Apple Inc. and the Production of iPhones

3009 words (12 pages) Business Assignment

27th Apr 2020 Business Assignment Reference this

Tags: Business AssignmentsSWOTMarketing MixMarketingInternal AnalysisExternal AnalysisBusinessAppleProduct

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Introduction

Apple Inc. is a multinational technology organization situated within California in the United States. The company normally manufactures and sells computers and electronics. It also provides online services and software. The key consumer electronics include iPhones, iPods, iPads, Apple TV as well as Apple watch. Apple has also introduced Apple pay, iOS App, iCloud, Apple card and Apple store among others as some of the main services to its customers. Additionally, the company also develops different types of software such as iPadOS, iOS, tvOS and macOS among others. It will be realized that the company was established in 1976 by Steve Jobs in collaboration with Ronald Wayne and Steve Wozniak. However, the company was incorporated during 1977 hence improving the demand for its computers. Apple hired competent and qualified employees that improved the design and performance of the computers, a situation that improved its financial success particularly during the 1980s (“Apple”, n.d.). The financial strength of the company and increased innovation necessitated it to upsurge the productivity level and production of unique and quality products. The excellent features forced Apple to introduce premium prices to match the value created to the customers in addition to generating a feeling of exclusivity. Nevertheless, the high pricing strategy adopted by Apple played a major role in the reduction of its market share in the 1990s due to the entry of low-priced companies.

The leadership styles adopted by the CEOs have helped in improving the company’s competitive strength in the market by utilizing key competencies to introduce new and quality products that match the current needs of customers. This has made Apple become one of the biggest technology organizations in terms of revenue and size where during 2018 it was capable of realizing $265 billion in revenue (“Apple”, n.d.). The workforce has further increased to over 123,000 individuals and operates in 24 nations through the establishment of more than 500 stores. Apple’s mission statement states that “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store and is defining the future of mobile media and computing devices with iPad” (“Apple”, n.d.). The mission statement guides the company in the development of new products to maintain its market position and competitive advantage. The vision statement revolves around making great products by utilizing innovation, teamwork, and values for excellence to be realized. The key values of the company entail team spirit, good management, rewards, innovation, quality, customer empathy and positive social contribution among others (Capatina & Draghescu, 2015).

Strategic/Situational Analysis

Internal Analysis

The key strength of Apple is a strong brand image. It is believed that Apple has the strongest brand across the globe where its value is over $182 billion compared to Google’s $132 billion and Microsoft’s $105 billion. Through the good brand image, the company has been able to introduce new products within the market with insignificant challenges thus obtaining the anticipated level of demand. This helps the company in developing new and quality products that add value and better customer experience compared to those of the competitors. Apple’s strong brand has helped in attracting the most competent, talented and diverse employees across the globe enhancing creativity and innovative ideas to sustain product development (Kubilay, 2015). On the other hand, the key weakness of the company is the high pricing strategy. The high prices are adopted due to the quality of the products as they contain better features compared to those provided by other companies. This only attracts the high and middle-income earners making it hard for the low-income earners to purchase the products. It is believed that the low-income earners make the largest part of the population thus losing significant demand from them. This necessitates other companies through their low-pricing strategy to target this population hence obtaining huge profits.

External Analysis

The main opportunity for the company is product diversification. Apple has the opportunity to introduce new product lines within the market following the success of the various products it offers. Therefore, through the current product success, the company can focus on product diversification to take advantage of the changing needs of the customers. This can be facilitated by high innovation levels within the company to boost product development and design. Product diversification will enhance expansion to new markets and an increase in profitability levels. It will also intensify the competitive advantage of the company (Padgett & Loos, 2019). On the other hand, the main threat to Apple is aggressive competition within the market. The main competitors such as Samsung, Microsoft, Huawei, and Nokia among others have better pricing strategies and quality products allowing them to possess competitive strength. The competitors are capable of creating products that perform similar functions to those produced by Apple hence reducing its profit margins in some markets (Kubilay, 2015). Consequently, the companies are capable of adopting defensive and offensive strategies to overcome the competitive pressure from Apple.

