Report on Iphone XR PDF

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IPHONE XR Analysis of Marketing Environment

Lecturer: Michael Harker Tutor: Kyle Andrews (Word Count: 1,626)

Finn Rogers (201601729) [email protected]

Executive Summary The goal of this report is to analyse each component of Apple’s marketing environment, and in turn to relate it to the firm itself as well as the iPhone XR. Concepts like bargaining power of suppliers and buyers, and industry rivals from Porter’s Five Forces model will be utilised to analyse how Apple’s competitors and consumers impact their micro-environment. PEST analysis of the factors which make up Apples macro-environment will also be undertaken to give it a clear image. Apple employees’ personal experience will be discussed to help understand Apple’s internal environment. At the end of this report it will, be concluded that the iPhone XR will see a good degree of success in the UK and recommendations will be made as to how Apple can maintain this and improve on it.

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Methodology This reports aim is to provide in depth analysis of Apple’s marketing environment. The key focuses in this instance are its micro-environment and its macroenvironment, as they are the broadest topics relevant to Apple’s marketing environment with the release of the XS, including consumers, their competitors and the socio-cultural factors which affect it. A variety of sources were utilised, academic ones mainly being used for the more theoretical aspects of the report (Porter’s Five Forces), as there is a negligible degree of journal articles and academic papers available on the XR due to its relative youth as a product. The Apple website (as well as its competitors’), Statista and the UK government website to find statistical and factual information on elements of the report, such as Apple’s market share and figures for the UK’s economic environment.

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Contents 4. Introduction 5. The Micro-Environment 8. The Macro-Environment 11. The Internal Environment 12. Conclusion 13. Recommendations 14. Appendices 15. Reference List

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Introduction Apple Inc. is a corporation founded in 1976 that develops and distributes a wide range of electronics to a large base of consumers, such as the iPhone, the iPad and the Apple Watch. It has the greatest market value of any corporation in the world, being valued at $926.9 billion (statista.com) so is clearly a dominant presence in the electronics industry, and importantly the smartphone industry also. Apple intends to maintain and maximise its share in the smartphone market with the release of the iPhone XR model. It is a smartphone that was released alongside the similar iPhone XR.

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The Micro-Environment The micro-environment is defined in a textbook by Armstrong et al (2015) as “the actors close to the company that affect its ability to serve its customers – the company, suppliers, marketing intermediaries, customer markets, competitors and public”. A conclusion can be formed from this that the micro-environment involves a diverse spectrum of components, all being vital to how the firm is run day-to-day. Competitors, customers and suppliers are key elements of Apple’s microenvironment and must be analysed to fully comprehend it. Competitors Apple intends to maintain and maximise its mobile phone market share with the release of the iPhone XR. It has the largest and most vivid screen display of any iPhone model with LCD to date, enhanced facial recognition for increased security, unprecedented camera effects and the most powerful processor of any iPhone to date. The variety of its features is productive for increased competition. Features of Porter’s Five Forces Model will be used to analyse the effect of competition on Apple’s marketing environment. Similar phones to the iPhone XR made by Apple’s competitors are currently on the market too. The table will display them in comparison to the XR.

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Company: Product: Price: Miscellaneous Features:

Apple iPhone XR £799.00 (128GB) (Previously

Samsung Galaxy S9+ £869.00 (128GB)  SD card

mentioned)



HUAWEI Mate20 Pro £899.00 (128GB)  Water

functionality

resistant –

for external

allows for

storage

more photo

Compatibilit

opportunitie

y with other

s

Samsung products



Wireless projection for home cinema experience etc

Based on the above examples, it appears possible that Apple are keeping their prices competitive with the XR while having comparable features as a result of their market share in the UK mobile phone industry being the greatest (51.46%), followed by their main competitor and manufacturer of the Galaxy S9+, Samsung (20.3%). Research by Porter (1989) on the forces which shape marketing strategy and more specifically supplier power can help explain this. As Apple is the most concentrated supplier in the UK mobile phone industry, this gives it more leverage, and in turn allows it to set its own prices on products, rather than charging a greater price than market competitors to ensure profits, as they are more confident of customers regularly buying iPhones off them. This is a result of Apple exhibiting more bargaining power with their customers in the UK than any of their competitors. Customers 6

Market orientation has been described by Wren et al (2000) as “a customer-focused process of intelligence generation, followed by coordinated, interfunctional marketing efforts to achieve long-term profitability”. A consequence of the death of former Apple CEO Steve Jobs in 2011, is the firm seemingly navigating towards becoming a more market-orientated company as well as already being a product orientated-one with the goal of innovating. A stepping stone in this, was the release of their first ever budget smartphone, the iPhone 5C – which was released alongside the similar but more expensive 5S. They appear to be making a similar attempt with the iPhone XR, which is cheaper than their competitors’ equivalents whilst also being released at the same time as the costlier XS model. The bargaining power of consumers could have influenced this, as in the past they could have opted for a range of budget smartphones offered by industry rivals as a cheaper substitute to an iPhone, in turn affecting how the values of the smartphones offered by Apple were determined by the company. By proceeding with this business model, it seems that Apple know their customer base and the iPhone XR should be popular with customers on account of its reasonable price, proving that they are market-orientated.

