Customer perceived value for a apple inc customer

In this assignment I am going to argue the customer perceived value for a customer for a apple company and I will judgmentally calculate the standing value proposition of my selected company. With this I am going to argue what will be the new value proposition for my company. As we know in marketing, a consumer value proposition (CVP) consists of the sum total of profit which a vendor promises a consumer will receive in move for the consumer’s associated payment (or other value-transfer). According to Peter Duchessi customer value proposition is a business operation or marketing statement that depict why a consumer should buy a product or use a function. It is specifically targeted towards potential customers rather than other essential groups such as suppliers, partners or employees. It is a clearly defined statement that is designed to persuade consumers that one particular product or service will add more value or better solve a problem than others in its’ competitive set.

Overall about Apple

Apple Computer’s 30-year history is full of lows and highss, which is what we would judgement in a highly innovative industry. They evolved throughout the years into an firm that is very much a representation of its leader, Steven Jobs. Apple made several hugely productive product introductions over the years. They have also completely come down on their face on several occasions. They struggled mightily while Jobs was not a part of the firm.Apple reached a point where many thought they would not hold up. When asked in late 1998 which Jobs should do as top of Apple, Dell Inc.’s (DELL) then-CEO Michael S. Dell said at an investor conference: “I’d shut it down and provide the money back to the shareholders.” (Burrows, Grover, and Green)

Well, times changed. Less than 10 years later, BusinessWeek ranked Apple as the top performer in its 2006 BusinessWeek 50. Apple attributes their recent success to robust sales of iPod music players (32 million in 2005). They are optimistic about the economies of scope with media giants, such as Disney and Pixar. (BusinessWeek)

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Apple rarely produces a new type of product. Thus, instead of being the innovate , they are an expert “second mover” by better existing products. Movable music players and notebook computers are examples. Apple modifies the appeal of these products by making them functional and more stylish. They now appear poised to make important strides in the computer market and to creating a total digital lifestyle whereby the home is a multimedia hub.

Apple consumer values

It’s official and even we discuss Apple is the most valuable computer manufacturure in the Global. In the come alive of the firm’s better than evaluate profits in the quarter 30 Sept end., company shares moved up by nearly 7 percent, making the firm’s total value ofmarket $162 billion.

That point out I.B.M., is deserving $155 billion. Apple also surged last Intel, worth $156 billion, and Nokia, the most precious cell phone maker, which is worth $150 billion.

Indeed, Apple is now the 4th most valuable technology industry, after Cisco $189 billion, Microsoft $290 billion, and Google $208 billion.

Apple’s stock

Apple, interestingly, has something in demotic with other firms. They all display their power from software. Microsoft trade software in a box.Cisco, like Apple, delivers software implanted devices Google hand over software online. Cisco, like Apple, it is largely contracts to make with others.

There is key difference, too. The other three have set up dominant place in their markets, which fends off compete and keeps high margins.

Apple is a extreme No. 3 in PCs. This acts upon personal music players, So it has a over much more moderate share if you define the customer electronics market broadly.

Still, Apple holds margins via a collaboration of marketing and innovation that leads customers to prefer its brand. That is a best achievement, but it is difficult to maintain that progress than an (O S) monopoly. An investor, one question is whether company can benefits its momentum to itself to catapult a business operation that doesn’t depend so much on each introduction of successive product .

To do so, Apple will progressively discover itself battling with the 3 other firms at the head of the technology pole. Microsoft think that it had over come firm in the operating system (O S) a ten years ago, to determine its equal has revived, stronger than ever.

If combat is the server-based applications is delivered on browsers in the future, the combate pits Google, Microsoft Apple and the collective pressure of software of open-source against each other.

In that Global, Apple has choice to build: application of work and life will move onto the Web? More significantly, will it contend in the business computer market, where an insurance firm the C.I.O. purchases desktops by the truckload?

