Apple strategic analysis

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Strategic and market analysis of Apple Inc

Isabelle Taylor | 31 Aug,2021

Introduction

The main aim of this report is to evaluate the external and internal market situation for Apple Inc. In this report, you will get to know about the factors that are impacting the growth of the consumer electronic goods industry. The external market analysis is performed in this report by applying the PESTEL and Porter five forces analysis model. The internal market analysis of Apple Inc. is also performed to evaluate the strengths, weaknesses and opportunities for the company. In this report, some of the recommendations for Apple Inc. are also provided on the basis of the internal and external analysis of the company.

Introduction about Apple

Apple Inc. is an American multinational company that specializes in manufacturing computer software, online services and consumer electronics such as personal computers, smart watches, wearable technology and smartphones. Apple is the world's largest technology in terms of its revenue and the total revenue of the company in 2020 was $274.5 billion.

Apple products

History of Apple Inc

Apple Logo

Apple Inc. was the first successful personal computer company as Steve Jobs, Steve Wozniak and Ronald Wayne incorporated the company in 1976 with the aim to develop and sell Wozniak Apple personal computer. The sale of Apple computers grew rapidly and the company went public in 1980 when the company sold 4.6 million shares at $22 per share. Further, in 1984, Apple Inc. launched Macintosh, the first personal computer without the programming language. However, the premium pricing strategies of Apple Inc. created huge problems and the sales of Macintosh also declined over the period of time due to the higher prices, limited software and slow speed. Further, in 1988, Jobs was hired as the CEO of the company who then instilled the corporate philosophy of standardized products and services with simple design. Moving further, Apple launched a successful iPod music player in 2001 and iTunes Music store in 2003. Now, the company is known for its range of products and services and in June 2015, the company was also recognized as the largest publicly traded company in the world in terms of its market capitalization. Further, in 2020, the company had earned a total revenue of $ 274.3 billion globally.

Apple mission and vision statement

The mission of Apple is “to bring the best user experience to customers in the market through innovative products (hardware and software) and services”. The vision of the company is “to manufacture and sell the best products on earth and to make the world better than we found it”.

Analysis of Consumer electronic industry - Apple industry analysis

The consumer electronics market is growing at a very fast pace and the consumer electronics industry is valued at USD 1 trillion in 2020. The consumer electronics market is also expected to grow at a CAGR rate of 8 % between 2021 and 2027. Furthermore, China is the largest producer and exporter of consumer electronics goods, especially brown goods in the world. Furthermore, the goods produced in China are almost five times the goods produced in Japan. However, the outburst of COVID-19 had negatively impacted the growth of the consumer electronics industry in 2020 as the lockdown restriction and decline in the income base of customers necessitated the consumer electronic good companies like Apple, Samsung, LG, etc. to suspend their production in several manufacturing locations (Wadhwani & Saha, 2020). Despite the impact of covid-19, China still tops the list of the export of consumer goods in 2020. Further, in 2020, the largest importer of Chinese goods was the US as the US imported 42 % of total electronic exports. Following table shows the export of electronic goods of different countries in 2020-

Export data of electronic goods in 2020

The above table shows that Hong Kong, USA, South Korea, Germany, Taiwan etc. also exports electronic goods to different countries. The estimated growth rate of the consumer electronic goods industry is shown as follows-

Projected growth of consumer electronic goods industry

Thus, it is found that the outbreak of covid-19 negatively impacted the demand of the consumer electronic products but the global market is expected to grow by 6 % in 2021 at international level. Along with this, the Asian and American market for consumer electronic goods market is expected to grow by 7 % in 2021. Further, rapid technological advancements such as artificial intelligence, Internet of Things, machine learning, etc. are expected to have significant influence on the growth of the consumer electronics industry.

India is also expected to be a big manufacturing hub in coming times as the national policy on electronics (NPE 2019) of Indian government targets turn over of $ 400 billion by end of 2025 from domestic manufacturing. Furthermore, there are around 270 mobile and component factories in India in current times and the Indian government is implementing various incentive schemes such as Electronic Development Fund and Modified Incentive Special Package Scheme to promote development of new technologies in the electronic industry. Not just this, the other factor which is expected to influence the growth of consumer electronic goods in India is rising manpower and infrastructure cost in China which will result in decline in the local electronic manufacturing in China and rise in manufacturing in India (Goel, 2021).

Apple core values

The core value of Apple is to manufacture and sell the best products in the market through innovation and development. Further, simplicity is at the forefront of Apple as Apple believes in promoting simplicity rather than complexity. In addition to this, the company focuses only on selected and important projects to promote excellence in all fields. The other main core value of Apple is collaboration as the company believes that collaboration and teamwork helps the company to innovate more effectively (Marketing, 2015).

