BusinessStrategy: Product Differentiation at Apple Incorporation
Businessstrategy: Product differentiation at Apple Incorporation
Reviewof the facts of the story
AppleIncorporation is a multinational firm that operates in the technologyindustry. Apple increases its competitiveness in the market throughproduct differentiation. One of the recent incidents of productdifferentiation is the changes in the design of the iPhone 6 screensize and features. Charton in the article “Best smartphone of 2015so far: iPhone 6 vs. Samsung Galaxy S6 vs. HTC one M9 LG G4”published on June 1, 2015 by IBTimes Co. LTD identified that Applehas managed to dominate the Smartphone sector by investing more ondifferentiation. For example, iPhone 6 has been a differentiatedproduct for several years, but nearly all its features were copiedand used by Samsung in the development of Galaxy S6 by the year 2014(Charton, 2015). The Apple Incorporation took the initiative todifferentiate its iPhone 6 by upgrading its screen from 4in to 5.5in.In addition, Apple refined the iOS to produce an excellent blend ofpower and simplicity. The different features give Apple customers aunique experience that they cannot get from similar products offeredby competitors.
Keycourse concepts, topics, and tools
Thekey concept addressed in this report is product differentiation,which is simply the process of making the company’s productsdifferent from those of the competitors. Product differentiation aimsat creating more value for the target consumers than the valuecreated by competitors (Rothaermel, 2015). This is mainly achieved bydeveloping products with unique features compared to similar productsin offered in the market. The objective of differentiating productsis to give customers a unique experience, which in turn enhances thecompetitiveness of the company that has successfully differentiatedits products. This implies that differentiation gives a company acompetitive advantage over other players in the same industry.However, the success of the differentiation strategy depends on thecompany’s ability to develop features that will increase thecustomers’ willingness to pay more for the differentiated product(Rothaermel, 2015).
Thefocus of differentiation is the unique features rather than the priceof the product. However, the company has to ensure that the featuresare good enough to lure customers to pay more to cater for theadditional cost of developing those features (Rothaermel, 2015). Thismeans that the economic value that is created through differentiationshould be greater than the value created by competitors for theorganization to achieve the desired competitive advantage. Moreover,product differentiation gives companies an opportunity to control itsown prices and increases its market share through an increase in theperceived value (Rothaermel, 2015). In overall, the success of theproduct differentiation is highly determined by the willingness ofthe company to invest in research and development in order to monitortrends in customer tastes.
Analysisof the effectiveness of the differentiation strategy
Itis evident that Apple has gained a lot from its use of thedifferentiation strategy. Studies have confirmed that Apple has beenable to increase its brand strength and the pricing power throughproduct differentiation. According to Cardenal (2015) Applecompetitors have been cutting prices aggressively with the objectiveof retaining their market share, while Apple has increased its iPhoneprice by an average of $ 62 in 2015. Apple has still managed toretain its market share of about 89 % in the smart phone sector inspite of the increase in the price. This confirms that thedifferentiation strategy has been effective.
Inconclusion, product differentiation is an effective strategy thathelps companies increase their market share and control their pricein a competitive market. Differentiation is mainly achieved throughthe development of unique features that give customers an experiencethat they cannot get from the competitor. The usefulness of thedifferentiation has been confirmed by its effectiveness in helpingApple Incorporation retain its market share and expand itsprofitability by increase prices for its products.
Cardenal,A. (2015, July 8). Three reasons I own Apple Incorporation stock. TheMotley Fool.Retrieved July 22, 2015, fromhttp://www.fool.com/investing/general/2015/07/08/3-reasons-i-own-apple-inc-stock.aspx
Charton,A. (2015, June 1). Best smartphone of 2015 so far: iPhone 6 vs.Samsung Galaxy S6 vs. HTC one M9 LG G4. IBTimesCo. Ltd.Retrieved July 22, 2015, fromhttp://www.ibtimes.co.uk/best-smartphone-2015-so-far-iphone-6-vs-samsung-galaxy-s6-vs-htc-one-m9-vs-lg-g4-1503877
Rothaermel,T. (2015). StrategicManagement (2nded.).New York, NY: McGraw-Hill.