Price is more essential than styling there. Steve Works has not liked commodity businesses. He said he did not choose to do a trade with a cell phone carrier either, but he establisha way to carry his nose and cut a rather advantageous trade with AT&T company. Who knows that if he will go after Microsoft processor business market? A safer predict is the real deal between some form of Linux ,Windows and with HP and Dell, the No. 1 and No. 2 computrs makers, both flavours of building machines and Cisco making the routers.

Other, perhaps larger, combact is over who will control the Global of connected communications and entertainment. But Microsoft has been working on cellphone software and communication media software from the last ten years. And Google is vital player in providing knowledge all about world by their software, video conferencing and distribution and other device on which it can display advertising.

To brings us to Cisco, the firm desire to get out much and some fun. This bought several social networks, side by side Linksys, home network and Scientific Atlanta, the company making the cable set up box .. And company announced that it will improve an “entertainment operating system.”.

Existing value proposition

Apple has positioned itself to a certain type of customer, wealthy people, innovators, people with good jobs, good lifestyle, etc. If Apple targets the poor, the trendy guys will stop buying Apple. This would hurt the brand more than the increasing sales because of lower prices, and in good times, where everybody has more money. Apple would have the problem that they cannot raise prices, because everybody expects a cheap Apple.

On the other hand, there are no really substitution products, there are no similar machines than we can buy to have the same user experience, PCs are the same competition to Apple as Ford is to Mercedes. PCs are the everyday workhorse for the masses; Apple is the elegance for the minority.

Geographic

Apple developed its working business principally on a basis of geographic. Apple comprises the country Europe,Japan America, Europe and Retail of reportable operting segments. Currently Apple operates its own Retail segment stores in the Canada,United State, Japan and the United.Kingdom. Apple operating other retail segments include Asia-Pacific (Australia & Asia). Every operating segment provided same Software and Hardware products and same services.

The largest geographic marketplace for Apple is the United States as it accounted for 60% of the company’s net sales in 2005.

Market Segmentation

One way in which a business will analyse the possible market for its product to consider the market segments at which the product may be targeted. Markets are segmented because of the variety in certain markets. Market segmentation is used to target a certain segment of the public and make them want to buy their product (Doyle and Stern 2006). Apple use carefully segmented markets to differentiate the different types of marketing to attract each segment to purchase their product. This is evident in the way they target their younger segment by selling cut-price apple machines to schools in the USA.

Target Markets

Educational Market

Apple has main concentration on the use of technology in education sector for the past 25 years. Company promises to delivering tools to help stucents learns and educators teach . The operational integration of technology used in student presentation thought and ideas,achievements of students in higher levels into classroom instruction, support collaboration, access of information, and the expression.

The company make solutions that can be better way of delivery curriculum delivery, new ways of research conducting, and faculty of staff or students and professional development opportunities. They had designed a range of products and services to help schools maximize their investments in the needs for education customers. (iBook & eMac)

Creative Professional Market

This market constitutes one of Apple’s most necessary markets for both software and Hardware products. The company i.e. Macintosh is the party who developes to give software and hard ware solutions to Apple Creative consumers used the firm’s components for large variety of activities including digital video and film production and editing (Digital Video, Film Special Effects & Graphic Design).

Apple also offers various Software solutions to meet the needs of its creative customers. Apple’s Operating System, Mac OS X, incorporated powerful graphics and audio technologies and features developer tools to optimize system and application performance when running powerful creative solutions provided by Apple or third-party developers.

Benefits

Apple uses a differentiation strategy that tells the company development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The value added by the uniqueness of the product may allow the firm to charge a premium price for it. The firm hopes that the higher price will more than cover the extra costs incurred in offering the unique product. Because of the product’s unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily.

Apple’s Competitive Strategy:

Apple has continually been at odds determining its strategic focus. When they began in 1976, they were market makers. They employed a Differentiation Strategy. They filled a need that was overlooked. They developed a computer for personal use and sold it at a premium price. They were successful because they were first to market and because onsumers had limited knowledge about computers of that time. The Buyers of computers in 1984 were

consumers and business managers who were most often unsophisticated first time buyers. Purchases were limited to a few computers at a time and placed great emphasis on service, support and compatibility. Price was secondary.

