Introduction
The iPhone has been in the market since 2007, when Apple Inc released the first generation of this phone. The company has managed to develop the product up to the seventh generation, which is the latest product in the market. The demand for smart phones in both the American and the international market grew over the last couple of years (Brower 153).
Apple Inc is aware of this high demand in the foreign market, and identified Brazil and China as potential markets. IPhone is an established brand in America and a few European markets, thus the need to pursue this ambition of achieving global market leadership. The company desires to make successful entry into international market, especially in Brazil and China as a strategy for its overall success.
It is important for Apple Inc to consider complications that characterize successful entry into foreign markets because of high vulnerability to various risks, differences in business culture, as well as numerous legal obligations to fulfill (Brower 160).
Achieving success in a foreign market requires thorough market analysis that assesses potential of the target market in terms of complementary skills, accommodating cultures, attuned goals, and corresponding risk (Masaaki & Helsen 30). This research paper will discuss Brazil and China as potential international markets for the iPhone.
The Brazilian Market
Brazil is one of the fastest growing economies in the world. The economic welfare of Brazil’s population has improved over the last decade, with 60% of population at least belonging to the middle class (Hill 100). The government has developed effective economic policies and structures that have attracted local and international investors into its economy. One of the largest industries in Brazil’s economy is telecommunication.
The mobile market in Brazil is very vibrant, as people are increasingly acquiring more knowledge and awareness on technology (Hill 109). Smart phones dominate the biggest portion of the market. The country’s mobile industry ranks sixth in the world, with statistics indicating that 19 million smart phones are in use in Brazil. This number will double by the year 2015, which means that demand for smart phones and user preferences will increase (Brower 163).
The idea by Apple Inc to venture into the Brazilian market is ambitious, but they have to prepare themselves for a tight battle in acquiring a share. The iPhone will have difficulty ensuring success in Brazil because of higher financial obligations in terms of import tariffs (Hill 116).
The import tariffs used in Brazil are very high, and make goods from other countries to have high market prices. This reduces the ability of such products to compete actively with existing brands, which have competitive market prices. Another risk that the iPhone is likely to experience is a dynamic market, characterized by massive evolution and high acquisition of smart phones over the last one year (Brower 169).
The Brazilian market has already experienced the world of smart phones, and the iPhone will have to settle for a very small portion of the market to start with. The expected high price for the iPhone once introduced into the market, is likely to influence a low percentage of the market that the product will control.
The iPhone faces a lot of competition from its imitation brands that provide consumers with cheap alternatives and sophisticated options (Brower 170). The smart phone market in Brazil is flooded with imitations, which unfortunately enjoy good representation in the market. These phones have digital televisions, a feature that most Brazilians seem to like.
Apart from these imitation brands, the iPhone faces huge competition for the market with other global brands such as Samsung, LG, Nokia, and Motorola. Samsung and LG are the leading brands in this market with a market share of 42.4% and 13.3% respectively (Hill 131).
Brazil is an emerging market for smart phones with most users using their phones to access the internet and social networking sites. In Brazil, 83% of internet users access the service using smart phones. The iPhone can change the nature of smart phone market in Brazil by developing quality products with much focus directed towards outbidding their competitors (Brower 176).
The iPhone is one of the high quality products from Apple Inc that easily penetrate any market. However, for the sake of this market the company needs to understand the value of having a sizeable market share above potential competitors.
The Brazilian smart phone market does not care much about great products, but instead focuses on meeting needs of consumers (Hill 138). If Apple Inc wants to achieve market leadership with the iPhone, it is important for them to develop a product that appeals to the market by understanding consumer needs and patterns.
The Brazilian smart phone market has a huge potential to support the growth of the iPhone brand. Predictions by technology and economic experts show that by 2015, more than 75 million Brazilians will have smart phones.
The experts also warn against competition from Apple products created in China, and the emerging Android phones that can easily take over the smart phone market (Hill 139). I think Apple Inc needs to consider venturing into the Brazilian market, because the current trends in the phone industry shows potential for a lot of growth in the next five years.
