This research is credited to Ahmad Fuad Al Hattab Abstract The research topic was effective marketing strategies, and the research questions revolved around Apple Inc. and its struggles in meeting the set iPhone sales’ targets. The importance of the research was revealing that even multinationals struggle with meeting their sales’ projections, even when they have numerous products and services. The research also revealed the role that marketing plays in influencing consumer decisions in purchasing. The research gathered increased information that aided in answering the identified questions. The findings made identified that longer customer cycles and COVID-19 are the two main reasons behind the slowdown in iPhone sales globally in 2019 and 2020.
The research presented recommendations that Apple can use to overcome the problem, such as venturing further into the mid-range and emerging markets and focusing more on ensuring their iPhones have the best technology. The ability to overcome the current challenge will rely on Apple attracting new customers and encouraging old ones to change their phones regularly. Table of Contents Abstract 1. Introduction 1.1 Background Information 1.2 Management Issue 1.3 Research Question 1.4 Research Objectives 2. Literature Review 2.1. Introduction 2.2. Key Themes 2.2.1 Struggling iPhone Sales 2.2.2 Consumer Behavior 2.2.3 COVID-19 2.3. Summary 3. Methodology 3.1. Theory Development Approaches 3.2. Research Design 3.3. Limitations and Advantages 4. Results 5. Discussion 6. Conclusion 7. Recommendations 1. Introduction
Apple Inc. is one of the leading technology companies in the world and its products sell to all nations and regions. The iPhone is one of the best-selling products by Apple and has been ranked among the best mobile phones over the years and decades. Apple has been successful in the creation of an ecosystem around its products and its loyal customers only purchase its products, especially them being a bit pricy (Nguyen and Tran 2018). However, for the past few years, Apple has been struggling with meeting its sales’ targets for the iPhone. One of the main reasons has been the weak demand emerging due to customer upgrade cycles taking longer than previously. In 2020, the company has also failed to meet its quarterly sales’ targets twice due to the COVID-19 pandemic.
In this discussion, the key management issue is the approaches that Apple can use to enhance its iPhone sales’ revenue. The main issue lies in that consumers are taking longer to upgrade their iPhones, and this is affecting the targeted sales revenue. Hence, the management needs to discover new marketing techniques and methods of ensuring that iPhone owners make regular changes and upgrades from their old phones to new ones (Martin, Javalgi, and Ciravegna 2020). The achievement of this goal will aid in improving the sales made from iPhones, which are a key contributor to the overall revenue generated by the company. It will also prove that the iPhone is still a competitive smartphone in the industry, despite the high competition coming from brands such as Samsung and Huawei, among other new players.
The research questions identified in this study will seek to get to the bottom of the research topic. The aim is to provide adequate and reliable information that will be useful in understanding the topic effectively. The identified research questions are:
The success of this research will depend on the ability to meet the research objectives. The objectives of this study are:
2. Literature Review 2.1. Introduction As noted above, Apple is one of the leading brands in the technology industry. The multinational operates in hundreds of nations across the world and it offers numerous products and services, from smartphones to computers and software. Apple is a company that has been experiencing increased growth and development in the past few decades. It was formed in 1976 by the late Steve Jobs and his two friends, Ronald Wayne and Steve Wozniak (Heracleous and Papachroni 2016). The initial aim of the founding was to create and sell computers, which it successfully did. In the 80s, the company went public and it achieved increased success due to the effectiveness of marketing techniques (Marini and Fazio 2018). The growth and evolving in the personal computers market presented Apple with increased chances of growth, especially in the late 90s and early 2000s. The introduction of the iPhone was a decision that Apple made slightly over a decade ago. In 2007, Steve Jobs presented the iPhone, as well as changing the multinational’s name to Apple Inc. (Mark and LaMarche 2017). The decision was also followed by the desire and interest in the consumer electronics markets that were growing at a fast rate. Ever since its introduction, the iPhone has been one of the main selling products by Apple. The financial success that Apple has achieved from the iPhone and other consumer electronics reveals that the shift was necessary and timely. Despite the technique and criteria used by Apple in releasing the iPhone being different from the rest of the competition, the multinational has managed to create a loyal customer base around the product. The loyal customer base is also evident around the rest of its products and services, and this is keenly known as the Apple ecosystem. In simple terms, the ecosystem includes customers from all over the world who only use Apple products (Cho, Kumar, and Telang 2016). From their smartphones to the laptops, computers, and tablets. The ecosystem is convenient for these consumers due to the ease of use and access created by the fact that the gadgets use similar operating systems (Nguyen and Tran 2018). Due to the uniqueness of the Apple operating system compared to other ones, it becomes more convenient for consumers to purchase its products and use its services exclusively, while paying the associated high price (Anggraini 2018). However, Apple has been facing a key issue in the past few years involving its iPhone sales. For 2019 and 2020, the company has been struggling to meet the sales’ targets. 