Apple is often mentioned a “cult brand” which makes different and takes risks also. The risks, on the other hand, have paid off. To illustrate, the iMac and iPod, have more than compensated for such failures. As a result, Apple has some of the most loyal customers there are and Apple brand worth of 13.7 billion dollars following brand consultants Interbrand Thursday (Ed Sutherland 2008).
Apple knows that getting customer happy is better than anything else. They do not see simply “customers” are customers; Apple inspires fans and followers more akin to a rock group than a computer company and they will discuss the brand in great detail on the internet forums. The company demonstrated the power of viral marketing with Iphone to fans that can help to promote this product. Just see what happen when Apple and viral marketing come in, Apple believed that introduced new product also meant create a new culture. That is why Apple has a string brand name and image that will be difficult to compete with and Apple’s constant innovation and product improvement make it difficult for other firm’s to stand out in the eyes of the consumer.
- Innovation products
Increasingly, corporate competitive success is hinging upon the product innovation. Innovation is a process by which new information is created, and it is this information that is embodied in the product. To understand this process we conceptualize human beings not merely as information processors (Galbraith 1973), but more importantly as information creators. Inherently, innovation is the process by which new information emerges and is concretized in a product that meets human needs.
According to Business Week, innovation today is “much more than new products.” Innovation is also “reinventing business processes and building entirely new markets that meet untapped customer needs.” The ubiquity of the Internet and globalization of the business expand generation of new ideas. Innovation is then “selecting and executing the right ideas and bringing them to market in record time.”
Apple Company is the World's Number One Innovative Company, four years in a row according to Business Week’s 2008 list of the world's 50 most innovative companies. Business Week proclaims "their creativity goes beyond products to rewiring themselves." Business Week ranks the innovative companies based on the responses received from over 1,000 global executives of the largest global corporations; survey questions include innovation metrics on process, product and business model innovations. So how have they can gain such huge success and became a giant in the electronics industry? We have to admire deeply their products innovative strategies.
Apple has created great innovations beginning with the first Apple computer in 1976 Graphical User Interface (GUI) along with the popular Macintosh introduced in 1984, the reliable PowerBook introduced in 1991, the PDA named Newton that created a new industry of handhelds in 1993, the new millennium revolution beginning with the iMac in 1998, the new iBook hot on the heels of the iMac in 1999, the iPod that put an oomph in the MP3 players and essentially changed music as we know it in 2001, iTunes software and Music store service that changed the Music industry business model and made it easy for fans to listen and buy music piecemealed in 2003, iPod mini, iPod (U2 Special Edition) and iPod photo in 2004, iPod shuffle, iPod Nano, iPod with Video and Mac Mini in 2005, the new iMac with Intel core Duo processors and the new MacBook with Intel processors in 2006.
- Excellent leadership
Leadership is vitally important at all levels within the company, from main board to the shopfloor. Leadership is the moral and intellectual ability to visualize and work for what is best for the company and its employees. The leaders directly support the value-adding activities, which is central core of the organization. Ability of leaders influences survival of company.
Steve Jobs, the co-founder is the key success of Apple. Steve Jobs is the right man to lead Apple. There is never been anyone at Apple who had impact that Steve Jobs has had since his return. He is a demanding, visionary, responsible and genius leader. Steve Jobs is Apple. The company was founded by him as leader and then the company fell on its face during the middle years of history (1986-1997) when they lost him. When he came back to Apple as the role of CEO in 1997, his return has made success for the company.
Firstly, Jobs made the evolution of Apple management. He knew that improvement was impossible without the change of leadership so he immediately took action. He quickly fired all but two of the previous board members and installs new ones. He made change in the executive leadership and the company’s advertising agency. He issued discipline on Apple about the quality that company had not had many years. The company that used to be known as the “ship that leaks from the top” was soon transformed into a tightly controlled, team – oriented machine. The evolution of Apple management with the change of leaders and the issue of the working regulation made the workers’ belief and loyalty, made Apple’s workplace to be more effective with the co-operation of workers. Also, the new discipline help Apple attract to more new brightest workers who bring Apple to success by their creativity.
