Apple Inc. is one company that for a long time has dominated smartphone market due to its exemplary technology and innovation. The company has built a formidable reputation that its competitors find virtually impossible to dislodge or ignore.
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Apple Inc., spearheaded by dedicated management team, has remained keen to innovation and technological development, which are the bedrock of the company’s success. Success for Apple Inc. has largely come from a combination of brand development and loyalty, innovative products, superb marketing strategies, and exemplary public relations strategies.
Recently, the company launched the innovative iPhones 4 products, which will be the basis of this study analysis. It is perceived that exemplary performance of this product in the market depends on identifying the right marketing strategies through carrying out adequate market analysis.
Apple Inc. was established in 1977 by three friends – Steve Jobs, Steve Wozniak, and Ronald Wayne. Since its establishment, Apple Inc. has established itself in the market as a company that is involved in the design and production of innovative personal computer (PC) products and also developing its own unique operating systems to run its designs of Mac desktops and laptops (Porter and Norton 2009, p.335).
In addition, Apple Inc. boasts of numerous innovative products and services it has introduced in the market over the years. For example, some of popular products innovated by the company include: Mac computers, iPhones, iPod, Apple TV, Xserve, consumer and professional software applications, the Mac OS X and iOS operating systems (Reuters, 2011).
Other products and services include third-party digital content such as iTunes stores, and many more accessories, service and support offerings, all of which are geared towards satisfying identified market niche (Reuters, 2011). At the same time, Apple Inc. employs different market methods to dispose its products and services.
The most notable ones include retail stores, online stores, direct sales, third-party network carriers, wholesalers, retailers, and value-added resellers (Reuters, 2011). The market niche for the company’s products is diverse, but the most identified ones include individual consumers, small and medium sized companies, education fraternity, enterprise organizations, government, and creative markets.
Apple Inc.’s market segmentation has concentrated largely in five market regions that include America, Europe, Japan, Asia-Pacific, and Retail (Reuters, 2011). American market serves both North and South American markets, while the Europe market extends its network among Europe countries, Middle East, and Africa regions.
On the other hand, Asia-Pacific markets cater for all Asian countries including Australia and New Zealand, but exclude Japan, while the Retail market has big concentration in United States of America and selected international markets. Financial performance of the company remains healthy, and this can be attributed to increasing sales of iPhones units.
Since 2007, net income for the company has been on upward trend and by the end of 2010’s fourth quarter, the company posted improved revenues of $28.27 billion with net profit of 6.62 billion (Apple 2011).
Market Analysis for iPhone 4
In 2010, Apple Inc designed yet another innovative product in the market (iPhone 4) which immediately became a market ‘hit’, recording massive sales and enquiries. Since the introduction of the first iPhone 4 products, Apple Inc. has continued to improve the product and just a few weeks ago, the company introduced to the market, an improved version of iPhone 4 known as iPhone 4S (Gallagher, 2011).
Within three days after being introduced in the market, iPhone 4S sold 4 million units, surpassing records set by other devices (Gallagher, 2011).
China’s political climate remains conducive for local and international business activities. The country enjoys political stability where also, government has been initiating policies that tend to open up the country’s market for outside world, while protecting the home firms through balanced regulation of business activities and contracting requirements for foreign firms (Asian Market Research, 2003).
China is a growing economy where social classes are differentiated by economic position. Young people and students tend to have fewer resources to purchase products or satisfy their consumption needs.
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As a result, they tend to operate on limited budgets while making purchases for smartphone products. Therefore, they tend to buy products that their budget constraints can afford, yet possessing the desired features and ‘smartness’.
China’s market is composed of different demographics that differ in consumption characteristics. With a population of over a billion people, China’s smartphone market remains dominated by young people and students who embrace latest technology at faster rate than older people do. However, the young population is limited by financial constraints in their consumption needs of smartphone products.
Technology remains the most avenue companies continue to battle especially as taste among different demographics tend to shift regularly and embrace technologically enhanced products. Apple can capitalize on its exemplary technological know-how to respond to consumer needs of Asian market.
Competitive Analysis for iPhone 4
Competitive market leverage emanates from market segmentation strategies, and this can be possible with Asian market (Sigal, 2010). Different market competitive frameworks can be used to assess Apple’s potential and suitability of penetrating the Asian market (China), which is one of the developing economies; this is in addition to how well the company can introduce the iPhone 4 products in this market.
Porter’s Five-force Model
In 1980, Michael Porter observed that the profitability potential of an industry depends on five competitive factors, which possess the ability to influence return on investment of any given company (Henry, 2008).
The five competitive factors, popularly known as Porter’s five-force model include threat of new entrants, rivalry among competitors, threat of substitutes products, bargaining power of buyers, and bargaining power of suppliers (Henry 2008).
Threats of new entrants
At the moment, the smartphone market is gradually becoming complicated, given the increasing number of competitors such as Nokia and Samsung. This shows that as potential continue to grow in the sector and entrants’ barriers become loose, it is likely that in near future, there will be flood of new entrants into the market, especially in potential markets like Asia.