External analysis of Apple

The external analysis relates to the environment analysis and mainly aims at evaluating the external factors which can impact the overall operations and growth of the company.

PESTEL analysis of Apple

PESTEL analysis is an important strategic analysis framework that helps to evaluate the external market environment of the company. The PESTEL analysis of Apple Inc. is performed as follows-

Political factors affecting Apple

The main factor that promotes the growth of the consumer electronic industry is free trade agreements of the United states with 20 countries. Along with this, the United States also has bilateral trade agreements with various countries which helps to promote private investment and US exports (Ustr, 2021). US also has strong bilateral trade relations with Afghanistan but the current humanitarian crisis in Afghanistan i.e. Afghanistan Taliban is expected to cause a decline in the total exports of electronic goods from US to Afghanistan which was worth $149 millions in 2019 (Ustr, 2021). Further, the US China Trade war has severely impacted the global electronics industry as the new tariffs are being introduced in the US as a result of trade tensions which further has resulted in decline in the import and export of various electronic products. Moreover, the global supply chain of the consumer electronic goods industry depends to a large extent on China but the trade tension is expected to cause various supply chain issues in the market (Browning, 2020).

Economic factors affecting Apple

The main economic factor that is supporting the growth of the consumer electronic goods industry is the rising GDP rate of the countries. Following table shows the rate of GDP in different countries-

GDP rate of different Countries

The US and China are major manufacturing hubs of consumer electronic goods and the expected GDP of US and China in 2021 are $ 22,675.27 billion and $ 16,612,32 billion in 2021 which will further have a positive influence on the growth of the consumer electronic goods industry. Further, the global economy is forecasted to grow at 6 % in 2021 in the post-covid period (Imf, 2021). In addition to this, the value of the US dollar has increased to 92.469 in the first quarter of 2021 which further will lead to an increase in the price of domestic goods and a fall in the price of foreign goods and services.However, increase in value of dollar may make it difficult for companies like Apple to do business in China, Pakistan, India, etc. The consumer electronic goods companies will also be able to import various goods and services in the US at cheaper prices which will help to improve the revenue of these companies. Moreover, the demand of consumer electronics goods is rising in the current times and the global consumer electronics industry is projected to reach USD 182.51 billion by the end of 2027 (MarketWatch, 2021). The growth of the consumer electronic goods by products is shown as follows-

Consumer electronic goods growth rate

The above figure depicts that the rise in demand for smartphones is one of the main factors that is fuelling the growth of the consumer electronic goods industry. Along with this, smartphones are also expected to represent 60% of the total revenue in 2020.

 

Social factors affecting Apple

Rising demand for smartphones, television, iPad, watches, etc. is one of the key factors that is surging the growth of the consumer electronics goods industry. The number of smartphone users is rising at a very fast pace due to the increasing rate of population and use of the internet. The lockdown conditions during covid-19 also accelerated the use of smartphones among young students due to increased online learning and remote working conditions. The following figure shows the growth rate of the smartphone users-

Estimated smartphone users

Thus, the rising number of smartphone users is also influencing the growth of the consumer elketfocnic goods market. In addition, the customers in the current times are also becoming more status oriented and prefer to buy unique and innovative products. This also has required the consumer electronic goods companies to manufacture innovative and unique products. However, Apple is one of the leading brands that manufactures unique, innovative and high priced products and services for customers. Not just this, the consumers in the current times demand technologically advanced products which also is pushing the demand of various products and services of Apple such as iTunes, iPad, Apple TV, etc.. Further, the remote working condition in covid-19 also has surged the demand for computing and other products (Fortune, 2021).

Technological factors affecting Apple

We must need to consider that speed is one of the critical success factors for the growth of the consumer electronics goods industry. The product's life cycles in the consumer electronic industry are short due to fast change in consumer interests and rapid technological advancement. Emerging technologies such as wearables, augmented reality, 4K televisions, 3D printers, drones, etc. are influencing the growth of the consumer electronics goods market. Thus, technological advancement is one of the big things where the consumer electronic goods companies are required to gain expertise to remain competitive in the market. In addition, the global wearable technology market is also projected to grow at a CAGR rate of 18 % between 2021 and 2026 due to adoption of healthier lifestyles among consumers. Apple also came up with various weables products such as Apple watch, AirPods, etc. The sales of the Apple wearable products is shown as follows-

Apple Wearable products sales

Thus, it is found that the Apple wearable devices are on rise in the current times and the company should continue to launch new wearable devices in the market to expand its market reach and sales revenue. Thus, the technological environment in the consumer electronic industry is found to be full of opportunities that the organizations can exploit to maintain a strong competitive position in the market.

