Apple Incorporated: The Possible Opportunity for Growth - Report Example

Apple Incorporated: The Possible Opportunity for Growth al Affiliation Introduction Multinational Corporations (MNCs) use diverse modes of marketing activities in order to expand their presence in both the local and international markets. Exploiting the possible opportunities for growth requires them a thorough understanding of the markets, including the different layers of the business environment. This report aims at analyzing the United Kingdom environment and providing Apple Incorporated the possible opportunity for growth in the long-run. 2. Apple’s Current Product Portfolio Apple has four product lines including Mac, iPhone, iPad, and iPod. Such a width of product mix is very comprehensive. iTunes and watch are a supplemental feature of some of these product lines. The company has more focus on the depth of its product mix. Under the Mac product category, the company offers MacBook Air, MacBook Pro, Mac mini, iMac, iMac with Retina 5K display, and Mac Pro; iPhone 5c, iPhone 5s, and iPhone 6 for the iPhone category; and, iPad mini 3 and iPad air 2 for the iPad category (Apple Incorporated 2015a). Almost all of these products, iPhone, in particular, have undergone a nexus of product modifications in terms of capacity, weight and dimensions, display, chips, video recording, among others. For instance, iPhone 6 has a height of 5.44 inches, width of 2.64 inches, depth of 0.27 inches, weight of 129 grams, and a Retina HD display of 4.7 inches. After some product modifications of the iPhone 6, Apple offered the new iPhone 6 Plus with a whole new features such as a height of 6.22 inches, width of 3.06 inches, depth of 0.28 inches, weight of 172 grams, a Retina HD display of 5.5 inches, and an optical image stabilization for iSight Camera (Apple Incorporated 2015b). In effect, iPhone 6 Plus had strong sales that rose up to 29.5% in the last three (3) months of 2014, generating a net income of $18 billion in the last quarter. In resulted in Apple’s net worth of $700 billion in February 2015--today’s world’s largest company (Trotman & Ping Chan 2015). 3. Company Analysis 3.1 Internal Environment Apple’s present Chief Executive Officer is Tim Cook (Trotman & Ping Chan 2015). The company can design and improve its operating systems, application software, hardware, and services to offer new products and solutions. Relative to its competitors, Apple offers its products and solutions with seamless integration, ease-of-use, and innovative design. The company has four products: iPhone, iPad, Mac, and iPod. In terms of business processes, the company offers an array of support options, such as assistance for the built-n software products, online support, printed and electronic product manuals, and technical assistance, such as AppleCare Protection Plan and AppleCare+ Protection Plan. As of September 28, 2013, Apple had total assets of 207,000 million. The company spent $4.5 billion on research and development in the 2014 marketing year. It has a total of 84,400 employees all over the world; 95% of them are full-time equivalent (Apple Incorporated 2013). 3.2 External Environment Just like the Smartphone industry in the United States, the sector in the United Kingdom is also lucrative due to the increased demand for innovative designs and more advanced phone features. In particular, UK is comprised of Great Britain (Wales, England, and Scotland) and Northern Ireland. The country follows a constitutional monarchy and parliamentary system (Wright 2013, p. 21). The Head of State is Queen Elizabeth II, and the Head of Government is Prime Minister David Cameron (Bowcott 2015). As of present, the UK’s political system is stable, and government decisions are not tainted with military involvement. The country is one of the world’s largest economies. It was strongly hit by the economic crisis in 2008-09, as well as the Eurozone crisis, but it has recovered. In fact, as of 2013, its GDP was $2.387 trillion and ranked as the world’s ninth largest (Central Intelligence Agency [CIA] 2015). However, the lowest interest rate in the UK is considered by economists as a threat to the economic recovery of the country (Spence 2015). In terms of markets, the society is stemmed from different social backgrounds with high education level and various religions and cultures, such as Christians, Muslims, Hindus, Jews, among others (CIA 2015). The country is clean and green, and it has implemented environmental laws that govern about carbon dioxide emissions. In terms of competition, Samsung is the toughest competitor of Apple with the latter’s Samsung Galaxy Note Edge to compete with iPhone 6 Plus (Allsopp 2015). Consumers depicted the Edge’s specs are great, especially the Quad HD display, which makes it a toughest competitor to 6 Plus. 3.3 SWOT Analysis A SWOT analysis is conducted by the company, with United