1. Executive SummaryThe mobile telecommunications market, until recently was an assortment of various manufacturers such as Nokia, Siemens, Sony Ericsson, Samsung etc. The market has moved away from the endless number of mobile telephone manufacturers and four major players now control the industry, Samsung, HTC, RIM and Apple. While Apples market share has been steady over the past few years, operating profit has increased. The main reason behind the slow growth in market share is due mainly to the high price of the iPhone. By introducing an entry and mid-level iPhone, Apple will exploit an untapped market. Apple would see an increase in market share, gained from new customers who previously would not have bought an iPhone due to price. Apple would also benefit from the enterprise market currently dominated by Research in Motion (RIM), who currently provide most smartphones to business users. This market development strategy is uncharted territory to Apple and could prove very lucrative if the operating system is developed to the needs of businesses as the iPhones ease of use would make it preferable to the Blackberry. In the following report, we have conducted internal and external analyses to enable us to formulate a suitable strategy in- line with Apples mission statement to allow Apple to create a sustainable competitive advantage. If Apple are able to successfully implement these strategies to increase market share, as the market matures, the iPhone will become a cash cow, indicated by high market share and low market growth, providing a steady stream of income for Apple.Applehas been building up a very big reputation and a very strong brand, I supposethat Apple is within the most expensive brands on earth (Osnews staff,2018). Everybodyassociates automatically Apple with innovation, design, quality, beingdifferent, etc (Osnewsstaff, 2018). Applecannot deliver products that are not innovative, well designed or top-notchquality, they would only destroy their own brand and reduce sales figuresdramatically (Osnewsstaff, 2018).Innovation and quality are related with high price, the high price guaranteesthe customer that he is buying an excellent product, this is psychologically aswell as from the business side, a typical business model (Osnews staff,2018). The humanpsychology says that the higher the price, the better the product andotherwise. Apple have enjoyed growing marketshare over the past 5 years and each new product release is seen as an upgradeon the previous technology meaning that at any one time, Apple essentially hasone mobile telephone in the market, i.e. the latest iPhone, unlike othermanufacturers who release new products to sell alongside older models (Academiaedu,2018). While some may see this as a disadvantage, there is always huge demandwhen Apple releases their latest iPhone and previous models of the iPhone stillsell strong to late adopters who want to own an iPhone but are dissuaded bythe high price of the latest model (Academiaedu,2018). To cut costs, Apple eliminatedsome accessories from the 20GB package, including the dock, which is a $39extra. The device is $299 and it adopts the iPod Minis intuitive Click Wheel,thus improving battery life and incorporating some key firmware enhancements.1.1 IntroductionAppleInc was started by Steve Jobs and Steve Wozniak in 1976 by Steve Jobs and SteveWozniak. Apple became a famous brand and grew rapidly in the 1980s, gainedhigh profits, but had a drastic drop in 1996. Steve jobs who became the CEOthen transformed Apple Inc. into a success story by introducing innovative andclassy non-PC products in 2000s, and from then on Apple became one of thelargest successful start-ups in the US market. AppleInc now manufactures, and markets mobile communication and media devices,personal computers (PCs), and portable digital music players, and sells avariety of related software, services, accessories, networking solutions, andthird-party digital content and applications. Apples product portfolioincludes iPhone, iPad, Mac, iPod, Apple Watch, Apple TV. Its portfolio ofconsumer and expert software applications include iOS, macOS, watchOS and tvOSoperating systems, iCloud, Apple Pay and a variety of accessory, service andsupport offerings. Apple sells and delivers digital content and applicationsthrough the iTunes Store, App Store, Mac App Store, TV App Store, iBooks Storeand Apple Music. The company operates globally across the US, Europe and AsiaPacific. It is headquartered in Cupertino, California. (reference)Appleas a stable worldwide market share, and has had a high profit share in thesmartphone market (Forbes). Walkley (Forbes) estimates starting in 2013 are:2013: 62%2014: 77%2015: 90% (iPhone 6 and 6Plus were launched in September 2014)2016: 83%2017 1st quarter: 83%As can be seen above, Apple captured almost all the industrys smartphone profits in 2015, and although there was a decrease, Apple still produces most of them. (Forbes)1.1 Apple Inc SWOT Analysis(S)trengths Applehas a strong brand image and a very successful marketing strategy which hasmade them to be a market leader in several products and services. Apple has alarge and loyal customer base, with high profit margins on their products.Innovation and a sophisticated supply chain has made Apple a financially strongcompany. Great product quality.