Market Analysis and Strategy – Apple Inc

Market Analysis and Strategy – Apple Inc

Market Analysis

Target market 

Apple Inc.’s target customers are based on various well-defined market segments, with each contributing different profitability rates. Demographically, the company focuses on marketing its products and services to customers with a few different characteristics. Notably, the tech giant pays much attention to middle and upper-class people because of their ability to pay higher premium prices for its products (Aljafari, 2016). The idea is that these customer segments have enough income that makes them readily willing to pay a little extra for quality and unique products. Another vast target market for Apple Inc. is the Millennials and Generation Y. The tech-savvy Millenials and Generation Y are the leading age groups behind purchases of the company’s iPhones (Yahoo! Finance, 2021). The bold advertising campaigns are at the heart of the company’s successful selling of experience. In the same vein, the company targets customers who love music. This segmentation is evidenced by Apple Inc.’s products that are focused on the iTunes store and ease of download.

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Industry analysis

The threat of new entrants in the information and technology sector is low, giving Apple Inc. an upper hand in gaining a vast market share. The low threat to new entrants in this industry is courtesy of the extremely high cost of establishing a reputable company (Aljafari, 2016). Another threat to new entrants is the high cost associated with creating a robust brand reputation that would compete with the leading firms. In this regard, new companies need extensive capital to develop and market smartphones and personal computers. Additionally, strategic marketing that would break the current customer loyalty requires a large amount of capital, consequently limiting the entry of new firms (Aljafari, 2016). Apple has taken advantage of this phenomenon to position its brand to capture a large customer segment.

As mentioned earlier, the information and technology sector has low switching costs for consumers. This is an essential factor that Apple Inc. considers when devising its marketing strategies as it strengthens customers’ bargaining power (Prakruthi & Ramu, 2018). The company continues to invest in R&D to produce new and unique products, such as Apple Watch Series 8, Larger iMac, iPhone SE, and iPhone 14, to combat the collective bargaining power force. This state of affairs has seen the company increase the switching cost for its products by maintaining the essential features similar and its products similar and easily transferable.

SWOT Analysis

Strengths

Apple Inc. exhibits many strengths in the information and technology sector. One of these is the firm’s robust brand image attributed to its innovativeness and investment in R&D that force it to keep abreast with the latest technologies (Aljafari, 2016). Similarly, Apple is considered an iconic global company with unique products, including personalized computers and smart technology devices (Aljafari, 2016). Another strength of the company is its high profit margin due to premium pricing.

Weaknesses

Apple Inc. has several weaknesses despite its many strengths. Top on the list is high selling prices for its products. The company’s products are considered luxurious; hence, they are high-priced to suit middle and high-income consumers (Aljafari, 2016). In the same breadth, the sales of Apple’s products depend on high-end market segments, leaving low-income customers. Another weakness of the company is the limited advertisement and promotions (Aljafari, 2016). The company’s marketing approach heavily relies on its flagship and iconic retail stores. The idea that the company has established loyal customers discourages it from investing in marketing like market rivals, such as Samsung. Additionally, the firm’s products are incompatible with software from other market players, forcing customers to purchase Apple products for continued use exclusively.

Opportunities

One of Apple Inc.’s opportunities is consistent customer growth. The company has been developing new product lines in consumer electronics and online services in a way that ensures customer experience. Essentially, the cutting-edge technology that fosters customer experience underlies its provision of unique and top-quality products. Also, part of the firm’s opportunities is the pool of qualified professionals at its disposal. The company’s staff embodies highly qualified professionals with vast years of experience in branding consumer products. This opportunity better places the company to create new opportunities by expanding its team of developers, researchers, and product specialists and utilizing available solutions, such as artificial intelligence and innovative wearable technology.

Threats

Apple Inc. also faces numerous threats from various sources that might reduce its profitability. Chief among them is aggressive competition from market players such as Samsung and Microsoft. As with Apple, these companies possess strong manufacturing and marketing capabilities due to their long-standing relationship with retailers (Prakruthi & Ramu, 2018). Another significant threat to the company’s financial performance is the recent coronavirus outbreak, which has negatively impacted its manufacturing and supply chain management. In addition to this, Apple’s products have become victims of counterfeits, especially in third-world countries. In particular, developing countries illegally utilize the firm’s brand image to sell fake products.

 Market segmentation

The company has segmented its market geographically into five major zones: American, Greater China, Europe, Japan, and Other Asia. According to Business Quant (2022), the American region was the company’s highest sales generator in 2021. The revenue yield represented 38% of the firm’s total segment operating profit, excluding corporate-level expenses such as share-based compensation and R&D (Business Quant, 2022). Moving forward, revenue margin from the European market totaled 24% of the company’s total operating profit in 2021 (Business Quant, 2021). The Chinese market trailed the European market, merging the third-largest contributor to Apple Inc.’s profits in 2021, totaling 20% of the firm’s total operating profit. Japan and the rest of Asia pacific were the fourth and fifth-largest contributors to Apple’s profits in 2021, respectively (Business Quant, 2022). Sales in Japan represented 9% of Apple’s total operating profit, while the Rest of Asia pacific represented 8% (Business Quant, 2022).

