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Apple company ranking value proposition

Overall about Apple

Apple Computer's 30-calendar year history is filled with highs and lows, which is exactly what we would expect in a highly impressive company. They changed throughout the years into an organization that is very much indeed a representation of its head, Steven Jobs. Apple made several hugely successful product introductions over time. They have also completely fallen on their face on several events. They battled mightily while Jobs was not a part of the business. Apple reached a spot where many thought they would not endure. When asked in overdue 1997 what Careers must do as brain of Apple, Dell Inc. 's (DELL) then-CEO Michael S. Dell said at an buyer seminar: "I'd shut it down and give the money back again to the shareholders. " (Burrows, Grover, and Green)

Well, times modified. Less than 10 years later, BusinessWeek positioned Apple as the top performer in its 2006 BusinessWeek 50. Apple features their recent success to solid sales of iPod music players (32 million in 2005). They are simply positive about the economies of range with advertising giants, such as Disney and Pixar. (BusinessWeek)

Apple rarely introduces a new type of product. Thus, rather than being the pioneer, they are really a specialist "second mover" by refining existing products. Lightweight music players and mobile computing are samples. Apple increases the appeal of these products by making them stylish and even more functional. They now show up poised to make significant strides in the home computer market and also to creating a complete digital lifestyle whereby the house is a multimedia hub.

Apple consumer values

It's standard and even we discuss Apple is the most effective computer maker in the world. Inside the wake of the business's much better than expected earnings in the one fourth concluded Sept. 30, Apple's stocks rose by nearly 7 percent, making the company's total market value $162 billion.

That ends out I. B. M. , which is worth $155 billion. Apple also surged past Intel, worth $156 billion, and Nokia, the most valuable cellphone machine, which will probably be worth $150 billion.

Indeed, Apple is currently the fourth most valuable technology company, after Cisco ($189 billion), Google ($208 billion), and Microsoft ($290 billion).

Apple's stock

Apple, interestingly, has something in common with these others. They all attract their electric power from software. Microsoft provides software in a package. Google gives software online. Cisco, like Apple, provides software embedded in devices, which it basically contracts to others to make.

But there is a key difference, too. The other three established dominating positions in their market segments, which fends off rivals and keeps margins high.

Apple is a faraway No. 3 in PCs. It dominates personal music players, but it includes a much more modest talk about if you specify the consumer gadgets market more broadly.

Still, Apple sustains margins by having a combination of innovation and marketing leading consumers to choose its brand. That's a great success, but it is harder to maintain that advantage than an operating-system monopoly. For an investor, one question is whether Apple can capitalize on its momentum to catapult itself to an enterprise that doesn't count a great deal on each successive product launch.

To do it, Apple will more and more find itself dealing with the three others near the top of the tech totem pole. Microsoft, of course, thought that it acquired defeated Apple in the operating system ten years ago, and then find its competitor has revived, more robust than ever before.

If the struggle into the future is server-based applications provided on web browsers, the fight pits Microsoft, Apple, Google and the collective forces of open-source software against one another.

In that world, Apple has some choices to make: Will its iLife and iWork applications move onto the Web? More importantly, will it remain competitive in the mass business Laptop or computer market, where the C. I. O. of insurance company purchases desktops by the truckload?

Price is more important than design there. Steve Jobs hasn't liked item businesses. He said he didn't want to do a offer with a cellphone carrier either, but he found a way to hold his nose and cut a rather advantageous offer with AT&T. Usually are not knows if he will follow Microsoft's corporate market? A safer bet is that the true rivalry will be between Home windows and some form of Linux, with Hewlett-Packard and Dell, the No. 1 no. 2 PC makers, building machines of both flavors and Cisco making the routers.

The other, perhaps bigger, battle is over who'll control the world of connected entertainment and marketing communications. The ipod touch begat the iPhone and Apple Tv set, of course. But Microsoft has been focusing on media and cellphone software for a decade. And Yahoo is shaping up to be a key player in cell phone software, video syndication, and another service or device which it can screen advertising.

