Market Share Strategy

Market Share Strategy

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Market Share Strategy

Since 1977, Apple Computers, Inc. has been a leader in the computer and technology industry. From the advent of the Apple II to the iPhone, Apple is a company known for innovation, vision, and transformation within the field. What began as a home-based operation in Menlo Park, California has transformed into a multi-billion dollar corporation with influence internationally (Encyclopedia Britannica 2008). The advancement for which much of today’s computer hardware and software are based, were developed by Apple.
Currently, Apple is enjoying great success within the technology and PC industry. The Apple brand is one of the most recognized brands in the world and tremendously popular with users (Baxter, 2008), often obtaining repeat business from its customers. Apple is at the top of the list for introducing so many new products to the market. This ranking was compiled by consulting 1,000 senior managers in a survey comparing companies based on the level of innovation. Apple also integrated seven types of technology in order to secure this ranking (McGregor, Arndt & Berner, 2006). Despite an impressive reputation and an illustrious history as a business leader, Apple must ever be watchful of increasing competition and well as the market forces surrounding it.
Problem Statement
The technology field is constantly transforming. In spite of near limitless opportunity for growth, there are still numerous obstacles which threaten the continued success and stability of the technology industry as a whole. Even with its current standing as a media and technological front-runner, Apple still faces threats not only from competitors within the technology field, but like every corporation, market forces as well.

Since the time shortly after it was founded, Apple has been besieged by rival companies like IBM and Microsoft. At one time the Apple was the sole company offering personal computer systems for household use. By 1992, however, Apple was fending off the advancement
of the more user-friendly Microsoft Windows. Even though the company still enjoyed high returns, its market share was falling rapidly (Encyclopedia Britannica, 2008). After reviewing the current data concerning Apple’s revenues for this quarter, it seems that Apple is doing well within its sector. According to its first quarter results released January 22, 2008, the company posted a net quarterly profit of $1.58 billion. Gross margin was 34.7 percent up from 31.2 percent in the same quarter a year ago (Apple, Investor Relations, 2008). The company second quarter results show a net quarterly profit of $1.

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05 billion with gross margin of 32.9 percent down from 35.1 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter’s revenue. (Apple, Investor Relations, 2008). Apple’s domestic computer sales were up 30 percent in December, and outsold the industry averaged 3 to 1, but its share of the market decreased in that same three month time frame (DeWitt, 2008). According to Peter Burrow’s article in Business Week, ‘Are Investors Unfairly Sour on Apple?’,
“Mac sales were scorching—particularly the desktop iMac, whose sales grew 53% in a market that expanded just 10%."The Mac is on fire," says Needham & Co. analyst Charles Wolf, who notes that Mac sales rose by 200,000 units in a quarter when Mac sales are usually flat.” (Burrows, 2008)

In spite respectable profits being posted in the area of iMac sales, it is important to note that Apple has just 6.1 percent of the market share according to numbers given by Garter in January 2008. The chart below shows Apple’s current standings among the top 5 U.S. PC Vendors for computer units shipped within the quarter.

Preliminary U.S. PC Vendor Unit Shipment Estimates for 4Q07 (Thousands of Units)

Company 4Q07 Shipments 4Q07 Market Share (%) 4Q06 Shipments 4Q06 Market Share (%) 4Q07-4Q06 Growth (%)
Dell Inc. 5,345 31.4 4,651 29.3 14.9
Hewlett-Packard 4,441 26.1 4,053 25.5 9.6
Acer 1,527 9.0 1,380 8.7 10.7
Apple Computer 1,035 6.1 808 5.1 28.0
Toshiba 900 5.3 852 5.4 5.7
Others 3,790 22.2 4,143 26.1 -8.5
Total 17,038 100.0 15,886 100.0 7.2

Source: Gartner (January 2008)
As well as Apple performs, when compared to other companies within its niche, it seems to be lagging behind in terms of creating the types of PC products that customers demand. Acer, a Taiwanese computer manufacturer, has begun to outpace Apple and is third ranked only to Hewlett-Packard and Dell (Garter, 2008).
In 2001, the U.S. economy began to spiral downward amid terrorist attacks, accounting scandals of corporations, and unstable economic times. According to the article by Neil Irwin, the effects of a weakened economy during that time on technology spending produced cause for concern. During the first six months of 2001 businesses spent 2.4 percent less on computers and technology. In addition, the decline marked the first time since 1974 that this industry did not
experience some type of growth (Irwin, 2001). The current economic climate in the world, some seven years later is an indication that an economic slowdown is on the verge of taking place. According to a forecast in the article ‘Growth of global technology spending is expected to slow in 2008’, International Data Corp expects the worldwide technology market to grow 5.5 to 6 percent in 2008, which is a lower rate than usual in this field. As the mortgage crisis and high oil prices continue, there is a dampening of growth in other sectors, technology included (2008). The question that must be addressed for Apple is can the company continue to grow

and gain market share in spite of gloomy forecasts for international economies? Which strategies should Apple use in order to not only maintain the current levels of revenue, but increase its hold on the technology sector? How can Apple increase its popularity with the heavy competition it faces? These are the questions that must be answered in order to assist the firm in making strategic decisions that will allow it to expand.
Research Objectives
In an effort to maintain a its current edge in innovation over its competitors, Apple must use its creativity to develop new products. The goal for this research is to create a pool of

Rearch Design and Data Analysis
The hypothesis of this research design is that by gathering data from the general public, unfamiliar with Apple products, and loyal Apple customers it will be possible to present a wealth of information to the company concerning which type of new products that consumers desire. In addition, the data is to include information concerning the type of features the public would like to see being offered along with those products that would ensure that the consumers would purchase those products.
To begin, the method of data collection would include a communication study. In order to make the communication study economically feasible, current Apple service representatives could be used in order to gather survey data from existing Apple customers in phone interviews. In order to conduct a communication study of non-Apple users, paper surveys would be provided to target communities based on demographics commonly prescribed to be those of computer and computer peripheral users.
The variables in the collection of the data would not be conducted in controlled environments in order that the subjects might be allowed to give the most open opinions possible. The time period in which the study is to take place would a three month to six month time frame. The study is to consist of 350 current Apple users and 350 non Apple users contacted per each month of the study further segmented by four age categories. The targeted age groups have been defined as 15-to-20 year olds, 21-to-30 year olds, 30-to 35 year olds, and persons 35 and over. Surveys would consist of at least 30 questions but not more than 50 questions, however, there should be ample room in the survey in order for a subject to simply be allowed to speak ‘off the tops of their heads’ concerning the types of new innovations they would like to see offered on the market.

Once this initial data collection process is completed, the data will be analyzed to order to find common traits or desired traits for new products. That information would then be passed on to a product development team in order to invent prototypes for the first five commonly identified devices requested during the study. At this point in the study, four focus groups would be assembled from each of the age segmented categories in order to present a rough work for the subjects to evaluate. This evaluation stage should take approximately 6 months until one product with a majority of the features requested can be settled on by consensus of the four groups.


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