Running Head: Apple Case Analysis 1

Case Analysis: Consumers Take a Shine to Apple Inc.

Ima A. Student

BUS 7113: Marketing Strategies; Fall 2018

Introduction

The growth of technology is undeniably the fastest, most quickly improving industry of

our generation. As a testament to this, an estimated 2.5 billion people are anticipated to own a

smartphone by year 2020 (Statista, 2016). This year alone, approximately 36% of the earth’s

population will possess a smartphone (Statista, 2016). These numbers are staggering considering

that personal mobile phones that only made voice calls did not become widespread until the

1990s. For a good amount of the population, the iPhone from Apple is synonymous with the

word smartphone. This did not happen by accident, but because “Apple has become skilled at

recognizing strategic windows of opportunity and acting upon them before the competition”

(Sawayda, as cited in Ferrell, pg. 332).

Problem Identification

As with all companies, competition is a significant threat facing Apple across product

lines. In 2015, just in the smartphone category, there were an estimated 24,000 different Android

(Apple’s iOS software competitor) devices made by approximately 1,300 brands (Tung, 2015).

Multiply this level of competition across all products (computers, tablets, smartwatches, etc.) and

it is no wonder that competition poses a problem to Apple.

Because Apple is so well-known, the company’s every move is in the spotlight.

Everything from customer privacy to ethical supply management is scrutinized. One small

misstep has the potential to be amplified. For instance, “many of Apple’s product components

are manufactured in countries with low labor costs, [so] the potential for misconduct is high”

(Sawayda, as cited in Ferrell, pg. 338). Apple’s desire to operate at high profit margins and churn

out new products quickly can produce questions on ethical practices in their plants.

Company Information
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Known for its “corporate culture of enthusiasm and innovation,” according to

former CEO John Sculley, Apple, Inc. at its core is “first and foremost, a marketing company”

(Sawayda, as cited in Ferrell, pg. 335). Beyond the products themselves, the emphasis on the

user’s experience has generated significant success for the company. Steve Jobs was the catalyst

in this movement upon his return to the company in 1997. This shift in corporate culture led

Apple to adopt “a market orientation in which it was able to gather intelligence about customers’

current and future needs for certain features – even before the customers themselves knew they

needed them” (Sawayda, as cited in Ferrell, pg. 332). With this intentional focus on the

experience coupled with brilliant innovation, Apple has positioned itself as a lead competitor in

the technology industry.

While the iPhone is probably the first product a person thinks of when they hear the name

Apple, the company has done well diversifying its product line up. Before it was in the

smartphone industry, personal computers were the focus for Apple with its Mac. Just in this

category alone, Apple has several products associated with its Mac line. Over the past few years,

tablets have gained traction in the market, with Apple’s iPad raking in a significant share. Most

notably, Apple changed the way people listen to and experience music with the invention of the

iPod and the corresponding program, iTunes. Apple’s most recent product introduction is the

smartwatch, a wearable technology.

SWOT Analysis

While Apple’s products are high quality and aesthetically pleasing, Apple’s most notable

strength is its ability to connect with the consumer. “Apple’s promotion strategy has led to a

perception that Apple products are part of a consumer’s identity” (Sawayda, as cited in Ferrell,

pg. 335). This mentality is ever present when people describe themselves as a Mac user versus a
Apple Case Analysis 4

PC user. The connection Apple has cultivated with the consumer drives the company’s ability to

generate repeat business by “[creating] the illusion that consumers have to have the newest

model” (Sawayda, as cited in Ferrell, pg. 332). When it comes to market share, Apple is

dominating the smartphone industry. As of the fourth quarter of 2017, Apple claimed 51% of the

smartphone global market revenue, whereas second place went to Samsung with 15.7% market

share (Fuscaldo, 2018).

As for its weaknesses, those are harder to clearly identify. Some may say that because

Apple leads the industry with highest pricing, that could exclude millions of potential buyers.

