Apple Incorporated is considered one of the largest brands in telecommunication systems up to date. Founded in 1976 by Steve Jobs and Stephen G. Wozniak after the two met each other at a local computer club, it became a multi-billion enterprise that produces numerous gadgets ranging from computers to smartphones. The company employs over 100,000 specialists around the world and possesses major assets and operations in many geographical segments, such as Europe, Asia, the Middle East, Africa, and Australia. Its span of services covers the entire world. The company’s market capacity is currently at 630.8 billion dollars (Apple Inc., 2016).
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Apple’s annual net revenue in 2015 is 231.3 billion dollars, which is almost 50 billion dollars more when compared to last year. The corporation is present in every segment of the IT Market. Its products include various mobile communication devices, laptops and personal computers, music players, accessories, networking solutions, and all related digital content, program software, and user applications.
The company’s famous for several brands known to just about anyone in the modern world – iPhones, iPads, iPods, Mac-computers, are among the few that could be named (Company description, 2016). The latest product released by Apple Incorporated is iPhone 7 – the newest model of the iPhone branch, which boasts significant improvements over its predecessors and competitors. The product was announced on September 7, 2016, and launched nine days later.
The company hopes that this new model is going to give it a competitive advantage over Android-based platforms, Samsung, Lenovo, Sony, and others. The purpose of this paper is to conduct market research of the company and its products, develop a basic marketing plan, and study the marketing problems and opportunities the company would have to address.
Apple Incorporated’s current mission is vastly different from the old one, formulated by Steve Jobs in the 1980s. Back then the company was clawing its way to the top and was dedicated to innovation and making breakthroughs in the technological field. The current statement was formulated after Steve Jobs’ death, and it sounds like this:
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 has recently introduced iPad 2, which is defining the future of mobile media and computing devices. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals, and consumers around the world through its innovative hardware, software, and Internet offerings. (Farfan, 2016, para. 3)
The conclusion that could be drawn from this mission statement is that Apple Incorporated’s current mission is to consolidate its positions as one of the leaders in computing and digital media industries, rather than strive for achieving new heights and developing groundbreaking products that would benefit humankind. Now, their mission statement resembles that of many other companies. A good half of it is dedicated to listing the achievements of the past, rather than goals and objectives for the future. In that, today’s Apple is very different from what it was under Steve Jobs, whose mission statement was truly unique and inspirational.
Sources of Competitive Advantage
As a multi-billion corporation, Apple possesses a vast technological and resource base that allows it to stay on top of the competitive market and create products that establish its dominance in the technological market by offering new, cutting-edge technology to the customer. The iPhone 7, released in September 2016, is one of its main tools to remain in its current position of power, as it allegedly outperforms all current smartphones and has several unique features, such as jack-less headphones, dual-lens cameras, improved battery life, and quicker processors. However, the technological base that allows the company to produce these marvels of technology is not the only factor that keeps Apple afloat. The other two key factors include a protected ecosystem and brand appeal.
To explain the concept of a protected ecosystem, and how it applies to Apple, one must look at Apple’s competitors – the devices that use Google Android. Apple is the only company to use iOS. This is a very important factor, as it keeps customers within Apple’s loop. Many of them made purchases on Apple stores, so if they wish to keep using those purchases – they have to continue using Apple products.
If they change to an android-based platform, they would not be able to import any Apple-based add-ons and programs with them. Android allows a degree of flexibility here – if the users are dissatisfied with a particular company or model – they could purchase a different smartphone from one of the numerous competitors. Apple does not have such a problem. Also, the number of various models running on Android caused an effect known as hardware fragmentation.
It means that due to the great number of different smartphones working on Android, it is harder to create new software, as it has to be tested and optimized for all different models ranging from Samsung to HTS. Apple is far more stable in that regard, which allows the company to release software updates much quicker, which contributes to the legendary reliability of Apple programming (Sun, 2015).
The other important source of competitive advantage for Apple is its brand. Right now Apple hardware is considered a luxury brand, which is rare considering how competitive the electronic market is. What this means is that the company is capable of charging extra for its devices, thus generating more revenue without hurting the sale rates. Since 2010, Apple remained in the Top 10 most valuable brands in the world, according to Forbes.
