Apple, Inc’s Internal Growth Strategy

Apple has produced some of the gadgets best-loved by geeks and technophiles around the world from the iPod, to the iPhone to the iPad, Apple has demonstrated great skill in developing products that geeks seem to be waiting for. Upon the release of these products, other technology companies follow suit and produce their versions of the products released by Apple. Apple’s stock price went up from $7 in 2002 to $200 in 2007. This growth was due to the hundreds of thousands of sales of iPods and millions of iTunes downloads by the end of 2007 (Larson and Deans, 2010).

Product Development: Innovation and Product Integration

Apple’s internal growth strategy could be summed up in one word—innovation! In addition to that, Apple’s products are highly integrated—the user interface of all these products are almost the same and they sync with each other. The end result was high brand loyalty, bordering on cult following, among its users. For every product released by Apple, its followers expect a lot from the product and they willingly spend money for these new releases. Moreover, these followers also become the evangelists and marketers for the Apple products they buy.

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With the success of the iPod and the iPhone, together with iTunes, it is not an exaggeration to say that through these products, Apple successfully revolutionized the distribution of music all over the world! Now, consumers can download games, podcasts and software applications from iTunes.

Effective Brand Management, Marketing and Distribution

Apple not only creates products, it also excels in managing its brand, even in marketing and distributing its products. The Apple Store is a great way of distributing its products. The pricing strategy has also been effective. More than that, Apple is able to manage its customers effectively, so that they, themselves, become the marketing agent of the company’s products. It has focused in knowing its customers well, so much so that, innovations produced by Apple are designed to help end-users be more delighted in using Apple products. Through the closed system of Apple’s product architecture, it managed to maintain its distinct brand name. Although the names of its products start with the lower case letter “i,” this has not diluted the brand at all. Apple’s marketing strategy has been effective. Its advertisements were memorable, especially those that were aimed against its chief competitor, Microsoft’s PC. Another truly memorable Apple ad was for the iPod with the tagline: “One thousand songs in your pocket.” In addition to that, Steve Jobs, co-founder of Apple and its present CEO, is something of an iconic superstar that when he speaks, the world listens (Graham, 2007).

Apple also targeted creative industries. Cruikshank (2005) said that Apple has been successful in setting up its retail stores in places where its target customers flock. The company has also been dependent on PR by making its products reviewed by writers who matter to its target customers. It has also invested heavily in product placement in TV shows such as 24 and movies such as You’ve Got Mail and Sex and the City among others.

Apple’s External Growth Strategy

Apple Products and Third Party Players. Apple’s business strategy is not dependent on mergers and acquisitions. It needs to have alliances with vendors and network providers, especially for accessing data from some of its products. The most recent difficulty that Apple faced was the bandwidth limitation by AT&T. Since Apple had an exclusive partnership with AT&T, it did not tap other providers such as Verizon or T-Mobile to handle data requests from its users. The result has been negative publicity in various media. Wired Magazine (Vogelstein, 2010) ran an analysis of this issue and implied that both parties may be blamed for the problem. The network problem between AT&T and iPhone can result to dissatisfaction among Apple’s customers and may affect the performance of the iPhone.

In terms of joint ventures, Apple may be compared with Microsoft’s strategy. Microsoft is mainly a software company, with its Microsoft Windows platform. Microsoft then establishes partnerships with hardware-manufacturers such as Asus, Dell and Acer among others and installs its O.S. in these computers. Apple, on the other hand, manufactures hardware and develops software. This can be both a source of strength and weakness of the company. Its operating system, until recently, had been exclusively for the use of Apple computers. For software developers for its App Store, developers get to keep 70% of their revenue.

On the whole, Apple does not seem to be interested in collaborating with other companies that much. Steve Jobs’ attitude towards Adobe’s Flash is an indication that Apple will not, in any way, support Flash. As such, the growth efforts of Apple will depend entirely on its penchant for innovation and its loyal followers.

Reference

1. Cruikshank, J. L. (2005). The Apple Way. New York: McGraw Hill.
2. Graham, J. (2007). Apple Buffs Marketing Savvy to a High Shine. USAToday, March 8, 2007. Retrieved 5 August 2010 from http://www.usatoday.com/tech/techinvestor/industry/2007-03-08-apple-marketing_N.htm.
3. Larson, M. & Deans, G. (2010). Growth for Its Own Sake is … Overrated. ATKearney. Retrieved 5 August 2010 from http://www.atkearney.com/index.php/Publications/growth-for-its-own-sake-is-overrated.html
4. Vogelstein, F. (2010). Bad Connection: Inside the iPhone Network Meltdown. Wired Magazine, August 2010. Retrieved on 5 August 2010 from http://www.wired.com/magazine/2010/07/ff_att_fail/all/1

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