Apple I-phone Strategy
Apple is one of the reputed brands in the electronic industry and its products have created a new wave of innovation in modeling high quality products that include the Apple i-pod, and iphone. The Apple product such as the I-pod has been earmarked as the device of the 21st century. The report provides a comprehensive strategic plan for Apple iphone based on an in-depth study and analysis of the existing company policies and market practices.
The key feature of Apple iphone is its multi purpose usage that allows the consumers to browse through the Internet, download songs, movies, books, use multimedia applications and play games in addition to making calls. The device is intended for use by tech-savvy younger generation consumers though consumers across all age groups have shown preference for the sleek looking device launched by Apple. Consumers are rapidly shifting from the conventional CDs to digital music and portable videos. The utility features supported by the device play a vital role in making the purchase decision.
The consumers in the electronics industry are offered with a wide range of alternatives and substitutes featuring different combination of utility features. The current technology trend is more towards integration of features and utilities combined into a single sleek device. Information and communications technology drives the market today and rapidly advancing technology in this field has led to increasing innovation in product design to enable enhanced connectivity and improved interaction for the individuals. Mobile telephony has revolutionized the digital communication technology and the widespread use of cellular technology has created tremendous opportunities for business growth. The latest technology trends in the industry relates to the launch of devices that used advanced technology converging the functions of watch, camera, MP3 player, video player, e-book reader, video conferencing and Internet browsing into one pocket sized device. Hence mobile phones are being termed as smart phones owing to their extensive utility and features.
The technology strategy adopted by Apple constitutes market segmentation into two basic categories that includes the ordinary mobile phones for the general public and the iphones that has enhanced utility features. “The first of these segments is well on its way to being commoditized as a low margin, fiercely competitive, zero-sum retailing game. The second, however, offers high margins and virtually limitless expansion and is an enticing proposition” (Naughton, 2008). Iphones are targeted towards the upper middle class and upper class market segment.
Based on these observations, Apple realizes the strategic importance of technology, innovation and creativity in design of product models in improving the market sales and revenue figures. Technology can provide the consumers with improved connectivity and ease of use by adopting two principles while designing the upgraded version of the product. Apple iphone must take into account features such as application software compatibility issues that can cause a lot of problems to the consumers. The platform independent application software developed by third parties must work smoothly with the iphones. Secondly the product should not be dependent on any single telecom service provider and allow the users the freedom to operate across different operators.
Strategy to protect innovations
The Apple iphone has been well received by the consumers in the mobile market and the product has captured 28 percent of the market within eight months of its launch (Naughton, 2008). The product faces stiff competition from leading brands like Sony, Motorola and Palm. The device makes use of high end technology that provides the consumers with exclusive features made available by the makers of Apple. This includes a touch-screen interface or a virtual keyboard that has been implemented first time by any company. The absence of a physical keyboard can prove disadvantageous to individuals that are not used to the advancing technology or comfortable with the use of traditional interfaces. Moreover, the device supports only software applications developed by Apple. The iphone functionality is limited by its inability to support external applications. Moreover, the iphone batteries cannot be replaced by the user that poses serious problems with the consumers who have to depend on the Company to replace the batteries once it wears out.
The iphone has created new standards in the field of mobile telephony integrating various functionalities to provide the user with extended benefits within a single pocket device. Convergence technology has provided the industry with advanced range of products and innovations in the field of product design. Jun Tanaka, general manager in the product planning division at Seiko Instruments observes “a good converged product reflects both complexity and subtlety. It can be complex in function yet condensed so it’s efficient in use and appearance” (as cited by Thuresson, 2001). Consumers prefer to purchase products that are sleek in design, easy to use having extended functionalities and are a trend setter in the industry. Apple I-phone serves to meet these demands and expectations of the consumer being a leading brand and providing innovative features supported by few others in the industry.
However, convergent technology poses several limitations in the form of increased efficiency of the individual functionalities supported by the product. The efficiency of the individual functionalities may be blurred in the face of such multiple functioning devices. For instance, the camera attached to a mobile phone does not have the required clarity of images and a professional photographer would prefer to use a highly equipped camera specially suited for his needs. Similarly, the music player or video player built into the mobile phone does not have high resolution picture quality that can satisfy the user. It cannot be compared to the home theatre system or normal television quality. This poses a serious limitation to the utility of such multi-functional devices.
Another shortcoming of the use of these convergence technologies is the high cost involved in making these products that reflects on their market prices. The companies launching these products conduct extensive research that incurs huge costs before the product is finally launched into the markets.
However, consumers from higher income range are willing to pay the higher price of these sophisticated devices. These products may be out of reach for many individuals but the growing wealthy population across the globe has created huge market demand for these products.
