As digital revolution continues to shape companies, enterprises are embracing innovation to gain competitive advantage in the market. This research paper focuses on the competitive strategy of Apple, which is the world’s second biggest phone manufacturer. The company’s main strategy aims at bringing to its customers the best user experience through innovative software, peripherals, hardware, and services. The products given to clients are characterized by seamless integration, higher ease-of-use, and innovative design.
Regarding setting charges, Apple does not use the low-cost strategy; it applies minimum advertised price retail tactic in pricing its products. Moreover, using differentiation, Apple focuses on setting itself apart from competitors not only by the price it provides, but also by its competitive advantages grounded on the distinctive product design. Lastly, Apple focuses on individuals with few but different characteristics as its target, hence its makes use of narrow market approach.
Competitive Strategy of Apple Inc.
The development of the world’s economy has been fuelled by various factors and events, which have shaped the business field to its current state. Today, information and communication technology (ICT), also referred to as the digital revolution, has dominated the business world. The innovation has dramatically transformed the present world into an information society over the last decades (Bahrini & Qaffas, 2019). Many ICT companies and start-ups that were established at the start of this digital era have grown up massively, and they have become key players in the world’s economy. This research paper focuses on the competitive strategy of Apple, which is the world’s second biggest phone manufacturer, and the leading openly traded company ranked by market capitalization.
Apple’s Competitive Strategy
Apple’s business strategy is clearly stated and can be easily traced in their annual reports. It is as follows: the company’s main focus is to bring to its customers the best user experience through innovative software, peripherals, hardware, and services (Zhang, 2017). It is a tactic which aims at leveraging the company’s unique ability of designing and developing its own application software, hardware, operating systems, and services to offer novel products and solutions to its target customers. The products given to clients are characterized by seamless integration, higher ease-of-use, and innovative design.
Apple believes that investing continuously in research, development, marketing, and advertising is very critical in promoting the sale of its products. As such, via the iTunes store, it continues to enlarge its platform for discovering and delivering third-party applications and digital content.
The iTunes store includes the company’s iBook and App store which authorises customers to download applications and discover books. This can be achieved either through a Mac/Windows-based computer or through IOS devices, specifically iPod, iPhone, and iPad touch. For instance, the Mac App store was opened in 2011 for customers to be able to download and install apps for their Macs easily (Zhang, 2017).
Expansion of the distribution network to efficiently capture more clients and offer high-quality sales, as well as a post-sales support, is a strategy which has enabled the company to lead in the market. The company’s marketing strategy aims at building a global brand through expansion of its customer base, attraction of more consumers, and establishing a strong connection with the existing clients by expanding on emerging markets and launching new products.
Is the Strategy a Low-Cost Provider?
Employing the low-cost strategy, a company can only win if it offers its products at the cheapest prices in the market. If a group of firms in a particular market are selling products which are identical for all purposes and intents, the company which acquires the highest number of customers is the one which charges the lowest prices. It is a strategy which benefits only the company which works with the most economical product charges. While a low-cost provider pursues to give its customers the most affordable price, it also focuses on the need to make profits (Fathali, 2016). Such businesses try to draw a large number of customers, and to petition a broad market niche. They seek to boost their sales volume to the highest point by having many different types of consumers.
The option is important because it gives the company a chance of exploring strategies that enable it to maintain and enhance its low-cost. It is, however, crucial for such enterprises to embrace new methods of marketing and intensify their product promotion efforts (Islami et al., 2020). The best way of achieving this is by positioning well in retail stores so that the company’s products can be purchased more than those of its competitors. Investing more on research and development helps in improving the products, but keeping the rivals out of the market by reducing prices works best (Fathali, 2016). To succeed in the strategy, the business needs to have numerous product lines which attract a wide range of customers, and a huge production capacity which can meet the high demand and produce a high volume of sales.
Apple does not use this strategy; it applies minimum advertised price (MAP) retail tactic in pricing its products. MAP policies restrict dealers and resellers from advertising the products of a manufacturer below a certain minimum price. They are normally enforced by marketing subsidies which are given by manufacturers to their dealers (Zhang, 2017). The popularity of Apple’s high-price products is maintained by giving its retailers, Best Buy and Walmart, a minimal wholesale discount. The slight percentage in savings is not sufficient for the retailers to give large discounts on the products. Thus, customers end up buying at a price which is close to the manufacturer’s proposed retail price.
However, a reseller is at liberty to forego the small profit margin and sell at a discount so as to attract more customers. Apple has a way of preventing such scenarios by offering monetary incentives to its supposed retailers, so that they can sell the products at the MAPs set by the company (Zhang, 2017). The pricing strategy is very efficient because it stops the retailers from having a direct competition with the company’s own stores. The approach also aids in ensuring that one or more retailers do not have an advantage over the others. The distribution channels are, therefore, kept clean while more money is made from direct sales.
A Differentiation Strategy?
The general tactic which is used by Apple is broad differentiation. This is a strategy which emphasizes on basic structures which differentiate the company and its products from the competitors (Dolata, 2017). Following the differentiation strategy, Apple is ahead in the information technology market. For instance, its stylish design and user-friendly products, coupled with high-end branding excellently give it unique position relative to the other technology businesses. Using differentiation, Apple focuses on setting itself apart from competitors not only by the price it provides, but also by its competitive advantages grounded on the distinctive product design. This innovation is inclusive of the seamless connectivity among various devices and front-line aesthetics.
Though the strategy brands Apple differently, it has enabled it to broadly reach several market segments. Its products are uniquely made for everyone, thus offering support to a broad market reach (Dolata, 2017). An example is seen in the company’s tendency to target organizations and individuals via the MacBook product line. As such, the differentiation strategy helps Apple to maintain its leadership, competitive advantage, and position as a high-end technology business. Just like Apple, a company with a successful differentiation strategy should have the ability of lowering its prices and offering a better brand loyalty to its target customers.
Broad vs. Narrow Market Approach
A broad market approach involves targeting many customers; it is characterised by a large client base. Products that thrive in this strategy appeal to a very wide range of users. A narrow market focus, on the other hand, implies a smaller consumer base which is more active compared to the one in a broad market type. With this kind of approach, the target customer is usually more actively involved in the buying process. It is a method whereby a product is identified by its discrete advantage since it entails the aspect of knowing the client (Islami et al., 2020).
Apple focuses on individuals with few but different characteristics as its target market. It mainly targets the upper to middle class people because this demographic cluster portrays the means required to pay high premium price for the products. They are willing and able to pay a little more for a product of interest. Thus, it has chosen to focus on a narrow market that features consumers with high potential of buying.
A high proportion of Apple users are wealthier than other phone brand consumers. Another target for Apple are the millennials, who are usually more involved with technology, and have money influx more than other generations. Normally, 35-44 is the average age for an Apple brand customer (Zhang, 2017). Those people who enjoy music are also greatly targeted by Apple, mainly because its products focus on the iTunes store, as well as the comfort of music downloads. Those who love music and need an easy way of downloading, storing, and sharing the same are attracted to Apple products. In addition, most professionals who are in the field of media and design prefer Apple products because they are impressed about creative functionality as a significant factor in their devices.
Having the right competitive strategies in place enables a company to survive in the world of business, especially if the market has alternatives for customers. Apple has been able to attract a large number of clients due to its high-quality and unique products. Differentiation strategy has enabled the company to be ahead of its rivals. Its stylish design and user-friendly products, which include seamless connectivity among various devices and front-line aesthetics, coupled with high-end branding excellently place it as a market champion in the technology businesses.
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