Apple Inc A Multinational American Company Marketing Essay

1.0 Introduction

Apple Inc is a multinational American company that design and sells computer software, consumer gadgets and personal computers. It was co-founded by Steve Jobs, Steve Wozniak and Ronald Wayne. Apple Inc is well-known for being innovative as they kept on producing new innovations from the first Apple computer Macintosh to the more recent iPhone and iPad series.

Apple Inc uses differentiation strategy to enter a market by inserting unique features and design into the development of their product to attract potential customers and enhances their market position at the same time. This strategy is defined as a strategy that aims to develop the products or services that have unique characteristics that are preferred by the customers and are valued by them.

One of the different of Apple Inc is it reputation of protecting his product from being clone, especially after the case of Apple II clones. Besides that, Apple Inc also produces hardware and software exclusively for their product that only available for Apple products. Unlike Microsoft and Intel that sells their software and hardware to other manufacturer such as Dell. ( Joel West, 2007)

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By using the differentiation strategy, the entry strategy of Apple Inc into a market is different and innovative; this can be proven by the challenge on Blackberry in the Smart phone market in 2007. BlackBerry is the first smartphone that allow mobile email and has the outlook similar as a regular mobile phone. This was changed when Apple Inc entered the market. Apple iPhone emphasized on the use of touch-screen by having no physical keypay and customizable set of apps to be tailored to individual needs making it a unique product then.

2.0 Current Expansion Strategy

Today Apple Inc. is very well known in the world because of their advanced technology in products such as iPods, iPhone, Macbooks, Apple TV and other professional software. All the high tech products provide consumers with a better living standard in many different ways. Moreover, Apple Inc’s dominant position in the global market has changed the trend of consumer usage of electronic appliances such as in vitual communication. Furthermore, Apple also created a substantial value in highly competitive market and industry which help them to achieve competitive advantages in an industry with stiff competition. In addition, it resolves the other external factors that present difficulty challenges to Apple Inc. Therefore, now Apple Inc is known as a strong company and the market leader in industry. Now, let us discuss about the current expansion strategy that used by Apple that make the company has greater success in marketplace.

The first strategy that use by Apple Inc for their current expansion strategy is creating innovative idea that slightly different from the competitors that already exists in market and industry (Masi, 2009). In order to make the company more innovative, Steve Jobs focused innovation on competitive pressure and value proposition by stressing his management style on customer centre innovation and customer experience (What are the Apple Innovation Secrets of Steve Jobs, 2009). As CEO in Apple, Steve Jobs carefully evaluated competitive pressure and opportunity in market place by continuously pursuit customer experience innovation. He also focused their business and IT strategy on customer centre experience. It means that Apple will be more focused on looking outwards, market and business drivers rather than at the products or services that already exist. Steve Jobs focused on this strategy because the customers can help the company to understand what customers need and scarcity of the people so that he can use the feedbacks as inspiration to deeply investigate and then to create more innovative, creative and highly advanced technological product or services that can fulfill the needs of the customers. Therefore, Apple products design is always attractive and elegant compared to those existing competitors. Apple products like iPods and iPhones are good examples that show the innovation of Apple Company by creating digital lifestyle.

The second strategy applied by Apple is differentiation. Apple is using Macintosh as operating software whereas other personal computer’s producers are using Windows. The differentiation in operating software gives Apple a competitive advantage in the personal computer industry. Macbook users are satisfied with Macintosh performance because it is very energy saving where the processor will automatically “close” those programs which are not in use when it is in standby mode. On the other hand, Windows does not have such technology. Thus, Windows’ users might have to charge the laptop more often due to the battery consumption is higher than Macintosh.

In terms of design, Apple came out with an ultrathin Macbook Air which is extremely thin compared to those existing laptops. To those consumers who prefer lighter and thinner laptops will definitely be attracted to the Macbook Air. Apple does not produce laptops in various colors like Dell or Hewlett Packard to increase the choices for consumers. However, to those consumers who are concerned about technology and high performance, Apple is still the preferable choice.

In terms of applications and software, Appstore provides a platform for customers to download software and applications according to categories. It is easy to search for any application or software by using Appstore. iTunes allow consumers to categorize and download songs easily. By using iTunes, consumers can choose their preferable album cover for their songs. They can also “synchronize” and update the songs in their iPhone with a laptop. Besides that, iTunes also allow consumers to transfer photos from iPhones to PCs.

