The Future of Apple’s Success and Reputation


Akademische Arbeit, 2017

13 Seiten, Note: 1.7


Leseprobe

Contents

1 Introduction

2 Theoretical background
2.1 Key Success Factors
2.2 Current Figures

3 Findings
3.1 General Framework
3.2 Results

4 Discussion

5 Bibliography
5.1 Books
5.2 Websites

1 Introduction

At the Worldwide Developer's Conference 2017 event in Jan Jose, California the multinational company Apple revealed a new smartspeaker called HomePod intended to compete against Amazon Echo devices and Google Home. It features the Cupertino tech brand's voice- controlled virtual assistant Siri and works with Wi-Fi capabilities. However, recent data shows the new Apple product is not yet holding people's interest. On the basis of a Morning Consult poll conducted June 8, among a sample of 2,200 adults, 55% percent of respondents said they are not interested in purchasing a HomePod. That number increased to 61% after people were shown a comparison with other smartspeakers, such as the Echo and Google Home.1

It becomes apparent that the already existing devices interfere Apple's position as the industry leading innovator. This incident could also be observed in the case of the iPhone 7, which is merely an upgrade of the previous model. Moreover, their latest four-inch iPhone SE and the latest iPad have received a poor response.

Considering these circumstances, it leads to an in depth examination if Apple is able to maintain their success or losing its innovative edge. The aim of the following analysis is to make an approximate prediction about the future and reputation of the brand based on customer opinions and actual financial figures.2

2 Theoretical background

2.1 Key Success Factors

The first step of this analysis is to take a brief look on the previous success of the brand to create a foundation of further investigations.

According to the 2016 edition of the annual study of the world's most valuable brands, published by Forbes, this was Apple's sixth consecutive year at the first position in the ranking. With a value of $154.1 billion the tech giant still outpaced other brands. As reported by Forbes, with a value of $82.5 billion Google is the second brand in the top ten list. Brands such as Microsoft, Coca-Cola and Facebook are also present, but are not able to reach Apple's level.3 4 The brand's expansion into new services such as Apple Pay and other various industries helped to boost Apple into becoming America's first $700 billion company. “That wasn't just a record for Apple, it was a new record for any U.S. company.”3 Furthermore it is one of the most respected and recognized international brands. But what kept Apple at the top over the past? The overwhelming success of the brand is obviously linked to Steve Jobs, the brain and soul behind the company. Until his death he remained closely involved as one of the cofounder in all the major decisions and key aspects of running the company. With his extraordinary sense of marketing and strategic plans he was able to prevent Apple from failing on various occasions. Tim Cook operates as his successor and was already in charge of supplier relationships and global sales for thirteen years in the company.5 “Apple's winning mixture of extraordinary products, great {...} design, grand strategy, innovative marketing, and inviting communications”6 are the key aspects of Apple's guideline, that will be further explain in the following.

Apple's brand has gained such prestige over the years that anything from Smartphone devices to operating systems caused widespread intrigue. To reinforce the company's main identity Apple implemented a series of products over the time. This supports brand consistency and makes sure to address the widest possible audience. To maintain brand consistency across product lines the brand should not overextend the brand. Apple doesn't confuse its image by starting to make clothing or energy drinks because it would muddle the company's sleek image.7 A big goal is to create some kind of cultural significance, so that on these grounds customers are willing to pay a higher price because they view the brand as status achieving or high quality. Apple's branding strategies are mainly based on emotions. What makes it important from a company perspective is that the brand does “not just forge intimate connections with its customers, but it is adored in return. Building upon the emotions we feel while discovering, owning, and using Apple products, the brand capitalizes on the lifestyle, imagination, passion, {...} and aspirations of Apple users.”8 In fact it doesn't matter how creative or entertaining a brand seems to be, “without leveraging the emotional aspects of your products, your marketing strategy may fall to resonate with your audience.”9 Creating an emotional connection with its customers leads to brand loyalty and secures the future of a brand. In order to increase brand loyalty, a company has to emotionally connect with its customers and create a believable aspiration that reflects in its marketing and image. On that front there's no doubt that brand loyalty has played a huge part in Apple's global success. Creative Tech Vlogger David Di Franco clearly said: “Ever since switching to the Mac in 2004, I knew there was something about Apple that really connected with me on a personal level. From the consistency in their product designs to the passion behind what they stand for {...}.”10 The key of brand loyalty is firstly to be transparent and trustworthy, which also reflects in Apple's official mission statement: “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.”11