Environment factors affecting Apple

The manufacturing of electronic goods poses various environmental challenges and according to the European environment agency, the electronic equipment alone causes 10 million tonnes of waste in Europe in a year. Thus, there is rising concern for environment sustainability in the current times and the organizations are also required to comply with ISO 14001: 2015 standards to ensure environment protection and management. Further, the consumer electronic goods companies are also finding new ways to reduce energy consumption and to promote environmental sustainability (Brown, 2021).

China is the leading producer of the electronic consumer goods and thus, is also the largest producer of electronic waste i.e. total of 10.1 million tons. However, the rate of e-waste per capita of China in 2019 was still lower than the other nations in 2019 which is shown as follows-

E-waste of different countries

The rise in the electronic waste in the countries is mainly due to increasing standard of living and affordability of customers for various electronics goods. Also, the e-waste in the countries is not easily stoppable. Thus, the key measure which can be taken in the consumer electronics goods industry is recruiting and safe disposal practices. Hence, it is found that consumer electronic goods companies are required to implement sustainable measures in compliance with the Triple Bottom line approach to promote environmental sustainability and reduce wastage.

Legal factors affecting Apple

It is a must to identify the key legislations and regulations in the consumer electronic goods industry to evaluate the external factors that impact the working of the organizations. The consumer electronic goods companies in the US are required to comply with various electronic and safety regulations to deliver safe and environmentally sustainable products to their customers. Consumer Product Safety Act is one of the important legislation that regulates the manufacturing and sales of the specified consumer electronic goods. Further, the energy policy and conservation act also requires the electronic goods companies in the US to maintain energy efficiency standards in the production processes (Cheng, 2020). in addition to this, the consumer electronic good companies are also required to comply with various laws such as clean air act 1970, pollution prevention act 1990, National Environmental Policy Act of 1969, Clean Water Act 1977, etc. to promote environmental sustainability

Apple’s Porter 5 forces analysis

Porter five forces analysis helps to evaluate the competitive position of the organization. The Porter 5 forces analysis of apple is performed as follows-

Bargaining power of buyers of Apple

The bargaining power of buyers in the consumer electronics goods industry is strong as low switching costs exist in the market and the buyers also have access to wide information on the competitive product features and their prices. However, the size of buyers of Apple is generally small and loss of one buyer causes minimal effect on the total revenue of Apple.

Bargaining power of suppliers of Apple

The bargaining power of suppliers is a weak force for Apple Inc. as globalization has facilitated easy movement of goods and services across the globe. The global supply chain of Apple provides access to a large number of suppliers. Further, large quantities of supplies and low switching cost in the industry also reduces the bargaining power of suppliers.

Threat of new entrants to Apple

The threat of new entrants is very low for Apple due to a number of reasons which include higher capital investment, strong brand image and economies of scale. However, we must consider that there are various firms that have already entered the market through the launch of different products such as Nexus smartphones.

Rivalry among the existing competitors of Apple

The extent of competition in the consumer electronic goods industry is vast due to the presence of a large number of competitor firms such as Dell, Lenovo, Samsung, HP, Asus, Sony, etc. (Bhasin, 2017). Further, switching cost in the industry is very low and there is limited differentiation in the consumer electronic goods. However, the rapid innovation, technological advancement, product standardization and status associated with use of Apple products reduces the threat of competitive rivalry for Apple.

Threat of substitute products to Apple

The threat of substitute products in the consumer electronic goods is huge but it is low in the case of Apple due to the product standardization and differentiation. The low performance of the substitute products is a key factor that reduces the threat of substitutes for Apple. The customers that have built strong loyalty with the apple products tend to repurchase the apple products such as iPhone rather than any other smartphone.

Apple competitor’s analysis

Apple has achieved a huge brand image in the consumer electronic goods industry but we need to ensure that the demand for Apple iPhones is highest in a few countries only. This is shown as follows-

Competitor analysis of Apple

The above figure depicts that the market share of Apple in the US and Japan is around 60 % but in countries like India, it is only 3 %. Further, the competitor analysis of Apple is performed as follows-

CompetitorsRevenue (USD)Market capitalization
Apple274.52 billion2473 billion
Huawei136.7 billion4.64 billion
Dell92.15 billion76.93 billion
Hewlett-Packard Company26.98 billion19.8 billion
Samsung19.8 billion246.39 billion
LG electronics56.94 billion22.38 billion
AsusTek Computer Inc181.428.45 billion
Google181.6 billion1891 billion
Lenovo60 billion12.53 billion
Sony85 billion123.30 Billion

From the above analysis of the market capitalization and revenue of companies in 2020, it is seen that Apple is at the top of the consumer electronic goods market (Apple, 2021).

