The company and industry overview
Apple Inc. is a publicly listed American company specializing in the production of high technological electronic products, computer hardware, and software (Apple Inc. 4). Under the electronic hardware category, the company products include personal computers, media devices, mobile communication, and portable-digital music players.
In addition to high tech hardware devises, the company produces a variety of software applications including third-party digital content applications and networking solutions (Apple Inc. 4).
Within the mobile communications category, the company has launched into the market variety of Smartphones including iphone and other android Smartphones that has significantly hit the world Smartphones market.
Currently, the Smartphone market share is valued at approximately five billion dollars with Apple products claiming 1.6 billion dollars, second after the Samsung products. The Smartphones market is expected to grow in the next five years, approximately an increase of 0.55% annually.
Apple market share is robust with expected growth of 1.67% annually (Apple Inc. 4). This growth in the market share is driven by the popularity of its brands among the younger generation. Apple Inc. brands are very popular in many countries. Its products iphone is highly welcomed by majority of young generation particularly the college students.
The popularity of the brand has enabled the company to be successful and become the leader in Smartphones market under a highly competitive and volatile environment (Linzmayer 34).
The company Smartphone, iphone, has remained to be most likable in the Smartphones market and has contributed over two billion dollars in revenue for the company.
Though the market is highly competitive with new models entering the market, the worldwide Smartphone market is rapidly growing. The majority of companies are targeting younger generation whose popularity with Smartphone is ever increasing (Linzmayer 34). it is expected that the Smartphones will be contributing over ten billion dollars in revenue over the next five years.
PESTEL analysis
This tool is normally used to analyze the macro-environment in which the company operates as well as the external factors that may affect its products (Herzog 112).
The macro-environmental factors include the political, economical, social technological, and legal. This analysis looks into the broader external factors that influence the company Smartphones market.
Political factors
Apple Inc. is a multinational company operating in many countries especially in North America, Europe and Asia. As such, its products are sold in a wide spectrum of political environments. Moreover, its Smartphones consumers are spread across the political divide found in all parts of the world.
Therefore, political consideration is very important factor especially when introducing a particular product in the foreign country market (Nijssen and Frambach 23). For instance, most of the company Smartphones is manufactured in China.
Majority are sold within the Chinese market. Thus the company marketing strategies must be in line with the country policy in which its products are sold (Herzog 118).
The Chinese government reduced the preferential policies to all foreign companies operating in the country. Consequently, the company met so many challenges than before in this market.
This policy has been replicated in many countries in a bid to protect their domestic firms producing similar products thereby increasing the risks of the company (Nijssen and Frambach 23).
Moreover, the company is facing imperfect piracy laws that have led to the copycat-products in both domestic and foreign markets. These political conditions have seriously influenced the company sales particularly the Smartphones.
Economic factors
The current economic situation around the world has a profound effect not only on the company products but also on the general production capacity. The recent economic downturn experienced in America and Europe has a considerable consequence on the Smartphones domestic market.
Sales for the Smartphones reduced as majority of consumers switched to other essential products as their income reduced. Reduction in sales was also experienced in many parts of Europe as well as in many countries around the world.
However, this presented an opportunity for the company to introduce cheaper Smartphones in the market. Moreover, in such an economic environment, the company must increase its capital flow in order to avoid negative effects of the economic shocks (Wernerfelt 172).
However, as other parts of the world were experiencing the effects of the economic crisis, China, the biggest Apple Smartphones market was experiencing an economic boom. The company concentrated much of its resources in China.
In the last two years, China has experienced rapid economic growth with increased consumer spending. In addition, the Chinese government has encouraged its nationals to buy products and services that have been produced in the country. This economic situation has presented the greatest opportunity for the company to sell its products especially the Smartphones (Wernerfelt 172).
In addition, the Chinese population consists majorly of the younger generation and college students who are the target market for the company Smartphones. All these factors are good for the company.
