Extended Essay

Business Management

Analyzing the effect of Apple’s marketing strategies on its position in the

market and its sales

Research Question: “To what extent where the marketing strategies implemented
by apple Inc effective in enhancing its market share and sales?”

Word Count:

1
"Apple Logo | Logok". Logok, 2022, http://logok.org/apple-logo/.
Table of Contents

1. Introduction ...................................................................................................................3

2. Methodology....................................................................................................................4

3. Analysis and Discussion..................................................................................................5

3.1. SWOT Analysis............................................................................................................5

3.2. The Marketing Mix – 4P’s...........................................................................................8

 Product: .........................................................................................................................8

 Price:..............................................................................................................................9

 Promotion:......................................................................................................................9

 Place:............................................................................................................................10

3.3. The Ansoff Matrix.....................................................................................................11

3.4. Porter’s five forces:....................................................................................................13

Appendix 1............................................................................................................................15

Appendix 2............................................................................................................................16

Page numbering should start appearing here “page 2”

 1. Introduction

Apple Inc is a multinational American manufacturer of various technological devices including

smartphones, personal computers, software and many others. It was founded in 1976 by Steve
jobs, the first chief executive officer (CEO) and Steve Woznick. The headquarters are based now
in Cupertino, California and it operates as a public limited company (PLC). 2 Apple Inc is a well-
established business worldwide, with a solid brand image, value and customer base. Apple’s
brand value was secured especially after the intensive growth it witnessed between the years of
2011 and 2018, which allowed Apple to be the first company that reached the value of 1 trillion
dollars (steven levy, After jobs: Tim Cook as CEO and the first trillion-dollar company). Apple
Inc was able to achieve a market leader position with a total of net revenues of 365.82 billion
dollars by the end of 20213 to compete with other major companies such as Samsung, and
Huawei.
This established and reputable position Apple holds is a result of not only providing state-of-the-
art technologies and high-quality products but is also due to implementing highly effective
marketing strategies that have also led to the increase in its customer base which ultimately
increased sales and market share. Their top-notch pre- and post-sales services are also part of
these strategies that had a major impact on its brand value and loyalty, as well as repeat of
purchase and good word-of-mouth. It is evident that apple’s market share increased from 14%
(Brent Cornell 2021)4by the end of 2021 to 23.4 by the first quarter of 2022 5. As Apple
incorporates new marketing techniques to widen its reach and obtain new customers.
This topic is attention grabbing as its obvious that Apple’s strategies have aided the business in
becoming one of the most well-known businesses globally, along with providing the essence of
luxury, prestige, and status with every single product. “We do the right thing, even when it’s not
2
Encyclopædia Britannica, inc. (n.d.). After Jobs: Tim Cook as CEO and the first trillion-dollar company. Encyclopædia
Britannica. https://www.britannica.com/topic/Apple-Inc/After-Jobs-Tim-Cook-as-CEO-and-the-first-trillion-dollar-company.
3
Laricchia, F. (2022, February 1). Apple: Revenue 2021. Statista. Retrieved February 20, 2022, from
https://www.statista.com/statistics/265125/total-net-sales-of-apple-since-2004/
4
Counterpoint, |B. T., Team CounterpointCounterpoint research is a young and fast growing research firm covering analysis of
the tech industry. Coverage areas are connected devices, & Counterpoint research is a young and fast growing research firm
covering analysis of the tech industry. Coverage areas are connected devices. (2022, February 9). Global smartphone market
share: By quarter. Counterpoint Research. Retrieved February 20, 2022, from https://www.counterpointresearch.com/global-
smartphone-share/
5
Laricchia, F. (2022, February 1). Apple: Revenue 2021. Statista. Retrieved February 20, 2022, from
https://www.statista.com/statistics/265125/total-net-sales-of-apple-since-2004 /
easy”6 is also part of Apple’s success, with implementing CSR and emphasizing values that
range from racial equity and justice to accessibility, responsibilities and much more 7, Apple has
gained a positive brand image and justifiable premium prices. Therefore, this extended essay
aims to answer: “To what extent where the marketing strategies implemented by apple Inc
effective in enhancing its market share and sales?”

