How can Apple use market penetration to increase its share of the smartphone market?
Apple is one of the most successful and innovative companies in the world, but it also faces fierce competition in the smartphone market. How can it use the Ansoff Matrix, a strategic tool that helps businesses decide how to grow, to increase its market share and maintain its competitive edge? In this article, we will explain what the Ansoff Matrix is, how it applies to Apple, and what strategies Apple can use to penetrate the existing market and attract more customers.
The Ansoff Matrix is a framework that helps businesses evaluate four different growth options: market penetration, market development, product development, and diversification. Each option involves a different combination of existing or new products and existing or new markets. The matrix helps businesses identify the risks and opportunities of each option and choose the most suitable one for their goals and capabilities.
Apple operates in several markets, such as smartphones, tablets, laptops, wearables, and services. It also offers a range of products, from the iPhone to the Apple Watch, that cater to different customer segments and needs. To apply the Ansoff Matrix to Apple, we need to focus on one product-market combination, such as the iPhone in the smartphone market. This is the most relevant and profitable segment for Apple, as it accounts for more than half of its revenue and faces strong competition from rivals like Samsung, Huawei, and Xiaomi.
Market penetration is the growth option that involves selling more of the existing products to the existing market. This means increasing the market share of the current product by attracting new customers, retaining existing customers, or encouraging more frequent or higher usage. Market penetration is the least risky option, as it does not require significant changes in the product or the market, but it also has limited potential, as it depends on the size and saturation of the market.
Market penetration can bring several benefits to Apple, including strengthening its brand loyalty and reputation, enhancing its competitive advantage, exploiting economies of scale and scope, and creating network effects and switching costs. This can be achieved by offering high-quality products and services that meet or exceed customer expectations, leveraging unique features like the iOS ecosystem, Face ID technology, and Apple Pay system, reducing costs and increasing efficiency through mass production and distribution, and increasing the number of users and devices that are connected and compatible with each other.
Market penetration poses some challenges for Apple, such as intense competition from other brands, market saturation and declining growth rates, changing customer preferences, and adapting to different cultural and regulatory environments. These issues can include similar or cheaper products with comparable or superior features and performance, customers becoming more aware and demanding of issues such as privacy, security, sustainability, and social responsibility, as well as different tastes, habits, and expectations in different regions and countries.
In order to increase its market share in the smartphone market, Apple can employ various market penetration strategies, such as offering discounts and promotions, launching new models and variants of the iPhone, expanding its distribution channels and partnerships, improving customer service and support, and increasing its marketing and advertising efforts. For instance, the budget-conscious customers can be attracted by the iPhone SE, while the iPhone 12 Pro can be targeted at professional users. Additionally, Apple can leverage online platforms, retailers, carriers, and resellers to reach more customers and markets. Moreover, it is essential for Apple to provide warranties, repairs, updates, feedback mechanisms as well as utilize social media influencers, events and campaigns to raise awareness of its products and services.