Competition

The information technology industry poses stiff competition to its market players. Apple’s products and services compete with offerings and substitutes from competitors, such as Samsung, Microsoft, and Google (Moorman, 2018). These firms heavily invest in R&D to fend off new technologies and maintain their dominance in smartphones and tablets. Illustratively, Google is posing stiff competition through its gesture recognition for AR/VR applications, biometric sensors, machine learning projects to enable automatic driving and integration of various devices, and watches with UV monitoring (Moorman, 2018). Furthermore, these rival firms spend significant resources on a host of different types of marketing projects to position their brand and ultimately boost sales. Underlying the high competition in the information and technology industry is the low cost of switching firms. For instance, switching from Google’s Chromebook to Apple’s iPad requires no substantial capital for customers. Even so, heightened competition is a central factor that Apple Inc. has addressed by continuously developing new and unique products that address the needs of the shared target market. Concurrently, the company uses aspirational messaging as its unique selling proposition to widen its market share.

Market Strategy

Four Ps

Products

Apple has a product mix of products and online services that are based on innovative technologies. Some of the standard products in Apple’s marketing mix include Mac, iPhone, iPad, iPod, Apple Watch, Apple TV+, Digital content, Software Accessories, and Cloud services. These products show that the firm deals mainly with consumer electronic products, reflecting its product diversification, focusing on information technology.

Place

Place refers to appropriate avenues through which Apple Inc. distributes its products. The company has several channels it uses in maintaining an efficient distribution channel. Specifically, the firm has Apple store locations, authorized sellers, company-owned websites, and telecommunication companies that sell its products and services. Through these venues, customers can order products or services, such as consumer electronics, music, apps, movies, and other digital content.

Price strategies

Apple Inc. uses premium and freemium pricing strategies for its products. In the first case, the firm sets high prices for its products to maximize profit margins. In the latter case, Apple Inc. combines free and premium pricing strategies. While this approach renders some products free, customers are usually willing to pay more to access products with unique, advanced, and better features.

Promotional strategies

Apple’s promotion entails communication strategies used to reach customers. Typically, Apple Inc. promotes its products and services through different parties and communication channels. The firm’s promotion mix involves sales promotion, advertising, personal selling, and public relations. Besides using technology news websites and Google’s digital advertising, the company collaborates with prominent websites to advertise and promote its products.

Sales forecast

Sales in the information technology market are expected to experience growth in 2022. As a major market player in the information and technology sector, Apple Inc. expects to continue building on success with its diverse product line. Particularly, the sale of smartphones is projected to rise, with the company maintaining its premium pricing. While each product line is expected to grow, the sales of iPhones are expected to account for a more significant portion of the overall revenue. According to Yahoo! Finance (2021), Apple Inc. is projected to round up the fiscal year 2022 with sales of more than $ 385.5 billion, signifying a growth of 5%. Therefore, the company’s sales are expected to peak in the next financial year.

References

Aljafari, A. (2016). Apple Inc. Industry analysis business policy and strategy. International Journal of Scientific & Engineering Research, 7(3), 406-441. Retrieved from https://www.ijser.org/researchpaper/Apple-Inc-Industry-Analysis-Business-Policy-and-Strategy.pdf

Business Quant. (2022). Apple’s revenue by region (2015 – 2021). Retrieved from https://businessquant.com/apple-revenue-by-region

Frick, W., & Berinato, S. (2014). Apple: Luxury Brand or Mass Marketer? Retrieved from https://hbr.org/2014/10/apple-luxury-brand-or-mass-marketer

Moorman, C. (2018). Why apple is still a great marketer and what you can learn. Retrieved from https://www.forbes.com/sites/christinemoorman/2018/01/12/why-apple-is-still-a-great-marketer-and-what-you-can-learn/?sh=3f48bed315bd

Prakruthi, A., & Ramu, M. (2018). A study on SWOT analysis with special reference to the apple company. International Journal of Pure and Applied Mathematics, 119(17), 181-192. Retrieved from https://acadpubl.eu/hub/2018-119-17/1/17.pdf

Yahoo! finance. (2021). Yahoo is part of the Yahoo family of brands. Retrieved from https://finance.yahoo.com/news/apple-iphone-sales-grow-faster-144129276.html#:~:text=In%20fiscal%202022%2C%20sales%20will,fiscal%202023%20to%20%24412%20billion.&text=Chatterjee%20forecasts%20that%20adjusted%20earnings,per%20share%20in%20fiscal%202023.

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Market Analysis and Strategy – Apple Inc

Based on your research, write a succinct analysis of each of the following items: (Please utilize Apple Inc. as a basis for this essay’s research)

Market Analysis
Target Market
Industry Analysis
SWOTT Analysis
Market Segmentation
Competition
Market Strategy
Four Ps
Price Strategy
Promotional Strategy
Sales Forecast