6
 "Ethics And Compliance - Apple". Apple Compliance, 2022, https://www.apple.com/compliance/.
7
 "Apple". Apple, 2022, https://www.apple.com.
 2. Methodology
The aim of this essay is to evaluate the marketing strategies of Apple Inc. that aids in enhancing
their position in the market and increasing their sales and profits.
The essay will be based on secondary market research that is conducted through google chrome
searching engine. The data collected will be qualitative and quantitative that is collected from
statistics, news articles, and Apple official website to evaluate the marketing strategies and the
promotional tactics that are used to increase their sales and profits.
The tools that are used are SWOT analysis that identifies the weaknesses, and the threats in
market that might hinder them from increasing profits to improve the current marketing
strategies. The marketing mix of Apple Inc. to ensure the proper marketing mix to increase sales.
As for the Ansoff matrix it evaluates the potential

3. Analysis and Discussion

3.1. SWOT Analysis

- Examining Apple Inc.’s position through a SWOT analysis framework.

Evaluating internal strengths and weaknesses and external opportunities and threats is vital for
businesses to improve their overall position as well as make use of existing strengths and
opportunities to further enhance their operations and to maximize profits. SWOT analysis is an
essential tool for businesses such as apple Inc to identify the gaps in their strategies and to
improve them to increase their market share and total revenues.

Strengths Weaknesses
 Product-oriented  High priced products
 Focus on unique value proposition  Incompatibility with other software
 Established brand name and brand  Many intermediaries involved through
value  Promotional strategy relies mainly on
  Continuous expansion in services its brand image
 High profit margin
 Varied product portfolio
Opportunities Threats
 The increased demand on  Increased competition
technological accessories and gadgets  Labor costs are increasing in several
 increase of demand on technological countries
devices  China tariffs
 Technological advancements pushing
for continuous and easy development
of new products in the electronics
field

Apple Inc is a product-oriented business with an inward focus of investing in research and
development excessively to provide state-of-the-art products that will aid in widening its
customer base through raising customer satisfaction and brand loyalty. Apple emphasizes the
importance of constantly innovating new technologies to address the customer needs as they
were able also to penetrate new markets. Through R&D, they were able address the unarticulated
customer demands which enabled them to secure loyalty, satisfaction and led to entering new
markets and generating market demand8. This is considered as a strength for Apple as being
product-led was key for them to diversify their portfolio and bring in higher profits. “Air pods” is
one of their highly demanded products which was able to bring in approximately 2.25$ billion
revenue boosts in 2017 and this revenue has increased in the following years in 2018 the
revenues became approximately $5.25 billion and 2019 the revenues increased to $12 billion for
the air pods only. 9
This demand reflects the large customer base of Apple which is proven as
customers justified the air pods’ premium prices and appreciated their value, which has resulted
with an increase in Apple’s market share. In addition, the focus on products and R&D has
allowed Apple to enjoy risk-bearing EOS which has reduced unit cost with the increase of
8
https://www.ringcentral.co.uk/gb/en/blog/business-orientation-product-orientation-and-market-orientation-whats-the-difference/
9
Cohen, C., King, A., 13, E. J., & 13, P. J. (2022, January 31). Apple's airpods alone make more revenue than Spotify's entire
business. Digital Music News. Retrieved February 23, 2022, from https://www.digitalmusicnews.com/2020/01/09/apple-airpods-
more-money-spotify/
production and has led to an increase in their profit margins. Furthermore, Apple strategies have
conveyed its brand value as the luxury retailer in the industry 10. unique value proposition (USP)
is a core focus for apple as they emphasize on the experience that the customer will enjoy pre-
and post-purchases.11 Through the focus on USP, they were able to gain a competitive advantage
over competitors and maintain customer loyalty as they create a story for the customer through
their products which is a persuasive technique for the customer to buy the product for the
memorable experience and the valuable product, this is also part of their marketing strategy to
promote their products as essentials in consumer lifestyles and push for repeat of purchases,
along with the encouragement of unplanned purchases and impulse buying. Apple offers several
services that creates USP for it such as the trials they offer for the customers, the show rooms,
the warranties and others the that creates brand loyalty, as the customers starts feeling as if they
belong to a family, and they become loyal to the products and services served. Other services
that are subscribable such as Apple TV+, Apple music, and Apple arcade make up approximately
19% of apple’s annual revenue. As the variety in offers also encourage the users to subscribe
there are offers such as individual, family, and premium to suit the majority of the segments.
12
Those services play a major role in maintaining a strong stand in the market and a sense of
security that will satisfy customers and enable loyalty. Other than that, the varied product
portfolio that satisfies several segments also lead to higher profits and sales. As the diversity of
the products maintain stability of earnings as the products that are in the cash cow stage provide
high revenues to mitigate the chance of product.13

