Introduction to Market Segment and Decision Making on Apple Company
Market segmentation is a procedure of dividing a broad customer segment into sub-groups of consumers. Under this, it assumes that various market segment needed several marketing events such as offers, promotions, prices etc. It becomes important part of organizations because in most of the cases, buyers of the companies are non homogeneous groups. The reason of this is every consumer is having diverse needs and requirements. On the basis of this, their preferences and buying behaviour becomes change. The present research is based on market segment and decision making and to understand its importance, Apple Company is taking into the consideration. Objectives that will highlight under the following study are brief description of the industry market for Apple, nature of competition of the selected industry; examine the major market segments of the cited company, level of involvement primary segment in decision making etc.
1. Brief description of the industry market for Apple Company and evaluate current trends.
Smart phone penetration is on the peak just nine years after the launch of the first touchscreen phone. The commercial and societal impact which smartphone had, no other personal devices are able to do that. Upgrading mobile signalling to 4G technology has influenced sales of smartphone and becoming very popular among the consumers. It is having a direct effect on the sales of feature phones. Consumers using feature phones are very easily switching to smartphone at a very low unit price in the recent years. The consumers are not giving priority to the quality and not including it in their decision of purchasing. The market experts forecasts that sales will continue to increase year on year and global slowdown will not affect it.
According to the leading market analyst GFK, the UK smartphone market will “ buck the trend” over the next two years. GFK predicts that UK will overtake as the fourth most valuable market this year. UK is bucking the trend a little bit as compared to the other market, majorly because of the powerful economic environment and high consumer desire for the smartphone. The market of UK also face a rush in 4G acceptance over the past 12 months. There has never been a high requirement for quick, uninterrupted connectivity. The speed of mobile networks mean that consumer's dependence on Wi-Fi will lessen until fixed line network speeds better. It is forecasted that smartphones will not have the condition as tablets. The sales of smart phones are likely to remain in the current phase. Globally, there have been some clear sharp slowdowns but UK is neglecting the worst of that trend. The statistics show that in 2016 46% of the users had an Apple iPhone. The current trends in this industry which Apple has to consider are described as follows
- Almost half of the young age consumers aged between 18 to 24 access their phones in the middle of the night.
- 27 percent of smartphones have a fingerprint reader of which 76 percent are used.
- Only 2 percent of adults own smart lights and smart appliances and they still have not connected their home devices.
- Almost half of the UK adults have access to at least one kind of connected entertainment products.
- The use of 4G technology has gone more than double in the last few years, from 25 percent to 54 percent.
- 31 percent of people who use smartphone do not prefer making traditional voice calls in a given week.
- The majority of users download 20 or fewer applications.
- By mid of 2016 almost two third of UK adults use tablets but penetration growth has gone slow.
2. Describing the nature of competition in industry
The smartphone market has become very much competitive in the recent times. The smartphone industry is at a turning point as smartphones are now more affordable and pervasive. Industries are blending as market giants are coming in the competition directly. The major challenge for the cited company is to withstand in the cut throat and intense competition and maintain growth. As the ratio of smartphones to basic mobile phones is growing very quickly all around the globe, consumers in UK are becoming highly addicted to this widget. Presently, about 50 percent phones in UK are now smartphone and this ratio is expected to increase 80 percent by the end of 2017. Smartphone market in UK is expected to grow till 2017 which is forecasted to drive the market value too. Earlier, they were considered as enterprise devices having a limited number of features on high prices. The market was hardly covered with very few smartphone having very limited capabilities. They became popular in 2007 when apple introduced its first generation which gave a whole new definition to smartphones. After that time, the global smartphone industry has gone under a huge transformation with mostly modern technological advancements having incredible features and capabilities.
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Competition in UK smartphone will escalate more and the cited company will have to focus on innovation. Successful economies would be able to survive in the tough competition and sustain their growth for a long period. Most conspicuously, delivering what consumer desire will result in the company's good turn. Prices of smartphone have fallen as the technology has become standardised. In developed market, the consumers are becoming more price conscious and a bit less brand sensitive. Worldwide growth in smartphone sales is beginning to decline and there are signs of market saturation in developed markets, however good growth has been found in developing and emerging economies. Consumer demands have been arising for smartphones which can surf the web and aids in a series of multimedia functions. Companies like Apple have been increasingly successful in providing products that are in accordance with the needs of the consumers. This in turn has led to an oversize demand from consumers all over the world. Customers are gaining benefits of the quick improvement in standard technology . Affordability is the main factor so unsurprisingly the smartphone is a rarity. Smartphone are becoming increasingly famous with many manufacturer looking to move in the market.
3. Outline and examining the major market segments for Apple Company
The Apple company has been a brand in market which attracts a large number of people towards its various products. The major and primarily used brand that has created a much hype in market is its smartphone series. The company has launched its latest series of i phone 7 and i phone 7plus which was launched in September 2016. The smartphone of this series has many functions with enhanced features of better camera quality, water resistant and so on (Akehurst Afonso and Martins Gonçalves, 2012). The said company use to segment its target market on various basis which are as follows:
The mentioned firm use to classify its customers into two segments in this criteria. One segment includes all those customers who belong to high level of income groups and brand loyal clients for company. They are big fans of the brand and use to purchase various other products of organisation as well like ipod, macintosh, mc book pro, ipad etc. They become very much use to of all the products of said company due to which they always prefer the brand. Further, they become aware of all features and become comfortable with it because of which all such brand loyal customers are ready to pay higher price of the product. The another segment in this classification belongs to middle to high class income group people who are able to purchase new products came in market. The number of such consumers are more and also prefer to purchase products that can give high quality.
