Executive Summary
Apple has since its inception remained a formidable market leader in terms of technological innovations (Apple, 2010 Para 1). With the launch of IPad tablet which has elicited serious consumer interest, it has managed to curve its own share of loyal and repeat customers. However, its main weakness is that despite its heavy investment in research and design, the production and other related costs have remained high. This has weighed down on it heavily in terms of competitiveness in the market. The company has a very high cost of selling, marketing, distribution, and advertisement which draws down its sales revenue. There also lacks compatibility with many of the soft wares in the market which puts it at a disadvantage with Wintel based systems.
Background information
Apple Inc is a multinational technology company that was founded in 1976 as Apple Computer Company and incorporated in 1977 in California USA. It later re-branded to Apple Inc. to capture its expansion into the production of consumer electronics products (Linzmayer, 2004 P. 300). Today it manufactures and designs both consumer and computer products. Among its globally recognized brands which include Macintosh computers, iPhones, and iPods, IPads have received the greatest attention by consumers, the media and the industrial players. It is the handwriting recognition flaws that crippled the functionality of this device leading to its withdrawal from the market in 1997 despite being touted by technology analysts as one of the most ingenious inventions. The IPad was reintroduced into the market in 2010 hitting the market with its versatility. Previous production and marketing strategies have been dealt a cropper by a myriad of problems emanating from high production costs, high cost of advertising and distribution. However, streamlining of these bottlenecks promises to solve these problems and ensuring success of the tablet computer.
Statement of the Research Problem
Apple Inc. Company has been in operation for the last three decades. However, despite its long experience in the market, the company has been outmatched by new entrants in the market who have only been in operation for the last two decades including Microsoft. The selling, distribution, marketing, and research and design costs have been very high relative to other players in the market. The company has early this year reintroduced the IPad tablet into the market which came into the market with a bang. The IPad, one of its most innovative products in its initial launch in 1997 flopped due to design error and market oriented factors.
Literature Review
The consumer electronics industry unlike other manufacturing industries is highly automated which helps it to cut on the production cost to a large extent. It is also largely driven by technological innovations as witnessed by the advent of IPad tablets and thus the rapidly changing nature of the industry calls for a large pool of specialized labor combined with heavy injection of research and development. Aggressive marketing and selling is an important factor in the industry which is riddled with competition from other players like Microsoft (Stone & Vance, 2009 Para 1). Joint research and development projects are a common feature of the industry while companies producing intermediate products are usually located near each other. Most of the companies in the industry are specialized in production with each player specializing in production of different component (Bureau of labor statistics, 2010 Para 1).
Specific objectives of the research
The major objective of this research proposal is to propose better ways of reducing the selling, distribution, marketing, and research and design costs. The proposal will thus seek to investigate why despite having a formidable brand name and innovative designs, Apple is still faced with high production and promotion cost in marketing the IPad. The research report thereafter will propose better ways of managing these costs and increasing its sales volumes amidst intense rivalry from its competitors who are already producing their own versions of tablets.
The proposal will also seek to propose ways of increasing the company’s market share of IPad tablets. It will explore ways of increasing compatibility with Wintel based products thereby increasing interoperability. In addition, this will be aimed at wooing developers to develop support software for the IPad platform. Another related objective will be to lower the production and operational costs of the company.
Research Assumptions
The research will assume that the demand for the tablets is elastic. This means that unit increase in the price of the tablets will lead to a corresponding decrease in the demand for the product. A decrease in the price of the IPads is also expected to have the same effect by causing an increase in the demand for the commodity. This is informed by the fact that the buyers of consumer electronic products are price sensitive and will respond appropriately to any changes in prices.
The demand of the tablets will also be assumed to be income elastic. The implication is that a unit increase in the income of the consumers will result to an increase in the aggregate demand of the tablets. If the income falls, the aggregate demand will fall and lesser tablets will be bought by the consumers.