Some weaknesses that may have an affect over their sales include the high premium prices set
for products which classify them as luxurious products. Due to that the target market of apple
will be limited to certain social class which are customers with middle- and high-income.
However, with the high prices being a reason for the high profit margin that apple maintains and
even though the target market becomes limited, yet these premium prices are justified due to the
product quality provided and the superior features available. Yet, with these features comes other
weaknesses such as the incompatibility of the software with other software as the IOS and
10
https://www.forbes.com/sites/christinemoorman/2018/01/12/why-apple-is-still-a-great-marketer-and-what-you-can-learn/?
sh=1004a92315bd
11
https://www.meltwater.com/en/blog/5-things-to-learn-from-apples-marketing-strategy
12
https://www.apple.com/jo/newsroom/2020/09/apple-one-makes-enjoying-apple-subscription-services-easier-than-ever/
13
https://seoaves.com/apple-swot-analysis/
macOS are incompatible with Microsoft and android. This limitation might minimize the target
market as well as the customer will be restricted into using apple software only and this might
cause high expenditure for the customer which is unfavorable and poses as a weakness. 14 Apple’s
promotional strategy rely mainly on its iconic and flagship retail stores, as the large customer
base, and the positive brand image is one of their keys for success, however expanding and
implementing more extensive strategies might be an opportunity to enhance their brand image
and brand recognition which enlarges their customer base. Furthermore, the distribution channels
for apple’s products are limited which also restrains the increase of sales, as the customers are
not able to buy the products through varied sales points and different areas as Apple stores are
found only in 17 countries around the world and they are mainly found in the United States with
271physical shop to create an empire for itself 15. Apple uses authorized retailers as
intermediaries to sell the product which increase the costs incurred by Apple, yet the narrow
distribution channels and limited accessibility to sales points might lower brand loyalty as
customers will be discouraged to make purchases without the ease of reach.
However, the consistent development and improvement in the electronics market enables apple
to improve its brand image that increases its customer base, and might trigger the customers to
buy the products even with higher prices. There are also other opportunities such as the increased
demand on the technological devices especially after the COVID-19 as the change to hybrid
and/or online transactions, operations and teaching as well as other activities has increased the
demand on technological devices16 This social opportunity (consistent customer growth)
increased the sales for apple which resulted in an increase in the revenues. Other technological
opportunities are taking place also such as the technological advancement and the
implementation of artificial intelligence in different field will enable easy development of new
technological products17. Moreover, increased demand on technological gadgets and accessories
that might become a $27 billion market with 233 million units to be sold, which creates an
opportunity for apple as some of their cash cow products are technological gadgets such as the
apple watch and the Air pods.18 Through this expected increase in demand Apple will be able to
achieve economies of scale and to increase revenues, to develop new technologies and products.
14
https://bstrategyhub.com/swot-analysis-of-apple-apple-swot/
15
Appendix 3
16
Appendix 1
17
https://bstrategyhub.com/swot-analysis-of-apple-apple-swot/
18
https://bstrategyhub.com/swot-analysis-of-apple-apple-swot/
There is an increased competition between the technological multinationals such as Samsung and
Huawei,19 the product portfolio is similar to Apple, which is unfavorable, as the increased
competition might decrease their market share. To maintain market leadership research and
development should be conducted and new technologies to be introduced to the market or to
change their pricing strategies to be ahead from its competitors 20. United states have imposed
new higher tariffs on the imports from China which adds on the variable costs of Apple and
decreases their gross profit margins, as the products of Apple are assembled in China, this might
add on to the prices of the products which minimizes their customer base.21
Furthermore, due to the economic crisis and COVID-19 pandemic around the world, the labor
costs have increased throughout last 2 years, as employees were laid off which caused increased
costs of the labor, that add on the fixed costs of apple.

19
Appendix 2
20
https://bstrategyhub.com/swot-analysis-of-apple-apple-swot/

21
https://bstrategyhub.com/swot-analysis-of-apple-apple-swot/
3.2 The Marketing Mix – 4P’s

- Analyzing Apple’s marketing mix through the use of the 4P’s (Product, price, place
and promotion) implemented.