Mobile based technologies are the major market driving forces in the present business environment. Apple has made constant efforts to remain the brand leader in the ever growing competitive market for technology products and services through innovative practices in product design. The Apple ipod is one of the distinctive categories of products launched by the company that gained immense popularity with the consumer segments. Consumers are the key players in the retail market and it is the consumers who make the ultimate decision of buying the product and giving it a brand image.
The design of the iphone was targeted towards the consumers after researching his needs and expectations. The need for a hand held pocket device that could enable them to instantly receive and reply to emails, browse through the web while traveling, and download files at the touch of a button. The iphone provides an answer to all these and more. A study of mobile phone users by Rubicon Consulting in 2008 revealed that nearly 80 percent of the users surveyed were satisfied with the device and they appreciated the touch interface and music download features most in the device. Among other features that the users found most beneficial was email access.
However, the survey found that the users were uncomfortable using the virtual keyboard to compose emails. Moreover the users found the browser and video capabilities limited in terms of speed and clarity of pictures. Among other concerns were the battery life and the speed of wireless connectivity. “One of the most promoted features of the iphone is its web browser. Many anecdotal reports claim that people browse more on the iphone than on other mobile devices, because of the iphone browser’s better compatibility and touch screen controls” (Rubicon, 2008).
A distinctive technology aspect that will enable Apple to add value to the product is to enable compatibility to third party software applications and allow the browser to download all kinds of websites. Currently there are certain limitations on the different types of web pages that can be opened on the iphone since it does not support Adobe Flash that is used by many websites.
The growth and development of such technology and innovation in product design has led to complete restructuring of business processes and organizational strategies. Apple has successfully managed to make use of these technology innovations to increase business efficiency and add value in terms of cost and benefits. The positive impacts of the use of these technologies in business ventures are felt in enhanced productivity, increased consumer reach, higher market shares, and efficient customer service. What is needed to understand is that when the consumer is willing to pay such a high price for the iphone their expectations from the product and company is naturally high. They expect the best in the features and functionalities provided by the device without compromising on any technology aspect. Ensuring the longevity of the product and extended application is one of the ways of satisfying consumer needs and increasing market shares.
Technology Sourcing and Internal Innovations
Businesses operate through continuous strategic planning process of setting goals, assessing performance, taking corrective action, and monitoring results to ensure improved performance and increased productivity. Management must detect problems and identify new opportunities through an effective control and in-depth knowledge of the business environment. The management must have the capability to identify new opportunities and technology changes that can have immense impact on their current business models. Effective strategic management process involves deriving feasible alternative strategies to capitalize on the opportunities and counteract the challenges and problems that may surface. A detailed analysis of the market forces and investigation of the environmental forces impacting the business will provide a stronger platform for devising effective management strategies.
The present generation comprises of techno freaks that love possessing hi-fi gadgets with advanced features and enhanced technology. The mobile phones are being replaced by i-pods launched by Sony and Apple. These devices are integrating the functionalities of the web, phone, camera, music player, video player, and video gaming consoles. Most of the technology companies are using convergence strategy to blend multiple functionalities into one simple looking device that is easy to use and carry around. These devices are primarily targeted towards the younger generation. Apple has adopted a similar strategy towards product development, design and promotion retaining the market competitive advantage through constant innovation and creativity. The ipod revolutionized the music industry and initiated a change to the digital music era. Consumers identify with this brand and feel a sense of pride on their ownership. The product sparked massive interest in the age group of 15-35 initiating a revolution in the music industry. The iphone has revolutionized the cellular phone market through its unique touch screen interface and web browsing features in addition to other related functions. “Apple leveraged on its core competence – designed a phone that had the form factor which would wow people as an iMAC or MACBOOK did and positioned the phone as a all in one for voice, videos, photos and music” (Rehman, 2009).
Innovation in product design and features are closely looked into by the customer. Electronics industry is largely driven by the willingness of a sizeable segment of consumers to spend more on the latest gadgets and changing consumer attitudes – the search for something new and unique will always guide the companies to adopt new strategies. New product launches and innovative models tend to grab consumer attention and tech-savvy consumers are much inclined towards purchasing the latest gadgets that provides them with a range of features and applications.
Product Development Strategy
New products and devices are being introduced into the electronics markets on a regular basis and consumers shift attention to new technologies. Product design and development are undertaken by the companies to maximize returns through adequate utilization of resources. The development of a successful product in the market requires an in-depth study and analysis of the consumer requirements. Organizations that understand the pulse of the consumer and his needs can provide innovative solutions in the form of new products that meet these requirements and added benefits in terms of enhanced features and reliability. Apple had researched the mature mobile market segment and felt that the consumer was ready for new innovative products that provided them with greater freedom of choices and functionalities. The company has been successful in increasing its market shares and revenues through constant innovation and new product development strategies. “The ipod family of products resurrected Apple’s fortunes by transforming the company from a niche player in personal computers to a market maker in consumer electronics” (Getz and Costa, 2008).