Apple competing strategy

The competitive strategy adopted by Apple in the market is broad differentiation which adds to strong competitive advantage for the company. Differentiation in the product functioning with higher technological innovation also helps the company to lead the industry. In addition, the user-friendly product features, convenience in use, higher branding, and continuous innovation helps the company to achieve competitive edge in the market (Seidel, 2021). The other important competing strategy of Apple Inc. is higher focus on user experience as Apple mainly focuses on effectively meeting the needs of each customer.

Apple competitors

The main competitors of Apple include Lenovo, Dell, HP, Asus, Samsung, LG, Sony, etc. However, Apple has achieved significant brand image and recognition in the market due to strong technological advancement and quality of the product offering. Dell is known for its desktop and mobile PCs but the products offered by Dell still do not match the quality standards of Apple. Also, Dell does not manufacture and sell smartphones in the market. Thus, Dell competes with Apple only for the Laptops. Lenovo is a China based company that competes with Apple in regard to all the products as Lenovo manufactures smartphones, computers and various other consumer electronic products. Despite this, Samsung also competes with Apple in different segments and Samsung Computers are in very high demand among the customers due to the affordable pricing strategy of the company. Samsung also has secured significant market share in the smartphone industry due to effective marketing and pricing strategies. HP also has established a wide presence in the market at global scale but HP competes with Apple for laptops. In addition to this, Microsoft is another main competitor firm of Apple as Microsoft corporation manufactures smartphones, hardware as well as the software products. The company also built software products for the computers and we all know that Apple Macbook computers also run on the Microsoft operating system. Sony is another largest electronic goods company in the world that competes with Apple in the smartphone and laptop segment. Further, Apple accounts for highest share in the smartphone industry of US which is shown as follows-

US smartphone industry market share

The above figure shows that Apple is the top seller in the smartphone industry with the highest market share in the smartphone industry.

Apple positioning analysis

Apple is positioned as the premium consumer electronic goods company that focus on the three core values i.e. simplicity, humanity and creativity. The positioning map of Apple is shown as follows-

Apple Positioning map

The positioning map of Apple represents that Apple is positioned as the premium smartphone company with strong brand value. The act of thinking differently is one of the main campaigns of Apple Inc. which helped to create the position of innovation and creativity. Further, Apple has always aligned to its motto of simplicity in its product design which also helped to create a strong brand image of the company in the market.

Apple Internal analysis

VRIO analysis of Apple

VRIO analysis is an important strategic management technique that helps to evaluate the company resources and determine the competitive advantage of the company. The VRIO analysis of Apple is performed as follows-

Resources and capabilities of AppleValuableRareInimitableOrganizedCompetitive advantage
Product portfolioYesYesYesYesLong term competitive advantage
ServicesYesYesYesYesLong term competitive advantage
Distribution channelsYesYesYesYesLong term competitive advantage
Supply chain networkYesYesYesNoUnused competitive advantage
Research and developmentYesYesYesYesLong term competitive advantage
Intellectual propertyYesYesYesYesLong term competitive advantage
Financial effectivenessYesYesYesYesLong term competitive advantage
Revenue streamsYesYesYesYesLong term competitive advantage
Human resource managemenYesYesNoNoCompetitive parity
InnovationYesYesYesYesLong term competitive advantage
Business process automationYesNoNoNoCompetitive parity
Ethics and sustainabilityYesNoNoNoTemporary competitive advantage

Apple non-core competencies and competitive disadvantage

The human resource management practices and business process automation are major areas that provide a competitive disadvantage to Apple. Apple lacks effective HRM practices and the company is also alleged for its sweatshop conditions in its factories in China. In 2014, the company was also criticised for ineffective HRM practices and excessive hours of working. Not just this, the workers involved in the assembling of the iPhones, iPads, etc. also face harsh working conditions. Moreover, the explosion at Foxconn iPad factory of China also killed 4 workers and injured 18 workers in 2011. Furthermore, in February 2020, Apple was also listed as a company involved in the forced Uyghur labour. The other main area of non-core competency is business process automation as this competency is valuable but is exploited and used by all the other firms in the industry which leads to the competitive disadvantage for Apple. The company also fails to comply with various ethical values. For instance, Apple was also criticised for preventing the iPhone users from using the google voice assistant. Moreover, the company is also engaged in various unethical business practices such as dubious tax tactics, use of sweatshop labour, misleading warranties, etc. Besides this, the premium pricing strategy is also an area of competitive disadvantage for the company as it leads to decline in the purchase intention of the customers.

