APPLE (IPHONE XI)
Market leader is a brand, product, or firm that has the largest percentage of total sales revenue (the market share) of a market. A market leader often dominates its competitors in customer loyalty, distribution coverage, image, perceived value, price, profit, and promotional spending.
Market challenger is a company aggressively working to obtain the market share of its competitors. A market challenger is a current non-market leader actively trying to move up within their industry.
Fast mover is a small business not yet destined to be a major challenger, but growing rapidly on a small scale.
Market follower is a company that allows other more dominant firms to lead the way within the marketplace that it does business in. For example, a smaller business that is a market follower might keep close tabs on the activities at major market leader firms and seek to copy or improve upon the leader’s product releases and marketing efforts.
Market niche is a small but profitable segment of a market suitable for focused attention by a marketer. Market niches do not exist by themselves, but are created by identifying needs or wants that are not being addressed by competitors, and by offering products that satisfy them.
Perfect competition is an idealised market situation in which all information is known to all market participants, and both buyers & sellers are so numerous that each is a price-taker, able to buy or sell any desired without affecting the market price.
Monopolistic competition is a market structure that all of business’s brands are registered and the business could settle prices of its products. In addition, the barriers to entry the market are low so the business could enter the market if the business has money.
Oligopoly is a market supplied by a small number of firms in which the choice of 1 firm affects the profits of the other firms. The firms are linked by strategic interaction, so market equilibrium is determined by the outcome of strategic considerations.
Monopoly is a market situation with only 1 seller. It can be illegal and it has high barriers to entry such as high costs, government restrictions. In addition, the government might control the business closely to ensure the business do not take advantage of customers.
Defensive warfare is a policy of striking a balance between waiting for market developments or competitor activity and proactively parrying competitors’ action.
Offensive warfare is a policy whereby challengers aggressively seek market share by identifying any weaknesses in the leader’s and other challengers’ marketing mixes and developing a genuine corresponding strength.
Apple iPhone’s generation is the market leader of smartphone market share in the UK. In the fourth quarter of 2011, the iPhone only had 15 percent penetration in British households. By the fourth quarter of 2017 this had risen to 42 percent penetration.
In order to be the market leader and maintain its position in the market share, Apple has used “Offensive warfare”, which means that Apple learns any strengths and weaknesses from its competitors (Samsung, Google, HTC) and from there, Apple improves, innovates, develops and releases its own products every year in order to be a heavy competitor. iPhone X is an example of Apple’s marketing strategy, with a lot of new and innovative features and technologies that even Samsung and other competitors could not do well. In addition, Apple has protected its customers database to prevent any data leaks by other parties (iOS 11), which is also that other competitors could never do (this is their main weakness when they use Android as their main operating systems for their smartphones). This helps Apple to build the trust of customers and create the loyalty of customers.
In addition, Apple is an monopolistic competition, which means that Apple’s brands are strong, registered and all right reserved, such as iPhone, iPad, MacBook. In addition, Apple can settle prices of its products by itself, for instance: in the US, iPhone X is $999 for 64 GB; in the UK, iPhone X is £999 for 64 GB. Furthermore, the barriers to entry are low so Apple has a lot of money to enter any market and set up their business if they see the bright future of the market (more profit, more loyal customers). Besides, Apple has a lot of money to invest the economy of the market that Apple is trading if necessary, such as Apple’s commitment to invest the workforce and more factories in the US in the next 5 years, which will contribute to the US economy $350 billion.
Apple has some strengths of its products that other competitors might not have.
1. Controlled sales atmosphere. Apple always does market research to ensure that it has information about smartphone market share (customers and competitors) and from there, Apple control the sales atmosphere completely. Second, complete software and hardware package. Apple has done completely and perfectly software and hardware for its products in order to catch up customers’ needs, such as new or upgraded iOS, new or upgraded iPhone (iPhone 6 -> iPhone 6S).
2. Use of the new technologies. Apple has a huge number of engineers in order to develop or updated its own technology to apply for its new product, such as iOS, Apps Store and iTunes Store, chips (A11, A12), OLED screen and strong camera, features (Face ID, Touch ID)
3. Brand stability. Apple has been building a strong company and a strong brand by a lot of investments that ensures the stability of its brands
4. Easy to use products. Apple always ensures that customers feel easy to use its products as much as possible by applying new technologies that it successfully researches and developing new software and hardware (new or updated iOS, new and innovative chips, new or updated apps, new and updated features such as Face ID or Touch ID) or have well-trained and professional sales teams in every Apple Stores to help customers if anything happens
5. Product differentiation. Apple has a range of different products that customers could choose for their own purposes, such as iPhone 8 or iPhone 8 Plus; 64 GB or 128 GB
In addition, Apple has some strengths of its own organisation, such as
1. High cash position. Apple has $281.5 billion in cash so it is an advantage for Apple to invest other markets and the company itself. In addition, this amount of cash could help Apple to prevent anything that might be happening in the future
2. Long-term excellent business reputation. Apple has been building an excellent business reputation since the first day of the business such as an excellent advertising campaign (Introduction Day) so its products will have a good advantage by Apple’s reputation.