Steve was visionary and responsible leader. When an independent contractor and hardware expert named Tony Fadell approached Apple with an idea of an MP3 player and a music sales companies, Jobs got it, even through other companies had reject it. Job is the responsible leader when he involved with the iPod is an indication of his leadership. Jobs paid 100 percent of his time involved in iPod since it started. He was involved in every single aspect of project to make it good as much as possible. Jobs understood what will be the effect that the device could make. It was consistent with his vision for creating a digital lifestyle. The launch of iPod made the most incredible success of Apple through 26 years of Apple’s history. iPod sales were phenomena and have passed the company’s computer sales. Apple was making profit while other technology companies suffered. In the October of 2001 Apple began introducing iPod and in the spring of 2002, Apple sold more than 10 million units. In the end of 2005, Apple held 75% of the world market of digital music player
- Supply chain management
Apple retail strategy appears to be a key factor in its success. Today, Apple operates more than 250 retail stores in nine countries and an online store.
Retail stores were located in high traffic place like malls to attract customers’ shopping in the environment. On May 19, 2001, Apple opened the first official Apple Retail Stores in Virginia and California. The first two retail locations welcomed over 7700 people and sold the total of $599000 of merchandise during their first two-day weekend. Ever since the first Apple Store opened, Apple has sold third party accessories. This allows, for instance, Nikon and Canon to sell their Mac-compatible digital cameras and camcorders inside the store. On July 11, 2008, Apple launched the Apple Store to sell third-party applications for the iPhone and iPod Touch. Within a month, the store sold 60 million applications and brought in $1 million daily on average. The Apple Store could become a billion-dollar business for Apple and help Apple had become the third-largest mobile handset supplier in the world due to the popularity of the iPhone in 2008
The success of Apple also goes along with the opening of online store. In 2003, Apple's iTunes Store was introduced, offering online music downloads for $0.99 a song and integration with the iPod. The service quickly became the market leader in online music services, with over 5 billion downloads by June 19, 2008. In February 2008 the iTunes Store became the second-largest music retailer in the U. S., right behind Wal-Mart. Almost everything Apple makes transcends gender, geography, age, and race. An Apple Store is a demographic melting pot, with computer games for kids and a Genius Bar for their parents and so much cool stuff to touch that it's a magnet for young people
Chapter 3: Insights
Apple is a technology brand like no other. Company understands that people choose brands based on emotional responses. With the edible name and the products “make you want to lick them”, a PC might me a machine, but it not sold to robots. Whereas, you can bet Dell Company never said that about their computers. Apple’s computers, such as the legendary iMac, are design icons. It has taken the fear factor out of technology by giving it a personality. In my opinion, Apple holders, they are not using their computers that are simply another item of furniture; it might as well be pleasing on the eye.
Apple products inspire strong emotions because the brand defines the identity of its customers. Holding an iMac, it seems like owning a Ferrari car says something about you. It like all cult brand, a collective individuality, people want to be different, but they want to belong.
Therefore, build expectation or forecast, impulse the holdings growth base on company brand name and increase productions investment. MiniCooper of BMW is one of similar example. After promulgated about this car, the expectation of market increased dramatically and distributors of BMW got so many orders from future customers who want to own this car even before seeing it. And the order happened even before new product comes to the market.
Ten years ago people are walking around with Sony Walkman, today they are using Ipod. May say there is no other tech company that possesses the kind of mind share and respect Apple does. Apple has effectively taken the coolness factor to a max. They know what a good looking product should look like and they have a good handle on what the world wants.
Moreover, the key success factors for Apple would be the extent of their product offerings. Competitors such as Dell are now also offering peripherals, and MP3 players, but Apple has the strong brand name and innovation that is difficult for the competitors to overcome. Apple is the oldest hardware manufacturer, and has a long history of improving on their current products while constantly developing new ones.
From Apple I personal computer to iPhone for over 30 years, Apple Company has introduced a series of innovative products that changed the electronics industry, of which the best known are the Apple II, Macintosh, iPod and the iPhone. Over the past decade, there is a belief in Apple’s culture that is on the absolute belief in products innovation. The company has combined product innovation with industrial design and clever marketing to gain a reputation far out of proportion to its size or market share.