(W)eaknessesAppleproducts are premium priced, made for high end market, which means they are notaffordable to everyone. The products also have a closed operating system, whichmakes them in-compatible with other brands. They have a very narrow productrange compared to their competitors.(O)pportunitiesInthe industry that Apple competes, technology is advancing at a fast pace, sothe companys capacity to compete is heavily dependent on its potential to havea consistent and timely flow of competitive products, services and technologiesinto the marketplace. The company has an opportunity to continue developing newtechnologies and improving its existing products by increasing their productrange contribution through Research and development, licencing of intellectualproperty and third-party business and technology acquisitions. Apple made asuccessful acquisition when they bought Beats by Dre. (T)hreats Thereis an intense rise in competition from other brands, and imitations of theirnew products being sold at cheaper prices by competitors, which makes it verytough to keep their position as the market leader. Other brands offering lowprices for products similar to Apple products poses a threat to their customerbase.1.2 Apple Porters Five ForcesApplehas achieved success as one of the most valuable companies in the world. PortersFive Forces analysis gives insights about the external factors influencing thefirm (Panmorecom, 2015).Apples Five Forces analysis also sheds light on what the company does toensure leadership despite the negative effects of external factors in thecompetitive landscape (Panmorecom,2015). Though Apple had lows when it started up, when SteveJobs became the CEO, the company flourished until it became an industry leader.Basedon Porters five forces analysis, one of the most significant external factorsthat has a strong impact on the firm is the bargaining power of buyers (Panmorecom, 2015). Also, the five forces analysisshows an indications of the places Apple needs to focus on in order to keeptheir position as the market leader in the industry (Panmorecom, 2015). Apples threat of new entrants competitors is moderate. Apple is one of the worlds dominant IT, there is a strong focus on niche market i.e. high income consumers, and this makes it difficult for new entrants to hold market share, especially when just an iPhone alone needs about $100 million investment. Apple also uses contract manufacturing strategy which saves unnecessary cost and expense (reference). What lowers their threat is also because they have copyrights, patents and high switching cost. (reference)Apples substitute product pressure is high-moderate. For almost every product Apple has, competitors have a substitute. Although that is the case, Apples Operating system still proves to be a strong area of Apple which is not having any near substitute. Apple also their own app store, iTunes and iClouds. Suppliers bargainingpower is moderate because of their uniquecapability to manufacture product for Apple (Scribdcom, 2018). But, Apple had avery well diversified supplier numbers; they arent manufacturing everythingfrom one supplier and one place (Scribdcom, 2018). Apple buys thins in bulk, so thisgives them a high buying power (Scribdcom, 2018).Therecompetitive rivalry is high because Apples product range is narrow. Applesproduct differentiation to other brands is high. The competitors have widerange of selection, but Apples limited product line which is simple and userfriendly has increased their customer base. Apples distribution channels onlineand direct outlets is strong and helps Apple position its products. There is aneed for Apple to increase investment in mobile, computer and software becauseof the strong competition (http://panmore.com/apple-inc-pestel-pestle-analysis-recommendations).1.3 Sales trends and forecastsApplepublished its Q3 FY17 results on Tuesday, reporting its strongest levels ofrevenue growth (7.2% year-over-year) in about seven quarters, driven by asurging services business and growth across its key hardware product categories(Trefis team, 2018).In this note, we take a look at some