Social and cultural factors
The company Smartphones is sold in an open cultural environment. Moreover, its target market of younger generation pursue vogue and like cultures (Linzmayer 37). Their lifestyles are similar in almost all parts of the world. In addition, the company Smartphone’s process designs are simplified to meet the needs of all cultures.
The company Smartphone’s designs combine simplicity and beauty, the logic that is praised highly in all parts of the world. All the Smartphones that the company has launched into the market has been popular among the younger generation, which has revolutionized the generation cultures.
With the current globalization where there are no cultural boundaries, the company Smartphones has been seen as the engine behind the current globalization.
However, the company Smartphones designs focuses on the needs and wants of the target market. That is, younger generation needs gargets that are simple and with wide applicability. Indeed, the Apple android Smartphones have achieved that objective.
The apple android Smartphone that has been currently released into the market has sophisticated attractive style, which is available, and have gone beyond the fashion (Dziri 8). The company Smartphones applicability, design, and style have cut across cultures.
Technological factors
The company is operating in a technological and changing environment. Electronic technology has found wide application in many industries and quickly improving. In fact, technology has formed the core of electronic and fiber information industry (Wernerfelt 168).
Apple Inc. is one of the leading companies in the electronic information technology industry. The highly volatile and ever changing technology has made it difficult for the company to hold the leading position in the IT industry.
However, with the advent of the android technology in Smartphones, the company made a great stride in capturing the larger market share (Herzog 124). In addition, the speed in which technology is being pirated has made it difficult for the company to hold on the patent technology.
Nevertheless, the company improvements on the current technology and innovative culture will enable it maintain its market share on the Smartphones market.
Legal environment
As indicated before, the company is operating in many countries around the world with various legal regulations. Moreover, these countries have their own domestic companies that produce similar products. Commercial regulations are varied ranging from preferential regulations to patent and rights laws (Henry 123).
The company is facing many challenges and legal tussles with many competing companies relating to patent and copyright laws and regulations. This has increased the risks for the company.
Besides, most of the products take long time before being introduced in the market because of legalities relating to patent and copyright. This has significantly contributed negatively to the growth of the company Smartphones market share.
SWOT analysis
The SWOT tool has been used to analyze the company internal strengths and weaknesses, opportunities available, and the threats the company is facing from the outside environment (Henry 68). In essence, SWOT analysis identifies both internal and external factors that have enabled the company achieve its marketing objectives.
The tool has been used to assess the company Smartphones market current situation, challenges existing, difficulties, and problems that have been experienced.
Strengths
The company is producing high quality and attractive Smartphones. This has made the products to penetrate and claim the largest market share in both android and other Smartphones market. Besides, the company leadership in high technology and electronic industry has boosted the marketability of its Smartphones.
The company strengths in technology and powerful innovative capacity have boosted the confidence the target market have on its Smartphones (Dziri 33). The company Smartphones operating system has exceeded any other competing Smartphones and this has become one of its greatest marketability strength.
In addition, the company Smartphones design is fashionable and stylish which enables the user interface. This has enable the company Smartphones be used in diversified cultures.
In addition to technological, quality and design strengths, the company Smartphones is diversified with different prices that meet all classes of people (Linzmayer 39). Besides, the company good relationship with the customers will boost the Smartphones sales.
Weaknesses
The biggest drawback the company Smartphones has is their limited compatibility with other gargets. Apple android Smartphones is not compatible with other applications. This has limited its use. Consequently, its market will significantly reduce particularly where the spare parts are not within reach.
In addition, the company Smartphones has limited market and distribution channels as compared to most of its competitors (Dziri 34).
Another problem is the supplier’s environmental concerns with pollution issues surrounding the production of the Smartphones and other company products. This has high probability of perceptive customers not buying from the company.
Opportunities
The growing global Smartphones market is an opportunity for the company particularly in countries like China, which is experiencing economic boom. Moreover, the huge population and increasing application of Smartphones by the younger generation offers a potential market.
Moreover, the innovative capabilities of the company are another opportunity to introduce new products into the market (Henry 72). Besides, the growing use of the Smartphones in the developing market such as in Africa presents another opportunity to be exploited.
