Background of Apple Incorporated - Essay Example

Apple was founded in 1976 by Steve Wozniak, Steve Jobs, and Ronald Wayne. The company was founded with the aim of making computers a standard feature in households. Thus, Apple embarked on making personal computers such as Apple 2, Apple 3, and Apple Lisa. In 1984, the Macintosh lineup was introduced. In 2001, the company introduced the iPod which revolutionized personal music players. As the iPods began to become less popular, Apple launched the IPhone in 2007 which propelled the company to greatness and ushered in an era of touchscreen smartphones. In 2010, the company came up with the iPad which made tablets a conventional device (Apple- Statistics and Facts, 2017).

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Apples mission statement starts by listing the companys achievement over the years which includes the development of the Mac, OS X, iPod, Itunes, IPhones, and IPads. It ends by stating that Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings (Farfan, 2017).

Apples short-term targets include the consolidation of existing markets while at the same time providing consumers with quality and innovative products. This can be seen through the annual release of devices that have gradual increments from their predecessors. However, in the long term, Apple seeks to dominate the global technological sphere through the use of its products. Apple products dominate American and European markets. However, the same cannot be said for the rest of the world. Thus, this article will make use of Apples growth strategies that focus mainly on emerging and developing markets such as India and China where the market has not reached peak penetration. Since IPhones are the primary product for the company, Apples expansion strategy with regards to the device will be utilized.

Diversification

In markets such as China and India, Apple has the potential to ship out very many units courtesy of the rapidly growing economies and an increase in consumer spending power. However, clients in these markets do not possess the same economic standing as those who live in regions such as Europe and the US. This means that customers in emerging economies are less likely to spend 800 to 1,000 dollars on a handheld device as compared to people in the US. Furthermore, many companies within these emerging markets are giving Apple a run for its money.

For instance, a report by the Wall Street Journal (2017), cites data from the International Data Corporation which shows that since 2012, Apple has not been the top-selling brand in China. Its market share has been taken up by companies such a Vivo, Huawei, and Xiaomi. Thus, this compelled Apple to develop a new product line that was specifically designed to target budget users in regions such as India and China. Good smartphones are getting cheaper, and at the same time, they are getting better. This forced Apple to come up with its line of smaller and less powerful devices which are targeted at budget oriented buyers. The primary budget product is the IPhone SE.

Given that Apple has a strong marketing, research, and production capacity, the company is utilizing these strengths to unseat budget phone giants while keeping its foothold in the premium market. On top of that, the company sells these devices through brand association which gives the pocket-friendly devices a high-end perception. Surprisingly, the strategy of developing budget handsets using the Apple brand name has shown promise even beyond the emerging markets. For instance, in the third quarter of 2016, the IPhone SE was the best-selling device in the UK (Lovejoy, 2016).

Differentiation

Levine-Weinberg (2017) notes that sales in China for the IPhone have slowed down. However, the country still possesses the potential to propel Apples growth strategies. The slowdown in sales in China is attributed to a number of things. One, competition from other brands such as Oppo, Vivo, and Huawei. Two, the similarities that exist between various IPhone brands. Levine-Weinberg (2017) states that in emerging markets, Apple products are seen as status symbols. Thus, when Apple produces IPhone devices that are similar to the previous generation, then customers do not have a compelling reason to upgrade to the new ones. This has meant that Apple has had to reinvent its lineup each year to be familiar but different. Such an approach is visible in Samsungs Galaxy lineup where each generation has the feel of the previous one but the new. The current Galaxy S8 makes use of dual infinity edges which were developed following the successes of Galaxy S7 which enjoyed successes from having a single curved edge glass.

When IPhone introduced the IPhone 5s, sales were not strong in China since the 5s device was similar to the IPhone 5. However, the following year when Apple unveiled the IPhone 6 and 6Plus, the company noted a significant rise in revenue by 84 percent in China to reach 27 billion dollars by the end of 2015 (Levine-Weinberg, 2017). The company noted the same when its market share dropped after the release of the IPhone 7 which was slightly modified (Wall Street Journal, 2017). The product differentiation strategy will probably be successful should Apple choose to redesign its upcoming IPhone 8 lineup,

Market Development

This is a strategy that seeks to exploit new markets by the use of existing products. India is an ideal case study example of such an approach. An article by Aulakh (2016) for the Economic Times shows that between 2015 and 2016, Apple's sales in the country rose by over 50 percent. Comparatively, in the US and during the same period, Apples IPhone sales had grown by just 1.3 percent. Similarly, in the UK, sales grew by 3.1 percent (Lovejoy, 2016).