Apple core competencies

The core competencies of Apple include innovation, effective distribution channels, intellectual property, extensive research and development, etc. Apple has a long history of developing innovative but simple products such as iPhone, iPod, iPad, Apple TV, etc. The key competitive advantage for Apple is that the company has the ability to develop innovative products which share the same software, applications as well as the operating system. Effective product design is also the result of the product differentiation and innovation strategy of the company as Apple products display innovative design, visual style, etc. (Linton, 2018). The innovative strategy of Apple also helps to build strong customer loyalty and barriers to competition in the industry.

Apple also has an integrated supply chain network which provides a strong competitive advantage to the company. The most components needed by the company in its manufacturing processes are also available from multiple sources which helps to deal with the issues of industry wide shortage and price fluctuations (Linton, 2018). Not just this, the company also developed a strong competitive position in the market through use of the custom components which are procured from one or few sources. The hardware components of the company are also manufactured by the outsourcing partners of Apple which are located in Asia, Ireland and the US. However, this core competency provides an unused competitive advantage to Apple as the company faced various production challenges in recent times and one of the major challenges is the global chip shortage which caused huge waiting times for the MacBooks, iPads, iPhones, etc. in the market (Supply, 2021).

Apple Core Resources & Capabilities

Core resources and capabilities of Apple include strong product portfolio, effective service network, strong marketing and distribution, extensive research and development, intellectual property, financial competency, etc. Apple Inc. holds a collection of the intellectual property rights which include patents, trademarks, copyrights, service marks, etc. in US and other countries. Further, the ability of the company to compete in the market depends on the extensive research and development. The extensive product portfolio further helps to mitigate the threat of competition and in 2020, the company also launched the new 16-inch MacBook Pro, eighth-generation iPad, iPad Air, and four new iPhone models with 5G technology. The service portfolio of the company includes the apple care services, cloud services, digital content and payment services. In September 2020, the company also launched the Apple Fitness+ service through its Apple watch. Apple also has developed partnerships with more than 6 million software developers which helps to effectively create various applications for the Apple products. The financial competencies of the company also help to bring innovation and achieve strong competitive advantage in the market.

Apple SWOT analysis

SWOT analysis is an effective analytical framework that helps to evaluate the competitive position of the company by assessing the organization strengths and weaknesses and by evaluating the available opportunities and market threats. The SWOT analysis of Apple is performed as follows-

Strengths of AppleWeaknesses of Apple
  • One of the big five American IT companies
  • Brand value of $ 322 billion
  • Loyal customer base
  • Strong product portfolio and launch of innovative products
  • Effective product designs
  • Sustainable development through Liam
  • Expansion of services and product base
  • Huge reliance on the iconic and flagship retail stores
  • Higher focus on the user-experience
  • Net sales of 34 % through direct distribution channels
  • Effective human resource management and employee base of 147,000 full time employees
  • Premium pricing strategies
  • Higher reliance on the global markets
  • Lack of affordability of products to the low-income group people
  • Limited advertising
  • Entry in areas of the non-core competency such as video content streaming, credit card, game streaming, etc.
  • Lack of compatibility with other software and technologies
  • Allegations regarding use of tracking apps in the phones
  • Unfair business practices
Opportunities to AppleThreats to Apple
  • Increase in demand of the consumer electronic goods in the post-covid and recovery period
  • Technological advancement
  • Increase in customer loyalty and retention rate
  • Expansion of current distribution network
  • Launch of sustainable and green tech products
  • Expansion of music streaming services
  • Introduction of new software such as self-driving software
  • Supply chain challenges due to Afghanistan Taliban
  • Implementation of new tariffs due to US china trade tensions
  • Implementation of new environment safety standards
  • New legislations
  • Bad publicity due to rise in allegations regarding unfair business practices
  • Increased competition

The service revenue of Apple is growing at a very fast rate and the company has introduced various new services such as Apple News+, apple card, apple arcade game subscription, etc. The above SWOT analysis of the company shows that Apple is one of the big five technology companies that has achieved a huge market reputation due to effective product designs, expansion of products and services, higher focus on simplicity and user service experience, effective distribution channels, etc. However, it is found that the company relies to great extent on the global markets which can lead to various supply chain challenges due to the US China war and Afghanistan Taliban.

Apple Business strategy analysis

The main business strategy adopted by Apple is product differentiation as Apple differentiates its products on the basis of simple but unique design and functionality of its products. The advanced features in different products and services provide strong competitive advantage to the company. Not only product differentiation but also the first mover practices helps Apple to establish a strong brand image. Some examples of first mover advantage areas of Apple include the launch of iPad i.e. device to store thousands of songs and Macintosh i.e. computer that uses the graphic user interface. Apple also focuses on enhancing the user service experience through innovation and convenience in its services.