2.2. Key Themes2.2.1 Struggling iPhone Sales For the past two years, iPhone sales have been slowing down due to various reasons. Despite Apple being among the leading companies in the consumer electronic market and the iPhone being among the best smartphones in the global market, the sales have been reducing (Giachetti 2018). iPhone sales contribute majorly to the multinational total revenue and a slowdown is concerning for the company. The competition in the smartphone market has been growing, with companies like Samsung and Huawei posing serious competition. One of the main differences between Apple and the rest of the leading smartphone companies is their products. Apple releases updated iPhone models annually, while Samsung and Huawei, among others, release numerous models that cater to different customer segments (Giachetti 2017). The price of iPhone models has been increasing and is over a thousand dollars, which means that Apple is still catering to the high-end customers alone. It explains why the firm has also been focusing on the provision of mid-range iPhone models to try to tap into the growing market. 2.2.2 Consumer Behavior Consumer behavior is definitely one of the main reasons behind the slowdown in the sale of iPhones. Initially, Apple depended on its customers changing their iPhones after every two years. The consumer upgrade cycle made it easier for the firm to meet its sales’ revenue and targets, alongside other approaches (Nainggolan and Hidayet 2020). However, the upgrade cycle that is present in the current smartphone market is different. iPhone users are staying with their current models for about three or four years before they can upgrade, hence, threatening the sales gained from the loyal customers. Despite Apple still attracting new iPhone buyers, the change in consumer behavior is worrying. Some of the factors associated with the lengthened upgrade cycle include the high prices, which have affected the sales in emerging markets in Africa and Asia. The growth of the Android dominance in other markets, such as India, has resulted in the shift to Android phones. 2.2.3 COVID-19 The whole world is dealing and trying to come to terms with the current COVID-19 pandemic that has affected all sectors and industries. Multinationals like Apple have suffered numerous consequences due to the virus ravaging across the world and its economic impacts (Borgenicht 2020). In January and February, Apple suffered due to the closure of its companies and stores in China and other locations that had been affected by the virus. Despite the opening of the stores and factories, the global economic impacts of the pandemic are still present and continuing and it is unclear how they will affect the projected iPhone sales, especially considering that the multinational missed its targets for the past two quarters. 2.3. Summary Apple needs to address the decline in iPhone sales before it starts affecting its competitiveness in the smartphone market. The company needs to find a way of ensuring that it can encourage its consumers to continue upgrading their mobile phones and shortening their cycles. The focus should also be placed on how the company will overcome the negative impacts presented by the coronavirus. 3. Methodology
When it comes to theory development, the two approaches are inductive and deductive. Based on the structure and type of this research, the identified theory development approach is inductive. The inductive approach commences with a set of observations and goes ahead to identify patterns that result in the observations. In this case, the observation is the decline in the iPhone sales in the past few years, especially 2018 and 2019, compared to the targets or projects. The approach will allow the investigation of the issue in depth to reveal the specific elements and factors responsible for the slowdown in iPhone sales in the two years. The research will also focus on the influence of marketing in the reduced iPhone sales and try to determine the presence or lack of a connection.
The identification of the research design is an important process in any study. The research design aids in the identification of the best methods and techniques that can be applied to meet the expectations and answer all the research questions. The approach selected for this research was the monomethod research. Due to the nature of the study being quantitative, the data collection process presented numerous options (Ghauri, Grønhaug, and Strange 2020). However, considering the current state of things, the only reliable means of collecting data and information was reviewing current literature. The information sourced was between 2019 and 2020 to aid in understanding how Apple has experienced a slowdown in iPhone sales. Increased information and data were available to support the research topic and try to answer the research questions effectively. The presence of increased information made it simpler to undertake the research process without experiencing any challenges or issues.