SWOT

Strengths Weaknesses
  1. Strong brand image
  2. Strong financial position
  3. High profits
  4. Rapid innovation
  1. High prices
  2. Decreased sales volume
  3. Limited distribution network
  4. Incompatibility of the company’s products with those of competitors.
Opportunities Threats
  1. Product diversification
  2. Increasing product compatibility
  3. High sales volume
  4. Strategic partnerships
  1. Aggressive competition
  2. Increased labor cost
  3. Quality problems
  4. Imitation

Marketing Strategy Analysis

Target Marketing

One of the key Apple’s product lines is iPhones which have highly helped in improving the overall competitive advantage. This has been attained through the outstanding product design which has aided in the development of superior products. Apple’s iPhones mostly target people between the age of 20 and 44 years. This group of the population is largely composed of the millennials who are geared at using technologically advanced products (Capatina & Draghescu, 2015). It will be realized that a large percentage of millennials have a stable flow of income and better purchasing patterns. They are also capable of paying more for smartphones that have advanced features and performance to improve their experience. However, the premium pricing strategy adopted by the company only allows the medium and high-income earners to purchase iPhones. The customers within these social classes largely seek a sense of achievement and exclusivity in the products that they purchase to distinguish themselves from the other individuals within the society (Pride & Ferrell, 2015). They also seek innovative features and better performance which can only be found within the Apple products.

The target market is commonly composed of people living within urban areas as their purchases are highly determined by the trending factors thus forcing the company to invest in continuous improvement of the iPhones to maintain its market position and image. Further analysis reveals that the iPhones are largely used by professionals and executives as they are heavy users of the internet which can be addressed through the utilization of quality and high-performing products (Pride & Ferrell, 2015). Despite the focus on low-income earners, iPhones are capable of generating significant demand levels for the company to outshine the main competitors in the market.

Positioning

The positioning of iPhones is mostly carried out through promotion which aids in generating high demand levels. The company also uses advertising as a major marketing effort to reach out to its clients (Pride & Ferrell, 2015). This is carried out through social media platforms, print, and televisions. The positioning strategy of the company is focused on creating customer loyalty. The iPhones’ high quality and excellent design also play a major role in their positioning in the market (Capatina & Draghescu, 2015). Additionally, the positioning of the iPhones to the customers is contributed by the culture and employees within Apple company among other intangible assets.

Marketing Mix

Product

The iPhones utilize an iOS operating system which is unique and operates faster than the operating system used by the competitors. The company, through the utilization of innovation, has been capable of introducing new and better products to meet the changing demands of the customers. Therefore, iPhones offer a better customer experience (Capatina & Draghescu, 2015). The quality commodities help in reinforcing the positioning strategy. The image of iPhones is as shown in Appendix A.

Place

Apple utilizes efficient distribution as well as place strategy to ensure that the products reach out to esteemed customers. This enhanced through iStores which are owned by the Apple Company and are operated by a highly experienced workforce to provide exceptional services and experience. The iPhones are also distributed through a few independent stores like malls and online retailers such as Amazon and eBay among others. The company also provides after-sales services to its customers to enhance repeat purchases (Kotler et al., 2015). The place strategy helps in preventing customer exploitation and the sale of counterfeit items.

Promotion

Apple has established remarkable advertising and promotional strategies for its iPhones. The product differentiation utilized in the production of iPhones aids in creating distinctive features as compared to the competitors’ smartphones. The company has further positioned the iPhones to the customers in a better way by guaranteeing that the advertisements surpass those provided by the rivals to reveal the additional features and product performance. Most of the advertisements are carried out in print media, televisions and social media. The company also uses sales promotions like price incentives to attract customers. Apple further utilizes personal selling, direct marketing, and public relations to promote iPhones to customers (Kubilay, 2015). One of the current ad campaign used by the company was billboard placed on a building within Las Vegas which displayed “What happens on your iPhone, stays on your iPhone” to indicate the high level of privacy provided by iPhones in comparison to the competitors as shown in Appendix B. The billboard is simple with a good choice of colors unlike most of the ads thus attracting more people to read the intended message. This message indicates how iPhones are secure especially when using the Face ID and Apple Pay among other features. Moreover, the video, “Privacy on iPhone? Private Side” is also a current ad campaign by Apple in a move to disclose how its products are secure and cannot be accessed by unauthorized individuals. The advertisement is short and clear for the intended audience to understand the message. It also uses catchy music and well-thought-out images and video compilations to convey the intended message. Therefore, the company uses various communication channels to reach to its customers.

