Apple's local market is the USA. Over two hundred and twenty million people in the USA use smartphones, and the population of these users grows gradually. Of this portion, ninety million people own an iPhone (Statista. 2019). Compared to other smartphones, iPhones are viewed as a premium product in the market. Despite the high prices, people in this market can afford the phones as the average annual per capita income in the country is approximated at fifty three thousand dollars (Tradingeconomics.com. 2019). It is essential to note that this per capita income varies based on households and different groups that live in the USA.
The iPhone is a product that targets all users of smartphones. It provides an inbuilt software and application that are unique to the company. Also, since the phone has a three year lifetime, Apple focuses on developing new versions that meet the consumers' needs and style. The iPhone is specially designed to work in the USA market, and the company enhances its consumer-centric approach with each new version. As a consumer good, Apple targets consumers of all age groups who need to use a smartphone for various tasks such as listening to music, taking pictures, finding directions, and making calls among other services. It is a product that targets the USA population and has captured a significant market share.
With a diversified product portfolio, Apple's target market comprises of different users who purchase its products for different needs. For instance, it MacBook targets business people and college students as it provides software for document preparation, studying and research capabilities. On the other hand, iPods target teenagers who continuously listen to music. As such, the consumer habits of its target market are different. Its target market purchases Apple's product based on the product-use. In the case of iPhones, consumers are willing to buy a new version of the product once it is introduced to the market. The features of its products are appealing and unique to the brand making it a valued product. The shopping habits often depend on the product-use, lifecycle and income level.
Since its incorporation in 1976, Apple has become a dominant brand in the local market. Globally, Apple is an iconic brand which attracts consumers from different markets. It is this strength that has established Apple as a top technology company in the USA market. The company consolidates the manufacturing of phone hardware and software to provide a unique product that is valued in the local market (Csimarket.com. 2019). Secondly, Apple has vast resources and expert employees that enhance the company's research and development approach. As such, it has aimed to maintain a product lifecycle of three years.
Thirdly, Apple is a brand of choice among its consumers. Though expensive, Apple has managed to develop brand loyalty in the local market. Companies rely on Apple products as they are efficient. Finally, its corporate social responsibility initiatives such as recycling parts of the iPhones not only support its bottom line but also contribute to environmental protection. These strengths have reinforced Apple's success in the local and international market (Csimarket.com. 2019). Its performance strategically positions the company as a market leader.
However, due to its success in the market, Apple has failed in investing in marketing and promotion strategies. The company is grounded in the market and has brand loyalty. It poor marketing approach limits Apple's capacity to capture a large market share. Also, it offers premium prices, and its products are incompatible with other software. These limitations are strategic for Apple to develop a differentiation strategy but also restricts product acceptance in the market.
Geographically, iPhones are sold in all states in the USA. Apple's products are designed to target consumers based on product-use and age of consumers. Apple has a well-designed distribution channel and retail outlets to help transport its product to different regions in the country. Besides, Apple's technology sophistication enables to company to provide customer service efficiently, communicate with its clients and enhance brand engagement.
As noted, Apple's products are highly valued in the USA market. The company offers premium prices that create a value perception among its consumers (Venter, Wright, & Dibb, 2015). In conjunctions with product efficiency and consumer needs focus, Apple's products are acceptable in the local market. However, Apple's products are incompatible with other software that are not inbuilt. This incompatibility limits product acceptance especially for users that rely on various software provided in the market. Secondly, its high prices make the product expensive to low and middle-income earners. These product issues create resistance to product acceptance.
Apple's distribution strategy includes retail stores and online shopping platforms. The company has opened various outlets in the country to reach its consumers. Its online store also allows consumers to purchase its products at their convenience (Csimarket.com. 2019). As of 2018, Apple incorporated Amazon as one of its retailers. Its products can reach different consumers in various regions. However, it limits the number of intermediaries to restrict the price margin and streamline its value chain.
Apple has not significantly invested in advertising and promotion of its products. Its brand recognition and consumer loyalty have positioned the company as a global iconic. Apple often provides adverts before launching a new version of one of its products. However, the ad is displayed to create consumer awareness and convince consumers to purchase its new product. The company relies on consumer loyalty as a marketing strategy (Csimarket.com. 2019). The lack of substantial competition in the market is an advantage to Apple. Also, its pricing strategy is premium pricing to create a value perception among consumers and position the company as a renowned brand. Its prices are high as it introduces a new product and fall by a small margin after the first six months.