Another strategic orientation of new product development is time to market from the initial design phase. This enables organizations to optimize the performance of their products, analyse the costs associated and market intricacies involved in the distribution of products and consumer feedback.
A third approach to the product development strategy is the low development cost in which the companies try to minimize their cost of production to maximize profits and returns. But often this strategy leads to overlooking of vital design aspects such as quality, performance and reliability.
Apple iphone has adopted an effective consumer research approach while designing the product to cater to consumer needs and expectations. Consumers are driven by the brand Apple while making a purchase decision. Matured consumers will go for purchase only after extensive research on the product. They get involved in the products, brands, and options available in the market before the actual purchase. Majority of these consumers look for information on the Internet. The abundance of information available on the net and its convenience has made the Internet a valuable source of information. Everything a consumer wants to know about a product is available on the net – the price range, product range, features, user opinions, market trend, and analysis. The willingness of a sizeable segment of consumers to spend more on the latest gadgets and changing consumer attitudes – the search for something new and unique will always guide the companies like Apple to adopt new product development strategies.
Product Deployment Strategy
A thorough understanding of the consumer behavior while he makes a purchase of electronic gadgets is essential to understand the various dimensions of the marketing process. So, what are the factors that trigger the purchase of iphones? Some of the answers include:
The brand name of the product is one of the strongest drivers of sales of these products.
Purchase off-the-shelf is made by consumers on grounds of social recognition since owning an Apple iphone is fashionable among consumers in the age group of 15 to 35.
Technology is another element that drives sales – a majority of the consumers are techno-freaks who love to own the latest device.
Word of mouth publicity is also a decisive factor in sales of such devices. Recommendations from an existing user will prompt the others to buy.
One of the greatest challenges facing the iphone market is the stiff market competition that it faces. There are numerous brands available in the markets offering similar technology and services that shifts consumer loyalty. Competitive brands in the market tend to lower the prices of their products to grab greater market share. Apple faces stiff competition from other prominent market players like Sony and Microsoft.
The abundance of information available on the Internet on various products in the market enables the consumers to research extensively before making a purchase decision. Feedback from existing users, pricing of the product and utilities supported by the device are highly relevant in deciding consumer behavior.
The brand awareness campaigns launched by our company have made a deep impact on the consumer minds and this is reflected when they make the purchase decision. Consumers are not at all hesitant in paying the price for the iphone since they trust the brand. However, not all consumers feel the same way – a segment of consumers will also refrain from making the purchase of the Apple iphone. The reason being they do not want to pay so much to own the iphone. They feel it is overpriced. The utility features supported by the product play a prominent role in triggering purchase decisions.
The brand awareness and positioning in the consumers minds is Apple’s strength that should be cashed in to generate more sales. At the end of the day it is the quality of the product and its reliability that satisfies the consumer most and boosts the word of mouth recommendation of his purchase to other prospective buyers. Apple has adopted an aggressive marketing strategy and should continue to do so as it enables consumer retention and visualization of the apple product. More publicity on the Internet and articles projecting the edge of the Apple iphone video over other options available in the market will surely register a positive image in the consumer minds.
Naughton, John. 2008. Apple set out strategy to dominate mobile market. Accessed on June 10th 2009 from http://www.guardian.co.uk/technology/2008/mar/16/apple.mobilephones
Thuresson, Michael. 2001. Convergence Emergence. Accessed on June 10th 2009 from http://www.japaninc.com/article.php?articleID=92
Rubicon Consulting. 2008. The Apple iphone: Successes and challenges for the mobile industry. Accessed on June 10th 2009 from http://rubiconconsulting.com/downloads/whitepapers/Rubicon-iPhone_User_Survey.pdf
John L. Colley, Jacqueline L.Doyle, Robert D. Hardie (2001) Corporate Strategy – The McGraw Hill Executive MBA series
Rehman. 2009. How Apple iphone changes the market landscape and what should carriers do? Accessed on June 10th 2009 from http://rainiazahmad.com/?p=1742
Iowe, Scott. 2009. Apple defies market trends. Accessed on June 10th 2009 from http://gear.ign.com/articles/947/947307p1.html
Getz, Gary and Costa, Pedro do Carmo. 2008. Linking new product development to strategy. Accessed on June 10th 2009 from http://www.strategos.com/articles/ManageSmarter-LinkingNPDtoStrategy-Dec2008-ggpc.pdf
Crow, Kenneth. 2001. Product development strategic orientation. Accessed on June 10th 2009 from http://www.npd-solutions.com/strategy.html