When Sculley held the CEO title, 1985-1993 the company’s maintained a Focused Differentiation Strategy focusing on desktop publishing and education while charging a premium price. As competitions prices crept down Apple’s premium became too high. Apple could either keep selling to their installed base or in win new costomers. They chose new customers and pursued a Cost Leadership Strategy by becoming a low cost producer of computers with mass market appeal. This focus was continued through the Spindler term at the helm, 1993-1995. When Amelio became CEO, 1996-1997, Apple’s competitive strategy became a Differentiation Strategy where they would demand a premium price, because it was an Apple. Amelio tried to position Apple as a premium brand with little success. In 1997 Jobs once again retained his seat as CEO and changed the competitive strategy to a cost leadership strategy once again appealing to the mass market.

The Customers:

Prior to 1990 Apple did have some advantages. Its design and operating system was easier to use and had plug and play ability, though as time passed the customers changed. Customers did not require simplicity as before, because purchasers had become more experienced with computers. Buyers in 2002 were largely business, IT managers, who were very knowledgeable about computers. They would often buy computers in bulk to drive the price down and in order to meet strict budget constraints.

In 2001 the market was becoming saturated, slowing growth was intensifying competition on price. The market no longer could support the premium price Apple demanded.

The Market:

IBM PC was a relatively open system that other manufacturers could clone. With many clones becoming available its operating system (Microsoft MS DOS) became the standard. Multiple companies producing similar compatible computers resulted in an increase in software programs for the MS DOS operating system. At one point IBM tried to build a more proprietary machine and not only lost a significant amount of market share, but its claim of the standard bearer of the industry. This opened the flood gates for the non-IBM Wintel computers. Apple’s software offerings were limited. In 2000 88% of the total software was for Windows, versus 5% for Mac. The Mac remained more user friendly with the Mac’s Graphical User Interface (GUI). In 1990 Microsoft offered windows 3.0 which incorporated GUI. The Mac no longer had the upper hand. This was Mac’s only advantage over the Wintel machines. With its proprietary design, lack of programs and same easy to use operating system Mac could no longer demand a premium price or appeal to the mass market. It had lost its last competitie advantage.

Apple computers relied on proprietary designs that only Apple could produce. As a result Apple had a higher cost structure, R&D costs were as high as 8% of sales versus 1.5% to 2% for their competitors. The competition cut R&D spending as components became more standardized. With reduced R&D costs the competition could then focus on improving manufacturing processes, distribution and marketing to give them more of a competitive edge.

Mac should choose a focused differentiation strategy or as Michael Dell said “…shut it down and give the money back to the shareholders.” They should narrow their focus to two market segments. Since they already have a foothold and a loyal following in desktop publishing they should concentrate their efforts in that market. Their share of the educational market has continued to dwindle from 26% in 1995 to 13.4% in 2001, but it provides the largest contribution to revenue, 35.4% in 2001. Since the Education and desktop publishing markets have been bundled together througout Apple’s history, I believe they should focus on those markets and appeal to this niche rather than the mass market.

Jobs (First term) and Amelio both persued a differentiation strategy. It was successful for Jobs, as mentioned above, mainly because he market was new and there was not yet a standard for the industry.

By the time Amelio took control the standard of the industry was set, and Apple computer did not do anything better than the competition. This strategy was not effective.

Both Sculley and Jobs (In his second term) chose a cost leadership strategy. This strategy would be right for Apple if they were competing with the exact machine. Because their machine is not the “Standard” it takes more than price reductions to woo a customer and lead the market.

Though Apple has outsourced Mac manufacturing and reduced inventory to two days worth of sales. Unless it can differentiate itself and actually do something better, customers will not purchase Apple because it is not the standard in the mass market. If compared to home video players, the market has switched to VHS, its going to be hard to push a Betamax player even if they were offered in pretty colors.

The buyers have changed dramatically. The primary driver of industry change is growing customer sophistication (a product of greater product maturity) and a fundamental change in functionality, which leads to a need for corporations to change their approach to purchasing. This has resulted in strong buyer power.

