Apple Incorporation has managed to retain its top position as the most valuable brand in the global market, edging out other reputable companies such as Samsung, Facebook, Google and Coca Cola. Despite constant change in technology and stiff competition, the company’s products and services have gain popularity and are currently established as the trend setters in the tech world. The company has invested heavily in its internationalization marketing strategies.We will write a custom Apple Inc.’s Internationalization Marketing Capacity specifically for you
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The scope of this paper is to review these strategies in terms of their efficiencies and inefficiencies. The report aims at examining external and internal marketing environment for Apple Incorporation based on its annual reports, journal articles and books. The findings indicated that competition, high employee turnover and counterfeiting are a threat to Apple’s Internationalization capability. Since competitors share a similar customer base, Apple has had to deal with the challenge of reducing market share as Samsung advances with its affordable and mass production of products that would provide similar functions as the Apple brand.
Other notable competitors of Apple Incorporation are HP, Dell, LG and Toshiba, especially with the laptop product line. These companies have been in the market for a relatively long time. As a result, they have established a sustainable production mix that rivals that of Apple Incorporation. Apparently, the competitive force is expected to expand as more companies emerge across the globe with cheaper perfect substitute alternative products and services to those retailed by Apple Incorporation.
Apple is grappling with some weaknesses, especially in the supply chain management and general marketing. In order to survive these challenges, the report has suggested that the company should invest more resources in innovation, employee motivation and product diversification. Moreover, Apple Incorporation might consider franchising in the international markets and expand its collaborative efforts to improve income streams and expand brand visibility.
Introduction: Product Statement
Background of the Organization
Apple Incorporation is currently the most profitable company and leading innovative tech firm in the world. The company operates within the electronics manufacturer industry and specializes in online services, table computers, smartphones, personal computers and iPod players. Headquartered in California, the company has grown into a global brand, despite having been in the market for less than two decades (Apple Incorporation 2018).
As at the end of the 2016-2017 financial year, the company had 678 stores spread across the globe with the highest concentration in its local market in the US (Apple Incorporation 2018). According to Merchant (2017, p. 56), “Apple is the largest publicly traded corporation in the world by market capitalization, with an estimated market capitalization of 786 billion by December, 2016”. Over the years, Apple Incorporation has implemented several internationalization marketing strategies aimed at expanding its market presence across all the contents. However, the progress of these expansionary capabilities has been limited by competition from other companies offering perfect substitute products such as Samsung and Microsoft.
Business Problem and Charge for the Internationalization Marketing
Apple Incorporation is currently struggling to sustain its market dominance as the trend setter in tech-based products as other companies such as Samsung penetrate the market with their relatively affordable perfect substitute products (Chaffey & Smith 2013; Bloom 2014). Just like Apple Incorporation, Samsung has a fully functional research and development division that is even creating new, interesting and tech-advanced products. In the last five years, the two companies have had serious marketing competition and legal battles over product copyright in their bid to control the global market dominance, especially in smartphones and television products (Apple Incorporation 2018).Get your
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The competition between Samsung and Apple has been described by analysts as unhealthy since a lot of resources are spent in counter court suits, which attract hefty fines. Specifically, the attention of these legal battles is focused more on the dominance fight than sustainability in the production of quality products and services to their customers (Bloom, Draca & Reenen 2016). Another challenge that Apple Incorporation has been facing is an emergence of affordable counterfeit products bearing Apple brand, especially from scrupulous Chinese firms. These counterfeit products have flooded the markets in third world countries with little government regulations and are sometimes retailed as the original Apple brand (Clow and Baack 2014; Zhang 2015).
At present, as Apple put in place strategies to increase its market share for the latest iPhone model in the market, its arch rival Samsung is on its way to introduce a more or less similar product at a more competitive price (Apple Incorporation 2018). This move by Samsung to user lower pricing for its perfect substitute products is threatening the performance of the Apple brand in the local and international markets.
