Apple is one of the largest tech companies and most valuable companies in the world. The company is behind some of the most iconic products of the information age to include the Mac line of personal computers, the now-discontinued iPod and iTunes which disrupted the music recording industry, and the iPhone smartphones and iPad tablet computers. Understanding its success requires understanding the sources of its competitive advantage.
Looking Into the Competitive Advantage of Apple: Key Strengths and Attributes that Allow It to Outperform Its Competitors
The competitive advantage of Apple sets it apart from other tech companies and gives it an edge over its closest competitors. It has banked on its strengths and attributes that put it in a favorable business position relative to its competitive environment.
1. Research and Development: Introducing Game-Changing and Disruptive Products Through Innovation
Apple is a game-changer and has disrupted different industries and markets. It is one of the first companies that introduced personal computers for mass consumption. The introduction and eventual popularity of iPods and iTunes changed the way people listen to music. Apple was also instrumental in launching the modern smartphone and tablet computer markets.
The innovative products of Apple helped it become a household brand and a reputable tech company known to the public. People from the media, tech enthusiasts, and loyal consumers are always on the look for the next products it would introduce.
Research and development are behind the capacity of this company to launch innovative products. Apple uses a reactive and proactive approach in its product strategy and differentiation strategy that factors in previous and future techs and market trends. It specifically reinvents existing products in the market and ideas to make them more useful.
Apple products are also consumer-focused. It uses simple design languages across its hardware and software products to provide users with a simplistic and straightforward experience that promotes functionality or usability without compromising aesthetics.
2. Partnerships and Outsourcing: Building and Maintaining a Network of Mission-Critical Business Partners
It is important to note that Apple does not have in-house manufacturing capabilities. Part of its supply chain strategy is to outsource the production of products such as the iPhone and iPad or components such as chips from specialized manufacturing companies located in different manufacturing hubs in Asia, North America, and Europe.
The M series and A series of chips found in its newer generations of Mac computers and iPhones are designed by Apple but are manufactured by Taiwan Semiconductor Manufacturing Company. These devices are assembled in countries such as China and India.
Apple also maintains relationships with other business partners whose products or services add value to its own products. These include manufacturers of components and parts used in its devices, software developers that populate the library of its App Store, and digital content producers and providers for its streaming services.
Outsourcing manufacturing has notable advantages. Cost-efficiency is one. It also allows the company to focus on research and design. Maintaining relationships with other businesses allows it to strengthen further the value proposition of its products.
3. Strong Brand Equity: Capitalizing on Brand Reputation and Loyal Consumers to Minimize Marketing Costs
Apple is also one of the strongest competitors in the entire consumer electronics industry and the more specific tech market. It would be difficult for smaller companies to take its market share or compete for attention because it already has built a strong brand equity that requires minimal costs in its marketing mix and promotion strategy.
Its brand reputation and a large pool of loyal consumers allow it to lower the bargaining power of buyers and even manage the competitive forces within the industry. A testament to this is its premium pricing strategy demonstrated through the high price tags of its products.
The company does not mind setting prices higher than its competitors or despite its low production cost because it knows that there is a sizeable number of people that would still buy its products regardless of the price tags. It also has higher profit margins because of its minimal marketing expenses on top of its cost-efficient production.
Apple also receives free mileage from media organizations and independent journalists such as tech vloggers and online influencers. These individuals and groups are automatically drawn to producing content about its trade events and product launches.
4. Close Product Ecosystem: Maximizing Sales and Customer Retention Through Product Complements
Another source of competitive advantage of Apple is its close product ecosystem that is created and maintained through product complements as part of its product strategy. The company has an expansive product portfolio that ranges from personal computers, mobile devices, and other smart devices to software applications, digital services, and content.
Note that the company develops and produces products both to diversify its product portfolio and create a unified user experience. Central to its product strategy is the need to develop products that can complement each other and create a close ecosystem
There are several benefits to a close product ecosystem. The first is a halo effect. This is a situation in which the positive experience toward one particular product entices consumers to patronize all other products of the same company. The second is that it retains existing customers and maximizes sales from each customer.
Consider owning an iPhone as an example. Most loyal consumers would agree that it is more convenient to use other Apple products such as an iPad and a MacBook. These devices provide the same user experience and would function better when used together.
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