A situational analysis revealed that Apple’s key problem is competition from companies encroaching previously held place of comfort. Apple has cutting-edge technology and can, indeed, claim to be miles ahead of its competitors in structure and model of the iPhone. However, it is clear that its narrow product line of the iPhone, close imitations of the iPhone, Google’s Android popularity among other aspects serve as key reminders of a gloomy future if the same strategies are pursued. Apple Inc. unlike other peers in the tablet and Smartphone industry stand tall but has much fewer options due to its non-diversified product line. The company came up with a unique product, which places it up to now as a market leader, but the product will not retain its charm for long and products resembling it flood the market. The field is no longer at Apple’s disposal; other companies want a share of the iPhone cake, they may not reproduce an equal of iPhone, but they surely have a match (Almendares, 2010).
On the operating systems arena, Apple’s iOS faces fierce head-on competition from Nokia, Google and other equally credible players. Apple’s problem may turn grave if its marketing strategies err; its competitors are enormous affluent companies, capable of enormous research and development investment, sustenance of price war and brutal advertising. In the application stores arena Apple has a reason to worry, given the growing popularity of Google Play application market supported by Android. The vetting process of Apple applications makes it complicated and unattractive; Apple faces competition from all angles and corners; its policies such as vetting and selfishness of blocking other applications from the iPhone are costing it dearly and offering competitor’s an opportunity to encroach even more (Barret, 2012).
The best strategy for Apple is Diversification.
Apple continues to pursue a narrow market segment in the tablet and smartphones industry. It penetrated into this market after introducing the innovative iPhone product. This has led to its phenomena take over with immense brand reputation. Apple may be renowned as the technology company that blends unique design with simplicity; it may launch a new line of iPhone every year, but clearly, this will not always work. Consumer psychology comes in handy in making purchasing decisions, and the charm of owning an iPhone is not a bet for the competition. Without forfeiting its core reputation of leadership and branding gurus, Apple should diversify its products. It should strive to be a company of enviable products in a number of fields. A diversification strategy will entail seeking new markets through structuring their already popular products in a manner that will appeal to untapped markets hitherto (Swanepoel, 2012).
Apple started as relatively small company with a thin consumer base. The iTunes revolution changed the music landscape; this was through a transformation of the manner of accessing songs free of Digital Rights Management (DRM) ties. This aspect presents the phenomenal potential of diversification, built upon superior technology. It was an ingenious stretch of the iPhone idea with a stunning response. In this same manner, Apple should diversify its product scope by tapping other arena, while remaining true to its branding reputation and iPhone popularity. Apple won a patent relating to pen stylus-ink useful in information data input system. This would allow recognition of handwriting and open an opportunity in the publishing industry. Such advance may not necessarily be dependent on iPhones popularity, yet it could take the company into a new realm of competitive advantage. Digital books would be available on Apple devices or patent them, while running on other devices Apple still has idle potential that should be used in a diversified manner. Technologies that run iPhone could still tap into virgin arenas but shed off the iPhone tag and stand on its own name, built upon iPhones reputation (Almendares, 2010).
Reasons for the Alternative Strategy Choice
The diversification alternative rests on the reality that a majority of other strategies may not aid Apple in fighting off communication. Apple has tried a market penetration strategy in the past through reduction of iPhones price. Apple pursued market penetration by divorcing price scheming and slashing its iPhone launching prices from $599 to $399 in 3 months, which turned out as an act of betrayal to Apple’s loyal fans who bought it at the launch price. This strategy has also fallen short of guaranteeing clear competitive or revenue advantages. Other marketing strategies, centered on the iPhone product itself, will fail to deliver Apple given the complications courting its deal with AT&T. This deal forces Apple users to sign up to this exclusive deal, yet evidence of unsold stocks. Non-diversification will also imply pursuance of strategies promoting the iPhone; however, iPhone’s revenues are on the dip given the widespread policy miscalculations. Future streams of income from iPhone sales take a deep after spread of unlocking over 30% iPhone units; estimates indicate that Apple losses over $300 million of future streams of income from this trend. Consequently, a reasonable strategy should center on taking a focus away from iPhone per se. Rather, it should focus on building extra facets through diversification (James, 2010).
The Target Group
The diversification strategy may defy the rules of confinement within a single target group since it seeks to relate Apple products with other markets. Apple’s smartphones and tablets are specialty goods taken for convenience, entertainment purposes and status. Diversification will see Apple products appeal to larger markets without forfeiting their current appeals. Diversification strategy will target new groups beyond the current youthful and affluent consumer. The academic, business and other fields are the prominent targets groups of this strategy. The strategy will conspicuously target the academic group; this group of academics possesses vastness of number and multi-dimensional character. While the youth are a thoughtful target of iPhones entertainment, they also form the bulk of the academic active group. Targeting them through diversification would net them in through previous entertainment appeal and the diversified approach.
Marketing Mix Elements
To achieve a unique selling position given the competition and the target group, appropriate tactical and implementation approach is central. Apple approaches to place, price, product and the target group will guide distribution.
(A). Product Element
Apple will use the strategy in a manner that boast iPhones appeal, its prominent product. The focus on the product will appreciate the reality of battery issues, AT&T contract and data problems, transmission chip issues causing slow speeds among others. The diversification strategy upon considerations these issues will add on it, appealing utilities that will reinforce new and existing users of Apple products flawlessness. Rectifying the flaws on the iPhone by itself may hold true but will not convince critics. The academic group will get assurance of a unique blend of formal and entertaining.
(B). Pricing Element
The diversification strategy will be through selling on a package bases, depending on the utility content, application of psychological pricing to replace skimming, and allowing purchasing quality and affordable amount.
(C). Promotion Element
This will be core in diversification strategy in popularizing the new appeals. The target group will be done through signs boards near institutions of learning, online advertising and general media before and during the launch period. Involving e-libraries and various points of sale point advertisements will also be a focus, plus PR aspects of donations to learning institutions.
(D). Distributional Element
Apple will approach selling differently from the AT&T manner, users of its devices will choose between various service providers. Distribution will cover previously under-tapped markets such as European 350 million populations.
In conclusion, diversification remains the most tenable alternative given the variant competition challenges and narrow market options it faces. It not only serves as a competition fighter but also opens Apple’s future fighting options (James, 2010).