Based on the above analysis, Apple Incorporation has the task of establishing an effective internationalization marketing approach that could be integrated in the current marketing strategies to ensure that the effect of competition and counterfeiting does not reduce the company’s profitability (Wilkinson & Redman 2013). The plan might be instrumental in distinguishing Apple as a superior brand and a trend setter to other existing or emerging brands. As a result, the company will be able to sustain and maintain its currently attractive sales in the local and international markets for electronic products and services (Vecchi & Brennan 2014).
Issues under Investigation and the Relevance of Internationalization Marketing
This study report is focused on examining the current internationalization marketing strategies of Apple Incorporation in terms of their effectiveness and challenges in addressing the issues of counterfeiting and competition. Despite having been ranked the most valuable brand in the world since 2014, the ratio of sales has been dropping slightly over the years as more brands enter or penetrate the Apple’s traditional market (Merchant 2017).
Specifically, the high brand ranking has not translated into same growth in the sales due to inability to integrate appropriate internationalization marketing strategies in the current marketing mix (Vanhala & Stavrou 2013; Suma & Lesha 2013; Sostrin 2013). These challenges could be solved by developing a strategic and focused internationalization marketing plan. Specifically, the proposed plan might be instrumental in improving Apple’s brand visibility, distinguishing its products in the face of competition and convincing the global market of quality assurance and trend setting over alternative products and services.
In order to propose an alternative to the current marketing strategies of Apple Incorporation, it is necessary to review the company’s situational environment to comprehend the current positive and negative forces in play. A comprehensive situational analysis will involve examining the external, internal and customer environment of Apple Incorporation. The external environment analysis involves reviewing the PESTEL and competitor functions. The customer environment analysis examines customer and collaborative aspects.
External Environment Analysis from Internationalization Marketing Perspective
A comprehensive PESTEL analysis is a prerequisite for understanding the current internationalization marketing strategies and their impacts on Apple’s performance in the local and international markets. According to Singh and Singh (2014), a PESTEL analysis encompasses reviewing the political, economic, social, technological, environment and legal situation of a company. Reflectively, Apple Incorporation operates in different political environments since it is a global company. In each region of operations, the company faces unique political forces that are different from the predictable local market (Solomon 2013; Simha 2014).We will write a custom
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For instance, some regions in Asia, Africa and the Middle East have unstable and unpredictable political environment characterized by little democracy or excessive government interferences. Fortunately, Apple Incorporation’s major markets are in the US and Europe, where government interference is very minimal in addition to stable political climate (Shende 2014). These regions are characterized by predictable democracy and relatively stable governments that support free trade.
Other than the political confrontations in Ukraine and parts of Turkey, Apple Incorporation has continued to enjoy a peaceful market for its products in the entire Europe (Searcy & Buslovich 2014). At present, the most affected markets for Apple products are Syria, Libya, Ukraine and parts of Pakistan due to political instability as a result of internal wars (Obeidat, Masadeh & Abdallah 2014; Apple Incorporation 2018).
In terms of economic forces, Apple has faced mixed results due to variances in the level of economic stability, especially in the international markets. Moreover, the economic swings characterized by regional imbalances have become an impediment to consistent positive sales. For instance, the 2008 global economic meltdown affected Apple, especially in the US and Europe markets. During this period, the company recorded a reduction in net sales by 13% (Merchant 2017) since the recessing economies lowered the purchasing power of its primary customers.
Although the company has recovered from the effects of this infamous recession, it is predicted that a similar occurrence in the future might have similar effects (Sampson 2016; Rashid & Naeem 2017). This means that Apple should prepare for a similar event in the future, in terms of strategies in place to minimize its impacts to avoid recording substantial reduction in sales (Osterwalder & Pigneur 2013).
The Apple Incorporation’s social environment has also changed over the years from one region to another due to the company’s global presence. For instance, the social environment in the US has remained predictable while that is most Arab countries change and unpredictable (Oakland 2014). Moreover, the capacity of these countries to promote a rise in middle income households also varies from one region to another. Although the US and Europe markets have the largest percentage of middle income families that are targeted by Apple products, there is growing opportunities in the Middle East, Asia and Africa (Apple Incorporation 2018).
