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Division B
Group IV
What , historically, have been Apple’s competitive advantage ?

1) Premium Pricing Strategy : Apple has always used a premium price-differentiation strategy for all it’s products. The
company offers customers a high-quality product with unique features and uses high prices to reinforce the
perception of added value as well as maintaining profitability. The high-pricing strategy has also set a benchmark for
competitors, who must offer equivalent features to match Apple’s perceived value without losing money.
2) Work culture : Steve Jobs always believed in focus and thereby , Apple had a very narrow product line. Also, his belief
in secrecy , using a “closed door policy” and making dummy positions to test the employees trustworthiness were
also essential in having a powerful and effective workforce.
3) Effective Marketing Campaigns : Apple invested in multimillion-dollar marketing campaigns and also highlighted
Macintosh as energy efficient and the greenest lineup of notebooks , all in a bid to differentiate itself from it’s
competitors.
4) Retail Strategy : With a retail division of 450 stores in 14 countries , Apple made consumers experience the products
and thereby used it to promote all of their products together like the iPad , iPod , Macintosh etc.
5) Brand Strength : Brand strength gave Apple great visibility in the marketplace and helped build consumer loyalty. The
company’s strong branding, and the interrelationships between its products, encouraged customers who bought one
Apple product to try another. Products such as the iPhone, iPad and Macintosh shared the same software and
applications, and operated in a similar way, making the Apple product a natural choice when customers are
considering another device.
Analyze the PC industry using Five Forces Model
Threat from new entrants
• Low manufacturing cost • Direct sales
• Industry concentration • Brand loyalty
• High economics of scale • Market maturity

Bargaining Power of Suppliers Bargaining Power of Customers


• Low components costs • Large volume buyers
• Large number of components • Price sensitivity
suppliers • Brand loyalty
• Small number of OS suppliers

Competitive Rivalry
Threats from substitution products
• Large number of manufacturers
• Potential substitutes for home users
• Price sensitivity
• Not close in performance
• Failing growth
• Globalization
Why did Apple struggle historically in PCs? What were Evolution of
its solutions? Why did they fail/succeed? Apple PC’s
Lack of mainstream targeting
Higher Price point:
- While Apple pioneered the first usable
“personal” computer they did not take it - IBM comparable Apple products were
mainstream. available for a lower price point.
- IBM was the first company to sell on high - Apple maintained a higher price point,
volumes thereby increasing the overall size however due to the market share of IBM
of the market Apple eventually had to drop prices and
reducing gross margin to 34%

Failures:
Mass products and marketing and the
Killing the Mac OS: Wintel era:
- In 1993 Apple announced that they would - In 1990’s Apple forayed into creating and
create a new selling of Mass products which did not work
- The lack of a good new software causes well the company's image
shifts in user preferences from Apple to - All the computers were in the 1990’s were
Intel based PC’s built around building blocks of Microsoft
and Intel.

Success:
• Return to premium pricing and niche products: After Steve Jobs had taken over the CEO role Apple underwent a major restructuring
where it killed around focused on four categories – desktops and portable Macintoshes, for consumer and professional
• The Digital Hub: Apple post 2001 positioned MAC as the “hub” to control integrate and value to the peripheral devices like the iPod
How sustainable is Apple’s competitive position in smartphones
Evaluate Apple’s Strategy for Apple Watch. Has Tim Cook taken the right
approach? Would you suggest any course corrections?

• Apple wanted to enter the Wearable Technology market, which had dominant players like Samsung and LG.
• Productivity applications with their user interface was designed with simplicity in mind.
• Apple introduced Apple Pay the same day it announced Apple Watch. It allowed convenient and secure
payments by simply holding their smartphone near the wireless payment terminal.
• Apple showcased various functionalities of the watch like fitness tracking, calendar events and messages
which appealed the customer.

Yes, Tim Cook had taken the right approach in launching the Apple Watch. Cook wanted to demonstrate that
he could not only sustain, but also take the Apple’s business to the next level. Apple had a major dependency
on iPhone, with its other products not doing so well. Cook’s approach was on similar lines of his predecessor,
Steve Job. It was based on four pillars: provide a small number of products, focus on they being premium, give
priority to profits over market share and create an effect that makes people starve for more such products.
One issue people faced when it was launched was the compatibility issue. It was not compatible with older
version of iPhone. It is one area of concern they could have improve upon.
Thank you!