That brings us to Cisco, which wishes to get out more and have some fun. It bought several social networks, as well as Linksys, the house network company, and Scientific Atlanta, the wire set-top-box company. Now it has declared that it will develop an "entertainment operating-system. "

No one is aware what an entertainment operating system is. But I suspect that if Apple may become the dominating player in that market, it gets the best chance to keep its position among the most effective technology companies in the world.

Existing value proposition

Apple has situated itself to a certain kind of customer, rich people, innovators, people with good careers, good lifestyle, etc. If Apple focuses on the indegent, the trendy fellas will minimize buying Apple. This would injure the brand more than the increasing sales because of lower prices, and in memories, where every person has more money. Apple would have the challenge that they can not increase prices, because everyone expects an inexpensive Apple.

On the other hand, there are no really substitution products, there are no similar machines than we can buy to have the same customer experience, PCs are the same competition to Apple as Ford is to Mercedes. PCs are the each day workhorse for the masses; Apple is the luxury for the minority.


Apple been able its business primarily on the geographic basis. The company reportable operating segments comprises of the America, Europe, Japan and Retail. The Retail segment currently operates Apple-owned retailed stores in the U. S. , Canada, Japan and the U. K. The other operating segments include Asia-Pacific (Australia & Asia). Each reportable geographic operating section provided similar Hardware and Software products and similar services.

The major geographic industry for Apple is america as it accounted for 60% of the company's online sales in 2005.

Market Segmentation

One manner in which an enterprise will analyse the possible market for its product to consider the marketplace segments of which the merchandise may be targeted. Market segments are segmented due to variety using market segments. Market segmentation is employed to target a certain section of the public and make them want to buy their product (Doyle and Stern 2006). Apple use carefully segmented marketplaces to differentiate the various types of marketing to appeal to each segment to acquire their product. That is evident in the way they focus on their younger section by reselling cut-price apple machines to schools in america.

Target Markets

Educational Market

Apple has focused on the utilization of technology in education for days gone by 25 years. These are committed to providing tools to help educators teach and student learns. The effective integration of technology into classroom instruction can lead to higher levels of student achievement, in particular when used to aid collaboration, information gain access to, and the appearance and representation of university student thought and ideas.

Apple created alternatives that enable new methods of curriculum delivery, better means of performing research, and opportunities for professional development of faculty, students and personnel. They had designed a variety of products and services to help schools maximize their ventures in the needs for education customers. (iBook & eMac)

Creative Professional Market

This market constitutes one of Apple's most important marketplaces for both Hardware and Software products. The forex market was also important to many third-party designers who provide Macintosh-compatible Hardware and Software alternatives. Creative customers employed the business's products for a number of creative activities including digital training video and film creation and editing (Digital Training video, Film Special Effects & GRAPHICAL DESIGN).

Apple offers various Software solutions to meet up with the needs of its creative customers. Apple's Operating System, Mac OS X, designed powerful design and audio technologies and features creator tools to enhance system and request performance when working powerful creative solutions provided by Apple or third-party builders.


Apple runs on the differentiation strategy that explains to the business development of something or service that offers unique attributes that are respected by customers which customers perceive to be much better than or different from the merchandise of your competition. The worthiness added by the uniqueness of the merchandise may permit the firm to fee reduced price for this. The firm expects that the bigger price will more than cover the excess costs incurred in offering the initial product. Because of the product's unique qualities, if suppliers increase their prices the firm might be able to pass along the expenses to its customers who cannot find substitute products easily.

Apple's Competitive Strategy:

Apple has regularly been at probabilities determining its strategic focus. If they started out in 1976, these were market makers. They hired a Differentiation Strategy. They packed a need that was forgotten. They developed your computer for personal use and sold it at a premium price. They were successful because they were first to advertise and because onsumers possessed limited knowledge about computers of this time. The Potential buyers of pcs in 1984 were

consumers and business managers who were most often unsophisticated first time buyers. Acquisitions were limited by a few pcs at a time and located great emphasis on service, support and compatibility. Price was supplementary.