Data analysis plan
For the purpose of data analysis the descriptive method will be employed to help summarize the findings and make a description of the sample. This will help to establish relationship between various variables in the data set since the research will be both qualitative and quantitative. It will also be important in managing the quantitative data more effectively while ensuring finer details about the data are not lost during the analysis. The method will also enable easier comparisons across people other units of the sample. During the data analysis, a consultancy firm will be consulted to assist in the technical aspects of the data analysis. The technical team will also ensure that validity and reliability of the data is not altered during the analysis. Careful scrutiny will be carried out to make sure that errors during analysis and summarizing are minimized. All the necessary precaution will thus be undertaken to ensure reliable conclusions are made in readiness for reporting.
Data collection procedures
Most of the reference material will come from books and websites from where the research will be majored. This will be achieved by analyzing peer reviewed articles and journals from various websites and also reviewing the company’s website alongside others from the competitors. These are going to constitute the major source of research data. Key relevant points will be captured from the sources then thereafter collected, systematically analyzed and summarized. Later they will be compiled alongside those collected from other sources in readiness for presentation to the marketing manager. A representative sample will also be generated from a list of consumer electronics companies from where personal interviews will be administered to the staff. The results of the interviews will be captured in a structured questionnaire then forwarded in to the research staff for analysis. Still photos and videos will also be taken as part of data collection using digital and vide cameras. These will form important reference material for use during data analysis and presentation.
Resources and clearance
To fund this project, funds will be sourced through grants and personal savings. This firm has already approached a number of research institutions to assist with the funding of the research project. This will be used in the data collection as well as the initiation of the research project. The firm already has key facilities such as a computer lab, office space in the field and a home institution which will help in the organization and the analysis of the information collected from the field. The firm plans to make use of services from consultancy firms to clarify on difficult research issues. These will also aid in analyzing the data collected.
The firm is equal to the task because it has done enough preliminary research on the Apple Company and the current difficulties it is facing. It also has enough experience in the field of research amassed from previous projects. To conduct research in the target company, the research firm will seek authorization from the companies’ human resource officers in order to be able to interview its staff. It will also need a written permit and clearances from the target companies which will enable its staff to gain entry to collect information.
Time table
The firm intends to carry out this project for a period of two months commencing 2nd of April 2010 and complete it on 3rd of July 2010. The time table for the research project will be as follows:
Reporting
The report will be presented to the management of Apple using power point slides. This will be professionally done to ensure it captures the attention of the audience while delivering the key points precisely. Printed copies of the report will also be issued to the audience for reference.
Current Situation
The tablet concept has hit the world with a bang with major consumer electronics angling to introduce their tablets since the botched introduction of Apple’s IPad in 1997. International firms including Lenovo, Eee Asus PC have already launched there’s in the market. Dell is said to be seizing the market with the aim of introducing its tablets while Microsoft in collaboration with HP have already showcased their own. Apple has a workforce of about 35,000 employees spread across the world. Its sales during the period ended September 2009 amounted to US $ 42.91 billion. Its advertising campaigns are quite unique and mainly focus on incorporating aesthetic value on its designs which has largely contributed to the impressive sales volumes worldwide.
As a result of the innovative strategy they have curved out a unique reputation in the consumer electronic market. This has helped it cut a sizeable market share and unrivalled brand loyalty among its customers especially in the US market (Corporate information, 2010, Para 1). This has even earned it endorsement from the media industry where the Fortune magazine voted it as the most admired company in America in 2008 followed by a similar endorsement by the same magazine as the most admired in the world in 2009. As a result IPad is expected to be a major hit with the customers. However, the operation cost of the company is very high relative to its competitors in the market which might cripple the performance of the IPad.
Internal analysis
Innovation has always made sure that Apple stands out in the consumer electronics market. The development of IPad has given the company particular prominence resonating very well with consumers. However, competition on the market is such that many of its products only remain dominant over short times until other similar products are introduced in the market as a result of the volatile nature of the market. The greatest strength of the company is its ability to release periodic blockbusters like IPad which buoy up the sales before similar products are released at lower prices. This is thus expected to deliver impressive sales to IPad which was launched early this year.
To ensure brand loyalty, Apple has always emphasized on user friendly designs as evident in the new look tablet. But this has continued to be pulled down by limitation on software compatibility in its platform which keeps some potential customers away. Thus, it could be said that its high sense of innovativeness and uniqueness has at times been counterproductive to the company by reducing its acceptability.