Destination Market Analysis
As an emerging economy, China present market opportunities for Apple. However, the economic conditions of the country are different, government restrictions are substantial, and product acceptance is a challenge. China is a developing economy whose infrastructure is not as sophisticated as in the USA. Since it is also a large country, Apple may face a challenge in distributing its products to different regions. On the other hand, the state has invested in technology advancement which makes communication systems accessible to reach the target market.
Nevertheless, over the previous fiscal years, the USA and China have been facing trade issues with both countries placing trade barriers in each other's products. Venturing into the Chinese market has created some of the problems for Apple leading to a decline in the company's overall revenue. Though Apple could take advantage of different retailers to distribute its products, its uniqueness present threats to the company's model and affects the sustainability of Apple in China. Intellectual infringement is a significant risk for Apple in China (Reisinger, 2019).
China is located in the Asian continent which is on the east of the USA. As a large nation, China's topography includes a long coastline, desert areas, grasslands, mountains, rivers and lakes. The Great Wall of China attracts tourists from different countries. It experiences seasonal weather changes like different parts of the world.
Unlike the individualistic culture in the USA, China social systems are strongly linked with strong social ties. Social bonds are highly regarded, and the age of people defines the hierarchy of command in these social settings. However, its education system is not developed with a larger portion of the adult community less educated than the millennials. Chinese culture emphasizes music, arts and other folklore symbols. Such unique traits of its culture can be viewed in housing designs and dress codes.
The Chinese culture upholds martial arts as one of its recreational activities. Training in martial arts is a respected activity in the community. Martial arts play a significant role in the nation's culture. Additionally, the Chinese language is the national communication language, and the understanding of English and other foreign languages are not common in the country. The language barrier is thus one of the issues faced by foreign corporations in this country.
China's political climate is stable. Nevertheless, the federal government controls internet access, imports, and currency exchange rates and has high restrictions on the entry of foreign companies in the country. These restrictions from the government inhibit the success of foreign corporations in the region. Often, global companies choose acquisition as an entry strategy as the government is likely to place fewer restrictions on local companies than foreign ones. Government tax rates apply differently for all companies. The Chinese government sets stringent regulations to support the growth of local companies. It also requires that a significant portion of a company's shares is owned by local investors to minimize capital outflow. The challenges instituted by the Chinese government make the market hostile to foreign companies such as Apple.
Competition in the Chinese market is the most significant threat for Apple Company. First, competitor products are significantly different from those that Apple offers. The distinct features include compatibility with other software, availability of spare parts, low prices and a variety of choices. Some of the most recognized brands in China include Lenovo, Vivo, Oppo and Huawei among others (Yang, 2019). Since they are founded in the local market, consumers in the industry are likely to accept them easily compared to Apple's products.
Unlike the USA market, the Chinese economy is saturated with companies that develop mobile devices such as phones, personal computers, laptops among other accessories. The competitive market allows consumers to choose from a variety of products. As such, the prices of such phones are often developed based on market demand, consumer perception and income level of the target market. Companies such as Oppo, Vivo, Huawei and Lenovo have also established brand loyalty in the market thus increasing the intensity of competition for Apple (Yang, 2019). Consumer preference of local products to foreign goods increases the competitive rivalry and threatens the sustainability of the company in the market (Dobbs, 2014).
Moreover, due to high competition, companies in the Chinese market have invested in marketing and advertisement. Marketing approaches seek to attract and appeal to consumers to purchase a company's product. The efficiency of a product and uniqueness in features creates a competitive advantage in the market (Dobbs, 2014). Apple will have to invest in marketing approaches to thrive in this market significantly. However, despite the competition, intellectual rights infringement is high (Reisinger, 2019). The Chinese market has a significant portion of copycats who are likely to sell fake Apple products thus reducing the revenue for the company. High competition, government restrictions, consumer resistance and property rights infringement are significant challenges for Apple.
Market Customer Situation
China has a population of about 1.3 billion people with a growth rate of 0.59%. The per capita income is approxim...
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