Specifically, the “desire for high end products by the middle class in developing economies has created a massive market for tech-based companies” (Merchant 2017, p. 45). This means that Apple Incorporation might capitalize on this opportunity to increase sales of its products such as laptops, iPhones, online streaming and iPad products in these emerging markets. In addition, most of the international markets are unique in terms of their religious persuasion and perception towards different products (Nisula & Kianto 2016; Merchant 2017).
For instance, Apple has to use sensitive language and marketing approach in the Middle East markets as opposed to the highly liberalized social environment in the US. The variance in social persuasion across different markets has made it difficult for Apple to have a standardized marketing approach since it has to appeal to each market (Merchant 2017). However, in general, the social environment has been predictable in most of Apple markets and negative forces has currently restricted to regions with unstable governments (Mangan, Lalwani & Lalwani 2016).Not sure if you can write
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The technological environment across the globe has been an attractive force for Apple Incorporation due to the presence of a myriad of opportunities for development of sophisticate trend-setting products. Fortunately, most of Apple’s products are of high quality and use innovative technology that appeal to its targeted markets (Martelo, Barroso & Cepeda 2013). As noted by Merchant (2017, p. 38), “Apple has been keen on studying the technological changes and modifying its products to reflect these changes”.
For instance, the online music streaming and iCloud products launched by Apple in the last five years have performed very well and set the trend for direction of technological innovation (Muthuraman & Mohandoss 2016). These products also indicate that Apple Incorporation has managed to incorporate the ideal product mix that make use of the most modern and efficient emerging technologies. Moreover, the company has managed to quickly expand its market share with these high quality technology-based products by ensuring that any product launch is accompanied by a thorough piloting and pretests (Monks & Minow 2014).
Despite these technological successes, Apple Incorporation is currently facing the challenge of technology copy as emerging firms have developed a capacity to reproduce these products under different brand names. For instance, Apple was able to win a court battle against Samsung for copying its technology in their Smartphone models (Nasrinsulthana & Hyder 2015). Apple Incorporation has also accused some Chinese-based firms of producing counterfeit products using Apple brand without obtaining official permission from the company (Merchant 2017). These unethical acts have seriously affected Apple Incorporation’s ability to remain unique and enjoy the advantages of its technological creativity.
Environmental issues have presented challenges that Apple Incorporation has to effectively deal with in order to make sales in the local and international markets (Myerson 2015). Although the company insists on following all the environmental requirements in production and management, several environmental organizations have accused Apple Incorporation of unsustainable business practices such as massive environment degradation through pollution.
These firms argue that e-wastes from tech-based companies such as Apple pose detrimental challenges to the environment in addition to unending health hazards, especially in the event of poor disposal approach. According to Merchant (2017, p. 78), “substances used in the manufacture of these electronics may be very harmful to human beings and animals if they are not carefully disposed of”. Apple Incorporation has faced legal challenges as environmental bodies file petitions accusing it of failures to draw clear plan for disposal of e-wastes, despite their harmful nature. These accusations have tainted the brand image of Apple, especially within the community of environmentally sensitive customers (Lohdi & Naz 2016; Kraft 2013).
Moreover, the sensitive nature of the environment and ever growing public awareness might taint this image further if Apple Incorporation fails to counter these accusations.
The legal environment has attracted positive and negative results for Apple Incorporation, especially due to variations in the legal regimes in the international markets. For instance, the legal twists and turns in the case of Apple against Samsung have created a perception of fear of competition between these companies (Kotler & Keller 2016). These two tech-based giants have had to defend their positions in the issues of copyright law abuse. Although Apple eventually won, it lost same petitions to Samsung. The entire period of court battle was very expensive for Apple Incorporation since it had to hire the best lawyers and pay hefty legal fees (Kiran 2016).
Moreover, the company’s attention was diverted from continuous research and development to putting down an image protection team tasked with ensuring that it wins the suit. Across the international markets, Apple has to adhere to different legal requirements since each country has unique business laws. Although some of these laws are inhibitive, Apple Incorporation has to find a way around them to ensure smooth operation and sustainability of its business activities (Kajalo & Lindblom 2015).
