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Porters Five Forces Model Of Apple

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Question:

Write a report on the ways two different Organisations have been able to compete in their Markets.
 
 

Answer:

Introduction

Marketing is one of the most critical and important departments of any organizations (Burke, 2017). The marketing department is capable of understanding the needs and wants of the customers and manufactures their products accordingly. Marketing helps in formulating strategies and proper execution of the planning to get competitive advantage in the market (West, Ford & Ibrahim, 2015). The function of marketing helps in the creation of place, time and utilities of ownership. The various marketing tools help in the identification of the strategic positions of the company and the growth of its products in the market. The report takes into consideration the successful utilization of the marketing tools by two renowned companies of the world, Nike and Apple.

Case Study

The case study of Apple defines that the central model of the company has not changed since its inception from 1980s. The company has produced the hardware as well as the software for the customers and achieved the competitive advantage and market share. The case study puts forward the strategic management decisions of Apple that have prompted the company in taking into consideration the non-PC products in the product portfolio of the company (Gupta & Prinzinger, 2013). The early market acceptance of iPad, iPhone and iPod has helped Apple in getting success in the technological market of the world. As far as the case study is concerned, the sales of iPod have slowed down. On the other hand, the iPhone is facing increased competition from other mobile manufacturers in the Smartphone industry.  

 

Ansoff matrix of Apple

Market penetration

Apple is able to sell the existing products in the present market such as the Mac computers and the MacBook laptops as a strategy to increase the share of the market (Akhter, Rahman & Rahman, 2014). Apple can achieve this through proper utilization of the core competencies and the resources in sales and marketing and attracting more customers by reducing the prices and keeping the focus on constant innovation of the products. Apple has tried to penetrate the market with the new versions of iPhone that are having better camera, faster internet connections and other innovative features.

Product development

Apple has a highly talented team of designers and research & development which it can utilize in the future for the manufacturing of more innovative products for the loyal customers (Sniukas, Lee & Morasky, 2016). This will help in increasing the satisfaction of the customers.

Market Penetration

iPhone

Product Development

iPod Shuffle

Market Development

iPod Touch

Diversification

iTunes

(Source: created by author)

Market development

Apple has the chance to extend its existing products by enhancing the geographical area (Gassmann, Frankenberger & Csik, 2016). It would require the company to identify the new customers who have not used the Apple products earlier and increase the customer base. The iPod Touch of Apple is just a replica of the iPhone. The only exception is that it cannot be used to make calls. Apple has the chance to develop the market of iPod Touch in the international market.

Diversification

Diversification is the introduction of new products in the new markets as the iPhone was first introduced in the market in 2007 (Bennett & Pierce, 2016). It involves a lot of risks and uncertainties about the success of the new products in the market. The case was same for the launching of iTunes and iPod. The company targeted a completely different group of customers from their existing customers.

 

Porters Five Forces Model of Apple

Industry Competition

The level of competition in the Smartphone industry is very intense. Low switching cost is the main reason for the competition. The costs of the Apple products are very high and the customers have every chance to switch to other products that are less costly.

Bargaining Power of Buyers

The low switching cost in the Smartphone industry increases the bargaining power of the buyers. On the other hand, the bargaining power of buyers in case of Apple is very less. However, the collective bargaining power of the customers in the market is very high. Apple has tried to counter this force by substantial expenditure in R&D.

Threat of New Entrants

The threat of new entrants that can affect the market share of Apple is very low. The two factors that are responsible for this are the huge cost of establishment of a company in the industry and the additional cost that the other companies need to bear for the recognition of the brand. A new player in the Smartphone industry needs to invest a lot of amount on the R&D as well as manufacturing in order to develop the product portfolio before bringing the products in the market. Another threat that Apple is having for its products is the brand names of Google and Amazon who are having very strong brand names.

 

Bargaining Power of Suppliers

The bargaining power of suppliers in the market for Apple is very low. The reason is the availability of large number of potential suppliers for the company and huge amount of supply. Apple has created such a huge brand identity that it is free to choose from the large number of suppliers. Apple has a very low cost of switching the suppliers. Apple has become one of the big companies for many suppliers in the technological market. Apple does not have to consider the bargaining power of the suppliers regarding the component parts like its competitors.

Threat of Substitutes

There are very less substitute products that are able to compete with the products of Apple. A landline phone is less costly than an iPhone and customers have every chance to switch from the products of Apple to other products.     

Case study of Nike

The case study of Nike gives an indication that the company is successful today because of innovation and gives the emphasis on the research and development (Mahdi et al., 2015). Nike has kept the prices of its products very high still are able to make huge profits and increase the sales because of its quality. It has successfully competed with Adidas in the sports segment.  

