Channel Conflicts - Apple Inc.

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Question #9

Though an older article, “Apple Grows, But So Does Channel Conflict” , demonstrates an excellent example of marketing and channel conflicts. As a result of the wide success of Apple’s comeback through the sales of iPods and iPhones, Apple aggressively increased the growth of their retail stores at a rate of about 33 percent a year (push strategy). At the same time, Apple previously had utilized a distribution (distribution channel) to many other companies (non-Apple stores). Prior to Apple’s return to dominance, there were very few Apple retail stores available at all. However, by opening more Apple retail stores, Apple basically is trying to sell everyone themselves. Hence, eliminating the need and potentially cannibalizing sales away from their companies they distribute their products to. In addition, Apple’s decision for an exclusive contract (exclusive distribution) for their iPhones to only AT&T further increased conflict with their pre-existing dealers. Later—in present day—Apple decided to sell their iPhones everywhere (although still limiting it to be used through AT&T contracts only). As a result, this likely created a mixed channel conflict with AT&T because sales of iPhones could be decreased through AT&T but any iPhone sale would increase revenues through the required AT&T contract.

Due to the huge popularity of their products, Apple holds a definite channel advantage to their dealers. Lately, for product such as the iPad, Apple utilizes more of a pull strategy while their Apple retail stores simply attract customers on its own through brand equity and innovative products. In their distribution channels, Apple utilizes a heavy price policy that prevents many distributers from having Apple products ‘on sale’. Instead, most organizations typically provide a ‘gift card’ to their own stores with the sale of an Apple product if they wish to have it ‘on sale’. This is another channel conflict to their...
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