Tuesday, December 2, 2014

Blue Ocean Strategy Apple Inc. – Essential to survive in Crowded & Oversupply Market

Apple with its disruptive innovations like iPod, iTunes, iPhone, iPad, iCloud have not only fascinated the customers but also made these devices an integral and essential part of their lives. Customers feel Apple products as completely new despite the fact that smartphones, MP3 players, online music stores existed even before Apple developed them and also customers feel Apple products and services resolve problems and make their lives better.  Apple markets its products based on functionality and usability not on the technical specifications of products as compared to its competitors the technical specifications are weak. For example iPad processor compared to competitors’ tablets is comparatively slower but Apple focused on the thinness and light weight of product to cover the weakness. Apple has also been successful to take advantage of its ecosystem and offer products that seamlessly worked and made the customer’s life easier. Apple initially began as Personal Computer manufacturer like Macintosh computers but now its product portfolio is dominated by iPhones, iPads and iPods. It is also argued that Apple is more a design-driven company rather than a technology-driven company and it created products that are far beyond customer’s expectations and thinking. Basically Apple creates a product that customers do not expect, build a need for the product among customers and quickly scale up the market and in between make life difficult for their competitors as competitors struggle to keep up with Apple’s products thereby losing market share to Apple.

In an interview published in Forbes, Dan Schawbel interviewed W. Chan Kim, the BCG Chair Professor of Strategy and International Management at INSEAD, Co-Director of the INSEAD Blue Ocean Strategy Institute and co-author of Blue Ocean Strategy Book, said “Our study shows that blue ocean strategy is particularly needed when supply exceeds demand in a market. This situation is applying to more and more industries today and will be even more prevalent in the future. Let me illustrate this using the example of Apple. The company was once a PC maker in a mature and unattractive industry. By making a series of blue ocean strategic moves such as iPod, iTune, iPhone, and iPad, Apple not only achieved sustained profitable growth, but also revitalized the declining consumer electronics industry. Apple achieved its success not by investing in what was hot in the marketplace, but by making strategic moves to lead and shape the evolution of a declining industry. From the perspective of blue ocean strategy, companies seeking profitable growth should not focus their efforts on identifying an existing lucrative market, but should set out to create and capture one.” Apple has consistently redefined the industry boundaries, created uncontested market space and its products and services always focused on delighting customers and making them essential part of their lives. Apple products eliminates the problems, raises the functionalities and expectations of customers, reduces the problems of usage and creates a need for the customer and make them use their products for long time. Apple profitability and revenue growth can be directly attributed to Blue Ocean Strategy and company constantly needs to find Blue Oceans in Red Oceans so that it continues its profitability growth. Without its charismatic founder Steve Jobs, company has to continue its journey of creating new products and services and fascinate customers.


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