of the significant trends from theearnings release (Trefisteam, 2018). (https://www.forbes.com/sites/greatspeculations/2017/08/02/the-key-trends-from-apples-q3-earnings/#598330477733 last accessed 20 January 2018)Q42017 summaryRevenue of $52.579bn, up from $46.852bn in the same quarter a year agoEarnings per diluted share of $2.07, up from $1.67 in the year-ago quarterGross margin of 37.9%, compared to 38.51% in the same quarter of 2016Operating expenses of $6.811bn, compared to $6.052bn in the year-ago quarteriPhone unit sales up 3%, revenue up 2% year-on-yeariPad unit sales up 11%, revenue up 14% year-on-yearMac sales up 10%, revenue up 25% year-on-yearServices revenue up 34%Other products revenue up 36%Thisis all at the upper end of Apples predictions (Macworldcouk, 2018).While reporting on Q3, the company provided the following estimates for itsfiscal 2017 fourth quarter:Revenue between $49 billion and $52 billionGross margin between 37.5 percent and 38 percentOperating expenses between $6.7 billion and $6.8 billionOther income/(expense) of $500 millionTax rate of 25.5 percentOtherincome/expense was $797 million in the fourth quarter, rather than the $500predicted (Macworldcouk,2018).(https://www.macworld.co.uk/news/apple/apple-financial-results-iphone-ipad-mac-sales-3581769/ lastaccessed 20 January 2018)2. Business proposition My proposal to Apple Inc is to re-enact the iPod shuffle as another Apple wearable device. The new iPod shuffle will still be portable and workout friendly as the old one but it will have more advanced features. It will allow be user friendly and give users a great working out experience. The new iPod shuffle will be an all-in-one gadget, as it will be able to record your workout progress and other health statistics. This will also have Bluetooth and WiFi, so it can integrate with your phone. 2.1. Objectives 2.1.1 ProfitabilityIncrease revenues by limiting expensesIncrease sales through introducing a new product line2.1.2 GrowthIntroduce a new product to the market Advancement in existing technology2.1.3 Customer serviceReduce customer complaints by 25 percent within a year2.2. Target Market Thisnew iPod shuffle will be designed for those in the health and fitness category.Wearable devices have become not only trendy but a health monitoring device (Berkowitz,2018). It will not belimited to only those who go to the gym, but those who do outdoor activitiessuch as Hikers, cyclist, etc. 2.3. Strategy StatementWewill develop the simplest yet life changing wearable device that will make yourfitness experience worthwhile. We will do this by incorporating all ourtechnological expertise into developing the best wearable device to suit yourneeds.3. Action Plan3.1. Product The new iPod will have the following features:Touch screenVoice recognitionBluetooth and Wifi connectionWorkout progress check Access to music appsMore storage capacityWearableVarious colour selection3.2. Price As Laurent (2003) stated, a good marketer should set the right price for a product or service. Nowadays the price of a product is usually pre-fixed with set tax charges (Saint-Laurent, P. 2003, vol. 6, no. 7, pp. 35.). Apple does premium pricing, so the price range will be as follows:Range from £350 for 8GB to £450 for 15GB3.3. Place The new iPod shuffle will be available in all Apple stores around theworld. Most Apple store are located in a3.4. Promotion The new product willbe advertised on media channels like Television networks, over the internet andin magazines. 4. EvaluationThe market research will not be all that is needed to bring this new product to the market, PESTLE analysis will be used to assess the external factors that could affect Apples growth, profit and reputation. 4.1. (P)olitical SinceApple Inc. has contract suppliers around the world, it is open to severalpolitical difficulties. Therefore, this means that some of the importantfactors for Apple are: Improvetheir free trade policiesStablepolitics in developed countries(http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-study accessed 15 Jan 2018)4.2. (E)conomicThe economicfeature of the Pestle analysis specifies the market and industry conditionsthat impact the company (International Journal ofEconomics, Commerce and Management, United Kingdom). Most of the economic external factors in Applesremote or macro-environment create opportunities. The most distinct externalfactors to Apple economically are:Rapidgrowth of developing countries Stableeconomies of developed countries The economic stability of most developed countries creates opportunitiesfor companies like Apple to expand their businesses. However, the rapid growthof developing countries is more significant. For instance, the high economicgrowth