Strategies For Apple To Penetrate And Survive In The Competitive Market Of Consumer Electronics

Uniqueness in Product Design and Innovation

1.Critically analyze and discuss the strategy adopted by APPLE to penetrate and survive in the highly competitive market of consumer electronics.

2.Based on the B301A course Material and your understanding of Strategy, Critically discuss what Nokia could have done differently to sustain its Initial Dominance in the Technology Industry.

This essay seeks to critically analyze the strategies that were applied by Apple in venturing into the consumer electronic market. The consumer electronic industry has many players and it is highly competitive. The level of competition in the industry usually discourages many new firms from entering the market. Apple however took the risk step of venturing the consumer electronic market with the launch of iPod. The decision proved to be a major success with the company selling millions of mobile handsets since starting production of mobile phones. Currently, Apple is the market leader when it comes to high end mobile phones. The company is also leading online download service provider with the iTunes brand (Armstrong, Denize &Kotler, 2014). This essay analyzes critically the strategies that the company put in place in order to venture the market successfully and survive for all those years.

1.The market success of Apple in the consumer electronic industry can all be credited to strategic management by the organization. The company put in place a series of strategies that worked harmoniously to conquer the consumer electronic industry which was originally dominated by Nokia. The Apple Company used the following strategies to penetrate and succeed in the industry:

The company was able to design its products in a very unique manner compared to the existing industry players. This gave the company a competitive advantage over her rivals. The consumer electronics industry had almost completely similar products before the entry of Apple into the industry (Hill & Jones, 2012). Apple was focused on innovation not only on the software aspect but also on design of the hardware component. The products of Apple such as the iPod, iPhone are very identifiable due to their unique and outstanding differences with other products in the market. Apple can further differentiate its own products to make a series of products just like Samsung does with its Galaxy brand. This would help the company to raise additional revenue.

Another strategy that was used by Apple in the consumer electronics market is the emphasis on innovation and technology improvement. The company has been developing its own unique technology in both hardware and software portfolio. The fact that Apple has invested in innovation has helped the company to pull many first`s on competitors. This has helped to put the company ahead since it patents all its technological innovations and keeps many of them a secret. An example Is the operating system of the company`s mobile phone brand, iPhone which is only used by the company. The focus on innovation by the company has helped the company to become a preferred brand by the company due to high level and ease of use. The idea of the revolutionary iPod music became very popular very in the music industry with the company managing to sign major contracts with major production studios in the world (Segal-horn &Faulkner, 2008). This innovation generated a lot of revenue to the company as it contributed to more than half of the companies` turnover. The company has a very strategic research and development department and it invests very little in research and development compared to its competitors. Apple spends about 3.9% of its total revenue on R&D because, the former founder and CEO Steve Jobs believed a company does not have to put loads of money on R&D In order be innovative. He believed that a company needs to have deep knowledge and understanding of its workforce and deploy them appropriately in order to get the best out of them.

Use of High-Quality Materials and Reputation for Quality

Over the years since the formation of Apple, the company has portrayed itself as a market leader in terms of quality. The unique nature of its products and positioning of the company has helped Apple to be able to be recognized as the premium Pc manufacturer in the world and therefore, it has been able to sell their products at very high price. The company has been using the “high price, high quality philosophy”. When the company entered the consumer electronic industry, it was able to enter and maintain the reputation of producing products of optimum quality and this competitive strategy has endeared the company to, many customers with high income levels. This has helped the company to create unrivaled brand image in the industry and this has helped the company to continue its growth in the consumer electronic industry. This is very unique since many other competitors in this industry are struggling to minimize costs so as to attract more consumers.(Thompson &Martin,2010) Apple on the other hand is banking on perceived quality of its products to drive its sales as well as to determine how high the price of the product will be . Therefore Apple has positioned itself as the quality leader in the market and it has become very difficult for any company to dislodge her from this position.

The strategy of unique product features and performance has been very crucial to the success of Apple in the industry. Apart from uniqueness in hardware design, the software components of the company`s products are also very unique and this has provided the company with a competitive advantage which It has explored. An example is the iPod mobile which users could use to download music from iTunes (Thompson &Martin, 2010). The Mac computers also use a unique operating system OS X which is used by Apple only. The provision of such unique solutions to problems facing consumers leads to consumer loyalty.