Product development is one of the main strategies that is adopted by Apple as the company uses innovation and extensive research and development processes to launch the innovative products such as iPad, Apple watch, etc. in the market. Further, the company also uses the market penetration strategy as the larger portion of sales of Apple comes from North America. Further, the iPhone was the first phone that had visual voicemail messages.

Apple also has focused on diversification strategy and has launched a diverse range of products such as iPhone, Mac, Airpods, apple watch, MacBook, HomePod, etc. with aim to ensure higher customer satisfaction.

Apple Macbook

In addition, Apple also has adopted the vertical integration strategy which further sets the company apart from its competitors. The advanced expertise of Apple in software, hardware and software helps the company to deal with various supply chain challenges. In 2015, the company also opened up a laboratory in Taiwan with the aim to develop LCD and OLED screen technologies which further helped the company to promote freedom and flexibility in its manufacturing processes.

The other important strategies of Apple include market penetration and market development as the large part of the company's sales comes from North America but the company also has established its presence in other foreign countries. The net sales of the company in different segments is shown as follows-

Apple sales in different segments

Hence, it is determined that Apple has adopted the market penetration strategy by penetrating a larger part of its sales in America. However, the sales in Europe, China, Japan, and other Asian pacific countries also depict the market development strategy of Apple.

Apple business model

The business model of Apple is based on consumer centric strategies and innovation as the main focus of the company is to ensure higher customer satisfaction through innovation and simplicity. The company targets the mass market customers for its products but the business model of the company can be broken down into different products and services. The company also keeps its production cost low by effectively controlling the supply chain. In addition, the company has captured huge market share in the smartphone industry due to simplicity, technological effectiveness, love-mark brand, etc. The company also continually focuses on new product development such as Apple pay, Siri, FaceTime, etc. which provide strong competitive advantage to the company.

Apple Business model canvas

Business model canvas is a strategic management framework that is used to evaluate the business processes of the company. The business model canvas is shown as follows-

Key partnersKey activitiesValue propositionsCustomer relationshipsCustomer segments
Foxconn Contract manufacturers Retailers Telecom companies Subsidiaries such as Apple energy, Apple sales international, LLC, etc. Institutional investors Suppliers Telecom companiesResearch and development IT Customer support Design Innovation App development Corporate networking Customer support Branding Training Marketing Software development Fabless silicon design Computer manufacturingSimple design Data privacy Think different Cloud solutions Security of payments Online stores and convenience Product design and aestheticsSelf-service Online shopping Unique products and services Distinctive marketing Customer assistance Digital experience Online order trackingMass market Businesses Students Professionals
Key resourcesChannels
Steve job vision Think different campaign Intellectual property Human resources Corporate culture Technological advancement Retail stores Logistic partners ITunes media player Safari web browser MacOS and iOS operating system Supply chain effectiveness First mover philosophyApple retail stores Online services Apple program Events TV Apple.com Third party stores
  
Taxes Advertising Manufacturing cost and Product design Worldwide operations Customer service Outsourcing Call center Software development Human resource costSale of products like Apple watch, iPad, iPod, Apple TV, etc. Apple search ads Subscriptions Online services like Apple pay, Apple store, iTunes store, Mac App store, iCloud, etc.

Apple Marketing analysis

Marketing analysis involves analysis of the market conditions and marketing strategies of the organization. The marketing analysis of Apple is performed in the following section.

Apple Marketing mix

Marketing plan describes the operational plan and marketing strategies of the company. The situational analysis of the company helped to determine that Apple invested huge sums of money in innovation, research and development, technological advancement, promotion, etc. The marketing mix of the company is then evaluated as follows-

Product mix of Apple

The product mix of Apple includes both products and services as Apple designs, manufactures and sells smartphones, wearables, computers, tablets, accessories and various other services. Apple iPhones are based on the iOS Operating system and the company has also launched four new iPhone models i.e. iPhone 12, iPhone 12 pro, iPhone 12 pro Max and iPhone 12 mini. Mac includes a line of the personal computers launched by Apple and in 2020, the company also has released a new personal computer i.e. 16-inch MacBook Pro. Not just this, the wearable products of the company are also high in demand and the major wearable products include AirPods, Apple Watch, iPod touch, HomePod, Apple TV, etc.

Apple watch series 5

Apple also provides various advertising, apple care and cloud services to the customers. The company in the current times has also come up with digital content services for the customers which include the subscription based services for Apple arcade, apple music, apple news, etc.

Pricing strategy of Apple

Apple has adopted the premium pricing strategy for its iPhone and other products but the premium pricing strategy of the company is justifiable to product differentiation, innovation, brand loyalty and status associated with use of the apple products (McCarthy, 2019). The company also uses the minimum advertised policy for its products which prohibit the resellers to sell the apple products at the price lower than the minimum price (Nielson, 2021). However, the company is also implementing an aggressive pricing strategy in recent times which encourages lowering the prices of smartphones to attract a large number of customers. The Apple iPhone 11 starts from $ 699 as compared to the price of iPhone XR which is $ 749 (Banerjee, 2019).