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The Macro-Environment The macro-environment is defined in a textbook by Armstrong et al (2015) as “forces that shape opportunities and pose threats to the company”. The forces in question refer to external forces which impact how Apple – or any firm – operates, such as political, social, technological and economic forces. PEST analysis – as explained in more detail by Gupta (2013) – of these forces was utilised to gain a full comprehension of Apple’s macro-environment. Political/Legal See Appendix 1 for points on the Political and Legal environment. The political and legal environment is not likely to have a negative effect on the sales of the iPhone XR, as Apple practise proper Corporate Social Responsibility, which was defined by Davis (1960) as “businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest”. In addition, factors that affect phone sales like VAT rate and unemployment have either not increased significantly enough in rate to have an effect or gave remained unchanged. Economic See Appendix 2 for points on the Economic environment. The UK’s economic environment will be very influential on how the iPhone XR will perform in terms of sales. It appears that it will work to its advantage however, as GDP has been on a slight constant increase throughout 2018, seeing its highest rate of growth in Q3(0.6%) since late 2016.

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While there is not explicit correlation between the two, increase in UK GDP is complimented by the constant rise in smartphone use by adults in the UK. As well as this, the slight growth in disposable income means consumers may be more tempted to opt for a high-price smartphone such as the iPhone XR than they would have been in previous years. Socio-Cultural See Appendix 3 for points on the Socio-Cultural environment. The slight increase in the UK’s resident population may lead to a slight increase in potential consumers, which could possibly give Apple a slight sales boost in their pursuit of marketing the iPhone XR in the UK. On the other hand, the fact that a decent proportion of the UK’s (18.2%) population is retirement age, this could mean that a lot of that segment may have no interest in, or knowledge of costly smartphones such as the iPhone XR. Technological Research by Huang and Trong (2008) suggests that many consumers don’t pay proper attention to what kind of handset they purchase, and instead base what phone they choose to buy on what contract they are offered by their phone provider. This implies that consumers with a budget for the XR may opt for another phone, comparable in price and technological aspects possibly from a competitor, as a result of their general indifference towards exactly what phone they buy, which may reduce sales slightly. However, it must be considered that this would only really apply to people who pay off their phones over a fixed term, rather than those who buy them sim free.

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Another point made by Huang and Trong (2008) is that some people will be quick to replace their mobile phone if they feel its battery life is below par. According to technology website “Tom’s Guide”, the iPhone XR’s battery life is the most durable of any iPhone, as well as being greater than that of Apple’s competitors’ equivalent handsets and is ultimately greater than the average smartphone’s batter life. This could be a small boost for apple whose device battery life has been under regular criticism since the release of the original iPhone.

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The Internal Environment Employees “internal customers must be sold on the service and be happy in their jobs before they can effectively serve the final customer” (Berry, LL). The “internal customers” mentioned refer to the employees in a firm. If these employees are looked after it can lead to a rise in employee motivation and therefore productivity, in turn boosting sales which are provided by the “final customer”, otherwise known as consumers. Apple are highly regarded on the company review website “Glassdoor”, which an average rating of approximately four stars out of five, as well as being ranked as Glassdoor’s ninth best company to work for in 2018. Based on this evidence, a conclusion can be made that Apple are an above average company to work for, with a great deal of employee satisfaction, which should bode well for its UK iPhone XR sales, as well as Apple’s sales in general if they maintain their seemingly positive working environment.

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Conclusion To conclude, the iPhone is likely to be successful in the UK, through Apple being cognizant of their customer base by releasing it at the same time as the costlier XS, being a leader in innovation and marketing the iPhone as a great alternative to their competitor’s devices.

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Recommendations The report recommends that 

Apple emphasise the competitive price of the iPhone XR in their marketing campaign, relative to the prices of their industry rivals’ equivalent smartphone devices.

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

Apple target the baby boomer generation to maximise general sales.



Apple continue to innovate to maintain parity with their competitors.

Appendices Appendix 1 Political/Legal Environment VAT has been a constant 20% since the 4th of January 2011. (Gov.uk 20/11/18) Apple conform with CSR and are constantly trying to build on and improve their practise of it. They ensure their employees wellbeing and are working to educate their female employees in Asia on personal health. (Apple website 11/11/18) Unemployment has essentially remained constant throughout 2018 so is not likely to be a factor that will affect smartphone sales.

