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Running head: APPLE INCE. CASE ANALYSIS 1

Apple Inc. Case Analysis

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APPLE INC. CASE ANALYSIS 2

History and Background of Apple Inc

Apple Inc. was formed in the year 1976 by Steven Jobs and Gary Wozniak with

headquarters in California USA. When this company was started, its initial name was Apple

computers Inc. (Gaudiano and Hunt, 2016). and its initial aim was to deal with consumer

electronics, and commercial electronic and computer gadgets. Currently, Apple is the most

famous for iPhone and Macintosh personal computers. Due to the application of effective

business marketing strategies, Apple Inc. has progressively gained a substantial market share

over the last 20 years to become the major manufacturer of iPhone smartphones and Mac

computers. According to the annual revenue statistics for the period between the fiscal year 2012

and 2018, Apple Inc. has gained a substantial market share in the technology industry to become

the leading brands in the industry. By the year 2016, the brand value of the Apple Inc. was

estimated to be around $228 billion. Among the most successful products by Apple was the

iPhone which was launched in the year 2007 and sold approximately billion units of the product

by the year 2016. This has made iPhone be the highest selling premium smartphone on a global

scale. In 2010, Apple unveiled another product that gained a substantial market share within a

very short time. This was the iPad tablet computer that had sold approximately 13 million units

by the end of 2017 fiscal year. The annual sales of the Apple Inc. have progressively increased

over the years. Between the year 2005 and 2017, the annual sales by Apple increased by a

margin of $47.02 billion. However, there has a been a market instability within the last 5 years.

In 2012, the annual sales were at $41.73 billion, $37.04 billion in 2013, $39.51 billion in 2014,

$53.59 billion in 2015, $45.69 billion in 2016, and $48.35 billion in 2017 (Investor.apple.com,

2014). This has primarily been due to increased competition from other leading brands such as

Samsung.

APPLE INC. CASE ANALYSIS 3

Market Structure

Apple operates in a perfectly competitive market whereby there other key players

operating on equal terms in the market. The perfectly competitive market structure allows for a

healthy competition between large and small companies with none having a significant market

power than the other. This implies that the market share of any particular company solely

depends on its marketing strategies and the quality of its products and services. The key global

market leaders in the manufacture of smartphones, computers, and other technology gadgets in

the same market niche with Apple include Samsung, Huawei, Oppo, Lenovo, Vivo, and LG that

commands a substantial market share. All these companies compete on a fairly level market

ground. The Perfectly competitive market structure is built upon the following market

assumptions that allow the competing firms to enjoy the advantages of optimal output.

• Every firm in the market seeks to maximize its profits

• There are no barriers to market entry and exit

• The products and services by the competing firms are completely identical

(Homogenous)

• The market structure does not offer any particular market preferences.

The Apple headquarters are found in California U.S. However, the company has

established branches in more than 70 countries worldwide to increase the market for its

successful product brands such as the iPhone and iPad. This makes the company an international

brand whose major markets are found in the United States, France, France, Germany, Canada,

United Kingdom, and Spain. Generally, the market for Apple products in these countries is doing

APPLE INC. CASE ANALYSIS 4

very well due to the high demand of the iPhone smartphone brand. As a result of the increased

demand and a good market response, the company has opened more branches in countries such

as South Africa, Hong Kong, Mexico, India, Sweden, Australia, Portugal, Denmark, and the

Netherlands.

The Main Competitors

1. Samsung – The Company was founded in the year 1969 in South Korea primarily as

a manufacturer of television sets. However, the company has progressively grown to

manufacture all kinds of electronic and technological gadgets such as smartphones. Samsung

was the first company to manufacture the black & white television sets in 1969, over time; the

company improved in technology and manufactured the first colored Tv set in 1975. In 1983, the

company began the manufacture of personal computers and developed the first mobile phone in

1999. Over the years, Samsung has advanced in technology and produced high-quality computer

devices that have earned it a global reputation of the best smartphone and Smart TV brand in

2016. The most successful smartphone brand manufactured by Samsung is the Galaxy Series. In

the first quarter of 2016 fiscal year, Samsung recorded sales revenue of around $173.36 billion

and annual turnover. The main markets for Samsung products are found in the U.S and European

countries such as France, Germany, and the United Kingdom.

2. Oppo – Oppo Electronics Corporation is a popular Chinese electronics consumer

brand especially in the manufacture of Oppo smartphones. The company was launched in 2004.

Over the years, the company has established its brand name by manufacturing quality mobile

phones and other technology-enhanced electronics that have gained a substantial market share

within the last one decade. As a result, the company was able to expand its market to other

APPLE INC. CASE ANALYSIS 5

countries such as the United States, Europe, and Middle East Asia. In 2016, Oppo was named as

the leading smartphone manufacturer in China and number four globally. Oppo has

tremendously grown recording the annual revenue of $78.4 million which accounted for a

marginal increase of 122.2% in revenue.