rates of Asian countries are major opportunities for Apple to increaserevenues through sales in these foreign markets. Based on this part of thePESTEL/PESTLE analysis model, Apple must ensure that it effectively exploitsthese economic opportunities. Speed and effectiveness are important becausecompetitors are also targeting these high-growth economies (http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-studyacced 15 Jan 2018).4.3. (S)ocial Apple has been making innovative changes to their products in pursuit to satisfy their customers needs. One of their most successful acquisitions has been Beats by Dr Dre, and also alliances like Sony and Phillips. Sales of Apple products increased by a good percentage in India in 2013, which forced the firm to open franchises and make investments in India, which makes it evident that Apples growth strategy is paying off (http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-study acced 15 Jan 2018). 4.4. (T)echnologyInformation technology is highest earner for past a decade but only those companies have earned well who had innovated. Current technological changes have had an impact on Apple. Although Apple has been a trend setter, some of the most significant technological external factors are:Cloud computing trend Technological integrationGrowing apps marketCloud computing is becoming popular among individuals and organizations.Apple can exploit this opportunity by offering cloud-friendly devices and apps.On the other hand, technological integration of devices is a major trend. Applecan take advantage of this opportunity by continuing its strategy of providingproducts that can be seamlessly connected to each other. In addition, the appsmarket is growing, Apple could grow its App Store. However,Apple needs to invest more and more in R&D because of the competitive andshort product life cycle nature of the industry (http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-study acced 15 Jan 2018). Apple has uniquedesigns, but customers want more preferences. 4.5. (E)nvironmentalApple is already addressingthe opportunity to maintain business sustainability through recycling andrelated programs. In addition, the company continually seeks for newtechnological solutions to improve the energy efficiency of Apple products,such as through improved batteries, processors, and components that emit lessheat. On the other hand, the labor rights trend is impacting the globalbusiness arena. Apple has already taken steps to address the opportunity to improvecustomer perception about its products by improving employment practicesthroughout its supply chain. According to the environmental analysis model,Apple is on the right track in addressing the opportunities based onenvironmental factors in its macro-environment (http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-study acced 15 Jan 2018).4.6. (L)egal Governments are realizing theprivacy issues connected to digital technology use. As a result, more privacyregulations are imposed on businesses like Apple. This factor is a threatbecause it creates new challenges for Apple in developing products that involvetransmission of private information. However, this factor is also anopportunity for the company to improve product features that protect privacy.On the other hand, governments are also imposing stricter telecommunicationsregulations, which are a threat because they could potentially limit theusability of Apple products. Therefore, the new iPod will need to have strongprivacy settings (http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-study acced 15 Jan 2018).5. Conclusion and reflection Looking at the issues set outanalysis Apples position in the market and the external factors that areaffecting it, introducing a new product to the market will be ideal. However,there are risks involved with launching this new product, as it is somethingthat has bee discontinued in the past and requires a lot of research anddevelopment before it can be put out on the market. Meanwhile Apple has achallenge to introduce a product that will allow them to stay above theircompetitors. Creating a business plan has ben areal challenge for me, especially for a big company like Apple it has beenchallenging, and also the reputation that they have built for themselves. Inthe market that they are operating in, every move counts, so there is a needfor thorough research and introducing the right product t the right time.6. ReferencesBiscontini, T 2015, Wearable technology, Salem Press Encyclopedia Of Science, Research Starters, EBSCOhost, viewed 19 January 2018.Saint-Laurent, P. 2003, THE FOUR Ps, Advisors Edge, vol. 6, no. 7, pp. 35.Wingfield, N. 2005, Apple Booms, but iPod Disappoints; Net More Than