Appendix 2 Economic Environment GDP growth is at a constant increase in the UK, with it being 0.1% in Q1 of 2018, 0.4% in Q2 and 0.6% in Q3. (Gov.uk 11/11/18) UK average disposable income has increased to approximately £28,400 in 2018, 1.2% greater than it was in 2017. (Gov.uk 11/11/18) A study from 2018 showed that 78% of adults in the UK owned smartphones as opposed to 2015 where only 66% of adults owned them. (Ofcom reports 11/11/18) Appendix 3 Socio-Cultural Environment The UK population of residents was approximately 66,040,299 in June of 2017, growing by 392,000 since the same time the year before. This is the smallest rate of population increase since 2004. (Gov.uk 11/11/18) Approximately 18.2% of the population were aged 65 or over which equates to almost two in five people. (Gov.uk 11/11/18)

Reference List Textbooks

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Armstrong, G., Harker, M., Kotler, P. and Ross Brennan, R. (2015). Marketing An Introduction. 3rd ed. London: Pearson Education, pp.74-108. Articles Berry, L.L., 1981. The employee as customer. Journal of retail banking, 3(1), pp.33-40. Davis, K., 1960. Can business afford to ignore social responsibilities?. California management review, 2(3), pp.70-76. Gupta, A., 2013. Environment & PEST analysis: an approach to external business environment. International Journal of Modern Social Sciences, 2(1), pp.34-43. Huang, E.M. and Truong, K.N., 2008, April. Breaking the disposable technology paradigm: opportunities for sustainable interaction design for mobile phones. In Proceedings of the SIGCHI Conference on Human Factors in Computing Systems(pp. 323-332). ACM. Porter, M.E., 1979. How competitive forces shape strategy. Strategic Planning: Readings, pp.102-117. Wren, B.M., Souder, W.E. and Berkowitz, D., 2000. Market orientation and new product development in global industrial firms. Industrial Marketing Management, 29(6), pp.601-611.

Websites Apple. (2018). iPhone XR. [online] Available at: https://www.apple.com/iphone-xr/ [Accessed 2 Nov. 2018]. Apple (United Kingdom). (2018). Supplier Responsibility. [online] Available at: https://www.apple.com/uk/supplier-responsibility/ [Accessed 11 Nov. 2018]. Glassdoor.co.uk. (2018). Apple. [online] Available at: https://www.glassdoor.co.uk/Overview/Working-at-Apple-EI_IE1138.11,16.htm [Accessed 17 Nov. 2018]. Ofcom. (2015). The Communications Market Report 2015. [online] Available at: https://www.ofcom.org.uk/research-and-data/multi-sectorresearch/cmr/cmr15 [Accessed 11 Nov. 2018].

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Ofcom. (2018). The Communications Market 2018. [online] Available at: https://www.ofcom.org.uk/research-and-data/multi-sector-research/cmr/cmr2018 [Accessed 11 Nov. 2018]. The Official Samsung Galaxy Site. (2018). Samsung Galaxy S9 and S9+ – The Official Samsung Galaxy Site. [online] Available at: https://www.samsung.com/global/galaxy/galaxy-s9/ [Accessed 2 Nov. 2018]. Consumer.huawei.com. (2018). HUAWEI Mate 20 Pro, Kirin 980, Leica Ultra Wide Lens, Advanced AI phone | HUAWEI UK. [online] Available at: https://consumer.huawei.com/uk/phones/mate20-pro/ [Accessed 2 Nov. 2018]. ONS (2018). Gross Domestic Product (GDP) - Office for National Statistics. [online] Available at: https://www.ons.gov.uk/economy/grossdomesticproductgdp [Accessed 11 Nov. 2018]. ONS (2018). Personal and household finances - Office for National Statistics. [online] Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhousehol dfinances [Accessed 11 Nov. 2018]. ONS (2018). Population estimates - Office for National Statistics. [online] Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigrati on/populationestimates [Accessed 11 Nov. 2018]. Spoonauer, M. (2018). iPhone XR Battery Life: The Results Are In. [online] Tom's Guide. Available at: https://www.tomsguide.com/us/iphone-xr-batterylife,news-28357.html [Accessed 11 Nov. 2018]. Statista. (2018). Biggest companies in the world 2018 | Statista. [online] Available at: https://www.statista.com/statistics/263264/top-companies-in-theworld-by-market-value/ [Accessed 20 Nov. 2018]. Statista. (2018). Mobile device vendors: market share 2010-2018 | UK. [online] Statista. Available at: https://www.statista.com/statistics/487780/market-share-of-mobile-devicevendors-uk/ [Accessed 2 Nov. 2018]. Tan, N. (2014). A Long-standing Discourse on Apple’s Orientation: Product or Market Oriented?. [online] The Discourse of Life. Available at: https://stringsofdiscourse.wordpress.com/2014/10/11/a-long-standing16

discourse-on-apples-orientation-product-or-market-oriented/ [Accessed 6 Nov. 2018]. TrendForce. (2018). Annual Growth of Global Smartphone Market Will Shrink to 2.8%, Vendors Are Faced with New Round of Competition, Says TrendForce. [online] Available at: https://press.trendforce.com/node/view/3067.html [Accessed 2 Nov. 2018].

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