The China Market
Just like Brazil, China is one of the fastest growing economies in the world. China’s immense dominance from a deprived agrarian financial system to an economic giant is unmatched by many. The last two decades have seen China go through incomparable economic escalation.
This growth has elevated China among the major economic powerhouses in Asia faintly behind Japan (Holloman 12). In the global economic market, China ranks as the sixth principal merchandising country, the twelfth biggest exporter of business services. it is also the leading recipient of unswerving overseas investments.
China is receiving a sizable share of foreign capital that has resulted in close to 50% lessening in foreign capital among its neighbors (Holloman 17). China is at present the second leading trade resource for the United States, evidenced by the number of American investors in China. One of the most vibrant markets in China’s economy is that of smart phones.
China is a major player in recent developments experienced in the global phone industry. The biggest contribution has been on the smart phone market, which is very huge owing to the country’s large population (Brower 160). According to studies conducted in China, there is a high preference for smart phones among the young people compared to the younger generation.
This is a positive indicator about the future of the smart phone market in the country. Smart phone users in China have preference for quality and value for investment whenever they want to buy a smart phone. Other important considerations for consumers in this market are the features supported by a phone, the type of operating system installed, as well as a stylish design and user friendliness (Holloman 30).
Most smart phone owners in China access the internet over their phones, thus the need to have a product that can meet that need. When introducing the iPhone in this market, it will be important for Apple Inc to ensure that the product meets these specifications, in order to increase its ability to compete well with other brands.
Chinese people prefer to use smart phones for a reason. Smart phones are easy to use, have less density, portable, easy to retain or posses, as well as their competitive market prices (Holloman 41). Apart from using their smart phones for accessing the internet, Chinese people also engage their phones in gaming, social networking, checking the weather, finding locations on maps, banking and other commercial activities, as well as entertainment and getting information.
It is important for Apple Inc to introduce an iPhone that can support all these users needs for smart phone users in the Chinese market. This will not be a challenge because the current generations of the iPhone support these needs. One of the key features of China’s smart phone market is the inability of any single brand to enjoy market monopoly (Holloman 52).
The iPhone will have to fight for its place in a market dominated by both local and international brands of smart phones. Various smart phones developed in China such as Xiaomi, Huawei, Lenovo, Oppo, and ZTE have a huge presence in the local market. The biggest challenge for the iPhone is that the locals have a high preference for these local brands (Brower 201).
These brands are affordable and feature oriented according to the market needs. International brands that have cut a niche for their products in the market include Samsung, Sony, Motorola, Sony Ericson, and LG. Introduction of the iPhone will change the dynamics of the smart phone market in China.
Buyers will have more options to choose from and get an increased value for their money through increased quality. The Chinese smart phone market has huge potential to influence growth of the iPhone brand (Brower 224). The iPhone has all the features needed by phone buyers in this market, thus the need for Apple Inc to carry on with its plan to venture into the market.
Conclusion
The global smart phone industry is growing very fast, and developers need to be aggressive enough in order to match the dynamic market needs. Apple Inc is one of the developers with a good chance to influence change by penetrating the mobile markets in Brazil and China. China is a major player in recent developments experienced in the global phone industry.
The iPhone has the potential for market leadership, if it develops around the user needs and preferences in its target markets. The current generations of the iPhone meet most needs of users in the two markets, but there is a need to improve on a few features in order to make them competitive enough and affordable to all buyers in the markets.
Works Cited
Brower, Tanya. Competitive Dynamics in the Mobile Phone Industry. London: Palgrave Macmillan, 2011. Print.
Hill, Charles. The Global Smart Phone Revolution. Cambridge: Information Gatekeepers Inc, 2010. Print.
Holloman, David. China Catalyst: Powering Global Growth by Reaching the Fastest Growing Consumer Market in the World. California: John Wiley & Sons, 2013. Print.
Masaaki, Kotabe, & Helsen, Kristian. Global Marketing Management. New York: John Wiley & Sons, 2010. Print.