Place

Apple has adopted an aggressive distribution strategy as the company uses direct as well as indirect distribution channels to reach out to a large number of customers. In 2020, 34 % of the sales were achieved through the direct distribution channels and 66 % of sales were through the indirect distribution channels. Further, Apple operates around 500 retail stores in 25 countries and the retail stores are mainly located at the high traffic locations with the aim to ensure higher sales. The customers can also purchase the Apple products through the online store or its official website i.e. https://www.apple.com/. The other distribution channels of the company include the third party sellers, retailers, third party cellular network companies and wholesalers.

Promotion strategies of Apple

Apple social media marketing strategy

The promotion strategies of Apple are limited and all promotion strategies of Apple are also kept simple and most of the print media ads are done in white and elegant background. The company also ensures that all ads provide only relevant information to the users. However, the promotion strategy of Apple includes very few price based offers or discounts for the customers. The promotion strategy of Apple includes use of TV, sign boards, online ads, etc. Further, the social media marketing strategies of Apple are also not only aimed at promoting its products and services but are mainly aimed at ensuring consumer engagement (Hessler, 2018). For this purpose, the company uses various social media channels such as Twitter, Instagram, Facebook, YouTube, etc. The company also uses twitter to advertise the launch of new events.

Thus, it is found that Apple has a very strategic approach to use of social media and the company positioned its strategy in the manner that supports user generated content and helps to attract a number of customers.

 

Apple Social media marketing analysis

Social media marketing strategies are used at large scale in the current times as social media marketing helps to enlarge social circles and promote awareness about the brand. The social media marketing strategy of Apple is very strange as the company uses the social media channels for ensuring customer engagement and the company ensures that all the visual ads and content are kept simple and engaging. Apple has around 13 million followers on its Facebook page and 5.6 million followers on its Twitter page but the company has posted zero tweets and all the posts on Facebook include change to the cover photo.

Apple Facebook Page

The LinkedIn profile of Apple also has 13 million followers but zero posts. Social media encourages comments and voice of everyone on the basis of individual opinion which Apple wants to avoid. Further, the company has created multiple accounts according to its product and service segments which is shown as follows-

Apple social media accounts

This shows that Apple has created multiple accounts which fulfils the narrow and well defined purpose. However, the company has started introducing its products to the influencers to get people to talk about its products. The iPhone X released in 2018 also attained huge significance and YouTubers also commented a lot about the product. The home electronics have gained huge importance in the covid-19 period and Apple is also engaged in promoting its newest products in recent times. the various social media marketing strategies adopted by the company in 2020 is shown as follows-

Apple social media marketing strategies

Thus, it is found that Apple relied heavily on the desktop display ads followed by the desktop video format. Further, the site spent share on the social media channels is shown as follows-

Digital marketing of Apple in 2020

From the above figure, it is determined that YouTube is one of the major social media marketing strategies used by Apple to promote its products and services as it is found that 86 % of the Apple advertisements are posted on YouTube followed by 6 % of the ads on Twitter. Further, the amount spent by Apple on the promotion of various new products is shown as follows-

Apple promotion budget

The above figure further shows that Apple has spent a huge sum of money in recent times to promote its new product launches (Fleishman, 2021).

Apple Price elasticity of demand

The price elasticity of demand for Apple products is generally inelastic as the change in prices of the Apple products have little impact on the demand of these products. Furthermore, there are very few brands which can compete with the quality and design of the products of Apple which also has resulted in inelastic price elasticity of demand for the Apple products. Not just this, the other important reason for the inelastic demand of the Apple products is the loyalty that the customers have developed with the Apple brand. Moreover, the products of Apple are not only innovative but also are unique and no substitutes are available for Apple products which also makes the Apple products price inelastic in the market.

Apple STP strategy analysis

STP is an important analysis model which helps to evaluate the market segments and target market of the company. The STP analysis of Apple is performed as follows-

Market Segmentation of Apple

The market segmentation for different products and services of Apple is performed as follows-