The 4P’s marketing mix is a marketing tool that illustrates the main factors that apple should
consider through launching their products which are product, price, promotion, and price. The
business plan of apple should include

22

 Product:

22
https://marketingsozial.wordpress.com/2016/01/17/marketing-mix-and-strategies/
Apple is known as one of the most reputable businesses with innovative goods, services and
solutions that are seen to meet customer needs and wants as well as fulfill customer satisfaction.
The main products that they offer are Mac, iPhone, iPad, iPod, apple watch, apple TV, digital
content, software, accessories, and the cloud services. Apple’s products are recognized for their
high quality, durability, and simple designs, that attract customers from different segments, as
the simple designs suit adults and youth with elegant designs that are long lasting models. Other
than that, the paper packaging of the tangible products that are sold is eco-friendly as Apple
started using fiber materials for packaging and protective boxes to reduce the paper footprint, as
they become carbon neutral through implanting the CSR concept. 23 In addition the packaging of
the products offers a sensory experience to the user that reinforces their brand image, and brand
loyalty, additionally the minimalist packaging attracts the eye of the customers, which also
signifies to the elegance of the product. Unboxing of the package is a unique experience for the
user as every detail is studied in the aim of customer satisfaction, and to create unforgettable
experience, for repetitive purchases that increases sales and revenues. Apple offers tangible and
intangible products, as the diversified products portfolio include different services that are
compatible with the products offered. Such as Apple music as it is a service found on products
such as I phone, I pad, and Mac book. However, those products have a weakness as they are
incompatible with other devices and software especially the services as they are offered only for
the apple users. However, those products might be high in market share and be the cash cows in
Apple such as I-Tunes which is a service offered for Apple products uses as its revenues reached
to $10 billion. 24
The star product of Apple is the I phone, as it the product that is always in an
expansion, as different virgins are offered every year that increases sales. The profits that are
obtained from the sales of the stars and cash cow products could be reinjected for research and
development for new products. Apple provides products that are product oriented, that is based
on field and desk research that have already been conducted, as the human behavior is also
considered through designing the product. This creates USP for Apple products which enhances
their brand recognition and increases sales. Based on different statistics the sales and market
share of apple are extremely high which reflects that they are in the saturation stage especially
for the Mac and iPhone as there is a high demand and high market share with limited chances of

23
https://www.apple.com/environment/pdf/Packaging_and_Forestry_September_2017.pdf
24
https://www.hollywoodreporter.com/news/general-news/apple-hits-10-billion-revenue-services-like-itunes-
1157173/
growth due to reaching their peak.25 This encourages Apple to pursue extension strategies and
constantly evolve their product portfolio to sustain customers and attract new ones.

 Price:

This element of Apple’s marketing mix considers the pricing strategies implemented in which set
a value to the products offered to the market. Apple implements 3 different pricing strategies
which include; a price skimming strategy which is offering the product at a premium price that is
relatively high compared to rivals but gives Apple a luxurious brand image and would be
justifiable due to great experience and top quality delivered to customers 26. Customers will also
feel a sense of exclusivity and prestige when buying products that are sold at premium prices.
This strategy aids in increasing Apple’s profit margins due to the increased sales which were a
result of the premium branding, and premium innovation, in addition to paving the way to
market leadership. Furthermore, Apple also adopts a freemium pricing strategy which involves
free and premium prices combined; Apple offers free services such as the 5 gigabytes of the
iCloud, as the first 5 gigabytes (GB) are free but to obtain more GB, the customer has to pay an
additional fee, and it is evident that customers rush to obtain advanced services as they perceive
the value of the good or service purchased. The use of those strategies is an advantage and
disadvantage for apple as the premium prices can increase the profit margins and consequently
their market share but at the same time some potential customers will prefer the rival companies
because of the difference between the prices. As for the freemium strategy it is convenient for
loyal customers, but it might be risky because of the new rivals that operate in the market and
offer similar services for free.27 Finally, Apple’s third and final pricing strategy includes
psychological pricing, which is mainly used for their services for example the iCloud storage as
it is offered for $2.99 for 200 GB per month which can manipulate the thoughts of the customers
and might lead to high profits at large quantities.