Along with these strengths, there are some weaknesses that Apple should be aware of:
1. A lot of investment in R&D (Research and Development). Apple has been spending a huge money on research and development in worldwide every year, and it is still increasing. In 2016, Apple spent $10.05 billion. In 2017, it spent $11.58 billion. Most of projects that Apple has been investing in are from other technology companies, especially in Chinese companies, such as Didi, an Chinese company like Uber. This is not good for the company because Apple’s investors could not see any bright future in these projects, which means that these projects might not help the business to grow up and from there, when the time comes, investors will withdraw their investment.
2. Reliant on suppliers. Apple has been relying on supplements for its products, such as Samsung has been supplying OLED screen for iPhone, Intel has been supplying chips. Because Apple could not manufacture components for itself: it only has factories in China to assemble its products, so Apple has to order them by other technology companies, even its competitors and then ship back to China to assemble products. This might be dangerous for Apple because other competitors, especially Samsung, will find out about Apple’s products and from there, they will develop their own products with more advanced and innovative.
3. High prices on the products. Apple has been setting expensive prices of its products, while other products made by other competitors are cheaper for customers. Especially when Apple releases iPhone X, the price of this product is very expensive, £999 for 64 GB. Customers (especially young persons such as students) might not afford to buy Apple’s products with full price, even if they are given some discounts. Apple should be aware of this because other competitors might release products with same qualities but cheaper prices. Samsung has just released Galaxy S9 with new features with cheaper price.
4. Patent infringements. Apple has been involving in some long-time patent infringement lawsuits, such as Samsung and other companies. Despite Apple has won or lost these lawsuits, it damages Apple’s reputation. Investors and customers are not happy about this. They think that Apple might copy other’s ideas illegally and bring them to develop Apple’s products. This will totally destroy the long-time reputation of Apple.
5. Competitors: Samsung, Google, HTC. Other competitors are very hard to develop new products with new features and technologies by any way. These products might be better than Apple’s products. In addition, prices of these products might be cheaper so customers might switch to their products so Apple will lose its market share.
Although there are weaknesses in Apple, there are some opportunities that Apple could catch up in order to maintain the market leader:
1. Apple could develop better products if it uses weaknesses of other competitors as an advantage of Apple when it is developing new products. From there, Apple will have better products that other competitors might not have.
2. Apple could expand market by investing more on internet shopping, developing new apps for its products in order to attract customers from other competitors. Apple has a huge number of cash so it has the ability to expand.
Despite there are some opportunities for Apple, there are some threats that might affect Apple in the future:
1. Dependence on consumers. Most of Apple’s revenue comes from sales of products so if more customers buy Apple’s products, Apple will have more profits & if less or no customers buy its products, Apple will have less products or make a loss, such as Brexit. Brexit has made Apple to lose customers from EU because EU citizens are leaving the UK. In addition, the sales will affect the investment because investors need to see how much Apple earned a year by sales in order to invest their money to the company.
2. Competitive environment. Like Apple, other competitors are very hard to develop new products with new features and technologies by any way, by learning strengths, weaknesses of each other, such as Samsung has recently released Galaxy S9 with new features and technologies. This will be a challenge for Apple in order to maintain the market leader of smartphone market share.
In the UK, there are some factions that may influence on Apple when it releases new products:
1. Political: The UK voted to leave the European Union (Brexit) in an referendum in 2016. It already impacted, with some of EU’s citizens started to leave the UK, which means Apple lost customers. In addition, a number of companies started to move their HQ to European countries, which means they were pessimistic about Brexit. In the future, everything will be affected in the UK. First, UK’s laws will no longer to rely on EU’s laws, which means all of EU’s laws will not affect in the UK, from immigration law, employment law and so on. Second, the UK will no longer in the EU’s single market, which means there will be no free trade and the trading tax system will apply so import and export will be difficult & then, prices of everything might be increased. In addition, there will be no free movement between EU’s countries so it will affect UK’s workforce: EU’s citizens might have to leave the UK so UK will lose a huge number of workers. To sum up, everything in politics is unstable because the UK and the EU are working together to have a final solution (now the UK has the transition period: from 29 March 2019 to 31 December 2020) but if the UK has no anything to guarantee about the bright future after the transition period, these above things will be happened and it will affect businesses and customers.