Apple is a very famous brand, and that alone allows generating new sales, as customers would prefer a well-advertised brand over an unknown one. Apple exists for over 40 years; it is associated with the first computers, best smartphones, and the best hardware. Unless something cataclysmic happens, the company would retain its positions and keep using their brand to generate greater revenues than its competitors, who have to decrease prices to stand a chance. Apple is a trendsetter, but this is a risky position, as their popularity is supported by the name of the company, rather than the superior quality of the products.
Marketing Microenvironment and its Influence
The microenvironment is a list of factors that directly affects the company’s product production and its relations with the customers. Here are the five factors that greatly influence Apple’s microenvironment:
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Rivalry among competing sellers
Current rating – high. Apple Inc. possesses a well-differentiated portfolio of products that it can offer to customers. Although the sales in the last year have plummeted considerably and the company is slowly losing its market share in the smartphone segment, with the introduction of the iPhone 7 it is looking to rise again. Apple’s natural strength lies in its distribution outlets via Amazon and direct sales.
Potential entry of new competitors
Apple currently occupies the niche market and provides luxury hardware to high-income customers. It is unlikely that any company has the resources to compete with Apple here, as the investments required to do so are just too high. Apple itself has to dedicate over 100 million dollars in investments just for the development of a new iPhone. The company protects its niche through an aggressive copyright program and a cost-effective contract manufacturing strategy.
As it stands, Apple’s direct competitors tend to have an answer for every product that the corporation produces, and it is expected of them to present an alternative to even the latest smartphone introduced to the market – the iPhone 7. Still, Apple’s iOS does not have any substitutes, which creates a secure environment for the company.
On the one hand, Apple relies greatly on its suppliers for parts to produce its smartphones, laptops, computers, and other hardware. Should any of the major suppliers stop working with the corporation, it would present a serious challenge to its production. However, there are no reasons for the suppliers to do so, as Apple is their largest buyer. Also, the company has a well-diversified net of suppliers, meaning that it does not rely on any one company too much.
Apple is popular among the users as a company that promotes quality and innovation and has a history of swaying crowds towards their products and away from its competitors. It invests greatly in research and development to provide the newest advances in technology to its customers. However, the company has a rather inflexible discount strategy, as it refuses to make any discounts for its products. While this bold move makes a statement, it also alienates a certain number of customers among the middle class (Khan, 2015).
Marketing Macroenvironment and its Influence
To analyze Apple’s macro environment, numerous factors need to be taken into account. The macroenvironment is also known as an external market and stands for all operations that the corporation is conducting outside of its walls. Here is a list of factors that affect the company and its business practices:
This stands for laws and regulations that are in place in particular countries, where Apple operates and launches new products. Each country has its own rules regarding competitiveness and monopoly, taxes, various regulations put in place by the government, employment policies, etc. This is of paramount importance whenever Apple develops new markets. Political stability is also an important factor, as great social perturbations such as revolutions, civil wars, and sanctions lead to overall market decline and thus affect sales. Apple is a company registered in the US and its profits from the protection provided by the local government as well as trade agreements it has with most countries in the world.
Economic factors play a big role in external markets
These factors include taxes, exchange rates, rates of inflation, average income within a particular country, its economic development, etc. Apple prides itself on selling premium-class gadgets, which are very expensive. They aim for medium and high-income clientele that could afford their merchandise. The richer the country – the more sales they make. Currency fluctuations are critical to the business, as Apple relies on foreign importers to get the parts required to produce their hardware.
With many countries experiencing rapid economic advances and growth, Apple is constantly looking to expand its sales within the developing countries. Apple gadgets are much sought after by students, businesspersons, and various groups to whom possessing an Apple product is a symbol of status. As a rule of thumb, the corporation largely operates in countries with relatively high living standards and good income. This provides the company with a steady flow of potential customers and ensures the successful distribution of their products.
Is one of the advantages Apple has over its competitors, as its products are always cutting-edge and define the trends of the market for the rest of the world. If Apple continues to promote innovations like it does today, it would inevitably reinforce its position in the external market and lead them to new heights. As it stands, the corporation remains dedicated to promoting innovation, as it has shown with its recent product, the iPhone 7.
