Understanding Apple Business Strategy

Based in Cupertino, California, Apple is an American multinational company that designs and sells consumer electronics, software, and services. Apple’s iPhones helped spark the dawn of the smartphone-era and have revolutionized the way the world sees phones.

Apple’s business strategy, though simple, holds up to date and has played a major role in helping Apple become the first-ever company to reach the trillion-dollar valuation.

apple trillion
Source: Statista

Apple’s business strategy can be easily understood by knowing the type of products and services they provide.

Let’s find out.

The Business of Apple

Apple was founded on 1 April 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, and bought innovation to the table in form of their rendition of what a personal computer should look like with the Apple I.

Apple continued producing quality and perfectly engineered products, with an emphasis on design and aesthetics. Apple primarily made desktop systems and hardware accessories related to it for a while and soon diversified into making other consumer electronics such as laptops, PDAs, music players and such.

Their first major success of the new millennium was the iPod – which wholly embraced all of Apple’s design philosophy and set stage for its future products. The revolutionary iPhone was launched in 2007. With resounding success, Apple once again redefined the public’s perception of the smartphone.

To put it in short, Apple has brought about –

  • The revolution of the PC industry
  • Introduced mouse and graphical user interface to consumer products
  • Innovated the music player
  • Launched the smartphone revolution
  • Bringing innovating technologies that set trends for the rest of the industry

Here are all the products and online services that Apple currently provides –

apple products
Source: Macrumours
  • iPhone
  • iPad
  • Macintosh
  • Apple TV
  • Apple Watch
  • AirPods
  • HomePod
  • iPod
  • Beats products
  • Apple-branded and third-party accessories
  • Digital Content
  • iTunes Store
  • App Store
  • Apple Arcade
  • Mac App Store
  • Book Store
  • Apple Music
  • iCloud
  • AppleCare
  • Apple Pay

Apple is among the leading electronics manufacturers in the world with profit margins and revenues that put most major businesses to shame. Apple became the first “tech” company to reach a trillion-dollar market capitalization value in August 2017.

There are only five other companies to have made it to the trillion-dollar list, which brings us to –

What is Apple’s business strategy that has led them to become such a successful company?

Let’s find out the operational tactics of Apple which have helped them list as one of the market leaders in the technology and electronics industry.

Apple Business Strategy

Apple Ecosystem

Apple has always designed, developed and manufactured its hardware and software in-house. This innate advantage helps them create a deeper level of integration between its hardware and software – between for all of its devices.

Here’s an example –

Say, you buy an iPhone. You soon start using a few of its online services such as iCloud for storage. Herein lies its brilliance – the hardware, software, and services on the iPhone are so well designed and intuitive to use that you soon fully embrace it. Once you do, it leads you to create a good image and also only the rest of Apple devices can use the services.

This makes you buy their laptops and other hardware that plays well with one another. This extends to their accessories as well – the recent line of iPhones have removed the headphone jack which makes people buy more of Apple’s wireless AirPods earphones.

apple ecosystem
Source: TechRestore Blog

This strategy has helped Apple create an environment or “ecosystem” that offers a consistent and great experience to its users.

Customer Relation

Apple has always made a major point in providing stellar customer service and has been able to facilitate this with its AppleCare service and by employing knowledgeable sales and service personnel to cater to the customers in need.

applecare plans
Source: Apple

This has helped Apple set itself apart from the rest of the competition in terms of customer relations and support, increasing its brand loyalty. Apple has made it a point to focus on providing the best quality of service to its consumers and this has been reflected in the increased chance of customers sticking with Apple.

Apple also builds upon this with their purpose-built Apple Stores, which are mostly situated at prime locations, allowing customers to experience Apple products before making the purchase.

apple store fifth avenue
Source: Apple

The Apple Stores also help have much finer control over the customer experience and apart from showcasing Apple products and devices, Apple Stores double up as service centres.

Form Over Function

One of Apple’s main strategies when it comes to product development lies in its ability to provide well-designed products and services – with emphasis on minimalism, clean lines, and solid tones.

apple design
Source: Medium

But it can also be said that Apple has made it a point to focus on design and aesthetics over performance when possible.

The recent Macbook (laptop) lineup is a great example of this. Apple has sacrificed heat dissipation capabilities and has included a thinner keyboard – which is riddled with issues such as not working in case the slightest of dust getting in between the keys – all in the pursuit of maintaining a thin and sleek design.

But this strategy has still worked out fine and in favour of Apple. The average consumer mostly prefers thinner and quieter laptops.

Brand Differentiation

Apple’s brand strategy and marketing strategy have always made it a point to promote itself as a luxury brand while focusing on differentiating itself from its competitors. Apple makes sure that it puts forth the following brand image – Apple competes against itself and not against others. This helps Apple in achieving its desired brand image and recognition.

apple brand
Source: Apple, SHOUTS

Consumers anyway tend to presume this is because Apple has built its reputation as a manufacturer of well-built premium products.

Customer Privacy

Apple has always made it clear that it values customer privacy and has shown to handle its customer’s data much better than the rest of its competitors.

apple privacy
Source: Apple

During CES 2020, Apple’s senior director for global privacy mentioned Apple’s take on privacy as –

  • Minimize the amount of personal data collected from its users.
  • Providing highly secured cloud storage (iCloud)
  • Providing tools for users to be able to maintain their privacy

Final Thoughts

Apple’s main strategies are as follows –

Apple uses product development and market penetration as its main intensive strategy for growth.

Apple’s product development revolves around creating clean and premium products that are quite timeless and appeal to a wider audience while their market penetration strategy can be summed up as distinguishing themselves from the rest of the competition, providing an air of distinction and recognition for their products.

Their exceptional customer support and the seamless integration between their products are icing on the cake which helps Apple firmly hold its place as one of the market leaders in the technology and consumer electronics industry.

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