ashcroft 2011).
Apple, Inc. operates in four market segments globally. These include Japan (Asia), Europe, America, and retail segments, but its main operations are in the US (Apple, Inc. 2010). The Smartphones have a high screen resolution capacity, which has allowed Apple, Inc. to compete effectively with other e-reader providers in the market (Marshall 2010). They are conveniently light and slim, have a longer battery life, and fast internet connectivity that allows users to browse the internet and download iTunes (Gormley 2010). This report analyzes Apple’s competitive strategies in order to determine the opportunities and threats associated with its entry into a new market. A market plan that will help the company make a successful entry into a new market is also provided.
Main Findings
Apple’s Marketing Strategy
Apple, Inc.’s success in the computer hardware and software industry is largely attributed to the company’s marketing strategies. The company focuses on creating consumer demand for its products in order to remain competitive in the market. Before launching a new product, Apple, Inc. conducts a market research, through a third-party agent, in order to determine the level of consumer interest in the new product (Hughes 2010). Apple then devises a marketing strategy to reach out to the consumers who, according to the research findings, show less interest in its products.
Before its launch, a survey had established that about 35% of the 2,500 people surveyed had indicated that they would purchase the iPad. The rest (65%) did not show interest in the product (Herrman 2010). Thus, it is evident that Apple, Inc. relies on independent market research to develop the marketing approaches for its new products. This marketing strategy helps the company to concentrate on the population segment that has an interest in its iPad product. It also enables Apple to devise new ways to reach out to new customers.
SWOT Analysis
This framework allows firms to evaluate its internal strengths and weaknesses, and the opportunities and threats relevant to entry into a new market.
Strengths
Apple, Inc. is renowned for its quality and stylish Smartphones. Apple has a strong brand image, which has seen it become a market leader in all its target market segments (Dziri 2011). Its brand value is estimated to be over $1.7 million (Kahney 2013). Apple creates innovative products, which served to increase consumer confidence in its products. Apple’s focus on R&D has enabled it to develop an improved operating system driving up sales for its Smartphones and iPads (Stone 2012).
Weaknesses
One of Apple’s weaknesses is the incompatibility of its products with common gadgets. The Android operating system in its Smartphone products is less compatible with other devices, which limits its use. Moreover, Apple’s products are entirely dependent on the internet. Several units (iPads), which cannot connect to the internet, have been recalled, which has affected the company’s sales (Smith 2010). Product fragility is another problem associated with Apple’s products. For instance, the iPad cannot function under hot weather conditions, which limits its use (Shah 2011).
Opportunities
The Smartphones market segment is growing rapidly globally. Apple’s market share in the Smartphone market has grown with the introduction of the iPad. The company attracts the younger clients with its innovative products; hence, it is poised to dominate this market niche (Apple, Inc. 2010). The mobile PC market presents another opportunity for Apple to grow its market share, as many consumers prefer iPads to PCs.
Threats
One of Apple’s threats as it enters into this new market is competition from firms such as Dell and Microsoft, which make similar products. The stiff competition might affect the sales from Apple’s Smartphones. The company relies on third-party agents for the distribution of its products and components. The lack of effective distribution channels might hamper the success of Apple’s products.
Apple’s Marketing Mix
Apple, Inc.’s strategy focuses on creating popular products with innovative functionalities as opposed to developing features for unpopular devices (Hughes 2010). Apple’s marketing strategy for its Smartphones, including the iPad, is as follows:
Product Strategy
Apple’s innovative products, including the iPads and the iPhones, involved intense innovation, which started in early 2000s (Ogg 2010). Extensive research led by Apple’s CEO, Steve Jobs, preceded the development of a prototype for Apple’s iPhone and iPad. However, initial research focused on the iPhone culminating in its release in 2007. On the other hand, the iPad was launched in 2010 (Nakashima 2010).
Apple’s latest product, the iPad, combines the features of a PC and a Smartphone. It allows users to access the internet, watch movies, download music and videos, and communicate via e-mail. It is size and shape is convenient for most users. The device allows users to access and download applications from Apple’s app store (Donatelli 2010).