Security plays a certain role when expanding products to new markets. Certain countries are concerned with environmental regulations for all electronic devices. For instance, Apple needs to make sure its products are recyclable to conform to laws regarding the protection of nature and rational use of natural resources. To improve its public image, the corporation dedicates some of its revenue towards supporting environmental initiatives, such as the green energy project.
Apple uses international intellectual property laws to assert its dominance over other companies. Among the journalists, this is known as the “Patent war,” often waged between Apple and its competitors. This tactic, however, proves damaging to the company’s reputation, as many news outlets claim this is a sign of impotency and inability to deliver a product that would best the others in a fair competition (Khan, 2015).
Current Brand Portfolio
The iPhone line is considered Apple’s most profitable brand – in 2015, is attributed to more than half of the company’s entire net revenues. It remains the company’s core revenue generator. Although in 2016 the company lost some of its market shares to competitors, the introduction of the iPhone 7 is supposed to restore dominance in that field and regain what is lost. The company sees its future with smartphones and computers, as other products do not see the same success. Ipad had a lot of potentials but failed to deliver due to the competition, and iPod and Itunes have meager sales in comparison. The Apple brand is currently worth 146 billion dollars, according to Forbes.
This success is largely due to the iPhone line, and it is expected to grow, should the latest model be as successful as the previous ones. The trademarks of the Apple products have always been innovation, comfort, and the perceived elite status of the brand – as mentioned before, iPhone is viewed as a symbol of status among the rich and powerful. The company’s strategy of not making any discounts for the products only enhances this perception, as Apple claims that the reason why there are no discounts is that they are selling quality products (Badenhausen, 2016).
The brand is one of the supporting pillars of the company since when it comes to gadget performance, the competitors are often ready to offer similar or better ones at better prices. The newest iPhone 7, released in September 2016, is expected to be the most expensive iPhone up to date, due to the innovations incorporated into its frame, which are going to bring the already steep price for the gadget even higher.
Gap or Opportunity Identification
While Apple Incorporated is considered one of the most profitable, powerful, and technologically advanced companies in the IT market, it faces the issue of a sustainability gap. As it stands, the company’s policy is to promote the iPhone line as a brand of elite products and sell them at incredibly high prices, completely ignoring the low-cost segment and catering to a niche market of wealthy users.
While the iPhone is a well-known brand, Apple’s products are not superior to those of the competitors in any way. That means the superiority of the iPhones is sustained only by the brand and the marketing strategy of the company. As was mentioned before, the iPhone 7 is what is supposed to give the company its technological edge and fill the gap between the popular perception and the reality about the quality of Apple’s gadgets. However, once the competitors like Samsung, Sony, and HTS catch up and release their cutting-edge smartphones, Apple’s dominance would be supported only by the name of the brand yet again.
The dangers of such a strategy are obvious – almost half of the company’s revenue is dependent on the iPhone line. Should the newest model fail to deliver or one of the competitors come through with a technological breakthrough, Apple will face severe losses in revenue and market share (Khan, 2015).
Instead of this gap and opportunity analysis, Apple should invest in discovering a low-cost smartphone market, which is currently dominated by its competitors. Many potential buyers remain outside of the company’s loop due to steep pricing on its gadgets, computers, and smartphones. Should Apple decide to invest in creating a budget smartphone under its brand, it is expected to have a large success with no damage to the overall brand name, and bring in revenues from the low-income market, which is currently unavailable to Apple products.
This strategy would also allow the company to spread into the developing markets such as China and India. With over 2 billion people in total, they are huge potential markets for budget smartphones. With Apple’s brand name, claiming these markets would lend results akin to the Blue Ocean strategy, which lent the iPhone line its success back when they were first introduced.
Lastly, iOS, while efficient at keeping customers, is not very cost-effective at attracting new ones. Right now, Apple smartphones hold only around 25% of the market share, with the rest belonging to the competitors who are aiming for the low-price markets. To mend that gap, the company is required to optimize its spending and development for the iOS and related user software, to adhere to the company’s strategy of price minimization strategy (Khan, 2015).
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Khan, U.A. (2015). A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6): 955-967.
Sun, L. (2015). Apple Inc’s sustainable competitive advantages. The Motley Fool. Web.