2. Economic: The UK’s economy is still in stable since Brexit. The British Pounds had gone down after the day of referendum, it has now regained its losses against the dollar, while remaining 15% down against the euro. The interest rate has gone up to 0.5% in 2017. The economy estimated to have grown 1.8% in 2016, second only to Germany’s 1.9% among the world’s G7 leading industrialised nations. The UK economy continued to grow at almost the same rate in 2017. Inflation rose after June 2016 but has since eased to stand at 2.5%. Unemployment has continued to fall, to stand near a 40-year year low of 4.3%. Annual house price increases have fallen from 9.4% in June 2016 but were still at an inflation-beating 4.9% in the year to January 2018, according to official ONS figures. But the important thing is free trade. Leaving the EU means that the UK will have to negotiate with other countries to have free trade deals and it will take years to have them so unless the UK has free trade, the price of everything might be increased.
3. Social: Nowadays, people’s lifestyle has changed. Since have smartphone, people are very reliant on it, from surfing social networks, take a picture or record a video, internet banking, order online and so on. Moreover, people are demanding more communication (phone calls, messages, video calls) with faster and convenience as much as possible. In addition, the level of education has growth, with more people can use technology devices. Besides, in the UK, the age of customers is between 18 – 35 years old (young person) so they are the target customer that technology companies are aiming to.
4. Technological influences: Since have smartphone, more useful apps have been launched, such as health apps for tracking health, internet banking for transferring money & check balance, online apps for order things such as food, drink, clothes,…, news apps and so on. In addition, the number of people using Internet by smartphone has been increasing every year. This is an opportunity for technology companies to launch new products. But the data of customers might be leaked or stolen because of obdurate lack of protection and security. There are some cases that people lost their money because of weak protection so it might be a challenge for technology companies when they develop new smartphone.
To sum up with, Apple is launching iPhone XI in the UK so this is a marketing plan based on above information:
1. Continue “Offensive warfare” in order to maintain the position of market leader in smartphone market share
2. iPhone XI will have to be better than iPhone X & other competitors’ products, by researching and applying new technologies and features. Furthermore, develop new iOS in order to secure and protect customers’ database
3. More products differentiation for customers to choose, such as iPhone XI 32 GB, iPhone XI 64 GB
4. The price of iPhone XI should be lowered in order to attract customers from other competitors
5. Apple should not waste its money in invest unnecessary projects and concentrate on building manufacturing factories that supply components in order to assemble iPhone XI
6. Keep updated information about other competitors by doing regular market research in order to find any strengths, weaknesses from competitors & customers’ needs
7. Avoid any patent infringement to prevent any damage to Apple’s reputation
8. Expand or open new market if necessary or possible
9. Use technological influences as an opportunity to develop iPhone XI
10. Have a better advertisement campaign than other competitors, such as invest more in social media’s advertisement to attract customers, especially young people
11. For now, UK’s economy is stable so this is a good opportunity to launch a new iPhone. Apple will create a huge profit by its new product. But beware of UK’s politics because politics has some pessimistic points and it has led to lose customers (EU’s customers) so Apple should try to attract more British or non-EU customers who are using other competitors’ products to make up for the loss of EU’s customers.
REFERENCES:
Definition of market leader, http://www.businessdictionary.com/definition/market-leader.html
Definition of market challenger, http://www.businessdictionary.com/definition/market-challenger.html
Definition of market follower, http://www.businessdictionary.com/definition/market-follower.html
Dictionary of economics, Oxford, Fifth edition, ISBN: 978-0-19-875943-0
Definition of market niche, http://www.businessdictionary.com/definition/market-niche.html
Apple accelerates US investment and job creation, https://www.apple.com/newsroom/2018/01/apple-accelerates-us-investment-and-job-creation/ , 17 Jan 2018
Market share of Apple iPhone in Great Britain, https://www.statista.com/statistics/288870/market-share-of-apple-iphone-in-great-britain/
Apple’s cash pile hits $285.1 billion, a record, https://www.cnbc.com/2018/02/01/apple-earnings-q1-2018-how-much-money-does-apple-have.html , 1 Feb 2018
Apple expenses for research and development, https://www.statista.com/statistics/273006/apple-expenses-for-research-and-development/
Why Apple is spending crazy amounts of money on new ideas, http://time.com/4339940/apple-rd-research-development/ , 18 May 2016
Apple to pay $500 million in long-running patent infringement case, https://news.sky.com/story/apple-to-pay-500m-in-long-running-patent-infringement-case-11327181 , 12 April 2018
Apple won patent lawsuit against Samsung Electronics in US Supreme Court, http://www.businesskorea.co.kr/news/articleView.html?idxno=19750 , 8 Nov 2017
All you need to know about Brexit, http://www.bbc.co.uk/news/uk-politics-32810887 , 12 April 2018
20.4.2018
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