For instance, the company has to put up with the restrictive legal business environment in China to avoid confrontation with the government. Notwithstanding, Apple Incorporation has often operates in double taxation regimes that make its business activities with expensive. For instance, Apple Incorporation had to move its offices from Kenya to the neighbouring Tanzania to escape double taxation (Apple Incorporation 2018).
These legal challenges have affected the company’s ability to freely operate and optimize profits. In general, the legal business environment is friendly since Apple is a registered company focused on obtaining all licenses and other requirements before entering any market (Homburg, Jozic & Kuehnl 2017; Harrison 2017). Moreover, the legal department is tasked with the duty of carrying out research on market legal requirements and their findings are used to allow or disallow new markets entry.
As already mentioned, Apple Incorporation is grappling with serious competition for several established tech-based companies spread across the globe. However, the primary competitor and arch rival is Samsung Incorporation. Based in South Korea, Samsung is a giant electronic manufacturer capable of producing perfect substitute products to Apple’s product line. At present, Samsung is actually the largest electronics manufacturer in the world (Guiso, Sapienza & Zingales 2015).
Unlike other companies, Samsung has managed to keenly track and replicate Apple’s products using more or less similar design, functionality and technology, especially for the phone brand (Harrison & Wicks 2013). Moreover, Samsung also has a global market coverage and active presence in most of the emerging markets in the Middle East and Africa. Specifically, Samsung has a stronger market presence in the international markets than Apple Incorporation. Another serious competitor is Microsoft under its Nokia phone brand. The company is also based in the US as Apple Incorporation. Microsoft has a strong capital base and inherited the expansive Nokia market network (Fill 2013).
Unlike Apple and Samsung, Microsoft offers perfect substitute products that are more affordable and durable using the Nokia product development model. Other notable competitors of Apple Incorporation are HP, Dell, LG and Toshiba, especially with the laptop product line. These companies have been in the market for a relatively long time (Elder & Krishna 2013). As a result, they have established a sustainable production mix that rivals that of Apple Incorporation.
For instance, Dell and HP have more market presence than Apple with their different laptop brands. These companies are able to offer quality products with competitive price tags that rival Apple product lines. Over the years, these competitors have posed a challenge to Apple Incorporation’s expansionary strategies in the local and international markets (Dasgupta, Suar & Singh 2013). As captured in table 1, Apple’s competitors have unique strengths and marketing capabilities that are difficult to replicate.
Table 1. Summary of Apple Incorporation’s competitors and strengths.
Customer Environment Analysis from Internationalization Marketing Perspective
The customer environment analysis for Apple Incorporation was carried out through classification of clients into groups using the demographic variables. As noted by Cole (2015), “customers can generally be classified as the low class, middle class and the high class groups”. Apple Incorporation mainly targets customers within the middle class and high class groups. However, the latter group consists of few customers.
Since the focus market is middle income households, Apple Incorporation has created a brand image of a company with high quality products that appeal to the targeted customers (Daft & Marcic 2016). These clients are attracted to Apple products due to their innovative nature, status symbol and quality aspects. These groups are always willing to try new products since they have higher disposable income for product experimentation.
According to Merchant (2017, p. 31), “customers in the high class put a lot of emphasis on the quality of the products”. This means that their purchasing decision is not primarily influenced by pricing of a product, but quality and other aesthetic value attached (Daft & Marcic 2016). The high end clients are willing and capable of paying premium prices for products perceived as unique and a symbol of status as long as they satisfy the needs of an end user.
Most of Apple Incorporation’s high end customers are spread evenly in the US, sections of the Middle East, Asia and Europe. On the other hand, the middle class customer segment consists of clients who are sensitive to the pricing of a product and are pursuing quality attribute before making a buying decision. This group is also willing to pay premium prices as long as quality and uniqueness is assured in a product (Cottrell 2013).