25
http://panmore.com/apple-inc-marketing-mix-4ps
26
https://marketrealist.com/2014/02/apples-premium-pricing-strategy-product-differentiation/
27
http://panmore.com/apple-inc-marketing-mix-4ps
  Promotion:
Apple implements and emphasizing the use of effective marketing strategies that are able to
portray the brand value and reach wider markets which resulted with higher brand loyalty. Apple
customers wait for the product and buy it without thinking much about the price because the
created brand image secures repeat of purchases, impulse buying and a loyal established
customer base. The promotional mix of apple includes the use of both above-the-line and below-
the-line advertising. Apple has an agreement with google digital platform and on technology
news websites to promote and advertise for its products. Apple targets users that are concerned
with technological platforms, and creating persuasive advertisements to the target users will
lower advertisement cost per unit as the product will be promoted to the right segment. As for the
print ads apple usually focus on their product in the advertisement as they create contrast in the
advertisement to reflect the unique product they are promoting for. The constant and simplicity
creates excitement and unforgettable experience through unboxing and it works as a branding
strategy. Apple also promote for their products before releasing their latest product by a short
teaser video that promote to the latest features in the new product which enhances their brand
image and engages the loyal customers in a personal journey and triggers their feelings to buy
the latest products. In addition, the keynotes speeches also play a role as the speakers promote
for the product indirectly by using their experience to talk about the products. Personal selling is
also implemented as the seller in the apple store provide the customers with specific information
to persuade them to purchase. The sales promotions also take place in the stores as some
authorized stores and the apple store might offer sales promotions on the old models. As for the
public relations apple might leak some information about the new product feature, or create
exclusive interviews, press releases to maximize the positive publicity. Apple conducted one of
its largest promotional campaigns in early 2020, that included several celebrities and
entrepreneurs that have stories of success. Behind the Mac campaign highlights the stories of
success and creates a source of inspiration for the users as it empowers the users. The use of the
testimonial method of advertising also makes the customer believe in the brand and the product
that is being sold. Moreover “behind the Mac” views normal people also who have stories of
success however the icon of Apple is the only focus. the main focus of this advertisement is the
next generation, and it motivates them for success, and a creates a positive brand image. 28 The
CSR concept is implemented as well, as Apple tries to maintain safe work conditions for the
labor and also the environmental considerations are extremely important for apple as the
products that are produced are recyclable, the carbon foot print is minimized through using fiber
based plastics for packaging, and non-hazardous materials are used through production, as well
as the energy sufficient products that minimize the use of electrical supplies. 29
this gives them a
positive brand image and pushes customers to purchase from them rather than competitors.
Apple also implements pre and post sales service, as they offer the experience for the potential
buyers to test the quality and aesthetics. Other post sales services also take place as the limited
warranty30, that cover the damage that is related to the quality of the product. Other services
include the trade-in programs that allows the customers to exchange their older version product
with a newer one with minimal amount of additional payment. Customers can also return the
product within 14 days if they were unsatisfied with the product 31. Those services secure
customer loyalty and repetitive sales, especially the trade-in service as the customer will
exchange their old products with newer ones, as once they became an Apple user they don’t
switch to other rival companies. Furthermore, Apple started offering a new service through
showing a 3D model for the customers that are unable to test the product in the physical show
rooms, as they will be able to test the color and size in comparison with real life through the
model. This will encourage the buyer that consider online shopping, and will increase the sales
through the online distribution channel. Apple is able to maintain their position as a market
leader through the use of those marketing strategies, as they are able to create promotional for all
the distribution channel and to all segments. The persuasive promotions will increase sales and
maintain their market leadership through time.

28
https://www.thedrum.com/creative-works/project/apple-behind-the-mac
29
https://www.eoi.es/blogs/marieglueck/2012/05/07/how-serious-is-apple-about-csr/#:~:text=%E2%80%9CApple
%20is%20committed%20to%20the,use%20environmentally%20responsible%20manufacturing%20processes.
30
https://support.apple.com/en-afri/iphone/repair/service#:~:text=The%20Apple%20Limited%20Warranty
%20covers%20your%20iPhone%20and%20Apple%2Dbranded,by%20accidents%20or%20unauthorized
%20modifications.
31
https://research-methodology.net/apple-value-chain-analysis/
  Place:

This element of the marketing mix involves the selection of appropriate places to distribute the
product through intermediaries. Apple had chosen mainly the owned locations as well as other
places that they give authorization to distribute the product, as they use intermediaries through
distributing the product, as the product reaches the customer after several intermediaries
especially in countries that don’t have an authorized apple store. As an alternative distribution
strategy company owned website and the telecommunications companies are used to sell the
products. Through this distribution channels apple can achieve more brand awareness and
recognition as a larger audience will identify the brand and this might expand and enlarge their
customer base. Furthermore, they choose the store locations strategically such as the shopping
malls in different markets. As for the telecommunications companies they have agreements with
them such as Verizon, and AT&T as the strategic alliance between them prepare packages for the
customers which aids in sustaining and securing a larger audience for both businesses and will
result with a mutual benefit that is cost effective. This external growth strategy aids Apple in
distributing their products to a wider audience and guaranteeing higher sales which ultimately
enhances their sales, profits and position in the market.
3.3 The Ansoff Matrix

- Illustrating Apple’s extension strategies implemented through the Ansoff Matrix

32

Ansoff matrix is a growth tool that evaluates the strategies businesses consider to further expand
their operations and extend their life cycle. Market penetration is a strategy used by Apple to
focus on their existing products and markets, to nourish and achieve higher sales which results
with an increase in market share.
Apple Inc. follow this least risky strategy through different products, as apple focus on this
strategy through the I phone, and the iPad intensively, as high number of products are available
throughout the year as according statistics Apple ships 84.1 million smartphone by the 4 th quarter
of 2021 33
as they penetrate their markets globally through the high number of products. In
addition to Apple is extending their outlets in different areas, as they vary between the Apple
32
https://research-methodology.net/apple-ansoff-matrix-2/
33
Appendix 4
store, or the online website, and the telecommunication companies are also outlets, as strategic
alliance AT&T, Vodaphone and others, extends their outlets for the products, as they became
attainable and approximate to all the potential buyers. Other than that, branding and packaging of
the products that also creates positive brand image, and grabs the attention of the buyers, as the
promotions such as the “behind the Mac” campaign also increases sales of the products that are
currently in the markets.
Moving on to the product development strategy in the Ansoff Matrix where the current products
are improved, and new products are developed. 34
Apple Inc. have been developing several
products, as they improve their features and aesthetics to have advanced and compatible devices
with the development of the market, as they were able to add the finger print password to the
Mac book to match the recent trends. In addition to the tool bar that was added to the Mac book
pro, as this product development increased the sales, and also created new experiences for the
users.35 Other than that Apple also works on the development of their services, such as the I
cloud and the systems of the electronic devices, as they were able to develop a strong security
system, and to create a network for Apple users through the Air drop facility, which enhance
brand loyalty. Throughout the years as they designed products in the product oriented strategy
where intense research and development took place and new products where release to suit the
taste of the customers, or to make benefit of the external factors to create products to suit the
current situation, such as the apple iPad, as their sales have increased intensively through the
pandemic, as apple have released this product to suit the students’ needs especially in the online
learning phase, as new products where released such as the apple pen and the wireless keyboard
to be compatible with the iPad, which also expanded their customer base, as kids and learners
became a segment of customers.
Moving on to the market development strategy where apple implements through entering new
markets globally such as in the far east. As they sell their current products in new markets to
maximize its profits. Apple implement this strategy through expanding to the far east, and other
regions in the globe, as it did not confine its presence in the main American and Europeans
36

markets rather it expanded to India, Dubai, and other potential markets. However the main
physical distribution channels are found in the united states with 271 physical shop, however

34
https://howandwhat.net/ansoff-matrix-apple-apple-ansoff-matrix/
35
https://research-methodology.net/apple-ansoff-matrix-2/
36
Appendix 3
development is taking place as they are expanding to different areas to decrease the number of
intermediaries for the product as it shortens the distribution channel, which decreases costs.

