Apple’s strategy and place in global market

Name – Simran Shriya

Sec - E
Roll No – 19202298
Subject – Managerial Economics

Submitted to: Prof. Shikta Singh

 Table of Contents

Abstract 3
Introduction 4
Background Note 4
Conceptual Framework 6
Discussion 7
Conclusion 8
ABSTRACT –

The case discussed will give the knowledge about Apple’s i-phone getting the
position of a premium product in the smartphone market. The moving of price
curve as there’s rise in the average selling due to the introduction of new models
of the i-phone. Consumers didn’t mind to buy the new i-phone by spending huge
amount of money as it added the extra style statement to their personality. It also
helped in creating a different environment. The environment of iOS, the related
applications, and services like iCloud and Apple pay and for other products like
apple watches and i-Pads, which obviously benefitted the iPhone to a great extent.
This artificially created environment also increased the dependence of consumers
on this environment.

Moreover, the case goes on discussing the launch of most awaited i-phone X at the
price of US $999 and above, its features, and how the limited supply of it added
the demand for the product. I-phone X was the largest selling smartphone in the 1st
quarter of 2018.The case also tells the challenges faced due to the pricing of US
$999 and above. It can be predicted that the steep price of i-phone X was the
reason for softening of demand. The case will cover the area of pricing or price
elasticity of demand in relation to Apple’s iPhone X.

This case will also help in understanding that how the Apple maintained its
premium pricing of its luxury models like iPhone X or iPhone XS. What role does
the price play in calibrating the demand for any product either premium or simple.
We will also analyze the pricing strategy or techniques adopted for i-Phone X by
Apple company. We will also understand the concepts for that type of goods
whose demand increases when its price increases, the role of another substitute
goods. Also, we will discuss that how the apple can maintain its high end pricing
of its products. Will it effect its previously launched products, the old models or
would apple organization develop any further strategies when it will come with
new more highly advanced products.

INTRODUCTION –
The iPhone, one of the magnificent product of Apple Company made its debut in
the global market in 2007 and conquer the market like a king overnight. Its style,
its looks, its features grab the attention of the smartphone lovers and obviously
everyone wanted to have one. The phone then came up with several versions,
several models over the years and was getting regarded as status symbol by many
customers of smartphones. People were so loyal that they formed the que in front
of numerous of apple stores as soon as there was news of launching the new model
of apple’s iPhone. By seeing this, the apple developed the idea of putting the price
high of their products. Now, due to the high demand of iPhone people also inclined
to the services like iOS operating system, apple’s cloud, apple pay. People also
further developed love for apple watches, iPads etc. Now again due to launch of
this new model of phone, the appeal for iPhone further developed, further reached
to new extent in September 2017. Other brands like Samsung, One Plus, Vivo,
Oppo, Xiaomi, Real me, Pocco faced a stiff competition day by day as soon as the
new products continue to come in the market.

BACKGROUND NOTE –
Apple computers, Inc. (Apple) was founded by the three persons namely, Steve
Jobs, Steve Woznaik, and Ronald Wayne in 1976. However, in 2007, the word
“computers” was dropped from the company’s name. Its headquarter is in
Cupertino in California. It also designs, develops, and sells various electronic
devices and online services. Apple is considered to be one of the Big Four Tech
companies along with Amazon, Google and Facebook.

In the year of 1976, the company introduced its first computer, named, Apple I.
Next one, it also introduced the next version Apple II in the year 1977. With the
introduction of Apple II, the computer industry saw a new boom with colored
graphics being introduced for the very first time. But it was the year of 1980 the
apple computers went public for the first time. In the year of 1984, in January, the
company introduced Macintosh computer. It created much hype and sensation
among the users. The Macintosh which was generally branded as Mac from 1998.
This mass market personal computer was having the feature of graphical user
interface, built- in screen and mouse. The apple company sold this mac product
along with its second generation family for almost ten years after which they
discontinued the product. Apple also developed a series of mac operating systems.
Though the very first version has no name, but eventually came to known as the
“Macintosh System software” in the year 1988. Then again MAC OS in the year
1997 with the release of Mac OS 7.6 and finally Classic Mac OS. By continuing all
this, the Mac continued to developed with new features and new operating
systems.

Now as the apple desktop conquered the choice of each and every generation, its
time came for apple’s phone. The phone came with wonderful technology system
that only not helped the consumer but also made it easy to use for consumer. The
touchscreen of the phone was very good in responsiveness. It detects the present of
fingers on screen much faster rate. It helped to the great level to work in several
ways, either its work related or anything other. The organization wanted to provide
such phone to the customer it should be near to the consumers’ physical selves.
They can be used so handily not that hyped design to make consumers
uncomfortable.

After all this if we look at the profit made by the i-phone on each of its model it
was almost 50%. By conducting a study in 2014 on these phones it was found that
gross profit was more than half of the price. Also the price of the phone ranged
from model to model. Simple version at low cost and as the model changes for
example the next line up of “S” version or plus version. Range was set according
to the types. If we take the case of iPhone 6 of providing storage capacity of 16GB
it used to be priced at $160 and if moved further to the upgrade model it costs an
extra amount of US$ 70. So we find the difference of pricing based on the
availability of phone we get from the market. But consumer was not intended to
shift their choice from this phone to another smartphone. People still preferred this.
The organization also played a smart move also by introducing the specific
operating system to be come with apple phones. This wasn’t android. It was ios
operating software. It was just and just for this specific gadget. Also the business
corporation was smart one to play with the fear of the customer. This business
body was very sure not to leak the private data and any sort of private information
to outer world, at any cost. However, played with this data outsourcing but apple
didn’t.