When Sculley organised the CEO subject, 1985-1993 the business's maintained a Centered Differentiation Strategy focusing on desktop publishing and education while charging reduced price. As tournaments prices crept down Apple's premium became too high. Apple could either keep advertising with their installed foundation or in succeed new costomers. They select clients and pursued a Cost Control Strategy by learning to be a low cost maker of personal computers with mass market charm. This emphasis was persisted through the Spindler term at the helm, 1993-1995. When Amelio became CEO, 1996-1997, Apple's competitive strategy became a Differentiation Strategy where they might demand reduced price, because it was an Apple. Amelio tried out to position Apple as a premium brand with little success. In 1997 Jobs once again retained his seats as CEO and altered the competitive strategy to a cost leadership strategy once again attractive to the mass market.

The Customers:

Prior to 1990 Apple have have some advantages. Its design and operating system was easier to use and had plug and play capacity, though as time approved the customers improved. Customers didn't require ease as before, because purchasers had become more experienced with computer systems. Purchasers in 2002 were largely business, IT professionals, who had been very proficient in computers. They might often buy pcs in bulk to drive the price down and in order to meet rigid budget constraints.

In 2001 the marketplace was becoming saturated, slowing growth was intensifying competition on price. The market no more could support the high grade price Apple demanded.

The Market:

IBM Laptop or computer was a comparatively available system that other manufacturers could clone. Numerous clones becoming available its operating-system (Microsoft MS DOS) became the standard. Multiple companies producing similar appropriate computers led to a rise in software programs for the MS DOS operating-system. At one point IBM tried out to create a more proprietary machine and not only lost a significant amount of market show, but its state of the standard bearer of the industry. This opened up the overflow gates for the non-IBM Wintel computers. Apple's software offerings were limited. In 2000 88% of the total software was for Windows, versus 5% for Apple pc. The Mac continued to be more user-friendly with the Mac's Graphical User Interface (GUI). In 1990 Microsoft offered glass windows 3. 0 which integrated GUI. The Macintosh personal computer no longer had the upper hands. This is Mac's only benefits above the Wintel machines. Using its proprietary design, lack of programs and same simple to use operating system Mac could no more demand reduced price or appeal to the mass market. It had lost its previous competitie advantage.

Apple computers relied on proprietary designs that only Apple could produce. Because of this Apple had an increased cost composition, R&D costs were as high as 8% of sales versus 1. 5% to 2% because of their competitors. Your competition cut R&D spending as components became more standardized. With reduced R&D costs your competition could then focus on improving manufacturing operations, circulation and marketing to provide them more of a competitive advantage.

Mac should choose a centered differentiation strategy or as Michael Dell said ". . . shut it down and present the money back again to the shareholders. " They need to narrow their concentrate to two market sections. Since they curently have a foothold and a loyal following in desktop publishing they should focus their efforts for the reason that market. Their share of the educational market has persisted to dwindle from 26% in 1995 to 13. 4% in 2001, but it offers the most significant contribution to income, 35. 4% in 2001. Because the Education and desktop posting marketplaces have been bundled along througout Apple's background, I believe they ought to give attention to those marketplaces and appeal to the niche as opposed to the mass market.

Jobs (First term) and Amelio both persued a differentiation strategy. It had been successful for Careers, as stated above, due to the fact he market was new and there was not yet a typical for the industry.

By the time Amelio required control the standard of the industry was placed, and Apple computer didn't do anything better than the competition. This strategy had not been effective.

Both Sculley and Careers (In his second term) chose a cost management strategy. This strategy would be befitting Apple if they were contending with the exact machine. Because their machine is not the "Standard" it takes more than price reductions to woo a customer and lead the market.

Though Apple has outsourced Mac making and reduced inventory to two days and nights price of sales. Unless it can distinguish itself and also do something better, customers won't purchase Apple since it is not the standard in the mass market. If in comparison to home training video players, the market has turned to VHS, its going to be hard to thrust a Betamax player even if indeed they were offered in pretty colors.

The potential buyers have changed dramatically. The primary drivers of industry change is growing customer class (something of greater product maturity) and a simple change in functionality, which brings about a need for corporations to improve their approach to purchasing. This has resulted in strong buyer power.