Also Design plays a huge role in Apples success story. They attempt to keep the imagination of products with sleek elegance that push the boundaries of innovation. “Apple has mastered the design dialog and conversation and speaks distinctly in its own voice and with its own point of view.”12 Their logo is something that has a certain value in our society. They want to transferred this elegance on their customers to let them feel special.13 A successful packaging design “must fulfill both the emotional and physical expectations of consumers. {...} It allows consumers to react to emotional cues”.14 The company takes a totally different approach to its design. Steve Jobs wanted Apple to be ahead of its competitors and the industry tastemaker with an incorporated design philosophy or concept. “Brand promises must be believable, clear, unique, compelling and endearing to the consumer. All marketing and communication tools must reinforce the promise such as the brand is shown to be uniquely qualified to deliver on it.”15

Because of Steve Jobs the company also distanced itself from focus groups in order to define the brand. In 1998 he explained BusinessWeek, “It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them.”16 According to Larry Tesler17 Apple mainly hire people who understand the culture of the company, which became the foundation of the Apple design culture. Therefore design-culture “is a beneficial virus that spreads wildly and influences all aspects of an organization.”18

2.2 Current Figures

Based on the achievements in the past the guidance for Apple's fiscal 2017 first quarter reveals a total revenue between $43.5 billion and $45.5 billion and a gross margin between 37.5 percent and 38.5 percent. Moreover, based on the most recent announcement about the financial results for its fiscal 2017 second quarter 2017, there is a revenue of $52.9 billion and quarterly earnings per diluted share19 of $2.10. In comparison there was a revenue of $50.6 billion and earnings per diluted share of $1.90 in the year-ago quarter.20

Considering the Smartphone Market Share in the first quarter of 2017 Phone companies shipped a total of 344.3 million smartphones worldwide according to the International Data Corporation

“Quarterly Mobile Phone Tracker”. Slightly lower than the previous forecast of 3.6% growth, Worldwide smartphone shipments grew 3.4% in 1Q17. Around 85% of the worldwide smartphone volume is captured by the Google OS. Within the platform many micro-trends can be observed. Despite the amount of high-end Android products, according to the ICD Android average selling prices decline. The anticipated 1.5 billion Android phones that ship in 2021 will have a collective Android average selling price of $198, compared to $220 in 2017Q1. Additionally, Windows Phone shipments continue to fall because of the shortage of new hardware partners and overall developer support.21

2016 was the first year in which Apple has reported a revenue decline in annual sales since 2001. In the statistics of Apples revenue growth since fiscal year 2000 a decline of 8% in 2016 can be observed after the company's revenue peaked in 2015 with 233.7 billion U.S dollars.22

It is important to note that beyond the previous financial figures and the overall revenue other factors also affect the market. According to the latest data by the world's leading research and advisory Gartner both Samsung and Apple lost market share in the first quarter of the year as Chinese brands continued to increase their sales in 2017. The market as a whole grew 9% in the same period of time, when the iPhone sales grew very consistent throughout the years, resulting in the decrease in market share.23 The global share of Apple fell from 14.8% to 13.7% and the market leader Samsung was hit by an overall decrease from 23.3% to 20.7%. The main players in the Smartphone business have to cope with competition from Chinese brands manufacturers such as Huawei, Oppo and Vivo.24 Gartner points out that the “top three Chinese smartphone manufacturers are driving sales with their competitively priced, high quality smartphones equipped with innovative features.”25

Towards the upcoming competition the latest projections for iOS of the IDC increased its 2018 volumes to 240.4 million. Related to this forecast late 2017 and potentially 2018 are expected to be strong again for Apple,26 but only if the iPhone 8 comes along with appealing and innovative technology.