Price

Apple uses a premium pricing strategy to target the high and middle-income earners due to the quality, status, and uniqueness of the iPhones. The price strategy ensures that the iPhones are offered at high prices to maximize the potential profits (Capatina & Draghescu, 2015). The company highly invests in innovation to generate quality and unique products thus selling at high prices which the target segment accept and reveal loyalty. The company is not focused on providing discounts to avoid brand dilution. However, most of the stores provide discounted prices particularly when the products decrease their market value. The pricing strategy is right as it matches the value provided by the products and has helped in the realization of a high level of revenues. The company revenues in 2016 were about $215 billion and increased to $229 billion in 2017 and $265 billion in 2018 as shown in Appendix C. Despite the capability to maximize profits, the pricing strategy fails to focus on the low-income earners.

Marketing Strategy Recommendations

Apple should continue investing in research and development as well as innovation to add new and advanced features to its products for superior performance to be achieved. This will not only increase the product line but also improve on the existing products to attract and maintain customers. This generates more demand levels hence increased profitability levels. The strategy will also improve the company’s competitive advantage to surpass the possible rivals. From a critical point of view, the company should design quality products that fit the low-income earners, a situation that will enhance growth by expanding to the developing economies. This will force the management to revise the pricing strategy to attract all potential customers in the market. The company should also design more products particularly iPhones that fit all populations in the market (Padgett & Loos, 2019). In this case, it should design simple smartphones that fit the baby boomers and silent generation who are not heavy users of technology. The strategy will make all generations feel respected and appreciated through the development of products that advance the level of satisfaction.

Apple should also consider improving its positioning to create more customer loyalty. To generate brand identity the company should focus on hiring diverse and competent employees to improve public perception and enhance the production of quality products that fit the changing preferences of the customers. This will assist Apple in maintaining its market position. The company should maintain its culture to preserve the perception of quality within the customers (Padgett & Loos, 2019). Apple should further focus on using fewer colors as well as clear and straight messaging for advertisements to promote and market its products.

Conclusion

Apple has been one of the leading companies, especially within the technology sector due to the continued use of innovation to generate quality products. This has helped the company to obtain an exceptional competitive advantage to outshine the key competitors. However, the company should utilize the SWOT analysis to address the potential threats and weakness by relying on the strengths and opportunities. The company should also consider revising its market strategies to remain competitive and increase its market share.

References

  • Apple. (2019, March 15). Privacy on iPhone? Private Side. Retrieved August 10, 2019, from https://www.youtube.com/watch?v=A_6uV9A12ok
  • Apple. (n.d.). Retrieved August 10, 2019, from https://www.apple.com/
  • Capatina, G., & Draghescu, F. (2015). Success Factors of New Product Launch: The Case of iPhone Launch. International Journal of Economics and Finance, 7(5), 62-70. doi:10.5539/ijef.v7n5p61
  • Haselton, T. (2019, January 6). Apple has a message for Amazon and Google and it’s plastered on the side of a hotel at the biggest tech conference of the year. Retrieved August 10, 2019, from https://www.cnbc.com/2019/01/06/apple-privacy-ad-ces-2019.html
  • Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2015). Marketing (9th ed.). New York, NY: Pearson Higher Education.
  • Kubilay, İ. A. (2015). The Founding of Apple and the Reasons behind Its Success. Procedia – Social and Behavioral Sciences, 195(2), 2019-2028. doi:10.1016/j.sbspro.2015.06.222
  • Liu, S. (2018, November 6). Apple: annual revenue 2018. Retrieved August 10, 2019, from https://www.statista.com/statistics/265125/total-net-sales-of-apple-since-2004/
  • Padgett, D., & Loos, A. (2019). Applied Marketing. Hoboken, NJ: John Wiley & Sons.
  • Pride, W. M., & Ferrell, O. C. (2015). Marketing (18th ed.). Boston, MA: Cengage Learning.

Appendix

Appendix A

The Image of iPhones developed by Apple Company. Retrieved from Apple (n.d.).

Appendix B

Apple’s Billboard on the Privacy of iPhones. Retrieved from Haselton (2019).

Appendix C

Apple’s Revenue for the past Decade. Retrieved from Liu (2018).

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