3.4 Porter’s five forces:

- Analyzing Apple’s surrounding environment and the impact it poses over its
operations through a Porter’s Five Forces analysis:

37

Porter five forces tool demonstrates and analyzes the forces that shape every industry, which
helps apple in determining the external environment and the favorable and unfavorable impact it
poses. This analysis aids Apple in finding organizational strategies and plans to operate in order
to enhance their profitability and sustain their position in the market. 38 Apple Inc. is considered a
market leader with advanced technologies and premium products, and it is vital for Apple to
examine the forces that act on the market of electronical devices, as this tool sheds light on the
areas that apple should consider to maintain market leadership.

competitive rivalry
Starting off with the competitive rivalry Apple faces fierce competition with the companies
which is unfavorable for Apple in the electronics markets. Huawei, and Samsung compete
37
https://extraessay.com/?key_wpg=6e330aece0d36b6a1d8c2e2042792828&sub_id=2grpboa1gkdfm
38
https://www.investopedia.com/terms/p/porter.asp
aggressively with Apple. The strength of this force is measured by the aggressiveness of the
firms that they are competing with, the switching cost that they impose, and to what extent are
their products differentiable. Apple Inc. has to consider the high competitiveness of its rivals, as
new strategies have to be considered to maintain market leadership, and to increase their
customer base as there is high aggressiveness between it and its rivals as LG, Samsung, Google
Inc, and Amazon Inc, as all of the rivals have high investments on research and development,
aggressive advertising, rapid innovation thus the competitiveness is high. 39Other than that, the
products of Apple Inc and other rivals are similar to a certain extent, all the products are mainly
similar in their function, and in the fulfillment of the purposes needed, such as the availability of
the wireless head phone, as this product was firstly launched by Apple’s competitors however
Apple met the demand and released the Air pods that have the same function, so this creates a
strong force. The switching cost is relatively low compared to other rivals, and it is also easily
accessible which causes a strong force that acts in the market.
bargaining power of the buyers
bargaining power of the buyers unfavorable for apple, is that the purchase power of the buyers
determine the competitiveness of Apple among its rivals. The purchase power of Apple is
measured through external factors that include as mention above the switching cost, as Apple
imposes premium prices for their products which might make customers that are price sensitive
from buying, the products, as they are considered luxurious for certain segments, which might
cause dissatisfaction for other segments of customers that prefer cheaper prices with lower
quality. However, Apple is controlling this by providing explicit information about their product
which is considered as a persuasive technique to maintain customer loyalty and to lower the
switching costs that are imposed because of the price skimming strategy that they are using.

power of suppliers

Moving on to the power of suppliers which is considered as favorable weak force and for Apple
Inc. as it influences the environment of Apple. The availability of many suppliers decreases the
cost per piece and the average cost which increases the efficiency of Apple and aids in achieving

39
https://www.investopedia.com/articles/investing/111015/analyzing-porters-five-forces-apple.asp
EOS. Furthermore, the availability of different suppliers globally, allow them to have different
supply chains. Furthermore, because Apple is a large producer and a market leader, thus supplier
force is very weak
force of substitutes
As for the force of substitutes is unfavorable for Apple Inc. as the external factors that influence
the threats such as there is moderate availability of substitutes, as Apple Inc got rid of the
landline telephone and replaced it with smart phone with advanced technologies which is more
convenient for the users of Apple, as the devices that Apple provides have different facilities that
enable the customer to have all the available possible facilities in one device, as the I phone is
known for having a very high quality camera that is able to substitute the professional cameras.
Such facilities minimize the possible unfavorable force that might decrease the sales.
force of the new entrant
Lastly for the force of the new entrant, is unfavorable and has a moderate effect that act on the
environment of apple, as the new entrant will need high expenditure on research and
development, which might cause bankruptcy to the business before entering the market,
furthermore because apple is a market leader, it is also a price maker, and this also hinder other
businesses from entering the market, as the costs of the brand development is extremely high and
need high capital from an eternal source of finance to support. However, this might be the
situation, and external sources of finance could be found as the market has the capacity for new
entrant, and there is elasticity in the market which might enable other new businesses to become
rivals with apple.
Conclusion:
Appendix 1

40

40
https://www.statista.com/chart/17862/apples-annual-revenue-by-operating-segment/
Appendix 2

41

Appendix 3
41

https://www.gsmarena.com/idc_global_smartphone_market_grew_by_132_in_q2_with_samsung_shipping_59_
million_phones-news-50317.php
 42

Appendix 4

42
https://www.forbes.com/sites/niallmccarthy/2021/05/14/20-years-on-the-global-apple-store-empire-
infographic/?sh=121edd674b26
 43

43
https://www.statista.com/statistics/299153/apple-smartphone-shipments-worldwide/