Apple Company in the Chinese Market

Introduction

  1. Apple is a company that has already established itself in the international market as a Smartphone company. It has a well-established market at home that make 38% of its total sales. It has done well in the Chinese market though it has faced competition from the established Samsung electronics, which is a major competitor. Apple has a market share of 12% in the Chinese market, which is increasing as days go by. The Apple products are expensive and some of the we4althy Chinese cannot afford the iPhone. The young Chinese have a strong appeal for the iPhone and see it as a status symbol. Apple’s has a higher price as compared to the other smartphones in the market. Regardless of this, it still commands a substantial market share.
  2. Apple is also in the process of increasing its market share by engaging licensing stores to distribute its products in china. It wants to form partnerships with the Chinese mobile telecommunications industry to gain a larger market that is untapped. The following terms are of importance to understand.
  3. Product development – Apple already has an established market in china, which is growing day by day. The product has developed significantly since Apple has reached the 12% market share, which is higher than most local electronic companies dealing in smartphones are.
  4. Intellectual property claims – this arises when a company uses a patent or technological design of another company without obtaining rights to it. This property rights may be abused when other companies use a patent from another company illegally or without obtaining rights for use. This usually leads in court cases like the one for Samsung.
  5. Product line – is the range of products that a company deals with. For example, Samsung sells many other products apart from smartphones like computers, laptops, television sets among others.

Environment

  1. Competitive environment –Apple’s product, the iPhone, is a very viable commodity in the Chinese market especially the youth. The advertisements speak for themselves since there are more people queuing for an iPhone product released in the market that for the local company’s products. This has led to Apple being innovative in its model by introducing application that suit the Chinese people. It appeals to the youth since being seen with an iPhone increases their value among their peers. Thus, it being a status symbol gives the iPhone an edge against other competing firms. Hence, they have a larger market share among the youth. Most of the other firms have also a competitive advantage since they sell their smartphones at cheaper prices than Apple products. Apple has maintained that it will not reduce prices but will continue making quality products. The market is very competitive due many firms in the market.
  2. Political legal – for the smooth running of the business a company has to know the rules and regulations governing operations in the market. The company produces high products that are very expensive and hence has a particular market especially the wealthy and part of the middle class. However, Apple’s partner in china Foxconn, has poor working conditions which has led workers to riot. This spoils the image of Apple, and Apple has had to intervene for Foxconn to provide good working conditions. This happens since there are no strict laws governing marketing and the protection of employees in such factories in China.
  3. Economic- the economic condition determines the sales that Apple should expect. The business may be in a recession, prosperity, depression or recovery period. These cycles determine the income and unemployment in the economy, which determines their buying power in the respective periods. Hence, when the economy is low, the buyers tend to reduce their spending of luxury or high end commodities. Hence, Apple may have a low market in such times.
  4. Social cultural – the iPhone appeals mostly to the tecno-survy youth as evidenced in china. It has targeted colleges and universities since it considered as a prestigious product and a global icon among the Chinese youth. Having an iPhone among the youth also increases their value among their peer hence most buy the phone for status especially in universities and colleges. Apple needs to study the population and know the trends of the youth and the aged population and to know what changes it can make to its products to meet the expectations of each group and hence market its product to each group.
  5. Technology – Apple has upped its technology to include Chinese sites, especially the social sites that are a favorite to the Chinese population, and this has been a selling point for the phone. Apple is using the iOS 6 operating system that hosts Chinese popular sites like Sina Weibo. In addition, it has the Mac OS 10.8 upgrade that includes mandarin sites that are popular with the Chinese.

Market mix variables

  1. Target market – Apple’s target market in china is the young Chinese especially the youth and those in higher institutions of learning. There is high appeal among young Chinese for the iPhone. IPhone has incorporated social sites that are common to the Chinese people especially the young people who enjoy being on social sites. Though its competitors are have a large market share, Apple is steadily gaining in the Chinese market. The number of Chinese, who buy the Apple iPhone when a new version is released, is high compared to those of local firms.
  2. Product – the product itself is of high quality. Hence, the products and its company Apple act as a selling point since Apple is known world over to produce products of high quality. Apple hence, appeals mostly to the wealthy and part of the middle class who want it for prestige.
  3. Price – the price of the iPhone is very high. This is because Apple produces products for the high-end market that consists of the wealthy that have a lot of discretionary income to spend. Most of the young Chinese would want to have one but the price discourages them. In addition, the middle class are conscious of the high price especially during hard economic times.
  4. Promotion – Apple is in talks with the various mobile companies including china Unicom and china telecom to promote its product. These mobile companies can also help in advertising of the product and increasing its market share. Moreover, the licensed outlets advertise the products through brochures and posters in their vicinity.
  5. Distribution – Apple distribute its products through licensed agents or outlets countrywide. It has its own building where the distribution starts and flows to the market. It has licensed many outlets in the country for the distribution of its products that has enabled it cover a large market.
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