The industry is highly focused.

Open expectations: Personal computers are commodities: manufacturers compete on price driving down margins

Industry fragmentation: You can find no market leaders to provide price stability

Very fast technology obsolescence

Strong buyers, with increased sophistication

Potential entrants

Technology: You can assemble Computers with a screwdriver or just snap the parts along. Not really hi-tech.

Components: Standardized components are generally available

Plant/location: Syndication can very cheap, over the net or through a classified advertisement.

Customers: Who would buy these PC? Price-sensitive customers; knowledgeable customers who recognize that PC's are a product product; customers looking for access to local service. Keep in mind PC's without national brands make up almost 25 % of the marketplace in THE UNITED STATES and 50% in Europe and Asia.


Network computers

Personal digital assistants, smart telephones (generally for calendar applications, address books and e-mail)

TV set-top boxes

Video games consoles (e. g. , Sony Play Station)

Summary: Life of substitutes could press PC prices down further and reduce growth of demand. Average price of the majority of these replacement is about $300


Applications: Software prices attended down while software efficiency and the amount of headings have increased; many of these innovations have increased customers' determination to pay for PCs


Commodity suppliers: Suppliers of components such as disk drives haven't any real power over Computer manufacturers. Intel/Microsoft: jointly, Intel and Microsoft received almost $20 billion in 2007, and about $9 billion in 2008. This is because there are high obstacles to entry. Set up expectations, start-up costs and established brands labels. (Intel, House windows)

New value proposition

External Environment

The industry has a fast development. Everyday new and innovative products flood the markets. From mobile phones to laptops there's a new product advertised almost every week. The major players of the industry are Dell, HP, Apple, Acer and Lenovo. There's a high entry barrier due to the standardization of the Personal computer components. If any new players desire to enter into this business, they need to have a differentiated strategy form the existing companies. Also, a higher learning curve is accessible which means the purchasers take time to get accustomed with the new product. The existing brands make the accessibility barriers high. Suppliers for this industry are powerful. There are only a small number of companies like Intel and Microsoft which companies microprocessor and os's (OS). These suppliers are hard to switch due to dominating production of such components. There is always a risk of in front integration by the suppliers because the products manufactured by these suppliers are highly sophisticated and the other components necessary for the production of PCs aren't so hard to imitate.

The type of consumers because of this market can be categorized as home, small and medium sized business, corporate, education and administration. Since clients are typically not concentrated they have got less bargaining electric power for prices and models. Buyers do have a higher switching cost which discourages them from buying an identical product from another dealer. But there are a variety of substitutes available making potential buyers powerful to choose from the available options and also because they are very price sensitive. The clients will have an benefit of choosing the electric good according to the need and taste. This industry has a massive customer basic and companies have to be customer oriented and should innovate according to their demand. Apple focuses on customers who are "techno savvy", who look for something unique. They have a wide range of products like personal computers (Mac reserve), ipods and iphones which can be highly differentiated. Customers prefer to buy its products because they are "icons of the digital industry". Exit barriers for this industry are high. There is a whole lot of capital need to establish a firm inside the consumer electronics and Personal computer industry. There is a chance of leave becoming almost impossible due to strategic interrelationships between these companies. Not all these products are made by the same company.

And so they need to be based upon other firms in the industry for making your final product ready for the customers. So it is very difficult if one organization leaves, departing the other centered firms in issue. Technological changes on the market are incredibly fast. Everyday a fresh product or a new program or version for the prevailing product is available. Consumers are incredibly demanding and it creates it essential for the organizations to contend with each other and become the first mover or the best as another mover in offering a new creativity. The young generation in particular is very trendy and they love to show of the new things as a fashion affirmation. And so they expect companies to give them something is different than what others have. It really is both a chance and a menace when it comes to rapid scientific changes. Companies have to move faster than the imagination of both their competition and the consumers. If not, it is not long before each goes down in history forever.