Rivalry among competitors
Currently, Nokia has established itself in the Asian market more strongly, given its concentration in low-end products; this endeavors the company to many consumers. Other smaller competitors are coming up, as market barriers reduce, and this is likely to complicate the market environment even further for Apple Inc.
Threat of substitutes products
Asian market, and specifically China, has a number of players producing market moving smartphone products. For instance, Nokia has the Nokia Oyj; Google Inc has numerous Androids, while Samsung also market numerous smartphone products. Therefore, substitutes to Apple’s iPhones are likely to be more as numerous competitors join the market.
Bargaining power of buyers
The smartphone market in China is highly competitive where many players offer a wide range of smartphone products to different consumer groups. As a result of many providers, consumers have become ‘price shoppers’, as they look for the best products at reduced price. This has increased consumer bargaining power, especially as constraints on the budget affect consumption needs of many consumers.
Bargaining power of suppliers
As competition increases and many players enter Asian market, there is tendency for competition among suppliers to source contract from various players (Apple, n.d). This aspect has led to reduced bargaining power of many suppliers in smartphone market, especially with tendency of many companies to reduce costs of operations and production.
Behavioral motivation for consumer purchase behavior
China’s culture abhors the concept of ‘face’, which is integral in the society. As a result, status consciousness is important to majority of Chinese. Among consumers, achieving greater status and prestige in the society is exhibited in the type of gadget can has and given the p[premium nature of iPhone products, majority of consumers have expressed desire and drive to purchase iPhones products not only for their usefulness, but also for the status it accord the user (Panzarino, 2011).
Consumer lifestyles and psychographics
China’s market for smartphone products is largely concentrated among young people and students who, given their trend, flashy and dot.com lifestyle tend to exhibit consumption behaviors for ‘smart’ products that propel their lifestyle. Products that appeal, convenient in nature, perform multiple functions, and still provide the user with fame are most preferred in China’s market (Panzarino, 2011).
Attitude plays great role in consumption behaviors of many people and this is evident in China’s market. For a long time now, China’s social life is intertwined in their consumption behaviors (Chan 2011). A product with negative social approving is likely to get backlash in the market.
Social approving for products emanate from the capacity of the product to meet social, economic and cultural benchmarks of the larger China’s society. Smartphone products especially that integrate China social, economic, and cultural aspects tend to have greater acceptance given the overall improved consumer attitudes on such products (Panzarino 2011).
Emotional involvement, expressiveness and intelligence
Asian markets are characterized by consumer attaching great emotions to products they use. The products become part of the consumer emotion expressiveness. Majority of Chinese students and young people can be described to have great emotion involvement, especially on products that meet their needs and expectations.
Smartphone products are used for educational purposes, social life, and all life activities, hence they have become part of emotion expression on part of consumers.
Recommended marketing mix for iPhone 4
Apple Inc valued products exhibit innovative technologies that integrate consumer needs and wants. Apple’s products are preferred and they have dominated the market, given their ability to remain flexible, unique, and technologically accepted to different demographics.
Therefore, to appeal to China’s market that remains front for competitor battle, this will require Apple Inc to design iPhone 4 products that have faster chip, possess higher resolution camera and possess software capabilities to meet customer needs as compared to competitors. In addition, the products should remain innovative, compatibility, easy-of-use, upgradeable and quality in nature (Maxwell, Lee, Suen, & Hofmann, 2007).
China consumers are price conscious especially young people. In addition, presence of Nokia, Samsung, Google Inc, all of which have specialized in designing products for low-end market makes market environment more complicated.
Therefore, Apple should embrace penetration price strategy, where the aim should be to design customized iPhone 4 products to specified market demographics – young and students (Itkar 2008). Further, it should still sale with its premium prices to corporate markets after extensive advertisement and promotion.
Accessing China’s market for Apple’s iPhone 4 products requires the company to strategically position the products to its website and social sites that seem to be popular among China’s consumers. Moreover, the products should be strategically available in Apple’s retail stores in China, while at the same time, the company should increase agent-sales strategy to reach more areas of China.
Apple boasts of heavy advertisement and promotion activities for its products, far above its competitors. Product promotion should be enhanced, while product demonstration should be integrated in promotion activities (Botha, Strydom, and Brink, 2005).
Social marketing should also be adopted especially given the nature of China’s market. Further, the company’s website should remain the best front for advertisement, and this should include product description, features, and benefits of product.
China’s market offers challenges for Apple Inc.’s iPhone products, given the competition in the market, China’s ‘in-group’ culture, economic challenges, and advancing technology. Therefore, Apple Inc. requires appropriate market analysis of China’s market environment.
Marketing mix to be adopted by the company should be premised on consumer behavior theories outlined. This will provide the company with a clear market plan to penetrate China’s market more successful.
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