Marketing Mix of Nike

The proper formulation of the marketing mix helped the company in getting success in the competitive market all over the world. It is now the leading brand in the equipment, athletic footwear and apparel.

 

Product

Nike has a number of products in its product portfolio. This is one of the important elements of marketing mix of Nike. The products of Nike include shoes, apparel and equipment as well as accessories. The sport shoes of Nike are the most popular products of the company. The various types of shoes are tennis shoes, running shoes and for other sports. The accessory is the golf club and the accessories take into account jerseys, related products and shorts.

Place

The distribution system of the products of Nike has helped the company in reaching to a vast number of customers around the world. The products of Nike are available from the retailers, official online stores and the retail outlets (Ailawadi & Farris, 2017). Retailers are the most important in the distribution strategy of Nike. Customers are able to purchase the products from the online stores of the company without any difficulties. It has a major control on the distribution and sale of products.

Promotion

The effective promotional mix of Nike has helped the company in enhancing its brand name. The promotional activities of Nike include advertising, direct marketing, sales promotion, public relations and personal selling (Boone & Kurtz, 2013).  Some of the attractive advertising has helped the company in attracting the attention of the customers. The direct marketing strategies of Nike include persuading the colleges, organizations and the various sports teams (Brohi. et al., 2016).

Product

·         Quality and reputation

·         Sporting events

·         Effective and comfortable

Price

·         Premium pricing strategy

·         High-end product

Place

·         Multiple retailers

·         Shops present globally

Promotion

·         Strategic alliances

·         Advertising

·         Various sports events

(Source: created by author)

Price

Nike has a value-based pricing strategy for the growth of sales and profits (Chang, Rodriguez & Su, 2016). The prices of the products of Nike are very high and worthy of the quality. Customers are willing to pay more for the Nike products than the competitors.

Conclusions

The report has inferred about the effectiveness of a good marketing strategy on the part of the companies to stay competitive in the market. The report has taken into consideration two case studies that depict the marketing strategies of two well-known companies of the world. The case of Apple helped to know how the company has expanded in the market and the analysis has been done through the Ansoff matrix. On the other hand, the case study of Nike helped us to know how the company is working successfully all over the world. The present marketing mix has been discussed using the 4Ps of marketing of Nike in the report. It has been inferred from the report, some significant marketing models that will be relevant for most of the companies in formulating strategies accordingly.

 

References

Ailawadi, K. L., & Farris, P. W. (2017). Managing Multi-and Omni-Channel Distribution: Metrics and Research Directions. Journal of Retailing, 93(1), 120-135.

Akhter, S., Rahman, N., & Rahman, M. N. (2014). Competitive strategies in the computer industry. International Journal of Technology Diffusion (IJTD), 5(1), 73-88.

Bennett, V. M., & Pierce, L. (2016). Motivation matters: Corporate scope and competition in complementary product markets. Strategic Management Journal, 37(7), 1304-1315.

Boone, L. E., & Kurtz, D. L. (2013). Contemporary marketing. Cengage learning.

Brohi, H., Prithiani, J., Abbas, Z., Bhutto, A. H., & Chawla, S. K. (2016). Strategic Marketing Plan of Nike.

Burke, W. W. (2017). Organization change: Theory and practice. Sage Publications.

Chang, X., Li, J., Rodriguez, D., & Su, Q. (2016). Agent-based simulation of pricing strategy for agri-products considering customer preference. International Journal of Production Research, 54(13), 3777-3795.

Gassmann, O., Frankenberger, K., & Csik, M. (2016). Innovation Strategy: From new Products to Business Model Innovation. In Business Innovation: Das St. Galler Modell (pp. 81-104). Springer Fachmedien Wiesbaden.

Gupta, A., & Prinzinger, J. (2013). Apple, Inc.: Where Is It Going From Here?. Journal of Business Case Studies (Online), 9(3), 215.

Mahdi, A., Abbas, M., Mazar, T. I., & George, S. (2015). A comparative analysis of strategies and business models of Nike, Inc. and Adidas Group with special reference to competitive advantage in the context of a dynamic and competitive environment. International Journal of Business Management and Economic Research, 6(3), 167-177.

Sniukas, M., Lee, P., & Morasky, M. (2016). The Art of Opportunity: How to Build Growth and Ventures Through Strategic Innovation and Visual Thinking. John Wiley & Sons.

West, D. C., Ford, J., & Ibrahim, E. (2015). Strategic marketing: creating competitive advantage. Oxford University Press.

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