As for pricing, Apple is using skimming pricing strategy where they set high selling price for their products. However, there are still a lot of loyal customers who prefer to spend more money on Apple products. This is due to the self esteem where consumers feel good by carrying Apple products because it somehow shows their status as being up-to-date and their taste is better than others. Some customers think that Apple products are not cheap but also not high-priced products because the value of Apple products bring to them is never disappointing (Wingfield, 2011)

Other than that, Apple is using specialization strategy where they customized customer’s laptop according to their requirements. Customers are required to add in features into the laptop which can serve them better. Beside this, Apple also emphasizes customizability on the part of entertainment that offer computer-build for high performance such as gaming. Gaming plays important roles to help Apple to customize in features and specification to make the products more attractiveness and creativity (Masi, 2009).

3.0 Future Expansion Strategy

3.1 Factor Affecting Decision

Timing to Entry – First Mover Advantage

Zambia has reached high and sustained growth and macroeconomic stability over the past decade, but poverty of that country still remains high. Real gross domestic product (GDP) increased averaged 5.2% in 2000 to 2010. Inflation rate in Zambia also decreased from 30% to single digits and debts in the country also decreased sharply and the international reserves increased to comfortable levels (Goyeneche, 2012). The government now is improving the economy and the country with privatization of the industry. This also helped the industry in a more profitable way and helped the industry growth faster. This shows that Zambia country is a developing country. Therefore, Apple Inc can expand their business to Zambia. Foreign Direct Investment (FDI) is an important source of private capital for developing countries. Thus, Zambia government is supportive for the company to invest in their country by removing barriers to entry for business. Zambia managed, for the first 11 months of year 2011 jumped to $4.6-billion from $4.3-billion in the same period as last year (‘odi briefing paper, 2002’).

Risk

The risk to expand to Zambia is the country’s shortage of skilled labor and inconsistent legal system and there is a need for improved and increased investments for infrastructure. The Zambian labor force is relatively less skilled and this will cause investors to think twice before investing. The infrastructure in Zambia also gives the bad impression to the investor. If the infrastructure is bad the investor will find it hard to work smoothly and hard to link up with the supplier. (“odi briefing paper”, 2002′).

3.2 Expand to Zambia

Advantage

Large Market and Labor Force

The numbers labor in Zambia is large male (79.2%) and female(59.5%). This number means almost 70% numbers of people in Zambia are working. The labor cost in Zambia is relatively low and therefore investing in Zambia can help to reduce cost. If Apple expands to Zambia they will have a large market in the country to them, because most of the people in Zambia is teenagers who are interested in gadgets. (UNDP, 2011).

Long Term Economic Benefits

The gross domestic product (GDP) in Zambia increased from 2008 (5.7%) to 2010 (7.6%). It has increased almost 2.0% from 2008 to 2010. The economic scenario in Zambia is entering to a more stable macroeconomic environment. (Index mundi, n.d.).

3.3 Entry Mode

3.3.1 Exporting

Advantage

By doing exporting Apple’s products to Zambia may be on advantage over its competitors. Government in Zambia introduced a more uniform, lower rate tariff regime and a reduction in the average tariff level. Zambia’s tariff was set at a minimum of 20% and maximum of 40% by 1993. The import license fee of 10% was also abolished (“Zambia Country Report”, n.d.). Furthermore, in 2010, 1.4% of Zambia’s total imports were from the United States. (U.S. Commercial Service, 2011). Apple can expand and grow by going global and this potentially can earn Apple a slice of the huge global market. Besides that, through exporting to Zambia, Apple can have a less risky option compared to opening a retail store. It can also help to clear out excess production goods.

Disadvantage

Apple may have financial risk while exporting. The collection of payment period is quite time consuming than the domestic sales, and it is also more complicated. Thus, Apple must carefully weigh the financial risk involved in doing international transactions. Besides, finding information on foreign markets is definitely more difficult and time-consuming than finding information and analyzing domestic markets. For instance in less developed countries, reliable information on business practices, how about the market characteristics, cultural barriers may be unavailable.

3.3.2 Joint Venture

Advantage

The Zambian business community has a strong interest in joint ventures agreement. Local investors actively seek out the arrangements in order to overcome scarcity of domestic capital, technology, and expertise. Besides, there are also no legal restrictions which define the terms of a joint venture arrangement (U.S. Commercial Service, 2011). With the use of joint venture, it can help to build credibility for Apple. It can be associated with a familiar name that would give the business a big boost and enable Apple Inc to hold its own in the market. By using joint venture, Apple can share the risks with the venture partner and it is also a great way to beat competitors by using this entry mode. It can be said is a win-win situation for both parties.

Disadvantage

It takes time and effort to build the right relationship and partnership with another business and it can be said to be quite challenging. Apple is made in U.S. while Zambian is in the South of Africa, different cultures and different ways of conducting business might result in conflict between parties, poor integration and co-operation.