Internal Analysis

Strengths and Weaknesses: Apple Inc. makes a difference in the Laptop or computer industry through its progressive product design and high standard applications. Macintosh has been the powerful tool to create the success account of the company. The "integrated system" of computer was its differentiated strategy which provided the Macintosh along with its own Operating System (OS). The new step in "Consumer Electronics Industry" has outshined Apple Inc's performance as a smart company. The progressive products like ipod device and iPhone have been very successful in potential music market. Customers have a great trust on company's fashionable products and they always anticipate be dedicated to the brand. Apple will keep it Price strategy not the same as its competition which give pcs and other entertainment devices at low cost. The high prices (especially Computer) keep it gain access to limited by only people who have high income level. The Apple computer got compatibility problems with Microsoft Office and IBM Personal computers, which motivated the study and development at the company. As the company has a wide products, each new product makes the prior one uninteresting against it; the problem of cannibalization may be considered a reason of bothering the expected revenue generation of the products.


Apple has been the leader of the buyer Consumer electronics industry and has preserved a definite image in Laptop or computer production and Music too. The Main competencies accountable behind the success are mainly the "Unique resources" and "Differentiation strategy". It offers the best designed hardware and incomparable software in its products. The Apple has been offering "Plug-and-play" alternatives. The hard drive based player called ipod touch has a stunning design which includes end up being the "icon of the digital age". Apple has a "Think Different" motivation and it believes in "Value Creation". The success of some products like ipod device and iPhone cannot determine its ecological competitive benefits because the industry has intense rivalry and imitation is also a hazard. Hence, Innovation plays an integral role to remain the primary company in the dynamics of fast-growing markets, and Apple definitely can stand up to the changes using its impressive skills. Apple has had the opportunity to command reduced in market and gain above average results owing to its development and differentiation of technologically superior products.

Strategically Alternation / Conclusion

Apple's strengths can be attributed to many factors. First, Apple's premium-price or product differentiation strategy as well as their retail strategy have proven to be essential to Apple's past and can continue to play a essential role in Apple's future. As a result of their previous success as identification as innovators, Apple has seduced the attention of many companies whom have acknowledged Apple's prospect of successful tactical alliances For instance, Apple's successful alliance with AT&T, provided Apple with the possibility to enhance their IPhone's technology. Apple was able to the low the IPhone's price to consumers, as well as, up-grade the Iphone's network coverage. Furthermore, Apple joined into partnerships with YouTube and Google to be able to provide their IPhone users with cutting edge "search, mapping, and video tutorial features". These partnerships allow Apple to further identify their products and add value to their users. In the same way, Apple's reputation as an innovator and inventor of easy-to-use cutting edge products is constantly on the improve apple by keeping Apple on the radar of the technologically savvy consumer, as well as providing support for Apple's product differentiation strategy. Still, there were some downsides or weakness consequently of Apple's choosing to hire a product differentiation strategy. First, Apple's collection of a premium price or product differentiation strategy also limits Apple's market talk about. Some customers do not realize the value that Apple's efforts to create because of their customers. Price hypersensitive consumers are hesitant to buy Apple's products. In the same way, customers seeking highly personalized computers may well not choose Apple. For example, Dell, one of Apple's biggest competitors and one of the top four P. C. companies, offers customers array of bundling options when investing in a computer. This enables customers to choose hardware and software components as well as relatively control the price of the computer. Instead, Apple offers their computer customers packages with very few customization options. Subsequently, a challenge for Apple is present in their reliance on Apple's C. E. O. , Steve Jobs. Jobs is a guiding pressure at Apple, behaving as Apple's savior when the business saw their lowest financial volumes in 2002. Steve Jobs was in charge of Apple's expansion and the intro of 1 of Apple's most profitable products, the IPod. There's a question as to if Apple could continue steadily to operate as they certainly currently in the lack of Steve Jobs. Still, there are alternatives to Apple's current problems.

Apple is regularly attempting to produce products with improved compatibility, allowing their customer more versatility and increasing the ease-of use of their products. By continuing with their high quality price or price differentiation and retail strategies Apple can continue strive and uphold their reputation as an innovator in the gadgets industry.

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