Brand reputation and awareness
Apple Inc. has developed both band equity and brand awareness among the consumers in the electronic industry for nearly forty years. The brand equity of Apple Inc. will allow iwatch to be priced at a high rate due to the value the consumer will place in the product. Current Apple user and potential Apple consumers will want to buy an iwatch due to their brand awareness to Apple Inc. They have used more than one device of Apple, and they think that Apple fulfill their physical and psychological needs, so iwatch will as well.
A variety of products Apple Inc. has over the years followed integration both horizontally and vertically and as a result emerged as a formidable competitor. The company’s different kinds of devices provide a product mix’s breadth. Through PCs, tablets, smartphones and other devices, Apple aimed to offering a whole range of associate products and devices, like iphone, ipad, ipod and imac. The different products meet different people’s need. The company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software, and services. The vertical integration provides control over the entire user experience or process from hardware to software which facilitates higher customer loyalty and provides lock-in. In the era of convergence, apple enjoys a favorable competitive environment provided by the user dependence on the iOS which enables it to earn incremental earnings by offering all associated devices, which is a huge competitive advantage. Another key integration aspect that has enables Apple to gain competitive advantage in the content offering. The company’s content bases are large and is shared across all devices through iTunes, which is a storefront offering all kinds of media.
Successful product lines Apple has a string of successful product launches which created a halo effect and the company was able to drive its market share. Between the third quarters of 2004 and 2005, sales of the iPod increased over six folds indicating the massive success of iPod. The customers kept purchasing new versions of the same products and by 2008 it had captured 48% of the MP3 player market share. SanDisk’s Sansa MP3 player was the iPod’s closest competitor with 8% market share. In 2012, the estimates indicate that about 350 million iPods were sold since its launch. Following iPod was the iPhone which saw Apple’s success build in the smartphone market. Since its launch, iPhone captured increasing market share and displaced the then mobile phone market leader, Nokia. By the end of third quarter of 2007, iPhone accounted for 3.4% share in the mobile phones market after launch in the beginning of 2007. The product gained traction and the market share was three times higher by the end of third quarter of 2008. The success resonates with each launch of iPhone. According to the industry estimates, Apple’s iPhone 5, which was launched in 2012, became the world’s best-selling smartphone worldwide during the fourth quarter of 2012, with shipments of over 27 million during that quarter. During 2012, the company sold 125 million iPhone units an increase of 52.8 million units over 2011. The success of the product was also reflected in the fact that Apple captured over 70% of the mobile phone industry’s total profits in the fourth quarter of 2012.
Availability of product
With Apple Inc. stores, retail providers, and a comprehensive website, Apple Inc. has the ability to provide the product to several different segments. Apple stores are located across the country and abroad to provide consumers with hand on assistance. Retail stores such as Wal-Mart, Target, and Best Buy, will have the product ready and available for the consumers to test and purchase. There is another channel---Apple Inc. website, for consumers to purchase the latest product conveniently and cheaply.
High dependence on iPhone and iPad product lines The company’s revenue and growth rates are largely dependent on iPhone and iPad product lines. The iPhone, iPad and related products and services together accounted for 72.1% of the total revenues in 2012. Although, these product lines have been the growth drivers for the company, any decline in the growth rates could impact the company’s performance. Dependence on few product lines increases the business risk, especially in an industry characterized by fast paced technological changes.
Lack of products at different price points
Apple positions its products in the premium category and offers them at a single price point. The average selling price of an iPhone has remained above $600, putting Apple out of reach for most buyers. Comparatively, the company’s competitors like Samsung have products at varied price points. As a result, the competitors have access to a large market base and are better positioned to capture varied customer interests. Furthermore, lack of products at lower price is proving to be a challenge while addressing price sensitive customer base. Despite being a leading player in the smartphone segment, Apple commands less than 10% of the global mobile phone market, as compared to about 30% share by Samsung. This factor limits Apple ‘s addressable market compared to competitors.
Evaluation and control metrics
Stars: stars (upper left quadrant) occur in high-growth markets and are high market share products. Star often require a heavy resource investment in such things as promotions and new production facilities to fuel their rapid growth.
Cash cows: cash cows (lower left quadrant) are in low-growth markets but are high market share products.
Question Marks: Question marks (upper right quadrant) appear in high –growth markets but have relatively low markets shares.
Dogs: Dogs (lower right quadrant) are in low-growth markets and have relatively low market shares.
The classification of Apple’s products iPhone The iPhone is certainly a star, which has a high market growth rate (87%) and a high relative market share. In 2011, Apple–the top company selling smartphone in the industry, sold 16.2 million units in the fourth quarter alone making its relative market share 100%. iPod The iPod’s relative market share is 100%, and with more than 300 million iPod sold in a little over 10 years. However, the Mp3 market is contracting, and its market shrank by 10% from 2010 to 2011. Due to the lack of market growth, the iPod is a cash cow. iPad The iPad is a question mark. Because it has an incredible sales growth rate from 2010 to 2011 of 333 percent, and sales of approximately 55 million units as of early 2012. In 2011, its absolute market share was 95.5%, making it the market leader with a relative market share of 100 percent. iMac Desktop
The iMac is a dog. The growth rate of the Mac Desktop has slowed to 4 percent, and it has a small relative market share in the desktop market. iWatch From the report and the data we gathered, we predict that the iWatch will be a question mark. It will have a high market growth rate and a low relative market share. For a high market growth rate, the iWatch provide useful functions for people who like doing the exercise, and with the high stress of the work, many people prefer to do some exercise during their leisure time. It satisfies the need of nowadays people. However, the price of iWatch is a little bit high, which is about $200, out of reach for some segment, like teenagers. Therefore, the iWatch will be a question mark for Apple Inc.