We can say that any product from the Apple wins the market wherever it appears although their price much higher than others. Such as compared to earlier generations of cell phones, the main difference in the iPhone’s features was the screen. The iPhone featured the largest screen (8.9cm diagonal, 320x480) of any standard-sized cell phone. To make room for the larger screen, the phone deleted a dialing keypad, and instead uses a touch screen for dialing and other input functions. Under this screen was a stripped-down version of Apple’s Unix-based OS X operating system, with an iPhone-specific user interface that’s claimed to match the ease of use of the Macintosh and iPod. Apple’s iPhone innovation strategy is of huge importance to Apple, not only occupy the biggest part of market share, but also marking only its fourth industry entry after personal computers (1977), PDAs (1993) and portable music players (2001). Many of the strategies are dictated by the core competencies that the company has acquired over its thirty year history, especially in product marketing and innovation. Apple incessantly to invest substantial funds to research and development new products so that their products become a fashion trend and influence more young people uses them.
In addition, Steve Jobs is the key lead Apple to success, who is the excellent leader. He is a encourage leader who keep his eyes and ears open and had the courage to seize new opportunities as they come along. “Think different” help Jobs make his products unique and available to the market effectively. If you dreamed of changing the world, Jobs was out to prove any way he could do to satisfy your needs. Jobs work to ensure Apple a place at the top of market next coming years. He did not like other previous CEOs only focus on sales and financing. An open mind and ability to put new twists on old technique was one of the key distinguishing factors between Jobs and his competitors like Dell leader or IBM leader. In 2001, while other computer manufacturers were pursuing PDAs, he did not follow this, he decided to turn Apple from just only focus on computers in the past into focus on digital music player market. "The place where Apple has been standing for the last two decades is exactly where computer technology and the consumer electronics markets are converging. So it's not like we have to cross the river to go somewhere else; the other side of the river is coming to us", Steve Jobs said.
Finally, retail stores can become the key success of Apple because it can meet customer satisfaction. Unlike many other companies' policies, where consumers cannot even talk to tech support if they are out of warranty or they do not have an extended support plan, any Apple customer can bring a machine into the store and get a free diagnosis. Customers must, of course, pay for repairs if they have not purchased the AppleCare extended warranty.
We can identify that Apple retails are successful as we can compare Apple store to other companies’ store. Apple stores are attractive to customers. Other companies create the store quite small and not colorful while colorful Apple stores are set to be around 6000 square feet and will carry Apple hardware and third-part software. Also we can recognize that in Apple stores, customers to avoid confusion over what the rights they choose with Apple consider 6 best options of third-party products in each peripheral category: 6 cameras, 6 camcorders, 6 mp3 player, and 6 handheld organizers.
Chapter 4: Recommendations
- Current problems of Apple
There are some competitive advantages of Apple: Firstly it is cult brand names, Apple spends a few hundred million a year on advertising and has one of the most recognizable name brands in the world. Secondly, it is new product pipeline; Apple is a pretty good new product company. In Apple, there are over 2,000 folks in our engineering groups who work on new and exciting products. Thirdly, Apple has CEO, Steve Jobs who is excellent visionary leaders and work to ensure Apple a place at the top of market next coming years. The supply chain management also is the Apple big advantage. Apple is one of the best companies in the world at supply chain management and logistics. The retail stores would be viewed as extra warehouses in the current system, so there would be one supply chain group for the whole company with the special design and effective staff and operation. Furthermore, Apple has the stable finance statement with over $4 billion in the bank; the company has the necessary financing to expend the product system and marketing, retail strategy.
However, as we know that the computer industry is one of the fastest growing industries globally. Globalization itself has increased competition against each of the computer companies to strive their best towards their target markets, to have customer loyalty and gain competitive advantage. Due to this reason, large and the “top of the rank” computer companies like Apple continuously keeps on increasing its research and development, which in turn forces them create new markets and large quantities of its products to fulfill the demands of its target markets.
A risk associated with focusing on the international market is again, unpredictability. Just as political changes and consumer taste can change here in the United States, so can it around the world. In the international market, it may be more difficult to predict and then recover from.
As following “cult brand”, Apple has taken a risk on practically every product it has made and sometime, this has not paid off. For example, the Apple Newton “personal digital assistant” failed because of the remarkably for an Apple product makes customers confused, even Apple also seemed confused about the function of the product when ran adverts “ What is it”. Moreover, the risk in Apple using the broad differentiation strategy is that competitors can imitate what they are doing, and also that consumer’s tastes can change.