The next segment for mentioned company is based on social acceptance oriented ones. In this segment, those customers are included who are mostly style and status conscious. It is apparent that the products of Apple company are mostly very expensive ones which cannot be afforded by lower level of income groups. Hence, rich class people use to purchase the products of this company so that they can maintain their social status in society. They feel that this purchasing attitude will differentiate them among others and also gives them confidence.
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The target market for Apple company can be divided into two types which are primary sand secondary segments for targeting customers. In primary target market mostly those people will be targeted who are fond of latest techniques and prefer branded products. They can be termed as premium target markets as well. Further, on secondary basis target markets will be youth who purchase more of gadgets that are latest and provide number of features to use it as a style or fashion. In both of these segments, customers with high to middle level of income can be included who are mostly interested in latest techniques.
4. Discuss the level of involvement of Apple Company primary segment
As per the segmentation of market, the primary target market for Apple are those who are brand loyal or generally prefer to purchase the branded products. Besides this, the customers of this segment usually prefer to have high features as well in the products purchased. In such conditions, the decisions of said company will be highly affected. As these are the primary segments for organisation, the involvement of such consumers also enhances. Further, in such situations, the organisation will have to focus more towards providing better features than competitive companies. It is also necessary for the organisation to be innovative and creative while producing any new products. With this objective, the research and development team of mentioned firm use to have a market study to collect more information on customer's demands and needs. This is a necessary part of cited enterprise as this makes a base for company to make a decision for launching a new series as per the needs of clients. Besides this, the management of firm primarily focuses on several questions while deciding about new products to be introduced. They use to focus on type of product company intend to launch on the basis of market survey done by research department for assessing needs and trends in market. On this basis, they decide the segment towards which more focus will be laid to target customers. As per this decision, products will be launched in market and various marketing efforts will be planned. The mentioned company believes that positioning of products play a vital role in success of brand. Because of this reason, most of the products are made available by Apple in its official retail stores and malls. This provided them to have a direct contact with customers and they easily identify their needs and demands. This information is then used by top level managers in deciding about new product's planning. For instance, recently the mentioned organisation has come up with a new innovation by introducing wireless headphones. This innovation was done by said firm due to correct analysis of market and identifying needs of consumers. Because of this, the mentioned firm has always been on top position in smartphone industries and all other markets. The quoted entity is able to identify in correct way the needs of consumers because of which it has been able to successfully sell its products on higher costs as well. Moreover, the mentioned company has also proved that by focusing more on customer's needs and demands organisation can attain large number of customers. Besides this, it also helps in giving better outcomes by making more brand loyal customers.
5. Creating a positioning map for the market place by considering primary segment, its level of involvement and the competition
The present positioning map of apple iphone shows its prsence in high price and high quality market. As per the figure it is also evident that there are competitors of mentioned comapny who are Samsung and Windows phone. This shows that cited firm is operating in highly competitive environemnet as rival firms are also positioned at same place. It has ficussed on primary level of segment which refers to customers who prefer branded products with high quality features. For such consumers, price is a regardless factor because of which the company has also laid emphasis on innovation and qulaity. This has made the position of qupoted enterprise different and higher than rival firms. Besides this, LG phone is also shown in this figure which is placed in low quality and low price segment. Therefore, Apple needs to continue with its present strategy of conducting market studies for making decisions and involve primaruy segment of target customers in the same process. With this, the company will be able to compete against the rival firms as well as maintaining its customer base. In addition, the company can also focus on next level of segment where target customers are generally youth who use to take interests in latest gadgets. They prefer to have these phones so that they can keep themselves updated. The reputation of the cited company as a leader in the smartphone market has begin to slip as rivals such as Samsung, Sony eyc. Has become more steadily more impresive as solid iphone competitors have introduced. The world of smartphone is a rapidly growing industry which sees a new gadget to be launched every year. Apple's smartphone series is branded to be the ultimate competition. Apart from the rival states above the new entrants like Xioami and Gionee are able of giving tough competition. The samsung galaxy's performance is touted to be at its best inspiteof the stuiff competition. It knows the mindset of its consumers and performs in accordance with it. Sony is also in the race. It is seriously focusing on its hardware performance to move forward in the ranks. The HTC one M9 is having the latest hardware and software whcih is surely giving a tough competition to Apple. XIAOMI MI5 is dust proof as well as waterproof. Currenty it is under manufacturing stage, it is cheaply prices to attract the attention of the customers.
The present report has focussed on market segmentation of Apple iPhones and also on decision making strategy of said company. The report has concluded that the mentioned organisation use to primarily focus on customers who are more conscious towards brand and quality of products. On this basis, cited venture use to launch its various products that are based on consumer's needs and demands. Besides this, their major focus is laid on maintaining quality in phones and providing enhanced features as well. Because of this strategy, the company is able to make large number of customers beside the availability of phones on higher rates than competitor firms of same industry.
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