Threats
The biggest threat the company and its Smartphone products is facing is stiff competition from other firms and similar products. Besides external competitive threat the company is facing on the particular products, the technology used is also hard to maintain.
That is, it is difficult to sustain technological leadership in the industry. New technologies are highly pirated by other companies to produce the competing products (Linzmayer 42).
Marketing mix
The company has used various marketing strategies to position the Smartphones in the market. Included in the market skimming strategies are product and pricing strategies, placing strategies, and promotional strategies.
Product and Pricing strategies
There are varieties of Smartphones that the company produces. The innovative capabilities of the firm ensure development and production of new Smartphones, offering varied choices for customers.
Moreover, the Smartphones’ auxiliary functions have been improved to suit the customer needs and bring convenience, a mixture of value and quality (Apple Inc. 4).
As expected, the quality and value addition attract high prices. However, the company Smartphones’ prices are middle-high with some gargets targeting high-end customers while others are made for low and middle incomers. The high-quality low-prices strategy is applied particularly to outperform the competitors.
In addition, the product and pricing strategy is aimed at widening the spectrum of customers the company is targeting. Before, the company was targeting customers at high-income level. Nevertheless, with the entry of more competitors the company is forced to widen its scope and capture middle and low-income clientele.
Placing strategies
The company has adopted the business to customer distribution channel in order to directly deal with its customers. Direct interaction with the customers has led to the development of the products that suit the customer needs (Henry 56).
Moreover, the direct sales of its Smartphones have led to the expanded market share. However, the company stores both physical and online are still limited. Therefore, the company should expand its distribution stores to reach all manner of customers.
The promotion strategies
The promotion strategies include advertising, public relations, and sales promotions. The company is using innovative advertising to attract and inform its customers about the company products both in mass and digital media.
Besides, the company uses its corporate social responsibility to appeal to many people as a method of maintaining its public relations (Apple Inc. 4).
The success of the company on public relations improves the company goodwill and attracts the public attention. Further, the company provides special offers as a good way to stimulate and retain its customer’s loyalty.
The Smartphones demand in five years
The robust growth which is now being experienced in the high-end Smartphone market segment means that the Smartphones sales are estimated to rise by 7% in 2012 fiscal year and 9% in 2013 fiscal year. Given the fact that the segment represents 70% growth, it provides material earnings for the company.
However, this growth in sales and earnings are expected to slow down by 4.28% in 2014 due to stiff competition and shift-down of the market. In addition, the introduction of new products in the high-end market is expected to drive down prices.
Further, the demand is expected to remain constant with the introduction of the products into the new developing markets. Nonetheless, the demand is expected to slow in 2015/2016 fiscal year. The Smartphones will only have 2% high-end market share but will have a reasonable demand in low end-market segment due to reduced prices.
The introduction of more innovative products will eliminate the product from high-end market segment to the low-end market segment, typical of technology products. The Smartphones will now be affordable to the low-end users.
Works Cited
Apple Inc. 2010 Annual report. Washington, DC: United States Securities and Exchange Commission, 2010. Print.
Dziri, Ramzi. Avoiding Strategic Drifts in a Hypercompetitive Market: Analysis of Apple’s Position in the Mobile Phone Industry and Suggestions. Munich: GRIN Verlag, 2011. Print.
Henry, Anthony. Understanding Strategic Management. Oxford, UK: Oxford University Press, 2008. Print.
Herzog, Cornelius. Strategic Tools in Dynamic Environments: A Framework. Munich: GRIN Verlag, 2010. Print.
Linzmayer, Owen. Legend of Apple. Beijing, China: Qinghua University Press, 2006. Print.
Nijssen, Edwin and Frambach Ruud. Creating Customer Value Through Strategic Marketing Planning: A Management Approach. New York: Springer, 2000. Print.
Wernerfelt, Birger. “A resource-based view of the firm.” Strategic Management Journal 5.2 (1984): 171–180. Print.