Customer Loyalty In The Smartphone Industry

Amazing Essays
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

Related Documents

  • Decent Essays

    While 2 out of 10 new products are successful, new products introduced as brand extensions are more likely to succeed. A brand extension can earn its own brand equity as well as contribute to the equity of the parent brand. For example, Apple’s iPhone has earned significant brand equity on its own and contributed to the equity of the Apple brand by clarifying brand meaning, enhancing Apple’s brand image and bringing new customers into the brand, as well as, increased market coverage. The iPhone is considered the most influential consumer electronic product ever made for various reason such as it inspired thinner phones, better screens capable of multi-touch input thus contributing to Apple’s brand equity. In addition, the introduction of the iPhone was accompanied with building an online App Store.…

    • 1555 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    AUCA Case Study

    • 1337 Words
    • 6 Pages

    Nevertheless, Apple has high profitability because the high prices relatively make profit. Hence, marketing mix of the Apple company is aimed to premium product development strategy. Place/Distribution in Apple Inc. Apple’s marketing mix contains a holistic approach to distribution, using advantage of different distribution channels.Basically, the company uses a selective distribution strategy. Company authorizes sellers to ensure control over this component of the marketing mix. The following places are included in Apple’s distribution strategy: • Apple Stores – the most visible place to sell Apple products.…

    • 1337 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    If the quality goes up, so does the pricing of the product or service. Many of other inexpensive Android devices and smartphones created by Asian manufacturers have done very well. However, the high pricing of Apple products could be a potential downfall due to its pricing strategy. They should reevaluate the brand’s approach to advance in the global markets. MacBooks, the Apple Watch, and Services are all opportunities that Apple has and should take advantage of them.…

    • 1362 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    Most people know and love the Apple brand. Its image is universal and easily recognizable, with a sleek design that separates its brand from competitors. “Apple enjoys the loyal following that it does because of the totality and consistency that comes from experiencing the products and the surround-sound that envelops them” (Joseph). Another part of their marketing strategy is not just with their products themselves but within their Apple store. “There are nearly 300 stores in the country right now, and each allows you to touch the brand and simultaneously be enveloped by it.…

    • 2889 Words
    • 12 Pages
    Decent Essays
  • Decent Essays

    Brand: Apple invests a lot of money to create brand awareness and it creates a very strong demand for IPhones. Over the years Apple has created a space as a brand which comes with the most innovative product. Apple uses its advertising to maintain that image in the eyes of the customers. Apple is also recognised as the most valuable brand in 2015 by Forbes and Interbrand. b.…

    • 2033 Words
    • 9 Pages
    Decent Essays
  • Decent Essays

    Apple Oligopoly

    • 1324 Words
    • 6 Pages

    They become inefficient because they mostly depend on market control if any other competitor takes the higher rank by wonderful product introduction. Monopolistic competitive entities have modest level of market control whereas oligopolistic companies have strong degree of market control. Analysis of Apple Inc. with other Competitive Companies Apple has an "i" for revolutionary technology.Since its release, the company's Iphone has made a revolutionary change in the market of cell phones and mobile, tablet computing. One of its popular products, iPad tablet computer has become another twirl change in the technology market. In past few years, it was stated that Samsung is a strong competitor to Apple Inc. and engaged in a rivalry relationship.…

    • 1324 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    When customers buy an iPhone they are getting beautiful hardware seamlessly integrated with an OS that is built specifically for Apple products. Apple This synergy locks customers in and prompts them to buy more Apple products to add to their synergy. No competitor has a synergy that can compare. Rivalry among Competing Firms: It's not easy to compete with Apple. While Apple's Gross profit soars as it takes advantage of a willing market ready to adopt smart phones and tablets, many competitors stand by losing profit and market…

    • 1191 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    Apple’s competitors are technologically advancing at the same rate as Apple. Competition is very aggressive in all areas of its business (Apple Inc., 2015). Other competitors have cut prices and lowered their product margins to gain or maintain a share of the market, even if that means losing money (Apple Inc., 2015). Apple stands steady by the quality of their product and keeps up to the competition but has not lowered their standards nor their prices very much. If you notice, Apple products maintain value longer than their competitors.…

    • 719 Words
    • 3 Pages
    Decent Essays
  • Decent Essays

    Achieving Apple's Success

    • 1574 Words
    • 7 Pages

    The correct Apple product positioning, along with target market and consumer satisfaction, help Apple products to have a really good reputation in general. Apple’s almost dizzying speed of new product releases has literally left other companies far behind in the…

    • 1574 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    Products are constantly being released by Apple worldwide within small time frames. Apple’s other goal is to remain the most dominant brand for technology. This aim motivates Apple and its internal stakeholders. This goal has been achieved, since Apple is dominating the high-tech market. Apple is number one in the world for highest amount of profit, which is also one of their targets, being 53.73 Billion USD.…

    • 999 Words
    • 4 Pages
    Decent Essays