Apple’s business strategy for its iPods is to differentiate themselves from their competitors. The primary essence of their strategy had remained the same over the years but has evolved in response to the changes in consumers’ preferences.
When Apple launched their first iPod in 2001, they shocked the market with its gigantic hard drive size, their impressive industrial design and their high pricing. Apple was able to incorporate the same storage capabilities into a much smaller hard drive mp3 player than its closest competitor - Creative’s Nomad Jukebox. The novelty idea of the mechanical scroll wheel also helped iPod stand out from its competitors. Its price penetration strategy was ...view middle of the document...
Moving away from functionalities and product designs, Apple is concentrating its efforts in building a unique to its own Apple community and promoting an Apple’s way of life.
2. Evaluate the effectiveness of this strategy (Be sure to critically analyse how Apple’s strategy fits value drivers of consumers, external environment and internal environment.)
The portable music player industry in 2001 is most likely to be at its early growth stage. This can be deduced by the rapid pace at which the industry players grow. Number of companies offering portable mp3 player grew into hundreds within a few months of the introduction of Rio’s MP3. At this stage, the industry was very attractive to Apple especially when they are facing a decline in their main source of revenue from computers.
Napster’s entry in 1999 has brought the attention of digital music to millions of users and Apple was able to see the opportunity in this. By understanding that the digital music industry is growing rapidly, Apple knew that more consumers would require portable player to complement the digital music.
High end, quality, portable MP3 player industry
The industry outlook was still highly attractive as Apple aimed to differentiate their product through functionality and branding. Thus, Apple created a new market space and focused on consumers who were less price-oriented but more functionality and image-conscious. This was seen from the massive marketing for iPod and the huge storage space of iPod which was unheard of before their entrance. This was in line with Apple’s motto “Think Different” which focuses greatly on innovation and the brand has already created a huge following in the computer...