Rivalry

The industry is highly concentrated.

Open standards: PCs are commodities: producers compete on price to margin pushing down

Company fragmentation: There are no leaders in markets to provide stability price

Very high rapid technology obsolescence

Powerful buyers, with greater sophistication

Potential entrants

Technology: Assemble computers with a screwdriver or just snap the parts together. Not really high tech.

Components: Standardized components are widely available

Plant/location: Distribution can very cheap, over the Web or through a classified ad.

Customers: Who would buy these PC? Price-sensitive customers; knowledgeable customers who realize that computer’s are a commodity product; buyers looking for access to local service. Remember PC’s without national brands make up almost a quarter of the market in North America and 50% in Europe and Asia.

Substitutes

Network computers

Personal digital assistants, smart phones (primarily for calendar applications, address books and e-mail)

TV set-top boxes

Video games consoles (e.g., Sony Play Station)

Summary: Existence of substitutes could push PC prices down further and reduce growth of demand. Average price of most of these substitute is roughly $300

Compliments

Applications: PC software prices have come down while software functionality and the number of titles have increased; all of these developments have increased customers’ willingness to pay for PCs

Suppliers

Commodity suppliers: Suppliers of components such as disk drives have no real power over PC manufacturers. Intel/Microsoft: together, Intel and Microsoft earned almost $20 billion in 2007, and about $9 billion in 2008. This is because there are high barriers to entry. Established standards, start-up costs and established brands names. (Intel, Windows)

New value proposition

External Environment

The company has a very fast growth. Daily new and advanceds products spread over markets. From laptops to mobile phones. Company is a new product advertised almost arround week. The comanies which areleading players in the IT industry are Dell, Compaq, Apple, Acer and HP.Due to standarisation Apple is a advanced entry barrier of the computer components. If any other new players desire to enter into this business, company need to have a distinguish strategy form the existing industry. Also, a high acquire curve survives its means the time taken by customers to get habituate with the new model product. The existing models names make the entry barriers high depth. The distributors of this Apple company are very coercive and powerful.The companies like Microsoft and intel are producer of Operating Systems OS and microprocessor are handful for industries. These distributors are hard to shift due to dominant manufacturing of such components. There is always threat of integration by the suppliers since the components manufactured by these suppliers are highly educate and other components necessary for the PCs production are not so aspirants to imitate.

There are lots of customers in this market can be classified as education institute, government offices, small and large scale firms business operations, homes,ITand BPO’S corporate centers etc.Since buyers are not concentrated they have less negotiate power for models and prices. Customers do have a high shifting cost which disapprove them from buying a same product from other supplier. But there are lots of substitutes accessible which makes buyers powerful to decide from the available options and because they are very price delicate. The consumers always have an advantage of selecting the good electronics items which is matching to the taste and need. That company has a fast customer base and industries have to be consumer oriented and should interduced according to their demand. Apple aim customers those are “technology grasp”, who appear for something uncomparable. Highly speciallized products like iPhones,iPods and PC’s (Mac book) are available in large range in the market. Customers want to purchase company products as they “icons of the digital company”. Pass away barriers for this firm are high. There is a lot of requirement to establish a company inner the electronics or PC firms. There is a numbers ofchance of move becoming almost impossible due to interrelationships between these firms are most important. All the products are not made by same industry.

One company have depend on another company in the industry for manufacturing a final product ready for the consumers. So it is very difficult if one company leaves, leavings the other dependent company in dilemma. Technological changes in the firm are very vast. Daily large numbers of a new version,latest application or a new product models for the exciting products is available. Customers are very demanding and it makes it essential for the firms in the same fields to contendwith each other and makes the top mover or the best as a mover in carry out a latest new innovation. Young and mature generation in particular is like to show the latest products in fashion or in trendy statement They expect industries to gave them something which is disparate than what others have. This is a threat and an opportunity when these comes to fast technological changes. Industries have to move rapidly than the imagination of their buyers and the competetitors.