Kingdom as the market in focus. Strengths Weaknesses strong research and development product- and market-oriented high market share for Smartphones high technology adaptation imitable features of Smartphones low focus on other international markets weak patents portfolio Opportunities Threats increased demand for larger-screen Smartphones in APAC and the Middle East and Africa Growing expenditure for advertising market competition recession product substitutes 4. Marketing Strategy 4.1 Possible Opportunities for Growth According to Ansoff (1957), there are four general growth strategies that firms can adapt when considering expansion: market penetration, product development, market development, and diversification (quoted in Masterson & Pickton 2010, pp. 465-467). Igor Ansoff depicted that if a firm wants to increase its market share in the current market where it operates, it must exploit on promoting the existing products--a strategy called market penetration. Moreover, the firm can modify some features of the products and offer it to the existing market--product development. Offering existing products on the new market is referred to as the market development strategy while diversification strategy refers to offering new products in the new markets. 4.2 Recommended Strategy for Growth Out of the four possible growth strategies aforementioned, market development strategy or the offering of existing in the new market is the most efficient. While Apple has already penetrated some parts of the European markets, it must exploit the increased demand in the Middle East and Africa and Asia-Pacific for larger-screen Smartphones. In fact, these regions are forecasted to have a 33% demand growth in 2015 (Endersby 2015). Considering that Apple’s net income in the final quarter of 2014 was very strong, reaching $18 billion in just three months, expanding into Asia-Pacific and the Middle East and Africa with its iPhone 6 Plus is a viable action step to be taken in the long-run. To achieve growth, product development strategy is recommended. This particular growth strategy refers to the modification of an existing product or development of a new product to make it look new to customers. Developed products may be offered to exist or new markets. The use of this strategy relies on the deep knowledge of the needs of the target market. Awareness of the aversion and inclination of consumers to the current product must be determined. Such awareness is essential in order to develop a new product that possesses the existing needs of consumers (Lamb, Hair & McDaniel 2012). It also aims to exceed the performance of the competitors’ products (‘Achieving growth’ 2015). 4.2.1 Segmentation The market is segmented in terms of demographic, behaviouristic, and psychographic variables. Middle/upper income - This market segment is consumers belonging to middle and upper class of society who can afford the expensive price of iPhone 6 and iPhone 6+. Technology admirers - This type of segment purchase phones in terms of features and convenience. This suit the new features provided by iPhone 6 and iPhone 6+ that includes a retina high definition display, larger and thinnest screen display, and a high-performance A8 chip (Apple Inc UK 2015). Media professionals - This particular segment is suited for the advanced video and camera features of the iPhones. With a higher resolution, better pictures and video will be captured by this segment. Business professionals - This segment aims for high-efficiency phones fit for their daily busy life. Built with a long life battery and faster processor, the phone best suits this market segment to assist their activities. 4.2.2 Targeting The products, iPhone 6 and iPhone 6+, are targeted at people who desire for new technology because of the improved features added on the phone models. Research is conducted to determine the needs and wants of consumers. The new iPhone models target customers who desire a high-performance phone with larger and thinner screen displays. It targets consumers who want to communicate and use the phone for entertainment purposes. With its expensive price, the target market consists of middle to high income earning consumers. With the improved resolution and functionality in the camera and video features, it targets consumers who desire to capture any moment in pictures and videos in high quality. The music that can be stored in the phone also indicates a target to music lovers who need to listen to music anywhere. 