Apple has also widely used the diversification market strategy to keep itself in the consumer electronic industry. The company has diversified into various lines of related businesses with its major diversification being the iTunes business. The sale of music online through the iTunes platform has become a very successful diversification move. The opening of Apple TV was also a diversification move which is also successful. The fact that the company is in personal computer industry and the consumer electronic industry provides the company with a competitive advantage because it is able to spread risk as well as increase its income streams.

Product Features and Performance

2.The Nokia mobile brand was very popular in the market and it had solid market leadership position. However, the company’s fortunes started dwindling in mid 2000s. The company failed terribly in its strategy and that why the company lost its market share position and eventually fell into financial difficulties. Nokia should have done the following things differently to avoid the occurrence of the situation.

One of the main failures of Nokia is its conservative nature. The company did not cultivate the culture of innovation and creativity among its employees and this made the company to be left behind in terms of technology. The fast rate of technological development since the turn of the century has rendered many production technologies obsolete within a very short period of time. Nokia did not match the fast rate at which technology was advancing and this resulted to other companies overtaking it. Companies like Samsung, Apple and Microsoft invested heavily in technology and within no time, these companies had developed far superior products than Nokia (Gbadamosi, 2013). The company should have invested in research and development realizing that technology changes within a short period of time. Investing in research on technology for a consumer electronic industry is very crucial since consumers buy products purely based on the technology and quality.

Nokia should have also differentiated its products. The strategy of product differentiation is very common and effective in this industry. At the time of its market dominance, Nokia used to have only few brands of products which were not differentiated at all (Mellahi, Frynas& Finley, 2010). The company`s over-reliance on one product resulted to failure of the company. Therefore Nokia should have differentiated its mobile handsets based on its features, hardware design and performance. This strategy has worked wonderfully with a company such as Samsung and Apple. Product differentiation would have helped Nokia to increase its revenue by offering consumer wide variety of products.

The strategy of diversification would have helped to prevent the decline of Nokia. During its glory days, Nokia concentrated entirely on the manufacturing and design of mobile phones. This means that the risk of the business was concentrated in one business segment and this increases the risk of failure (Kachru, 2015). Nokia should have invested in related technologies which would have helped the company to become more stable. Such diversification would include investing in manufacturing of home electronic equipment such as TV sets and public address systems.

Another strategy that Nokia should have used is that of establishing their market position as the cost leader. Since at the time the company was the market leader in mobile technology, it means that it made a lot of sales and therefore enjoyed economies of large scale production. The company could use this as a competitive advantage against its competitors to help it maintain its market share. However, Nokia failed to exploit the competitive advantage and it eventually lost the cost advantage it had.

Conclusion

Formulation and implementation of strategies is one of the most important key success factors for any organization. It is therefore very important for an organization to examine its core competences and design strategies that favor the organization. The consumer electronics industry has been very competitive over the years and therefore it is very important for organization to heavily invest in technology in order to have a competitive edge over its rivals. Strategies keep changing every day depending on the trends in the industry and the activities of the rivals. Therefore, a company which fails to stay on progress will get eliminated out of the market

References

Kachru, u. (2015). Strategic management: Concepts and cases. New delhi, excel books.

Thompson, j. L., & martin, f. (2010). Strategic management. Andover, cengage learning.

Sekhar, g. V. S. (n.d.). Business policy and strategic management. [s.l.], i k international publi.

Hill, c. W. L., & jones, g. R. (2012). Essentials of strategic management. Australia, south-western/cengage learning.

Mellahi, k., frynas, j. G., & finlay, p. N. (2010). Global strategic management. Oxford, oxford university press.

Armstrong, g., adam, s., denize, s., & kotler, p. (2014). Principles of marketing vs. Sydney, pearson education australia. https://public.eblib.com/choice/publicfullrecord.aspx?P=4741493.

Gbadamosi, a. (2013). Principles of marketing. Palgrave macmillan. https://www.myilibrary.com?Id=977151.

Segal-horn, s., & faulkner, d. (2008). International strategy. London, thomson learning.