Appendix —–Countries that have Apple’s retail store and/or iTune online store

No.

Country with Apple

No.

Country with Apple

1

Albania

32

Chile

2

Algeria

33

China

3

Angola

34

Colombia

4

Anguilla

35

Congo

5

Antigua & Barbuda

36

Republic of Costa Rica

6

Argentina

37

Croatia

7

Armenia

38

Cyprus

8

Australia

39

Czech Republic

9

Austria

40

Denmark

10

Azerbaijan

41

Dominica

11

Bahamas

42

Dominican Republic

12

Bahrain

43

Ecuador

13

Bolivia

44

Egypt

14

Belarus

45

El Salvador

15

Belgium

46

Estonia

16

Belize

47

Fiji

17

Benin

48

Finland

18

Bermuda

49

France

19

Bhutan

50

Gambia

20

Botswana

51

Germany

21

Barbados

52

Ghana

22

Brazil

53

Greece

23

British Virgin Islands

54

Grenada

24

Brunei

55

Guatemala

25

Bulgaria

56

Guinea-Bissau

26

Burkina-Faso

57

Guyana

27

Cambodia

58

Honduras

28

Canada

59

Hong Kong

29

Cape Verde

60

Hungary

30

Cayman Islands

61

Iceland

31

Chad

62

India

63

Ireland

95

Indonesia

63

Israel

96

Nepal

65

Italy

97

Netherlands

66

Jamaica

98

New Zealand

67

Japan

99

Nicaragua

68

Jordan

100

Niger

69

Kazakhstan

101

Nigeria

70

Kenya

102

Norway

71

Kuwait

103

Oman

72

Kyrgystan

104

Pakistan

73

Laos

105

Palau

74

Latvia

106

Panama

75

Lebanon

107

Papua New Guinea

76

Liberia

108

Paraguay

77

Lithuania

109

Peru

78

Luxembourg

110

Philippines

79

Macau

111

Poland

80

Macedonia

112

Portugal

81

Madagascar

113

Qatar

82

Malawi

114

Romania

83

Malaysia

115

Russia

84

Mali

116

St. Kitts & Nevis

85

Malta

117

St. Lucia

86

Republic of Mauritania

118

St. Vincent & The Grenadines

87

Mauritius

118

Sao Tome e Principe

88

Mexico

119

Saudi Arabia

89

Micronesia

120

Senegal

90

Federated States of Mongolia

121

Seychelles

91

Montserrat

122

Sierra Leone

92

Moldova

123

Singapore

93

Mozambique

124

Slovakia

125

Namibia

148

Slovenia

126

Solomon Islands

149

Tunisia

127

South Africa

150

Turkey

128

South Korea

151

Turkmenistan

129

Spain

152

Turks & Caicos

130

Sri Lanka

153

Uganda

139

Suriname

154

Ukraine

140

Swaziland

156

United Arab Emirates

141

Sweden

157

United Kingdom

142

Switzerland

158

United States

143

Switzerland

159

Uruguay

144

Tajikistan

160

Uzbekistan

145

Tanzania

161

Venezuela

146

Thailand

162

Vietnam

147

Trinidad & Tobago

163

Vietnam

4.0 Conclusion

Apple Inc might be a very popular and famous brand in this current market, but will they will not stand tall if they continue to remain on the same step. Besides, Apple will also have to keep their product unique and different despite of all the challenge from other brands on different product attributes such as Microsoft and Android for operating system and also challenge from Blackberry and Samsung for mobile phones. The list of competitors goes on. Those are the reasons why Apple Inc will need to innovate from time to time and explore new market needs in order to stay superior in the market. There are still many countries that Apple has not entered and some of them potentially might prove to be very profitable. Therefore, taking the initiative to explore this new market before Apple’s competitor does will keep Apple Inc one step ahead of its rivals.

Being the first organization to sell at a whole new market will be a smart decision as the organization will have the chance to set a level of quality and price for certain products. For example, when Apple iPhone was first introduced into the smart phone market, it grabbed many users’ attention with the different outlook, unique features and brand new style. This is why Apple iPhone are able to sell at the price that they desired. Therefore we are recommending Apple to expand their brand and products into Zambia because it will not only benefit the company in the sense of increasing revenue but at the same time reducing production cost.

On the other hand, Apple Inc should further improve the product and ensure their product will able to adapt into each different country because each country will have different language and culture. iPhone will be overtaken by other smart phone brand if they do not continue producing something new, something innovative. Therefore, exploring new technology will also help Apple in the future by providing product that is not only unique but convenient to the consumers. This will allow Apple Inc to continue to expand and grow for the foreseeable future.