Apple Corporation Case Study

COMPANY BACKGROUND

    Apple Inc., a California corporation established in 1977, designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple Watch, Apple TV, a portfolio of consumer and professional software applications, iOS, OS X and watchOS operating systems, iCloud, Apple Pay and a variety of accessory, service and support offerings. The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and value-added resellers.

SALES OVERVIEW

1. Net Sales

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1. Net Sales by Operating Segments 2015

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1. Net Sales by Product 2015

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(All data are from Apple Annual Report 2015)

KEY SUCCESSFUL FACTORS

• Product differentiation and technological innovation

1. Formidable competitive advantages through vertical integration: iOS operating system

The vertical integration provides control over the entire user and provides lock in. Apple’s sustainability market share successfully connect its devices from each other or process from hardware to software which facilitates higher customer loyalty. Apple builds sustainable competitive advantages that are hard to replicate.

1. Product differentiation creates high barriers to entry：

Product differentiation based on manufacturing its own personal computers and software. Apple has done a great job through effective innovation with its three core products, computers, personal media, and mobile phones. Products are comprised of Mac, iPhone, iPad and iPod compatible products, including application software, printers, storage devices, speakers, headphones and various other accessories and peripherals.

• Brand Equity

1. Apple’s sustainable competitive strategy focus on building strong customer loyalty by meeting their customer needs more effectively with their products innovations, and unique designs. This competitive strategy has advantaged Apple apart from rivals and has kept them in front of the competition in new products introduction and on the updates of existing ones.
2. Apple’s concentration on the importance of aesthetic values and user friendliness has allowed them to maintain a loyal following of consumers that have so far overlooked premium pricing and interoperability issues, (Hoovers)
3. Apple reclaimed the title of ‘world’s most valuable brand’ in the 2015 BrandZTM Top 100 Most Valuable Global Brands, with brand value to $247 billion

• Customer-oriented pursuit and culture

Apple is committed to bringing the best user experience to its customers through its innovative hardware, software and services. Apple’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and seamless integration. The company's product strategy is based on customer satisfaction, with the iPhone, Mac, iCloud, iTunes, and the Apps Store all playing key roles.  Even the distinctive feature of each of Apple Pay and Apple Watch remains the customer experience of an elegant user interface and simplicity of use.

• Distribution channels

1. Apple builds and expands its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience. In general, the company uses a selective distribution strategy, which involves some degree of exclusivity that could limit market reach. Apple authorizes sellers to ensure control over this component of the marketing mix. 
2. Apple Stores: The very successful Apple Retail stores give prospective customers direct experience of Apple's brand values. Apple Retail visitors experience a stimulating, no-pressure environment where they can discover more about the Apple family, try out the company's products, and get training and practical help on Apple products at the shops' Guru Bars. Apple retail staff are helpful, informative, and let their enthusiasm show without being brash or pushy.

SWOT ANALYSIS

Strengths Analysis:

• Market Diversification

A wide variety of products: mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications.

• Manufacturing both hardware and software

The combination of hardware and software manufacturing enables Apple to control design and quality so that it appeals to the functional uses and aesthetics required by consumers.