On the basis of geographical attributes, Apple’s customers are unique in each targeted markets. For instance, customers within Europe and local markets are more focused on buying the latest Apple products immediately they hit the stores. On the other hand, most customers in Africa and Asia prefer following the direction that is already confirmed by the early adopters (Cravens & Piercy 2013). In handling these unique features of these customer categories, the company should be keen in developing marketing strategies that might appeal to these customer segments (Cole 2015). As captured in table 2, the customer segmentation suggests that Apple targets high end and middle income customers spread across the globe.
Table 2. Summary of Apple Incorporation’s customer segments.
|Customer Segments||Unique features|
|High class|| |
|Middle class|| |
Apple Incorporation has come up with strategies to increase its collaboration with organizational buyers in the local and international markets under its business-to-business retail model to substantially increase sales (Fill 2013). The company has been contracted by some organizational buyers in Europe and Africa to supply customized Smartphone products in relaying data during research projects or elections.
For instance, in the last presidential election in Ghana, Apple Incorporation successfully supplied customized laptops and Smartphone products to the local electoral commission. The collaboration was aimed at securing elections to ensure free and fair results in Ghana. Apple’s collaborative strategy was a success and the company is currently in talks with other government institutions such as India electoral body to offer similar services in the next election (Apple Incorporation 2018).
These collaborative activities have boosted the company’s sales. Apple Incorporation has also participated in security promotion in most international airports through development of modern screening gadgets that are pre-ordered. For instance, the screening system in Abu Dhabi International Airport was entirely developed and sold by Apple (Merchant 2017). These collaborative projects have reaffirmed Apple as a trusted and reliable brand in the international market in addition to increasing the company’s sales volumes and general profitability.
Internal Environment Analysis from Internationalization Marketing Perspective
As noted by Oakland (2014, p. 19), “it is important to understand the internal environment of a firm in order to determine its capacity to compete against its market competitors”. In order to accomplish this task, it is imperative to carry out a comprehensive analysis to categorize the strengths, weaknesses, threats and opportunities operating within Apple Incorporation’s internal environment.
In terms of strengths, Apple has a strong brand image in the local and international markets as a tech-based firm with the latest innovative products and services that spell status and quality. At present, Apple brand is the most trusted tech-based product line across the globe (Sampson 2016). This makes Apple products easy to market and retail in different markets. The high brand visibility has enabled the company to quickly expand its market presence and penetrate new markets without having to carry out excessive promotional activities. The second strength is unique and customized marketing strategies in the local and international markets.
For instance, the online-based superior social media marketing has further expanded the brand’s visibility across all customer segments. Thirdly, the company has close to two decades experience in the electronics manufacturer industry (Daft & Marcic 2016). The extensive experience has given Apple Incorporation the much needed knowledge on how to react to competition and minimize its impact in the short and long term through proper use of emerging technologies.
Moreover, the company has consistently recorded huge profits over the years. The high sales have given Apple the needed strong capital base to support continuous research and product development in addition to marketing and other promotional activities. Lastly, Apple has capitalized on innovative technology to retain the trend-setter position in at the local and international market levels. At present, the company is the very innovative with the most sought after products at the time of their launch (Cravens & Piercy 2013).
Just like any other company, Apple is grappling with some weaknesses, especially in supply chain management and general marketing. For instance, despite having appointed a competent CEO called Tim Cook, the general market perception is that Apple’s success rides on the accomplishments of Steve Job’s management era. Although this perception might be false, it has become a common belief that Apple has not been able to get a perfect replacement for the late Steve Jobs (Merchant 2017).
From a marketing perspective, this negative perception has the potential of affective the level of trust customers have attached to the Apple brand. Moreover, several cases of faulty charging system in some Apple iPhones might alter the trust customers have bestowed upon this brand, especially if the company is not able to come up with a perfect solution. In addition, the company has set a very high standard in terms of innovation and product quality (Fill 2013). This means that any future negative review of any of its products might seriously dent the company’s image.
