Example Of Report On Apple, Inc.’s Positioning Strategies
Apple, Inc. (Apple) is involved in the design, manufacture and marketing of media devices, mobile communication devices, portable digital music players, personal computers, networking solutions, software products (including operating systems) and accessories as well as third party products. Apple also distributes digital applications and content through its app and iTunes, iBook and Mac App stores as well as through third party resellers. With upwards of $182,795 million, $52,503 million, and $39,510 million in 2014 revenues, operating profit and net profit respectively, Apple is easily one of the biggest and most profitable companies in the world. In 2015, its market capitalization hit upwards of $651.70 billion. Apple’s success in the technology industry has been hinged fierce product differentiation, premium pricing, vertical and horizontal integration and a focus on innovation. While the company’s operations are primarily concentrated in the US, it has a considerable presence in Asia, Pacific and Europe. The three key products chosen for this paper include the iPhone, the iPad and Mac personal computers.
iPhone & Smartphones Industry
Apple’s main competitors in the smartphone market include Samsung Corporation, Blackberry, Microsoft Corporation (Nokia), LG, Lenovo and Huawei. Apple positioned the iPhone (and its brand) as having a distinguished hardware/design, easy interface, and strong features. The iPhone has been immensely successful since its inception, in part because it built on the iPod’s success, but also because of the innovations that the phone brought. In the 30-month period between 2007 and 2009, the company sold upwards of 42 million units. In 2014, Apple’s iPhone sales comprised 13.15% of the more than 94 million smartphone sales across the world, with Samsung leading the market with 26.43% of the sales. See Table 1 below.
Google’s Android operating system, which is also used in Samsung products, was the overwhelming favourite in the industry, but still Apple’s iOS was the second most popular. Apple’s iPhone series is largely attributable to fierce brand loyalty, high consumer satisfaction, simplicity in design, great customer service as well as in-store experience, and exclusivity branding.
Mac Personal Computers
In the personal computers market, Apple has been equally successful, but the fact that computers that run Windows operating system form the majority of the sales, Apple has struggled to cope, especially outside the US and Europe. In 2014, Apple made up 13.4% of the US personal computer sales but still fell behind HP and Dell. Globally, Apple’s personal computer sales are far below the top five industry leaders, which include Lenovo, HP, Dell, Acer Group and ASUS.
Tablet Industry (iPad)
Apple’s iPad was among the first tablet products, which allowed the company to make the most of being a pioneer in the market. However, with the emergence of Android-based tablets by competitors such as Samsung have ensured that the iPad’s market share is clawed back considerably. The market shares according to the operating systems are as follows.
The individual brand sales in the year 2012 are shown in Table 5.
The successes of the iPhone, the iPad and the Mac have several common characteristics that the company has managed to successfully leverage over its lifetime. To begin with, Apple with Apple has successfully differentiated itself and its products as innovative, exclusive, creative, highly usable and functional. The company came to the scene when the market needed something different from Microsoft and the traditional mobile phones, and created products that meet these needs successfully. It positioned its products attributes (simple design, functional, best quality, and creative), product (amazing and new products) and use/application (iPad meant to replace phones and personal computers). Apple products are perceived by consumers to possess these qualities as shown in the perceptual map in Table 61, and few competing products have attained a similar brand perception.
The brand achieved these values through aggressive marketing (including product launches by Steve jobs that became a media event), ensuring high customer satisfaction, close value chain management afforded by Apple’s business model, successful partnerships with AT&T and purpose-built Apple stores to project the brand. Apple has a great advantage of designing and developing its own operating system, hardware, software and other services, which ensures that its products can seamlessly operate, while at once giving the company unbridled control over the user experience. This makes for greater customer satisfaction, brand loyalty and equity. This has further been enhanced by Apple’s uncanny ability to remain consistent in creating innovative and competitive products over its history (Zhang, 2013; Laugesen & Yuan, 2010).