4.2.3 Positioning Since Apple Inc is a large innovator in phone brands, the position of iPhone 6 and iPhone 6+ in the minds of customers is very high. With its expensive price, the purchase of the products entails luxury where only the rich can afford. Additionally, the high investment on research and development by the company positions the new iPhone models as built with efficiency. It is also positioned as a leader in phone technology due to its premium design and features. Their exclusive feature that may not be found with other competitors makes it a benchmark in other phone brands. With the large screen displays designed, it positions itself as a more improved iPhone model as compared with its predecessors. This makes the latest design as the best smartphone for consumers who need convenience and efficiency. 5. Marketing Mix 5.1 Product The iPhone 6 has the following dimensions: 5.44 inches height; 2.64 inches width; and 0.27 inch depth. On the other hand, iPhone 6+ has the following dimensions: 6.22 inches height, 3.06 inches width, and 0.28 inch depth. They are both shaped rectangularly in silver, gold, and space gray colors. The phone is enclosed with anodized aluminum and stainless steel. To make the phone slimmer, its chips are made smaller and batteries thinner. They are building with an 8-megapixel camera. The display screen is made of glass free from arsenic compounds. As purchased, the box will contain the following: iPhone, earpads, USB cable, and power adapter. The purchase of the iPhone comes with one-year warranty (Apple Inc UK 2015). 5.2 Price In the UK, the price of an iPhone 6 is £539 while an iPhone 6+ is priced £619 (Apple Inc UK 2015). The products adopt a skimming price strategy where a higher price is set in the market. Over time, the price will tend to reduce. Such pricing strategy is used because it targets premium consumers who have high income (Kirk 2013). In comparison with other Smartphones in the market, the said phone models are expensive because of their exclusive applications like iTunes and Apple Store. The premium brand of Smartphones also leads to their high price. Despite the high price, more customers are still willing to purchase them for its brand name. Apparently, no discounts are offered by the brand, but sales promotions are provided. A standard price is set in all stores across countries. 5.3 Distribution The iPhone 6 and iPhone 6+ are available to many countries targeted to premium consumers. The stores in other places are known to provide excellent customer service much to the delight of consumers. Apple has its retail store known as I-stores where the new iPhone models are available. These I stores are commonly found in department stores and high-grade cities. To be more specific, the iPhones are distributed by a forwarding agent. Distributors provide the iPhone products to numerous retailers. The Apple stores are provided with Smartphones straight from the company (Smith 2014). The phones are also made available through the corporate partnership of Apple with companies. Apple supplies the Smartphones to the managers of the partnered company. 5.4 Promotion The promotions made for the iPhones 6 and 6+ are considered to be extravagant which may range from different advertising strategies. Both the Smartphone models were advertised on the front page of magazines and newspapers, especially on the date of their launch. Several other advertising channels used are television and radios. To be specific, the media platforms used by the brand to promote the two Smartphones are above the line (ATL) because the target market is the premium consumers. The social media, i.e. Facebook and Twitter, are also used as media platforms for promotion. To promote the product to below the line (BTL) consumers, sales strategies like sales promotions are used to attract them. 6. Conclusion The product development strategy is recommended for growth because it contributes to the competitive advantage obtained by the brand in the market. The market is divided into several segments, such as technology admirers, business professionals, and high-income earners. The target market is high earning individuals with a strong preference for technology. The marketing mix is described to be strong most especially its product mix. As seen in the SWOT analysis, one of the strengths of the brand is its good reputation and premium quality. The strong qualities of its product mix are effectively supported by its promotion mix that targets its premium market. The place makes the product very accessible to the market while the price is reasonable for its premium brand. References Achieving Growth Through Product Development: A Portakabin Case Study [Online], 2015, Available at: http://businesscasestudies.co.uk/portakabin/achieving-growth-through-product-development/ansoffs-matrix.html#axzz3SiwByl3H. [Accessed 25 February 2015]. Allsop, A., 2015, iPhone 6 Plus vs Samsung Galaxy Note Edge comparison: Edge is gimmicky but its specs make it a top 6 Plus competitor. MacWorld, [online] 19 February. Available at:http://www.macworld.co.uk/review/iphone/iphone-6-plus-vs- samsung-galaxy-note-edge-comparison-3598596/ . [Accessed 25 February 2015]. Apple Incorporated, 2013, Form 10-K (Annual Report. 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