Apple in Microeconomics
As inter-specific competition increases between companies, especially in the same product line, there is need to come up with better and innovative ways to market their brand. These product enhancement techniques need to meet the current consumer demands and tastes and preferences. However, there are other factors like quality, quantity, and price that also affect how consumers view an individual product and its purchasing power.
Proper market intelligence is very crucial to an enterprise especially in the early development stages of a product this is because the consumers are taught different ways to utilize the product and its benefits and compositions. Our essay seeks to highlight on some of the key milestones that Apple Inc. has achieved throughout the years to stay at a better competitive advantage over other brands in the market. Moreover, our study also focuses on the significance of some of the marketing tools adopted by the company and their effectivity towards gaining and maintaining an extensive customer base and diversity.
Apple Inc. is a corporation whose origin is in America but has branches globally. The company was co-founded by Steve Jobs in the year 1976, of 1st April. The company has its headquarters in California Steve jobs stated that his love for apples inspired the name. He thought the name would be fun and exciting (Summit, 2013 to consumers and suppliers.
Apple is currently ranked second in the technology industry, and it the third best mobile manufacturer globally. The company has 415 stores globally, whereby 253 are in the United States while 162 are spread globally. The company majors in designing, advertising and producing advanced electronics, Apple laptops, and computer programs. The company also provides different software and hardware products, for instance, iMac, Mac mini, MacBook Pro, iPad, iPhone, and iPods. The company also develops new programs like OS X and IOS operating systems and different application programs. The company also produces phone accessories and offers after sale services like customer support, online support, and a well elaborate care protection strategy.
Milestone one: Marketing and distribution
Apple primary consumers are within the companies, educational institutions, government agencies as well as personal customers, varying from small to medium enterprises. The in cooperates direct and indirect allocating strategies, for instance, online shops, retail stores, wholesaler divisions, mobile network providers and value addition agents. (Apple.Inc, 2012). The revenues of the enterprise are ingenious and distinct because the products are enhanced by skilled sales representatives that can assess the value of the outputs based on the programs used and the uniqueness of the hardware of the item. Direct contact with the consumers is appreciated by the company, as a better way to pass on information about the significance of a particular product concerning other competitors and ensuring product quality and better after-sale services.
Milestone two: A proper market structure
The company operates in an oligopoly market structure as economist put it. Oligopoly refers to an imperfect market model having a few companies working in the market by creating similar items or substitutes but not perfect prototypes. Its character includes interdependence of the businesses, higher competition by not pricing through making their products distinct and of a better quality, advertising, access to a significant market power and having the smaller number of firms. For instance, Samsung Company, a producer of smartphones such as the S series and edge series phones and computers.
Milestone three: unique products and market power
Business like Apple Inc., which function under imperfect market models (oligopoly) capitalize on a distinction of the goods plan to capture and dominate the market and therefore become the price setter. Intensive competition cannot be prevented in a market with fewer big companies, for a business to sustain itself it needs to make sure that demand for products and services are high at all times as compared to their immediate rivals. Over the years, Apple Inc. has been functioning this way the company has successfully distinguished its products from the rest, for instance, the iPhones. They achieve this by frequently improving the features of their products and upgrading its quality to keep the current customers while attracting new ones. Eventually, this results in a corresponding increase in demand causing a shift in the demand curve to the right.
Figure 1: demand curve
Source Apple Inc.
Milestone four: MacBook introduction
The creation of MacBook Air, being the lightest laptop in the market (Cohen, 2008) has amazed the technology industry and the globe by appealing to a vast number of consumers. Through numerous enhancements and product distinctions, growing in demand, the company can counter competition through ensuring that the users cannot function properly without the product and this creates brand loyalty. The primary objective of the enterprise is to increase its revenues and overall market share. This is achieved by growing demand for its items more so through extensive marketing, a distinction of its items and ensuring brand loyalty (nonprice competition). Furthermore, if the company reduces its prices, it can still increase the number of its products sale, but fewer profits would be seen. Nonprice competition ensures that the enterprise creates a unique and loyalty item to its customers while making demand inelastic. This ensures that the company always sets the price of its product.