Price
The prices of Apple’s products are relatively high. Each of Apple’s products MacBook, Pad, and iPhone) is priced depending on the model and internal memory capacity. For instance, a WiFi-enabled iPad with 32GB memory retails at $600 while that with 64GB memory is sold at $830 (Marshall 2010). Besides prices, Apple allows its customers to enter into a flexible contract where they are able to get data at a specified price (Herrman 2010).
Promotion
The purpose of Apple’s promotional activities is to create brand awareness in order to generate interest in its new products. Its new products, including the iPad, are promoted as Apple brands. It uses several promotional approaches to increase sales in its target market and attract new customers. Apple uses social media marketing to reach out to many customers. It offers promotions on Facebook whereby Smartphone users can invite their friends to an online Apple group (Herzog 2010). Lucky users are also rewarded with free iPads. Besides social media, Apple sells its products directly to consumers through the Apple stores. It employs people who are knowledgeable about the applications and prices of Apple’s products to help market the products in its stores.
Place
Apple’s place strategy involves a wide network of distribution channels that allow the company to reach out to its target customers and expand into international markets. The distribution networks have created interest and high demand for Apple’s products, including the Smartphones, globally. Soon after the launch of the iPad, the Apple stores and retailers reported low stocks of this product due to high demand (Vertigo 2010). Nevertheless, as the company expands into new markets, the sales of its products will go up.
Conclusions
Apple has been promoting its Smartphones as fast internet devices with several applications to its customers. Its Smartphones have fast internet connectivity and large screens, which makes them popular among customers. Inbuilt applications, including the iTunes, video games, and iBook, influence most customers to purchase these gadgets (Ogg 2010). Furthermore, the prices of these high-tech products are quite reasonable. An iPad costs about $700 while an iPod and iMac cost $50 and $2000 respectively (Jacinto 2011).
These prices are reasonable considering the fact that the products are highly innovative. Apple, Inc. uses social media marketing to promote its products. The company runs promotions on Facebook where it awards customers with free devices. Apple’s products also have an inbuilt Twitter application. Occasionally, lucky Apple followers are rewarded with promotional giveaways.
Apple has also taken steps to expand the distribution network for its products. After the launch of the iPad, the demand exceeded the available stocks. As a result, Apple has expanded its production capacity for products that are in high demand. It currently produces over two million units of iPads monthly (Marshall 2010). Apple has also allowed several retailers to distribute its products. Tech Data, AT&T, and Wal-Mart are some of the major distributors that sell all models of Apple’s products. This approach has increased the company’s market presence (Adhikari 2011).
Recommendations
Apple’s expansion strategy has a potential of enhancing the company’s market presence in the global market. Its future success lies in building its managerial competencies and continuous innovation as the company expands into international markets. It should capitalize on its Smartphone technology, which has been touted as the best in the market, to grow its market share (Ogg 2010). Apple should integrate this technology with the features of PCs, such as Adobe Flash Player to allow consumers to watch movies on their gadgets and utilize PC programs. Thus, Apple should create Smartphones that offer both business and entertainment functionalities in order to meet the needs of its customers. In this way, Apple will strengthen its internationalization strategy.
Apple should also invest in brand development. The company should refocus its brand development strategy to quality development to ensure that its brands give customers value for their money (Georgescu 2010). Since Apple is reputed for quality brands, the company should create products that reflect the needs of target consumer segments. This differentiation strategy will reinforce Apple’s expansion efforts into international markets whose needs are very diverse. Moreover, as the company expands into overseas markets, it should establish subsidiaries at the new markets as opposed to partnerships or mergers. The subsidiary option will allow Apple to benefit from its R&D and retain full control of its operations in the new markets. It will also help Apple avoid economic and political risks in these markets.
Apple utilizes a number of promotional strategies to market its products. The writer would recommend that Apple, Inc. invest in advertising through its apps, including the iAd application. The apps can serve as marketing channels for Apple’s products. Moreover, the company can generate revenue by allowing other businesses to advertise through the apps. Since the demand for Smartphones is high and continues rising, advertising through apps presents Apple with immense opportunities for growth. Consumers spend as long as a half an hour on apps in a day; this means that ads placed on Smartphone apps can reach many users globally (Kincaid 2012). Thus, Apple should focus its strategies on app advertising to market its products and generate revenue.
References
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