The research process presented by limitations and advantages. One of the limitations was the reliance on a single means of data collection. It is always advisable to rely on numerous data collection techniques to achieve great efficiency and productivity in research. The role of different data collection methods is to broaden the scope of the information collected. In this case, the reliance of a single method, which is existing literature, on gaining data presented its own shortcomings and limitations. The application of interviews, questionnaires, and surveys failed to emerge as reasonable ways of collecting information. Due to the technical nature of the research topic, it was presumed hard to find people that possessed concrete information that could analyze the matter effectively and provide reliable results and feedback. Therefore, the limitations in the data collection process might influence the results and findings made during the research. However, the research process also presented some key advantages. First, the reliability of the existing literature in the collection of information means that the study will be successful. The focus will be shifted towards ensuring that the sources used for information are credible. The research design applied will make it easier to gather information and also make the data analysis stage quite simple. All the methods selected for the research were the best ones. 4. Results The findings gained from the research revealed that Apple has been suffering from reduced iPhone sales. However, the company recorded a $11.5 billion record in revenue from its important services division for the second quarter of last year (Welch 2019). The reviewed literature identified two main reasons associated with the slowdown in sales revenues. The change in consumer behavior and the shift in upgrading cycles is a problem that Apple has been encountering for the past few years. The fact that consumers are considering using their smartphones for more than two years before they can make an upgrade has affected the firm’s ability to meet its sales’ targets. The growth of the mid-range market has also been another influence in the slowdown. As more and more companies invest in the mid-range market and offer smartphones that have high-end features for low prices, the demand for high-end smartphones has been reducing. It explains why Apple is also aligning itself to tap into the market. The increase in the competition in the smartphone market and the growth of brands like Samsung and Huawei in emerging markets is proving quite challenging for Apple to keep up and compete at the same level. The COVID-19 pandemic emerged as the key reason behind Apple being unable to meet the expected iPhone sales for the two quarters this year. The company expects that the sales will continue to drop as the global pandemic is still present and things are far from getting back to normal. The main question that emerges now is how the company plans to make necessary adjustments to try to overcome the impact of the virus on its activities and iPhone sales. It is integral to have a plan with the expected annual release of a new iPhone model taking place in the next few months. The lack of a plan will see Apple continue to experience issues in meeting the targeted iPhone sales and a reduction in its overall revenue. 5. Discussion A close analysis of the struggles Apple is facing with meeting the sales’ targets for its iPhones only presents two key issues. The first one is the longer upgrade cycles, and the second is the coronavirus pandemic. Apple has been struggling with the issue of its consumers failing to upgrade their iPhones often for the past few years. Tim Cook, Apple’s CEO, in 2019 noted that Apple was experiencing a weak demand for iPhones across the world (Mitter 2019). The key reason was that consumers were taking longer to shift from their old iPhones to new ones, with the upgrade cycle lasting for three to four years, compared to the previous two years. Numerous reasons have been associated with the longer upgrade cycles. One of the main factors has been the high prices of smartphones, especially iPhones and other high-end models. With new iPhone models retailing for around or over a thousand dollars, consumers are questioning the need to change their phones, if their old iPhones still function effectively. The lack of any cutting-edge technology included in the new models also causes more and more people to question the need to change their phones. The fact that the old iPhone models still receive software upgrades also reduces the need for the new models. Another identified reason has been the reduction in the demand for iPhones in China and other emerging markets such as India. The element has been associated with the high competition in the smartphone industry, especially from Android phones (Matyugina, Broslavskiy, and Bulygina 2020). The growth of the mid-range market has also been a threat to the high-end smartphones. Companies such as Samsung, Huawei, Nokia, and Xiaomi are investing in the mid-range market by offering smartphones with high-end features for low prices (Aldashova et al., 2020). The growth of the market explains why Apple released the 2020 iPhone SE to try to compete with other smartphone models. The issues related to COVID-19 and the impact on iPhone sales is very unique. The whole world has been caught by surprise by the extent of the virus and the economic, social, and health impacts. Apple started seeing signs of being unable to meet its March or first quarter sales’ projections of between $63 and $67 billion (Gurman and Frier 2020), in late January and February. The spread of the coronavirus through China resulted in the closure of its factories and stores (Malara and Kearney 2020). The closure meant that the company was unable to produce iPhones and its consumers could not access the stores for a while. By the time the stores and factories were reopening, the damage had already been done. China contributed $13.6 billion or 15% of the multinational’s revenue (Malara and Kearney 2020). Hence, revealing that it is a great contributor to the overall sales and revenue generated by the company. The company, like all other multinationals and businesses across the world, faces increased uncertainty surrounding the rest of the year. COVID-19 has been spreading to other parts of the world and causing negative outcomes in all sectors and industries. Even with the opening up of the Apple factories, things are going back to normal slowly and this will further affect sales and revenue levels (Hawkins and Albergotti 2020). With people losing their jobs and businesses closing and slowing down around the world, it is expected that Apple will continue to face a reduction in the demand for iPhones. Increased uncertainty revolves around the reception of the new 2020 iPhone models. Getting answers for all these questions will become harder and harder in the next few months and the company, like all other businesses across the world is hoping that the COVID-19 pandemic ends soon. 6. Conclusion Overall, the research was quite successful and it provided increased insights and information. Despite the limitations presented by the research design and data collection methods, the information gathered from the research was adequate enough to understand the research topic effectively. Some of the conclusions from the research include:
7. Recommendations
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