I X is £1,300. This is too much

I have chosen
Apple for my report as I find them as a very interesting business and as I have
many of their products. I also would like to know about their marketing
strategies  and the work they put into
their company that the average person could not see.

 

Oligopoly –  AppleJE1 

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

An oligopoly is a
market structure in which a few firms dominate. When a market is
shared between a few firms, it is said to be highly concentrated. Although
only a few firms dominate, it is possible that many
small firms may also operate in the market.

Apple is an
oligopoly because there are two firms who dominate the market and they are
Samsung and Apple who have a 18% market share. Also, succeeding in an
oligopolistic market you would need to advertise your products and Apple do
this, whenever a new product is released. 
Apples products differentiate form Samsung’s products by the design,
logo and many different featuresJE2 . An advantage for apple being in this market
is that not many other new companies could enter this market and succeed Apple.

What is meant by
demand?

Demand is how many goods and services are bought at
various prices during a certain period of time.

What is meant affordability?

The meaning of affordability is that an average person
afford certain thing.

The latest product of Apple which is the iPhone X is
£1,300. This is too much money for an average person, however people still have
a demand for the product this is called price inelastic. This means that when
apple change their price of a product, they still have demand for that new
product. If Apple decrease the price of their products, demand will increase
for their productsJE3 .
Apple priced their latest product at this price, as they know their customers
would pay for it if the design was new and features were improved.

The
definition of competition is the businesses or companies your business/brand is
competition with. For Apple their main competitors are SamsungJE4 , other competitors
include  Huawei, Sony, HTC, Lenovo and others.. The market Apple
are in have a few competitors but the main competitor’s Apple is competing with
are Samsung. The impact this has on Apple’s demand for their products varies as
if Samsung release new products and Apple don’t, then demand for Apples
products will decrease. However, the other brands will have not much of an
impact on for the demand for Apples products. Apple also make tablets, which is
the iPad and their competitors are Samsung, Microsoft and Nokia.

https://www.billboard.com/articles/business/7964782/iphone-x-apple-pricing-strategy-analysis

Some
celebrities using Apples products have previously complained about their phones
being hacked by using iCloud and leaking inappropriate photos of the all over
the internet. Apple have responded
to this by having a brand new feature, this feature is having face recognition
on the IPhone X. You could sign into your ICloud with your face ID. Therefore,
the demand for this product has increased, because of this security issue.

 

What is Gross
Domestic Product?

Gross domestic product
is the total value of goods and services produced by a country per year.

The current GDP for
the UK is £488,907 millionJE5 . This growth in the UK economy is good for
Apple as it means people will have more money, which could mean that they could
buy Apples products.

https://www.ons.gov.uk/economy/grossdomesticproductgdp

5 forces model – AppleSuppliers Power

Apple has managed more of a complex chain of suppliers that are spread internationally
over many nations including US, China, Japan, Mexico and several other small
and big nations. It has the largest number of suppliers and potential
suppliers that limits their bargaining power. Apart from that Apple products
are not developed entirely by any single supplier. While one part may be
supplied by a supplier in Mexico, another by the US or an Japanese supplier
final might be then made and completed in China.

 The threat of new entry.

If the threat of new competitors stays weak for Apple, then
it’s because of two factors. First, because the cost to develop a brand new
technology company is extremely high and second, brands cannot assure Apple’s
kind of brand image and recognition over a small amount of time. Still, the
threat comes from the existing companies, big brands which will
compete with apple for shares. An example could be Google who have brought
their smartphones into the market that can be effective alternatives for the
customers who cannot afford Apples products. Although Apples products are
innovative, premium and unique, they are priced at very high prices. This is a
place where Google have seen an opportunity and been able to take away market
share from Apple. However, while the threat of new entrants in Laptops and
smartphones market is low, existing technology companies can divert into these
areas, still have a chance of becoming successful.

Threat of Substitutes

 The threat of substitutes has increasingly
grown overtime for Apple. This is because some brands in the smartphone market
have made cheaper alternatives that are average priced models, compared to
Apples high priced products. Whilst the brand loyalty of Apple customers is
high, some of the models from Samsung and Google are a potential threat because
of their efficiency and design.