Quadruples On a 57% Gain in Revenue; Shares Fall After the Close, Eastern edition edn, New York, N.Y.Porter, M. (2008). The five competitive forces that shape strategy. Harvard Business Review., 86(1), 25.Kim, J 2004, Apple iPod, Computer Shopper (08860556), 24, 11, p. 70, Supplemental Index, EBSCOhost, viewed 21 January 2018.Wingfield, N. 2005, Apple Scores With Cheaper Lines; Profit Surges on Hot Sales Of New iPods, Mac Minis, As Revenue Jumps by 70%, Europe edn, Brussels.Saint-Laurent, P. 2003, THE FOUR Ps, Advisors Edge, vol. 6, no. 7, pp. 35 Apple iPod Shuffle, 2006, Personal Computer World, . https://themarketingagenda.com/2014/06/01/end-of-the-cycle-for-apples-ipod/ (last accessed 19 January 2018)Secgov. 2018. Secgov. [Online]. [20 January 2018]. Available from: https://www.sec.gov/Archives/edgar/data/320193/000119312514383437/d783162d10k.htm Slidesharenet. 2018. Slidesharenet. [Online]. [19 January 2018]. Available from: https://www.slideshare.net/MunnavarShaikh/porters-five-force-model-with-respect-to-apple-inc Ovidijus jurevicius. 2017. Strategic Management Insight. [Online]. [20 January 2018]. Available from: https://www.strategicmanagementinsight.com/products/apple-swot-analysis.htmlLifewirecom. 2018. Lifewire. [Online]. [16 January 2018]. Available from: https://www.lifewire.com/ipod-shuffle-top-competitors-2000409 Lifewirecom. 2018. Lifewire. [Online]. [19 January 2018]. Available from: https://www.lifewire.com/history-of-ipod-shuffle-2000733 Shaw, Keith. Samsung USB MP3 player (YP-U3). Network World, 19 Nov. 2007. General OneFile, http://link.galegroup.com/apps/doc/A172066804/ITOF?u=anglia_itw&sid=ITOF&xid=d2c59727 . Accessed 20 Jan. 2018.Osnews staff. 2018. Osnewscom. [Online]. [17 January 2018]. Available from: http://www.osnews.com/story/3921/Analyzing_Apple_s_Market_PositionBurstmarketingnet. 2018. Marketing Agency Albany NY. [Online]. [17 January 2018]. Available from: http://burstmarketing.net/knowledge/newsletters/marketing-product-lifecycle-success-apples-ipod-stage/ Applecom. 2018. Applecom. [Online]. [20 January 2018]. Available from: https://www.apple.com/uk/shop/product/FD477QB/A/refurbished-ipod-nano-16gb-blue-7th-generation Ecommerce-digestcom. 2018. Ecommerce-digestcom. [Online]. [20 January 2018]. Available from: http://www.ecommerce-digest.com/apple-ipod-case-study.html Panmorecom. 2015. Panmore Institute. [Online]. [15 January 2018]. Available from: http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-study https://neilpatel.com/blog/7-key-strategies-that-you-must-learn-from-apples-marketing/ Accessed 20 Jan 2018Berkowitz, D. (2018). Wearable Technology Lets Us Track Consumers Activity as Never Before. [online] Adage.com. Available at: http://adage.com/article/digitalnext/wearable-technology-newest-advertising-frontier/241211/?_ptid=%7Bjcx%7DH4sIAAAAAAAAAFWQyU7DMBRF_8XrPunZjqfuAg20FRB1ENPOsZ1i0aahSScQ_06IEFI3T1c6597F-yI2ejIkye7j_uX8mZ1HZEBquwqPMRwnv4Qh1YAUGALlwAxgF1DA7mHK3fhuITN2HOn8CtD4QpecUxZsUSBnskTOuQmUylJJ2Q2HUx12MVQu9NPZc86exgsxnafzC5qdgtu3cVv1GjqfoJIJKC4YJJJKsEIjlFRjoZ3zXKmLeur-u83b9rgMm3pt23D9mqUs0WpGZ7czZbpK-0d6NV8ulRL5jRScd8zZTW3jqmrIsNqv1wNyiE1se_MAl0-hCVADjAs4lM1Tmkn5Pp-uJlJswBurqPJovWGuC6IoEh8ER10q213y_QN8iG4PggEAAA&CSAuthResp=1516454961161:0:2265572:0:24:success:55509F0E184E1714952A05C9345B16D1 [Accessed 20 Jan. 2018]. Slidesharenet. 2018. Slidesharenet. [Online]. [20 January 2018]. Available from: https://www.slideshare.net/sophlee/using-porters-5-forces-on-apple/7-In_order_to_succeed_against Karen haslam. 2018. Macworld UK. [Online]. [20 January 2018]. Available from: https://www.macworld.co.uk/news/apple/apple-financial-results-iphone-ipad-mac-sales-3581769/ Applecom. 2018. Applecom. [Online]. [22 January 2018]. Available from: https://images.apple.com/uk/supplier-responsibility/pdf/GBEN_Apple_Supplier_Responsibility_2017.pdf http://smallbusiness.chron.com/examples-business-goals-objectives-4698.html Accessed 20 Jan 2018Apple Inc. Form 10-K, 2014. Accessed 20 Jan 2018Academiaedu. 2018. Academiaedu. [Online]. [22 January 2018]. Available from: http://www.academia.edu/9254033/Apple_Inc._Executive_Summary_1_Contents Accessed 20 Jan 2018Macworldcouk. 2018. Macworldcouk. [Online]. [19 January 2018]. Available from: https://www.macworld.co.uk/news/apple/apple-financial-results-iphone-ipad-mac-sales-3581769/https://www.macworld.co.uk/news/apple/apple-financial-results-iphone-ipad-mac-sales-3581769/ Trefis team. 2018. Forbes. [Online]. [22 January 2018]. Available from: https://www.forbes.com/sites/greatspeculations/2017/08/02/the-key-trends-from-apples-q3-earnings/ Get Help With Your EssayIf you need assistance with writing your essay, our professional essay writing service is here to help!Find out more
Recent Comments