Figure 2: Apple laptops sales against
Source: Apple Inc.
Milestone five: reducing App prices
Apple’s app store is considered as a sufficient opportunity for application and program developers because it facilitates a lot of jobs. However recent studies show that income for developers in the App Store has reduced. Apple encourages free and reduced applications, however recently it ventured into different trends of applications and programs relevant to Apple items, and their products have dropped mainly. As Adam, Apple consumer states. This is good news for consumers, healthy competition has reduced price Referring to the lower App and program costs. This creates an environment to critically analyze the impact of the rise in demand for an item and increase in the price of its byproducts. In such a case an Application is seen as a complimentary for iPad and iPhone in the market. When the prices of complementary good (App) reduces, a market of the real inconsideration rises (iPad and iPhone), Additionally, this concept is applied to Apple programs that are complementary goods to the hardware component. Moreover, the application store has more reasonable impacts on different aspects of the society, results that transcend the venture business, international borders and the technology industry as one (Libin, 2013).
Milestone six: ensuring demand exceeds supply
From the explanation above, the use of nonprice competition plan in achieving market power through increasing the market of its item over their rivals, however in the short-term this might cause demand to exceeding supply. The senior chief manager of Apple Inc. Tim Cook stated. We can’t keep up with the prevailing market demand’s this is an indication of how demand outstrips supply on a range of items like the iPhone, iPad, and iMac. (Matt Warman, 2013). This causes another similar outward shift in the demand curve.
Figure 3: demand vs. supply graph
The implication is well illustrated on the chart above. When the market exceeds supply or when a market moves outward this means the same supply curve doesn’t t have any behavior of shifting, but just a temporary move on the same supply curve. This is shown by a move from D1 to D2 showing demand from Q1 to Q2 increasing quantity supplied at the point Q1 when a price is constantly at P1, due to the impacts of reduced complimentary prices like (Apps and Software), non-price competition while acquiring market power creates an excessive demand of Apple items. This also makes a temporary scarcity due to the quantity supplied doesn’t meet demand eventually, it causes a shift of the balance area from E1 to a new equilibrium Point E2, causing a rise in balanced price from P1 to P2 as well as balancing quantity from Q1 to Q3. The elaborate evaluation includes inefficiency of the demand as a result of scarcity, whereby Apple items are considered as poorly produced and this is a form of market failure.
Apple gains market power besides survives the great competition that cannot be prevented in its market model. However, the company has transformed the general outlook of the technology industry and beyond its borders by regular innovation and enhancements that have the organization get global recognition today. However, the company can also invest more in a more diverse workforce, and this will enable the increase in sales drastically. Because individuals are from different walks of life, and therefore having a wide variety of employees helps to speak at various consumers quickly, and this increases the overall costs. The company also needs to ensure that its products and services meet the rules and regulations placed by the government with regards to the mobile industry. The company should also adopt other market intelligence like neuro-marketing.
This type of marketing uses programs that can read an individual emotions and determine whether they like a particular product or not. The strategy has been proven to be very effective and therefore should be adopted by the company as a tool. The company also needs to ensure that it trains and recruits individuals with a talent with regards to information and technology and this provides that the corporation is always creative and has a stronger customer base while increasing revenues.
Apple.Inc, 2012. Annual Report. [Online] Available at: http://investor.apple.com/secfiling.cfm?filingID=1104659-06-84288&CIK=320193[Accessed 23 October 2013].Cohen, P., 2008. [Online] Available at: http://www.macworld.com/article/1131583/macbookair.html[Accessed 22 0ctober 2013].Inc, A., 2012. Annual Report, California: s.n.
Libin, P., 2013. [Online] Available at: http://pandodaily.com/2013/07/10/apples-most-important-innovation-turns-five-today-how-the-app-store-changed-business/[Accessed 23 july 2013].
Matt Warman, 2013. The Telegraph. [Online] Available at: http://www.telegraph.co.uk/technology/apple/9822856/Apple-We-cant-keep-up-with-demand.html[Accessed 23 October 2013].Sumit, 2013. History of Apple Company. [Online] Available at: http://www.techstories.in/brief-information-about-apple-company/[Accessed 23 October 2013].`