SegmentationSegmentation criteriaMarket segment for iPhones, iPad, iPod, MacMarket segment for accessories such as Apple watch,Market segment for apple services such as iTunes,Market segment for operating system and software
Apple TV, ETC.Mac App, iCloud
GeographicRegionUS and other foreign countriesUS and other foreign countriesUS and other foreign countriesUS and other foreign countries
DensityUrbanUrbanUrbanUrban
DemographicAge18 to 50 years20 to 40 years18 to 35 years20 to 35 years
GenderMale and femaleMale and femaleMale and femaleMale and female
IncomeHigh income group peopleHigh income group peopleHigh income group peopleHigh income group people
OccupationStudents, professionals, managers and business executivesStudents, professionals, managers and business executivesStudents, professionals, managers and business executivesProfessionals and managers
BehaviouralPersonalityInnovative, passionate, imaginative and determinedInnovative, passionate, imaginative and determinedInnovative, passionate, imaginative and determinedInnovative, ambitious and determined
LoyaltyHighHighHighHigh
Benefits soughtStatus symbol, sense of achievement, speed of service, etc.Recreation and sense of achievementEase of use, efficiency, and easy access to catalogueSpeed of service and efficiency
User statusNon-users, potential usersNon-users, potential users, regular userNon-users, potential users, regular userNon-users, potential users, regular user
PsychographicSocial classUpper classMiddle and Upper classMiddle and Upper classMiddle and Upper class

Targeting

The target market of Apple mainly includes youth as well as the working professionals between the age of 18 to 40 years. Due to its premium pricing strategy, the company mainly targets the high income group people. However, the company also targets the mass audience due to the vast variety of products being offered to the customers. Furthermore, there are around 1.5 billion users of the Apple products and the market reach of the company is further expanding with every new product release (Andrew, 2021).

Positioning strategy of Apple

Apple is positioned as the premium brand that offers high quality products and services to the customers. The main focus of Apple is to ensure higher user experience and to effectively meet the needs of the customers. Emotional branding is at the heart of the core strategies of the company and the quality of products and services is reflected from its innovation, product design and simplicity. The company is also positioned as the emotional brand with higher customer loyalty.

Apple Consumer analysis

The target customers of Apple mainly include high income group customers and the business professionals. The main focus of the company is to supply high quality and innovative products to the customers in the market. The company also focuses on higher user service experience to ensure higher customer satisfaction. The customers of the company for iPad, iPod, Mac, and other products mainly include the high income group students and professionals. The customers of Apple Inc. also include education institutions, government authorities, enterprises, students and business professionals. Further, the company also targets the middle to high income group people for various products and services such as operating system, iTunes store, Apple TV, etc. However, the large part of the Apple products is still bought by the males rather than the females which is further shown as follows-

Apple consumer analysis

Thus, it is found that the average yearly spending per person is higher among the males as compared to the females. Also, the average yearly spend on the Apple products is highest among the old people above the age of 65 years which shows that old men also buy large quantities of the Apple products. Further, the highest percentage of people who buy the Macbook, iPhone, Apple TV, etc. are between the age of 25 to 34 years. The biggest iPad customers are between the age of 35 to 44 years and above 65 years of age. The largest portion of the Apple watch sales comes from the people between the age of 25 and 34 years of age. Hence, it is found that the customers of Apple include people of all ages and each product has a different target segment (King, 2015).

Recommendations for Apple

various recommendations have been suggested for the company on the basis of the current market situation-

  • The analysis of the current market situation and demand of the Apple products helped to determine that Apple is facing largest competition in the smartphone market segment which is the largest source of income for the company. Thus, it is suggested that the company should firstly focus on its smartphone market to maintain its competitive position in the market (Jurevicius, 2017). Apple should also continue to innovate and launch unique smartphones in the market to maintain customer loyalty and purchase intention.
  • Apple Inc. should penetrate in the developing countries also to increase its market share for various products and services. Besides this, Apple is currently focusing majorly on the product development strategy but the company should also adopt the market development strategy to enter the new market for its current products. Thus, Apple should establish strong market presence and brand image in the developing countries where Apple has limited presence in the current times.
  • Apple should also launch green tech and other sustainable products and services in the market to further raise its brand image.
  • Besides this, the external market uncertainties such as Afghanistan Taliban, US China trade tensions, etc. could adversely impact the supply chain network of the company. Thus, Apple should focus on localizing and expanding its supply chain network to improve its supply chain effectiveness. Not just this, Apple should also expand its current distribution network to further expand its market reach and presence.

Conclusion

In nutshell, it is found that Apple is a premium brand that manufactures and sells a variety of software and hardware products. The consumer electronic goods industry is progressing at a faster rate and it is found that 60 % of the revenue in the consumer electronic goods industry comes from the sale of smartphones. Thus, it is recommended that Apple should continue to focus on its product development and differentiation strategies to maintain a strong competitive position in the market. further, it is also recommended that the company should adopt the market penetration and development strategies to expand its market reach. Not just this, it is also determined that various external market factors may negatively impact the growth of this company. hence, it is recommended that Apple should focus on localizing its supply chain operations and expanding its distribution network to improve its supply chain effectiveness.

Further readings

References

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