Internal Analysis

Strengths and Weaknesses: Apple making high a difference in the computer industry through itsstandard applications and progressive product design models. Macintosh has been the coercive and powerful tool to make the success story of the industry. The “integrated system” of computer was its distinguish strategy which represented Operating System (OS) of Macintos. Apple performance has outshined as a smart company by new step in “Purchaser Eletronics Industry”.Most innovative products like iphone and iPods have been very flourishing in latent music market. Consumers have a great trust on industry elegant models product and which are always look headfirst to be loyal to the brand. Company keeps it Price strategy unique from competitors which gave entertainment and other computer components at low cost. The high amount prices (especially Computer) keep it find to high income level to limited income people.Apple computer releases with IBM Computers and Microsoft Office, which actuate the research and development at the industry. As the industry has a large product line, each new product builds the last one dull against it and release of cannibalization may be a conclude of bothering the products generation of expected revenue.

CORE COMPETENCIES

Apple has been the top leader player of the Customer Electronics industry and has maintained a different image in PC production and Music too. The Core competencies liable behind the success are primarily the “Unique resources” and “Differentiation strategy”. This offers the best create incomparable software and hardware in its product models.”Plug and Play” solutions has been given by Apple.I Pod has a immobilized design of hard derive based player has made the “digital age of the icon”. Company has a “Value Creation” in its believesand “Think Different”motivation .The famous product models like iPhone and iPod cannot determine its sustainable combative advantage because the company has imitationed and aggravated rivalry is also a threat. Innovation plays a role to remain the leading industry in the dynamics of vast-growing markets, and company definitely can withstand the shift with its innovative skills. Industry has been able to command a superior in market and obtain above average returns to its innovation and distinguish of technologically superior products.

Strategically Alternation / Conclusion

Apple’s strengths can be evaluate to many factors. First, Apple’s products and premium-price distinguish strategy in their market strategy have demonstrate to be necessary to Apple’s previous and play a key role to proceed the Apple’s future. The result of their last success as recognition as innovators, Apple has force the attention of many companies whom have acknowledge Apple’s prospective for increasing strategic alliances.e.g., The company successful collaberation with AT&T, the opportunity to successful their I iPhone’s technology provided by Apple. Company was lowering the prices of iPhone’s price for customers, side by side high grade network coverage for iPhones. In addition, company participate into partnerships with Google and You Tube in order to provide “search, video features, and music” for their iPhones users with cutting edge. These partnerships allow company to further distinguish the value and product for users. Simultaneously, as an innovator and creator of easy to use edge products proceed to strengthen the firm by keeping firm on the radar of the company technologically grasp customers of company reputation, side by side gave support forcompany product strategy differentiation.And some weakness or drawback as a result of the company to selecting to employ a component differentiation strategy. First, Apple’s choosing of a product strategy differentiation and price premium price also lowering the company market share. Consumers do not recognize the value that Apple’s try to create for their customers. Price erogenous customers are reluctant to purchase the firm’s products. Simultaneously, buyers seeking highly produced PC’s may not select the company e.g., Dell, the Apple’s one of largest competitors and ranked one in top four computers manufacture, offers consumers array of bundling options when buying a computer. This allows consumers to select software and hardware parts side by side somewhat manipulate of the computer price. Instead, the company offers their PC’s buyers packages with low customization options.And Secondly,Apple a problem for exists in their reliance on Apple’s Chief Executive Officer( C.E.O). Steve Jobs. C.E.O. has been a head force at firm, and saw the dull financial statement in 2002 acting as Apple’s savior. The company C.E.O.Steve Jobs was responsible for firm’s introduction and expansion one of Apple’s most profitable components, the IPod,models product. A question for Apple could continuosly operate to manage as they do presently in the absence of Steve Jobs .There are alternatives to Apple’s present problems.

Apple is continually working to manufacture components with improved compatibility, allowing their consumer more flexibility and improviing the easeof use of their products components. By continuing comparing with price differentiation, premium price and retail strategies .In the Electronic industry as an innovator Apple can continue upload their reputation and strive .