Apple also did the X factor by launching series 8, 8plus and X together in the
market. The previous mentioned series that is “8” ones were just the upgraded
style of format 7. They came up with shiny glass cover, very good speakers,
awesome processor and mind-blowing camera. The camera was so powerful that it
topped the priority of the people. People were totally slave of this function. This
build up the excitement of the people and they have the facility of ordering the
phone also. That is wat we say preordering.
After charging so high for their phones it came into limelight. As they tagged the
iphone X at $999 and above, the company was almost set at uniform style of
putting the prices of 4 digits. Though many of the high expert people didn’t find it
odd thing that it is priced at so high price. They are ok with that. The factor can be
concluded that they are basically two reasons for doing this. First we can say that
market of this gadget is so compact. There’s hardly more any innovation so if
apple is doing something new and providing new experiences to people then why
not price should be that one. No one can conclude anything wrong from thi point
of view. Also we know it is a kind of premium mobile phone. Another factor
contribute to this is that the components which are required to build up the
smartphone is almost limited in supply. So as we know if there’s limited supply
and the demand is high, price would definitely increase. It’s the theory of demand
and supply. We can look at this point from other side too. As mentioned apple puts
the high price due to a point supply of materials required, this puts a hurdle to
coming demands so that organization can meet the any shortage which they might
face in the going on market.

Despite of all this it is not possible to say demand for it will decrease. In various
countries, people formed queue to get the phone. In the year of 2017, in Singapore,
Australia and UK, large number of people have gathered in front of the shops to
have their favorite in their hand. The madness doesn’t stop here. Men, women and
youth doesn’t hesitate to camp out near the stores of the apple so that as soon as the
outlet opens they are the very first ones to get the hold. This type of craziness had
not been identified in any of the competitors of this brand. Its hard to see in future
too.

CONCEPTUAL FRAMEWORK –

In this section we can figure out the level of loyalty of the love of the customers
towards their brand. Customers preference should not change as it’s the most
important thing that it will help the organization to earn revenue from high
speculated demand which turns into reality and process in long run. The way we
can achieve long run is also the fact the brand awareness among the people. The
more people are aware of the brand the more they will come into the contact if the
brand. However, in the case of the people though it was almost and already
achieved, but the company should keep in mind this factor. Expanding your market
is not of a bad thing. Also we cannot sideline the role of advertisement, place and
promotion. Each factor has different role to perform. We always see the amazing
advertisements of iphones on you tube. By seeing the ad, we get the feeling of
premium quality. It excites us to get, grab the phone. Its designed so well.
Brilliantly. This process also examines the quality. As quality shown good comes
out to be good, people doesn’t hesitate to put on their trust effectively on the
product. It also grows the innovative market significantly. The company also
conducts surveys, collects the answers they put up on their questionnaires which
they distribute among the people of age ranging from 18-35 years. It was returned
with positive feedback, which again enhanced the status of the apple. Customers
satisfaction is an extremely important part of this organization. The brand equity
impacted from both brand association and perceived quality helps to establish
positive relationship with the customers. This conceptual framework has resulted
in good way to this smartphone. We can say that if the positioning of the brand is
done well in its competitive area then it will help in gaining the larger number of
consumers globally. We can literally take out the fact that the success of the
apple’s products helps them to survive perfectly in its tough market space. This is
absolutely not an easy task as no other brand has been able to take up this position
as of right till date. We can’t say about the future and in present there seems no
scope that pricing high you scope the high position too.

DISCUSSION –
According to some data published, there’s more than 15 million of X models of
smartphones already shipped globally. It certainly predicts the continuous long run
of the product. The model “8” were sold more than 20 million. That is the
combined of its both the versions. This emerging nature of the apple leads to see
the amount of economic deceleration in China. The shortfall occurred in the
revenue of the organization in China in all the products, like of smartphones,
personal computer that is Mac and also IPad. The reason could be the fall of GDP
in china in the second half. It is the second lowest in last 25 years. The trade war
with USA plays a major role in this. The trade and business of china contracts, no
expansion. Mainly like standstill. So, with the growing decline of this economical
thing, it reached and affected the customers to out there. Though the business
slowdown in china, but still this corporation believes that they have a good
foothold in the market as they enjoy a good supportive customer base. The rate of
productivity in that country has increased due to the installation of the base device
there in few last years. One more good point is that the shortfall of revenue in
china is lower than expected. It causes at least a small sense of relief out there.

CONCLUSION –
What we can finally conclude that Apple corporation has shown amazingly growth
since its starting phase. Their new game changer iphone X has been wonderfully
able to create a huge customer base around the globe. And by now latest of the all
Iphone 11 is also grabbing the eyeball of the people all over globe. Though more
details cannot be derived out for this specific model, as its so new but it’s expected
that obviously without any doubt it will perform in the same way the previous all
versions had performed. Top at the edge always!
The contributions of the amazingly talented people also can’t be avoided. Their
super technological skills and brilliant idea is the hard core conception idea of this
heart hacking smartphone. Earlier only the Steve Jobs was the prime and sole
reason for its success as he only implemented its idea in the new upcoming phones.
Though the sales never decline. But after him there are now new and many talented
minds to carry out the work beautifully and we are seeing the effects. Samsung
also tried to innovate their phones their curved edged screen style, but was unable
to match to apples. By seeing the premium products people were like set up the
mind if we do buy that level of product by spending such huge amount then why to
go for any other substitute. Apple is there, why not to buy that. It’s the first choice
people prefer if they go to high price instead of any other, be it Samsung or any
other premium brand. Apple is going very strong, remaining hard rock and the
applause goes to well-maintained customer base and surprising and loving tech
characteristics of this. Iphones are highly inelastic as they show very less or
sometimes null response to change in the price. This type of play strategy is always
a want thing or desirable point of many organizations.