3. LG – LG Electronics is a global electronics brand established in 1958 as a producer

of consumer electronics such as home appliances, communication gadgets, and vehicle

components with headquarters in Seoul, South Korea. The company has established its brand of

smartphones and home appliances and gained a market share to achieve global sales of $55.91

billion in the 2014 fiscal year. LG has established its brand in more than 100 countries

worldwide. However, the most important markets for the LG products are found in South Korea,

European nations, and North America.

Product differentiation at Apple

Apple has successfully applied the strategy of product differentiation to gain a

competitive advantage over other competitors in the same market niche. The product

differentiation strategy has been applied to target a specific consumer segment especially the

smartphone users in the following ways;

The Product design

This is the main aspect of product differentiation that has been used by the company.

Each product is designed with a distinct visual appeal and advanced communication and security

features that make it stand out from the products by other firms in the market. Apple Inc. has

APPLE INC. CASE ANALYSIS 6

focused on the product design as the differentiation hallmark with regard to products such as the

iPod music players, the iPad tablet computers, and the iPhone smartphones that have no

similarity in the market (Gaudiano and Hunt, 2016). Each of the Apple products is designed with

iconic and distinctive features that have helped the brand to maintain and improve its market

share.

The Pricing Strategy

Apple Inc. has focused on producing highly advanced products with distinctively iconic

features that make them more preferred despite the high pricing. Thus, the company maintains

high-profit margins by proving the consumers with topnotch products and selling at

proportionate prices. This product differentiation strategy effectively counters the lowly priced

products made by the competing firms by ensuring that Apple gives the customers a rich user

experience for high prices.

Brand Loyalty

Development of brand loyalty has been among the most successful marketing strategies

applied by Apple Inc. The company has focused on creating a strong foundation for brand

loyalty by differentiating its products by features such as customized TV shows, games, and

iTunes music which is only available for Apple users.

The Economic Concept of Advertising at Apple Inc.

Based on the annual profit margins of the Apple Inc., its imperative that its marketing

strategies are highly effective. When coming up with the best marketing strategies to optimize

the market potential, Apple evaluates various factors such as the geographical location of the

APPLE INC. CASE ANALYSIS 7

market segment, the current demand, and the usage of Apple products within that market niche.

Upon these considerations, Apple uses television commercials as the primary advertising

strategy (Gaudiano and Hunt, 2016). The television commercials are advertised in the popular

TV shows and are focused on changing the way people regard certain technological aspects to

make the apple products more appealing as they display its ability to solve the common

technological problems in the society today. Additionally, Apple uses the print media such as

newspapers, magazines, and posters to advertise its new product to the consumers.

Recent Changes at Apple Inc.

Apple has expanded its market share through acquisitions seeking to diversify its

products by acquiring the markets previously occupied by the companies. For instance, Apple

Acquired Shazam in December 2017 at a price of $400 million. This acquisition was mainly

focused on improving the music experience of music users. However, this acquisition increased

the managerial diseconomies for Apple as the company will was forced to seamlessly integrate

its company policies and strategies with those of Shazam without affecting the market. Similarly,

Workflow was also acquired by Apple for millions of dollars in 2015. This acquisition was based

on the seamless integration of the multi-app software by Workflow into the IOS system.

Additionally, the software would help to improve the automation of certain Apple features to

enrich the Apple user experience. These acquisitions affected Apple both positively and

negatively. The positive impacts include increased market share and also financial revenue while

the negative impacts are concerned with the managerial diseconomies and integration of the

company policies with the mergers in such a way that the quality of products remains paramount

for the best user experience.

APPLE INC. CASE ANALYSIS 8

How Apple mitigates Challenges

Apple responds to various challenges affecting its operations by employing a

combination of the best innovative technology, experience, creativity, and top-notch excellence

to support and empower the drive for industry leadership. This is specifically effective in

capitalizing on the company strengths to reduce the impacts of the weaknesses.

APPLE INC. CASE ANALYSIS 9

References

Investor.apple.com. (2014).Apple - Annual Report. [online] Available at:

http://investor.apple.com/secfiling.cfm?filingid=1193125-14-383437&cik= [Accessed 19

May 2018].

Gaudiano, P. and Hunt, E. (2016). Forbes Welcome. [online] Forbes.com. Available at:

https://www.forbes.com/sites/gaudianohunt/2016/08/08/apples-diversity-report-reveals-

risks-and-opportunities/#297799e473d6 [Accessed 19 May 2018].

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