Apple Incorporation faces the threats of stiff competition, changed customer preference and global economic meltdown. The activities of its competitors such as Samsung and Dell are threatening to reduce the company’s market dominance. In fact, at present, Samsung has managed to overtake Apple in terms of sales in the emerging markets in Africa, Asia and the Middle East. Moreover, terrorism is posing a threat to Apple’s international business networks as some of its stores and other infrastructure have been destroyed in war-related attacks (Merchant 2017).
The rising production cost due to increasing inflation pressure might force the company to increase its pricing further to the advantage of the lower pricing for its perfect substitute products retailed by Samsung. Thirdly, the ever changing technological dynamics associated with modern innovative products are expensive and might not be sustainable. For instance, the company might be forced to abandon an expensive research and development project if one of its rivals gets it right before Apple (Cottrell 2013). For instance, Apple had to abandon the facial recognition research project after investing millions and resorted to buying the rights to use this technology from one of its rivals.
Apple Incorporation has put in place strategies to ensure that the management is restructured for optimal performance in the post-Steve Jobs era. This is evident by substantial growth and continued recording of massive profits. Moreover, the research and development division has received a large share of reinvested profits to ensure that product design and quality are always assured (Cole 2015).
A lot of attention has been directed towards creating extensive, unique and customized marketing strategies in the local and international markets (Merchant 2017). The general SWOT environment was analyzed and findings summarized in table 3.
Table 3. Summary of Apple Incorporation’s SWOT.
|SWOT||Examples||Not Useful Statement||Better Statement||Best Statement|
|Internal Strength||Brand image/financial strength||Our brand image is strong||Our current market share for computers is 10% (Apple Incorporation 2018)||Our global market shares for various products have experienced growth. Currently, our market share for personal computers is 10% (Apple Incorporation 2018)|
|Internal weaknesses||Employee turnover||Employees turnover is high||The firm has experienced high employee turnover in the recent past||In the last 4 years alone, the firm has lost 12% of its employees in various departments (Apple Incorporation 2018)|
|External Opportunities||Improved technology||Technology has been useful to the firm||Technology has improved production and marketing strategies||The firm has benefited from improved production and distribution strategies due to emerging technologies|
|External threats||Competition||Competition is stiff||We are facing stiff completion in the market||Samsung, Sony, Toshiba and HP offer stiff competition in the market.|
Based on the SWOT results, Apple Incorporation should come up with strategies for minimizing the effects of the current threats and weaknesses in the local and international markets. The following recommendations are suggested to ensure that the company has stable and sustainable internationalization marketing capacity.
Collaboration and Franchising
Apple Incorporation should consider increasing its collaborative capacity and franchising its retail model in the international markets for ease of product penetration and localized marketing strategies. For instance, the company may partner with retailers selling electronics to include its product lines in their stores (Sampson 2016). As these independent retailers advertise their products, Apple will gain from free marketing. Moreover, these independent retailers understand their local markets and would create the ideal advertising and promotional messages that relate to the targeted customers (Oakland 2014; Merchant 2017). As a result, the company will be able to increase its market share while minimizing the impact of competitors eating into its markets.
Continued innovation, employee motivation and product diversification
Apple Incorporation should consider investing more resources in the research and development division to sustain its market leadership position as the most innovative brand ahead of its competitors such as Samsung and Microsoft (Singh & Singh 2014). Moreover, due to high employee turnover, the company should improve its remuneration plans and general work environment to retain top talent. In order to survive the competition and sustain its current business model, Apple Incorporation should focus on product diversification to increase its income streams and reach a wider market base (Merchant 2017).
Apple Incorporation has incorporated the business to customer and business to business retail models to sell its products and services across the global market. The surge of counterfeit products is threatening to taint the strong brand image of Apple and their mass release in the markets is projected to substantially reduce the company’s profitability, especially in Asia and Africa markets. Moreover, stiff competition has reduced the company’s market share over the years.
This means that Apple must create a superior internationalization marketing plan with a capacity to go beyond competition and counterfeiting. In order to accomplish this, the company should consider continued innovation, franchising, expanded collaborative efforts, improve employee motivation and product diversification.
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