Description of Business and Competition
Apple is a leader in IT industry with S$96 billion revenue a year. Customers and technology are the primary driving factors in this arena. Customers want products that satisfy their needs or improve their productivity. Apple looks for ways to deliver these benefits at a lower cost, smaller size, and higher speed. Operating within an industry with this kind of rapid change presents several challenges for personal computer and notebooks, namely production costs, intellectual property owners, and monopolies.
For Apple and its product iPod, European market proposes great opportunities to expend its business and gain market share. Over the years Apple has sold over 70 million iPods. Five years down the line the Apple ipod is reckoned as a major brand in the market with its strong presence felt across the globe. But at this juncture our focus must lie on the negative feedback about the product that can easily crack the success model so far (Mossberg, 2006). The Apple Ipod has been earmarked as the device of the 21st century. Since its launch in the year 2001, the device has gained immense popularity with the masses.
It has been hailed as the style icon of today – a must have with the techno savvy generation. The Apple I-pod has revolutionized the music industry and initiated a change to the digital music era. Consumers identify with this brand and feel a sense of pride on their ownership. The ipod allows the users to store and watch movies – but the size of the screen does not appeal the consumers much (www. apple. com) Competition Recent years, the main competitor of Apple on the American market is Sandisk and Zune. In Europe, there is a wide number of smaller competitors selling MP players and similar devices.
The main international competitors are Creative’s Nomad, Samsung’s Napster YR 910, Dell’s Dell Jukebox, Toshiba’s Gigabeat (Giro 2004). In contrast to its competitors, iPod is the best solution on the international market. Apple bases it is strategy on traditional marketing theory and internet marketing. The main advantage of the company is that it can achieve lower cost and differentiation simultaneously. Company’s managers admit, however, that many different kinds of potentially profitable competitive strate¬gies are possible.
Although only a company can successfully pursue the cost leadership strategy (because it is so dependent on achieving dominant market share), others can pursue an almost unlimited number of differentiation and focus strategies (depending on the range of possible desirable features and the number of identifiable market niches (Fill 1999). In Europe, competition is fierce influenced by a number of internal and external factors. Michael Porter contends that a corporation is most concerned with the intensity of competition within its industry.
“The collective strength of these forces,” he contends, “determines the ultimate profit potential in the industry, where profit potential is measured in terms of long-run return on invested capital” (Porter, 1985, p. 58). In his book “Competitive Advantage” Porter identifies five forces that drive competition within an industry. For Apple, “the threat of entry by new competitors” is high caused by innovative technological solutions and developed of Zune by Microsoft. “The intensity of rivalry” is strong including such giant as Dell and Toshiba.
“Pressure from substitute products” can affect competition inclosing low cost CD players. “The bargaining power of buyers” will also influence Apple iPod because there are fewer the buyers and the larger the volumes of products available on the market. “The bargaining power of suppliers” will not have a great impact on Apple performance on this market (Porter, 1985, p. 67). For Apple iPod, the ability of a firm to use its resources and capabilities to develop a competitive advantage through distinctive competencies does not mean it will be able to sustain it.
Two basic characteristics determine the sustainability of a firm’s distinctive competen¬cies: durability and imitability. Market Research Market research will be based on primary and secondary data analysis which help to create a strategic plan and marketing campaign. “One such type of research that can influence all functions is customer satisfaction” (Fill 1999, p. 48). The following methods will be used in order to collect primary data for new product: individual interview and samples, direct marketing tools (coupons, discount coupons and internet questionnaires).
This method is probably the most expensive, but has the advantage of completeness and accuracy: normally questionnaires will be used; individual interview of customers who buy iPod and skis in specialized shops; internet questioners aimed to collect information about potential consumers. Secondary data sources fall broadly into two categories: those that are internal and those external to the organization conducting the survey. Statistical modelling techniques can be used to isolate the key drivers and to identify customer clusters or groups.
Alternatively, the company can use off-the-shelf segmentation classification systems. On the first stage company could orient on the particular geographic area, for instance south of the country. Increasingly market researchers are turning to lifestyle analysis as a means of generating a clearer picture of their customers’ behavior and thus their tendency to purchase iPod. Preliminary results suggest that European consumers are similar to American ones. The target audience will involve male and female consumers from 15-45 years old.
Segmentation will be used to understand individual customers in the music market place and to group them together to form distinct segments which are identifiable, accessible and substantial. At its simplest, a consumer segmentation will be: non-user, competitor’s customer, low-value customer, high-value customer (Fill 1999). In business markets, segmentation is often used to make selling more cost effective by prioritizing the companies that require regular face-to-face salespeople and that can be served better by telesales and direct distribution.