Pixels
from Google and Galaxy from Samsung are huge competitors of IPhone. This
threat increases outside of the UK and internationally, where Apple’s brand
loyalty is relatively lower. Apple can barely do anything to dismiss this
threat but to bring out more effective and efficient products with new and
improved features, so that their customers could purchase their products with a
bit of satisfaction know there’s new and improved features.

Buyer power from customers

Despite
the fact the bargaining power of individual customers in the case of Apple or
its competitors is low, it is not so in the case of customer groups or markets.
For example in the last few years Apple has lost a huge market share in the
Asian markets in PC industry to competitors like Lenovo. So, when considering
the shared bargaining power of the customers in individual markets, it is high.

Apple
has tried to counter this threat by investing time inro research and development,
also by bringing new and unique products that could maintain its brand value
and image. However, over time while in the world market, the influence of
customers has increased, that of Apple has reduced. One important factor that
has worked in the favour of Apple is brand loyalty which has led to high sales.
So, the bargaining power of buyers can be considered as weak to average.

Competitive Rivalry

The rivalry of competition between the bigger companies in
the technical industry is extremely high. There are several competitors of
Apple in the industry including Google, Amazon, Microsoft, Lenovo, Samsung and
others. All these brands are engaged within the intense competition, where the
loss of one can be the benefit of the other. Although, competition is a key
factor affecting Apple’s performance and profits. Amazon is a threat to its
IPad and Google and Samsung’s smartphones to its IPhone.

Other competes with
its laptops, while Microsoft is a big competitor in functional systems. The different
costs for customers are very minimal and a majority of these companies have
made huge investments into research and development.  The majority of
these causes strengthen the competitive rivalry between the more of the successful
technology companies. So, the level of competitive rivalry in the industry is very
intense  for Apple.

sources

http://devsolomon.com/competitive-forces-of-apple-inc/

 

 

 

 

 

Supply is the
total amount of a goods or available for purchase at any specified price.

What is price elasticity of
demand?

 

Political
Issues that affect Apple

Apple is one of a number of American companies that
has gained a large amount of money. It had $34.7 billion in the bank on June
30, 2015. This is generating calls for higher corporate taxation in the United
States, where income inequality has become a huge political issue.

 

The cost of finding alternatives to Chinese
manufacturing could be high for Apple. This could lead to increased prices for
Apple products and therefore less profits for Apple.

 

More than half of Apples sales of their products come
from countries other than America.

The bad relations between US and other countries could
have bad outcomes for the company.

Economic
issues that affect Apple

A strong U.S. dollar could increase exchange rates, making it more expensive for Apple
to do business in key markets like Europe and China.

 

Increased labour costs in China could take away
the profits of some Apple productsJE6 .

 

          Impact
of global recession

         
Increased rate of inflation in US

Social
issues that affect AppleJE7 

Rising use of mobile accessJE8 

 

Rising use of social media 

 

Technology
issues that affect AppleJE9 

Fast changing technologies and the making of new
technologies.

High costs of making and purchasing new software.

Apple have to release new products often to outdo
competitors

 JE1Please
add a paragraph explaining why you have selected Apple and what you seek to
learn in this report.

 JE2Good
summary of differentiation as applied to Apple

 JE3What
is Apple’s pricing strategy?  How can
Apple justify charging £1300 for an iPhone X?

 JE4Who
else makes Smartphones, tablets and personal computers?  Please identify more competitors? https://www.investopedia.com/ask/answers/120314/who-are-apples-aapl-main-competitors.asp
Last accessed 18 December 2017

 JE5Good
evidence, how might a growing UK economy be good news for Apple’s sales in the
UK?

 JE6Will
this still be cheaper than making Apple products in California (or Europe)?

 JE7Find
2 further social issues that may affect Apple from this list  http://www.ohchr.org/EN/Issues/Pages/ListOfIssues.aspx
Last accessed 18 December 2017.

 JE8In
which countries or continents might this be an opportunity for Apple?

 JE9Good
ideas but these need to be developed into a paragraph each supported by
evidence which you can find to support your point.