Continuing the strategy of not licensing MacOS to Orriginal Equipment Manufacturer (OEM), Apple had launched Macintosh which is a promise of making its position strongly and gaining proprietary benefits. Yet, Apple did not realise that Microsoft was a close follower and ready to launch the Microsoft Windows which had similar characteristics to MacOS and would reduce the point of differentiation of Apple’s Graphical User Interface (GUI) that Apple intended to use for gaining superior benefits (Apple Macintosh was launched in 1984; Microsoft Windows was launched in 1985). The strategy of not licensing also reveals that Apple overlooked the importance of speed in using other PC manufacturers’ distribution capability to bring the innovation to market. As a result, the MacOS failed to take off as quickly as Microsoft Windows. Furthermore, the strategy of not licensing constrained the growth in the installed base of Apple machines, lowered Apple’s capability to compete and limited the potential to create a business platform whereas Microsoft could create both technology platform and business platform. In term of pricing strategy, the use of the low price licensing strategy by Microsoft enabled it to achieve adoption for a variety of manufacturers and hence to create a virtual standard. The self-reinforcing effect was evident in that the pursuit of low price licensing strategy to the PC manufacturers led to the growing installed base of PCs running Microsoft Windows operating system. Once, Apple has lost competitive advantage.
According to many analysts, Apple has no product blockbuster to make after the launch of its iconic device 3G iPhone. Although, Apple had made a revolution in the Smartphone market, its revenue is not as high as Black berry. RIM ranks the top position and make a further distance to Apple. It is likely true that Macbook Air had announced as lightest and slimmest laptop in 2008. Consequently, this year’s Trade show was witnessed as no big unveiling. In addition, Jobs is also an elite products developer whose name is on the patents for iPhone and iPhone 3G smart phones. This would make pressure on Apple whether it can keep coming out with popular product like iPod and iPhone because some fear that lack of clarity would affect the company in many ways. Furthermore, there will be a required margin of differentiation in order create separate needs and target markets.
Finally, one of the biggest challenges for Apple as well as the interim CEO is Steve Jobs. Many people say that Apple is Steve Jobs who is an excellent leader. During almost 33 years since 1976, we can see the fervent devotion of Jobs for his company – the Mac faithful, and recently are iPod and iPhone cult. These are the reasons of distinguishing Apple products from others competitor. Once in case Jobs products are ineffectiveness or he is not back at the helm, analysts fear that share price will be tumble.
A tough time for Apple has been not only the sudden absence of Jobs but coming with the troubled economy in America. The economy has fallen far enough, long enough that consumer demand and expenditure become extremely weak. According to a recent report from research firm IDC, Apple has decreased from third to fourth rank in the US computer market share. Apple’s share of the US computer market fell to 8 percent during the fourth quarter of 2008 from 9.5 percent in the third.
- Recommendations
The concern is that what Apple should do to overcome these problems?
There is a trend toward the notebook computer and away from desktops PC’s. Apple may develop and focus on their version of the laptop in order to keep up with this trend. Notebook sales have been very strong and represent a large contribution to income. Apple must continue to develop new products as well as improve on their current products in order to remain competitive and achieve growth. They must also be able to retain customer loyalty which has contributed to their success.
One mention relates directly to the iPod and iTunes. Currently, Apple is leaving money on the table, so to speak. Apple has also been under pressure from the music industry to increase prices on iTunes. They might have to completely reconsider their pricing strategy in order to try to satisfy consumers as well as the music industry. Particularly, for downloading songs, consumers have to pay $.99 for a song or typically $9.99 for an album through iTunes. That is why there is a big amount of consumer not interested in that. On the other hand, other competitors of Apple give good offers for their consumers who can download free many songs they would like.
With this adaptation, Apple could aim to attract more new consumers and expect that they would be interested in other Apple products in long term. Hopefully, in the next year, consumers will be satisfied by new products which are considered as further and longer paces than its rivals. Furthermore, with very low market share internationally, there is plenty of room for growth; thereby Apple should implement internationally strategic plan. Hence, the company could exploit the potential market segments such as China, Vietnam, and Thailand. Apple seems to have nailed it when it comes to the MP3 player market and can possibly create a strong brand name from that in the international market.
Chapter 5: Conclusion
In technology industry, Apple can be called as a leading computer and entertainment products nowadays which is still able to make great money on their excellent products. In order to continue with rapid growth both on American soil and beyond, Apple may focus on distinguishing themselves with top of the line products and services. Apple has seen success and growth in the past two year in the architecture, engineering, and construction industries. Basing on all advantages in the whole market like that, Apple is more and more successful when continue to push more innovation products to the market.
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