[...]


1Morning Consult. (06-08-2017). National Tracking Poll, p. 26

2Morning Consult. (06-08-2017). National Tracking Poll, p. 26

3 Chapman. (06-10-2016). The World's Most Valuable Brand: Apple's Secret to Success, Web

4 Gillespie. (02-10-2015). Apple: First U.S. company worth $700 billion, Web

5 Zylla-Woellner. (2013). Business Analysis of Apple Inc., p. 2

6 Zylla-Woellner. (2013). Business Analysis of Apple Inc., p. 2

7 Donelly. (11-18-2010). How to Maintain Brand Consistency Across Product Lines, Web

8 Chapman. (06-10-2016). The World's Most Valuable Brand: Apple's Secret to Success, Web

9 Chapman. (06-10-2016). The World's Most Valuable Brand: Apple's Secret to Success, Web

10 Twitter @DavidDiFranco

11 Apple Press Release. (04-14-2000). Media Alert, Web

12 Edson, Beck. (2012). Design Like Apple: Seven Principles For Creating Insanely Great Products, Services, and Experiences, p. 157

13 Donelly. (11-18-2010). How to Maintain Brand Consistency Across Product Lines, Web

14 DuPuis, Silva. (2011). Package Design Workbook: The Art and Science of Successful Packaging, p. 54

15 DuPuis, Silva. (2011). Package Design Workbook: The Art and Science of Successful Packaging, p. 53

16 Edson, Beck. (2012). Design Like Apple: Seven Principles For Creating Insanely Great Products, Services, and Experiences, p. 48

17 software designer and early pioneer of the graphical user interface (GUI) at Xerox Parc and at Apple

18 Edson, Beck. (2012). Design Like Apple: Seven Principles For Creating Insanely Great Products, Services, and Experiences, p. 66

19 diluted shares include all possible sources of conversion to outstanding shares, such as convertible bonds, stock options and convertible preferred stock or debt, assuming these securities were exercised, Ho, Lee. (2004). The Oxford Guide to Financial Modeling: Applications for Capital Markets, Corporate Finance, Risk Management and Financial Institutions, p. 339

20 Apple Press Release. (05-02-2017). Apple Reports Second Quarter Results, Web

21 IDC Smartphone Data. (05-02-2017). Smartphone OS Market Share 2017 Q1, Web

22 McCarthy, Niall. (10-26-2016). Apple Has Experienced Its First Annual Decline In Revenue Since 2001 [Infographic], Web

23 Gartner Press Release. (05-23-2017). Gartner Says Worldwide Sales of Smartphones Grew 9 Percent in First Quarter of 2017, Web

24 Seitz. (23-05-2017). This Is Why Apple Is Losing Ground In The World's No. 1 Smartphone Market, Web

25 Lovejoy. (05-23-2017). Apple & Samsung lose smartphone market share as Chinese brands continue to grow, Web

26 IDC Smartphone Data. (05-02-2017). Smartphone OS Market Share 2017 Q1, Web

Ende der Leseprobe aus 13 Seiten

Details

Titel
The Future of Apple’s Success and Reputation
Hochschule
Ludwig-Maximilians-Universität München
Note
1.7
Autor
Jahr
2017
Seiten
13
Katalognummer
V1127724
ISBN (eBook)
9783346509949
ISBN (Buch)
9783346509956
Sprache
Deutsch
Schlagworte
Apple
Arbeit zitieren
Manuel Kreis (Autor:in), 2017, The Future of Apple’s Success and Reputation, München, GRIN Verlag, https://www.grin.com/document/1127724

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