External analysis of the company
The IPad tablet has been released in a highly competitive atmosphere dominated by Wintel based consumer electronics. Microsoft in collaboration with HP for example has announced plans to unveil their own tablets in the market (Kobie, 2010 Para 1). However this comes at a time when Apple has already launched its own in the market meaning that it already has competitive advantage over these new entrants which are yet to unveil theirs. The biggest competitive advantage of Wintel based products produced by Microsoft and HP over Apple is that their supporting applications are widely available which makes buyers to prefer them.
Another competitor who has already released his own version is Asus Eee PC which launched the Eee PC T-91 tablet. The company has been known for state of art sleek electronics and is thus expected to provide stiff challenge to Apple. As a result this might sway the market once they launch their own into the market. However with a lower market share of its products relative to Apple, the latter still stands a better chance of standing the competition. Price is also likely to disadvantage Eee PC tablet which is priced at £269 against Apple’s IPad which is priced at $499. There is increasing consciousness by buyers on higher prices which when combined with substitutes curtails the performance of a company. However Eee PC has lower production cost which enables it to issue affordable market prices which drives its sales to the disadvantage of Apple. Its collaborative production ventures usually on a vertical integration approach with Chinese, Taiwan, Indonesia, and other countries with lower labor costs which lowers its costs of production greatly will raise its leverage in production and distribution relative to Apple Inc. Chinese and Taiwan labor rates are known to range at between 10 to 20% of the United States rates.
Lenovo has also joined the bandwagon by releasing its own version of a tablet called Lenovo ThinkPad Ă—200 which combines the features of laptop and tablet (Kobie, 2010 Para 1. However it is priced higher than Apple’s which is likely to lower its competitiveness compared to the latter. While other companies put effort on manufacturing, distribution of the products and marketing, Apple focuses on breakthroughs from research and design which seems to have disadvantaged the company relative to the competition. Distribution and aggressive marketing of products is important because it is what brings the sales to the company (O’Grady, 2008 p. 156). New innovations must thus be backed with high level of marketing and reliable distribution channels for a company to achieve the intended objectives. This will be expected of the IPad tablet if it has to make a significant impact in the market.
The sluggish growth of the market and availability of similar products in the market has intensified competition will present a stiff challenger for Apple’s tablet. The developers of complements have also found Apple unattractive to develop applications for due to its smaller sales potential as a result of the smaller market share. Another possible bottleneck for the IPad is that the bulk of the fastest growing markets are to be found in emerging economies like China where Apple has been slow in adopting its products to the Chinese characters unlike other PC makers. This has presented a huge challenge to Apple due to its inability to conform to Wintel industrial standards and their cost reduction strategy.
Recommendations
The firm should put a little more effort on manufacturing in order to meet the rising demand in the market fo9r tablets. This will help it counter the effects of Wintel based consumer products which engage in mass producing for the mass market. To promote IPad in the market, the company should also embark on aggressive sales and marketing campaign to popularize its brand name in the market. For along time, Apple has relegated its role in sales and marketing. Its new products for example require aggressive marketing for them to gain a market share in the fierce competitive market. New technologies also require heavy marketing efforts.
Yet another frontier that should deliver impressive results is researching into cheaper production technologies that will lead to reduction of cost per output of the tablets. The reduction in production cost will help lower their product prices thus making it possible for the company to compete in a market full of price sensitive consumers. Apart from the potential increase in sales volumes, the strategy will help reclaim its market share from its rivals.
References
Apple, 2010. Apple and environment: Designed to make a difference. Apple Inc. Web.
Bureau of labor statistics, 2010. Computer and Electronic Product Manufacturing: Nature of the Industry. U.S. Bureau of Labor Statistics Office of Occupational Statistics and Employment Projections. Web.
Corporate information, 2010. Apple Inc. The Winthrop Corporation. Web.
Kobie, Nicole. 2010. As Apple gets ready to unveil its own tablet computer, we look at the competition already out there. Web.
Linzmayer, Owen W. 2004. Apple confidential 2.0: the definitive history of the world’s most colorful company, No Starch Press
O’Grady, Jason D. 2008. Apple Inc: Corporations That Changed the World, ABC-CLIO.
Stone, Brad and Vance, Ashlee. 2009. Just a Touch Away, the Elusive Tablet PC, New York Times. Web.