Analysts indicate that Apple is losing its smartphone market share despite the fact that the company’s sales increased in the first quarter of this year. A critical point to note is the fact that the company shipped 43.7 million iPhones globally during the first quarter of this year. However, reports indicate that this only comprised 15 percent of the smartphone market share as Samsung took the largest share and was followed by Apple. Additionally, Apple recorded a decrease in percentage of the market share it took last year. A peculiar characteristic of the smartphone market is that it is expanding while at the same time becoming competitive. Analysts have pointed out two factors that explain the trend with iPhone. The first reason regards its lack of presence at the entry-level category; the second one is that Apple is in remarkable competition with second-tier smartphone brands such as Lenovo and Huawei. This essay explores strategies for Apple to reclaim the market share.
Alternative Solution on how Apple Can Regain Its Market Share
Undoubtedly, Apple is the world’s most valuable technology company. However, the loss of its market share to cheaper smartphones has undermined its dominance. Last year, Apple’s shares dipped from impressive $700 to modest $200, but most significantly, the firm has made great profits since it launched the iPhone back in 2007. Even though it is no longer appearing to set the standard as it did in the past, Apple has the capacity and potential to rebound and regain the market share it formerly commanded (Grobart, 2013).
Judging by the trends in which iPhone sales have been fluctuating, it is noticeable that every time a new model of iPhone is launched, the sales increase and then dip for the rest of the year until another project is introduced. Apple needs to perfect the art of re-launching and re-introducing past brand lines at more affordable prices. This will be a key strategy, utilizing which the company will be able to prove that it can maintain the momentum of sales, especially when they begin to dip after a previous launch of a new edition of gadgets (“How Apple is losing mobile,” 2013). Re-launching has proved to be a key advertising tool, and releasing previous premium editions at a much lower price tends to drive sales even higher as a new market segment that could not afford the gadgets initially receives a chance of ownership. At the same time, the tech-savvy and fashion-conscious consumers also get an opportunity to upgrade their iPhones to avoid having commodities that are considered ‘commonplace’.
Most noticeably, even though Apple’s products are usually regarded to be of superior quality compared to most of its competitors, they tend to be costlier than those of the company’s rivals. To counter the effect of the cheaper smartphones blocking Apple products from the market share, it will need to produce more affordable iPhones (Bui, 2013). A recent research by Trust Search Advisory (TRA) in India has shown that Samsung beats Apple in the Indian market. The major reason for it is that Samsung has a wider array of cheaper alternatives.
Moreover, Indian consumers have begun looking for more feature-rich phones, but cost is still a major determinant. Therefore, cheaper but reputable brands like Samsung are easily winning the competition thus strengthening the need for Apple to produce less costly gadgets. Jan Dawson, the chief telecoms analyst at Ovum is one of the experts touting for cheaper alternatives as a method of capturing and retaining the market share (Lomas, 2014). According to Dawson, a trick that Apple can use is positioning a cheaper iPhone even without key functionalities because they will still attract buyers who have never owned an iPhone.
Smartphones are increasingly becoming more than communication gadgets, and for Apple, iPhone might be a perfect means of gaining a foothold in the phone market. Emerging markets like India, Brazil and several African markets with a growing middle class population can help Apples to regain its market share.
Apple can also classify its range of products to cater for the high-end, middle-level as well as budget clientele. Despite the superior design of most of Apple’s products, pricing has proved a major disadvantage, making the appeal of Apple products to be largely assumed to be targeting only high-end clients (Bui, 2013).
The Best Solution
In my opinion, the best solution for Apple is classification of its products into three main clusters. Some experts are of the opinion that by doing so, Apple will ruin the stereotype of being an elitist gadget retailer. Even though the process of stratifying its products to cover all market segments will potentially cannibalize its high-end market, this will serve to cater for all sets of the market segments as well as retain the existing Apple product users. Firstly, by producing newer lines of top-of-the-range electronics, Apple will be able to keep up with its competitors in the market and solve the issue of high-end clients jumping ship (“How Apple is losing mobile,” 2013). Secondly, this will also thrill Apple’s loyal customers who will be pleased to follow in line with newer versions of products; therefore, they will appreciate Apple’s innovative activity. The market segment that would value newer technology will most likely be the high-end clients who have traditionally formed the backbone of the Apple clientele.
Next, by producing more mid-range products, Apple will be able to tap into the growing middle-class consumer base in most developing parts of the world. It will attract newer consumers who will mostly belong to the younger generation, probably in their first or second jobs. This step will also establish a full cycle of consumers that Apple needs for its short-term and long-term market share expansion projections. Finally, with the introduction of economy or budget products, Apple will most likely appeal to lower-level consumers who would be proud to interact with the brand for the first time.
For the most part of its history, Apple has been producing gadgets that target high-end clients, who traditionally form the smallest segment of the population. It is not favorable for long-term growth and market expansion. Apple’s competitors have never failed to capitalize on this weakness, which decreases Apple’s market share no matter the volume of sale it records with its traditional market (Grobart, 2013).
Finally, Apple can implement this solution by employing the market segmentation strategy. This involves defining and subdividing the larger market size into smaller targeted needs and aspiration clusters. By using this tactic, Apple can specifically aim at the budgetary allowances and constraints of the expected market cluster.
Apple can even fine-tune the strategy by providing customer outreach and unified product ranges as well as establishing customer support and selling strategies. This method is much more effective than simply having a product with very many advanced features (which is typical for most expensive Apple products). Apple can instead manufacture products simpler but more affordable. Apple has utilized the segmentation approach before when it split its iPod products into iPod Nano, iPod Shuffle and iPod Touch (Lomas, 2014).
Research asserts that one of smartphone market holders, Apple, is losing market share for its iPhone at a fast rate. This has been attributed to the lack of the company’s presence at entry-level, which gives the new entrants a possibility to outperform Apple at that level. Another problem leading to a drop in the market share of Apple is stiff competition that emanates from both the lower upper segment of the market. Apple faces competition from Samsung at the upper segment. Samsung avails competition because of its cheaper gadgets that cater for all the markets. At the lower segment, Lenovo and Huawei are significant competitors as they have entered the market with cheaper smartphones that have almost the same features as those of Apple. The first proposed solution for the latter is to produce smartphones that are more affordable. Another strategy that can be adopted by Apple is expanding to countries with emerging economies that are predicted to bring a large number of customers in the near future. Lastly, Apple can classify its range of products to cater for lower-level clientele, middle-level clientele and lastly, high-level clientele. In regard to the best solution, employing market segmentation will be the most appropriate strategy. This stems from the fact that the strategy focuses on the definition and subdivision of larger market size into smaller and targeted needs and aspiration clusters. This strategy is aimed at the budgetary allowances and constraints of the expected market cluster.