Thus, markets such as India have provided Apple with an opportunity to sell its devices and to reap from the untapped market demand before the market hits saturation. Emerging economies provide a fast growing market for Apple.

Market-Oriented Strategies

India is the third largest market for handheld devices. While Apple does not have a significant presence in the market due to competition from smaller manufacturers, it has shown the potential to succeed in the premium sector. For instance, in the first quarter of 2016, the company managed to gain an 18 percent market share. During the same period, Samsung ceded 25 percent of its premium market share (Vincent, 2016). India is not at the same level as IPhone in China. Thus, strategies for the two markets needed to be different from each other. Vincent (2016) quotes Tim Cook who described the Indian market as bearing semblance to the Chinese one, albeit a decade ago. Thus, Apples strategies for the Indian market are designed to be for the long term.

These strategies include coming up with IPhone content that is relevant to the local market such as maps. This makes IPhones easy to use and relatable by consumers in India. Additionally, the company plans on taking advantage of local production to cut down on logistics and taxation costs that drive up IPhone prices in India (Mayo, 2017). At the moment, carriers in India do not sell devices for manufacturers. This situation has given Apple the opportunity to exploit the gap to partner with carriers to reach a broad audience (Vincent, 2016). Furthermore, partnerships with carriers allow Apple to subsidize handset prices as they both stand to benefit.

For the Chinese market, IPhone generational differentiation, pricing strategies, and the use of local-oriented adverts have worked to attract buyers. On top of that, Apple has made use of its made in China brand to attract customers and to avoid many of the legal hurdles that plague many other foreign brands that seek to work in the country.

Service

This is an emerging segment for Apple whose growth can be attributed to Apples devices. Apple has managed to integrate services such as Apple Store, Apple Music, Apple Pay, and Itunes to its devices. Most of the 19.9 billion dollars that Apple earned from these services in 2015 came from IPhones. Apple has made sure that access to these services is only through Apple products.

References

Apple- Statistics and Facts. (2017). Statista. Retrieved May 19, 2017 from https://www.statista.com/topics/847/apple/

Aulakh, G. (2016). Apple iPhone sales in India up by 50% for fiscal ending September 2016, Tim Cook highlights Jio tie-up. Economic Times. http://economictimes.indiatimes.com/tech/hardware/apple-iphone-sales-in-india-up-by-50-for-fiscal-ending-september-2016-tim-cook-highlights-jio-tie-up/articleshow/55062847.cms

Farfan, B. (2017). What is Apple's mission statement? The Balance. Retrieved May 19, 2017 from https://www.thebalance.com/apple-mission-statement-4068547

Levine-Weinberg, A. (2017). Apple's iPhone loses the China sales crown: 3 reasons it doesn't matter. The Motley Fool. Retrieved May 19, 2017 from https://www.fool.com/investing/2017/02/12/apples-iphone-loses-the-china-sales-crown-3-reason.aspx

Lovejoy, B. (2016). iPhone sales growing again in US & Europe, iPhone outsells Samsung S7 in US, iPhone SE best-selling phone in UK. Retrieved May 19, 2017 from https://9to5mac.com/2016/08/10/apple-ios-market-share-q2-2016-kantar/

Mayo, B. (2017). Apple has started production of iPhone SE in India, shipping to customers later in May. Retrieved May 19, 2017 from https://9to5mac.com/2017/05/17/iphone-made-in-india-2/

Vincent, J. (2016). Apple is taking a beating in India, the world's third largest smartphone market. The Verge. Retrieved May 19, 2017 from https://www.theverge.com/2016/8/5/12385134/apple-india-android-market-share-97-percent

Washington Post. (2017). Cheaper rivals eat away at Apple sales in China. Retrieved May 19, 2017 from https://www.wsj.com/articles/cheaper-rivals-eat-away-at-apple-sales-in-china-1485924305