Would market share be greater if the price were reduced? Possibly, but it can also be argued that

Apple is so strong because of its aggressive pricing. Another weakness is Apple’s

cannibalization of its products. Because new versions come out almost yearly, the sales of the

new absorb those of the existing product models that are still relevant.

A significant opportunity for Apple lies within the computer sector. Despite its market

share in the smartphone industry, “95 percent of consumers do not consider Macs when buying

new computers” (Sawayda, as cited in Ferrell, pg. 335). This number is staggering considering

that the typical Mac product life is significantly longer than that of another PC not using iOS.

Also, Macs have traditionally been seen as a computer for designers. “Macs tend to be the best

platform for design and creativity due to the strength of the applications” (Anali, 2010). It would

beg to stand then that Apple has a significant opportunity to pull from what it does best,

marketing, and market Macs to the broader population outside of creators to gain more share.

A threat already touched on has to do with Apple’s constant scrutiny under the public

eye. The greatest of threats in this case is ethical practices at the plants where the products are

manufactured. “Some blame Apple’s culture of innovation and the need to release new or
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improved products each year, which require suppliers to work quickly at the expense of safety

standards” (Sawayda, as cited in Ferrell, pg. 339). Even when improvements are made, Apple

still see negative press on the remaining issues found in the plants. In addition to production

concerns, competition is an always present threat to any company, but especially one in an

industry that is ever-changing. Despite its current success and cult-like following, Apple cannot

afford to ease up off of innovation. Competitors are constantly growing in number and

innovation, so to sustain its share of the market, Apple cannot take for granted its current

standing.

Response to Questions

Apple’s ability to connect with the consumer has created a unique loyalty that drives

followers and repeat business in ways few companies have been able to achieve. Through its

commitment to relentless marketing, Apple has made its products “become a part of [the

consumers’] self-concept and image when interacting with others” (Sawayda, as cited in Ferrell,

pg. 340).

While Apple’s retail stores were created to give more opportunity for product display, the

unintended byproduct was an increase in the customer experience (Sawayda, as cited in Ferrell,

pg. 336). This coincides with Apple’s strength of connection: not focusing on the sale, but on the

relationship. The customer not only has the opportunity to test the products for themselves, but

are accompanied through the process by Apple Geniuses who are highly trained and certified.

From an aesthetic standpoint, Apple’s attention to appearance of its stores aligns with the

products themselves.

In order for Apple to sustain its product innovation and loyalty, a continued focus on

improving ethical practices in its plants and corporately is of significant importance. Despite a
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statement by an Apple executive stating that “customers care more about a new iPhone than

working conditions in China,” regardless if that is true or not, violations in the plants can lead to

closers and significant financial burden. Apple also needs to not take for granted its current

market position. “Apple is serious about keeping its proprietary information a secret to prevent

other companies from stealing its ideas” (Sawayda, as cited in Ferrell, pg. 338). However,

technology is improving quicker than ever, with more competition entering the market. By

pulling from outside sources and gaining broader knowledge and skillsets, Apple could launch

into even further uncharted territory by engaging with outsiders and differentiating its resources.
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References

Alani, F. (2010, October). Mac vs PC: Which should I buy? Retrieved May 13, 2018, from

[Link]

Ferrell, O. C. (2016). Marketing Strategy (7th ed.). S.l.: Cengage Learning.

Fuscaldo, D. (2018, February 16). Apple's World Smartphone Market Share Above 50%. Retrieved

May 13, 2018, from [Link]

more-50-first-time/

Statista. (2016, June). Number of smartphone users worldwide from 2014-2020. Retrieved May 13,

2018, from [Link]

Tugend, A. (2010, February 26). Too Many Choices: A Problem That Can Paralyze. Retrieved May

12, 2018, from [Link]

Tung, L. (2015, August 6). Android Fragmentation. Retrieved May 13, 2018, from

[Link]

brands/