Customer Loyalty In The Smartphone Industry

Apple was founded by Steve Jobs and Steve Wozniak in 1976. Jobs transformed Apple from a company close to bankruptcy, to one of the most profitable companies in the world. Apple has continued to have a great performance over the past decade, due to its competitive advantages. One major advantage that has helped Apple is its customer loyalty. Apple has created a well-established brand and is known for its easy to use products with a sleek design. Customers have loved the design of Apple’s products, which has created a strong customer loyalty over the years. These faithful customers continue to choose Apple over other brands and purchase more of the various Apple products. Since customer loyalty is so strong, Apple can sell its products at a …show more content…
Two of the strongest forces in the smartphone industry that could impact profits, are rivalry and the bargaining power of buyers. Rivalry poses a major threat to the smartphone industry because there are several aggressive firms with rapid innovation, and large investments in R&D and advertising. Companies such as Google and Samsung could be serious threats to Apple. Both companies are very large and there are low switching costs, making it easy for customers to switch from Apple to a competing brand. Google’s Android has been the biggest competitor for the iPhone, as it has an open and free platform, lower prices, and a comparable set of applications. Another serious issue in the smartphone industry is the bargaining power of buyers. Individual bargaining power is a weak force, since the loss of a single customer will not hurt a large company’s profits. However, the collective bargaining power of buyers is strong because the possibility of losing many customers to a competitor would be detrimental to a company’s profits. Apple counters the forces of rivals and buyer bargaining power with its brand loyalty. As Apple continues to update the features of the iPhone and invent products that pair with it, its customers will stay loyal to the brand and are unlikely to switch to a phone they are not as familiar …show more content…
Over the years, Apple has created one of the most valuable brands in the world and established a strong brand loyalty that is one of the key reasons for its success. This resource is inimitable. While competitors have tried to imitate the products of Apple, no one has been able to replicate the brand and customer loyalty that Apple has. This is the reason Apple can sell its products for a higher price and in return creates a higher profit margin. This resource is also very durable, as Apple has been able to maintain its brand reputation for years. Apple’s strong brand also passes the appropriability test. Under Sculley, the brand had loyal customers devoted to the brand, and later Steve Jobs revamped the brand, which made it even stronger. Many were worried that Apple’s achievements would not be sustainable following Jobs’ death, but the company has been doing just as well under Tim Cook. In Cook’s first three years as CEO, the stock price of Apple doubled, revenues were up, and its market capitalization surpassed $700 billion, making it the most valuable company in the world. There could be substitutes to the Apple brand name, as competitors could use other resources to generate large revenues, but Apple’s strong brand name is the key reason Apple does well in the premium market, so substitutability should not be a major issue. Lastly, all of Apple’s key resources