Once the brand had been established, Apple sought to leverage the brand parity, by creating an ecosystem of products and services in which customers were “trapped”. The company created a large portfolio of products (including Mac Computers, iPhone and iPad), which tapped into ecosystem of devices and associated products, effectively attaining a connected user experience across all its products. Once a customer buys an iPhone, they will find that they will have greater value buying a MacBook computer and/or an iPad, as against buying a competing product, because Apple has made it difficult for its products to be owned with competing products. It is more difficult to transfer songs from a Dell computer to an iPhone, than from an iPad because Apple’s products use the same/related operating systems and a huge range of purpose-built applications. Effectively switching from competing products is not only difficult but also injurious to the customers’ value, which forces them to keep to Apple.
Market Potential, Demand & Company Demand
The market potential refers to the highest iPhone, iPad, and Mac PC sales volume that can be achieved if all possible consumers that can purchase the respective products do so, including new buyers, replacement/upgrade buyers and others. Given the fact that Apple’s operations are still centred in the US, Europe and Asia Pacific, the untapped potential in markets in the emerging economies including Brazil, South Africa, India and Russia is huge (MarketLine, 2014a; MarketLine, 2014b). However, the market demand is markedly lower than the potential because it refers to the demand that has already been attained by the industry as a whole. In this respect, the market demand represents the total value of sales of the respective products in the given period. In the year 2014, the market demands for the iPhone, the iPad and the Mac PC was 94 million phones, $29 billion and $83.4 billion respectively (International Data Corporation, 2014; Statista, 2014). Without competitors in the respective industry, and supply-side bottlenecks, it is possible for Apple to realize the market demand. However, these industries are characterized by intense competition and supply side bottlenecks (including Apple’s lack of presence outside its traditional markets), which have ensured that the company demand is as shown by the respective market shares in Tables 1, 2, 3 and 4. The company demand can, however, be increased by building the brand and manipulating the marketing mix, to influence the customers’ purchase decision-making. To this end, Apple, Inc. should:
Consider expanding its operations into the emerging markets, which are characterized by expanding populations and income, as well as less intense competition. The company’s market demand is constrained by its limited geographical reach.
Expansion into the emerging markets requires a change in the marketing mix, including pricing concessions in order to appeal to Middle classes that comprise the majority of these markets. Geographical price discrimination will facilitate the expansion.
Continued expansion of the company’s product portfolio to build on the Apple experience, brand loyalty, equity and parity (Laugesen & Yuan, 2010; Zhang, 2013)
Increased expenditure on research and development to facilitate innovation, new product development and value creation, which in turn impacts the company’s brand value/equity (Yip & Hult, 2012; MarketLine, 2014b)
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International Data Corporation. (2014). Smartphone OS Market Share, Q3 2014. Retrieved Jan 17, 2015, from http://www.idc.com/prodserv/smartphone-os-market-share.jsp
Laugesen, J., & Yuan, Y. (2010). What factors contributed to the Success of Apple iPhone? Ninth International Conference on Mobile Business / 2010 Ninth Global Mobility Roundtable.
MarketLine. (2014a). Samsung Corporation. New York: MarketLine.
MarketLine. (2014b). Apple, Inc. New York. Retrieved from http://content.ebscohost.com/ContentServer.asp?T=P&P=AN&K=26FFE4D9-E51D-4F5B-AC02-76DC923525A7&S=L&D=dmhco&EbscoContent=dGJyMMTo50SeqLI4zdnyOLCmr0yeqK9Ssqa4S7SWxWXS&ContentCustomer=dGJyMPGvtU2xr69RuePfgeyx44Dt6fIA: MarketLine.
Statista. (2014). Global market share held by leading smartphone vendors from 4th quarter 2009 to 3rd quarter 2014 . Retrieved Jan 27, 2015, from http://www.statista.com/statistics/271496/global-market-share-held-by-smartphone-vendors-since-4th-quarter-2009/
Yahoo Finance. (2015, Dec 14). Apple, Inc. Retrieved Jan 27, 2015, from http://finance.yahoo.com/q/pr?s=AAPL+Profile
Yip, G., & Hult, T. (2012). Total Global Strategy. New York: Pearson Education.
Zhang, C. (2013, June 27). Brand Positioning Strategies of the Rising Chinese Smartphone Brands. Retrieved Jan 27, 2015, from http://www.labbrand.com/knowledge/labreport/brand-positioning-strategies-rising-chinese-smartphone-brands