How Apple Addressed These Issues

Categories: Distribution Channels

The multinational technology company headquartered in California is engaged in developing, designing, and selling customer electronics, computer, software etc. Around the globe, the organization under the stewardship of Steve Jobs has developed as one of the most imaginative and inventive various of various devises. Apple Inc. has used on its inventive and imaginative gadgets just as well as ideal launching of products in different markets over the previous years. As the market has been changing with such a quick rate, the competition between two organizations contending in a similar industry has additionally begun to develop in an alternate manner.

Over the past few years, the company has spent a significant time in developing and designing their distribution channels, trying to focus on all of their buyer segment, developing and launching their products and engaging more customers. When we talk about distribution channel, Apple uses a direct as well as indirect approach. (Kunter, 2012).

  • The company has a website which allows customers to make a purchase of their choice prior to shipping.

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  • Apple stores around the globe and easily accessible to every customer.
  • Apple distributes its products through e-commerce platform like Amazon.

Even though the company has a very solid distribution network, it faces a lot of challenges also-

· Different Cost Structures- The first challenge that Apple has been continuously facing through their multi-channel distribution is that the cost structure of every channel is different. The cost structure for a particular product that Apple launches differentiated from its retail outlet structure, this is basically because on online platform, the cost structure is variable, the more the number of orders received the more will be the workforce engaged in delivering, packaging etc.

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  • Different Competitors- Another challenge which Apple continuously deals with is competing with many different types of entities. Since, Apple has always been known for its high- end pricing, the company has been facing challenges from both the retail outlets as well as the online platform. India being a country, where most of the customer are price sensitive, Apple still has managed to maintain its competitive spot in the market through its innovation. For example, Apple has been competing with its competitors on the basis of the breadth of services provided by their retail outlets.
  •  Providing Customer Service- Since the distribution channels of a company increases, the customer service issues also increase with customers now including your distributors. (Ashe-Edmunds, 2017). To deal with such issues, you basically have to increase your customer service by training your sales representatives, giving them incentives, keeping up with the time invested in dealing and solving a particular client query.
  • Grey Market- According to research done in 2018, around 150 million iPhones currently in use at that time were passed through grey market. (Cybart, 2018). Even though because of this the company’s customer base has increased but has impacted Apple’s profitability in an unexpected way by selling the products at a lower cost that decided by the company itself.
  • Cash Flow- The company believes that the need for liquid cash flows is greater in retail outlets than in online platforms. As whenever, you run a particular store the need for liquid cash is high, however on the other hand, on online platforms everything works through online payments.

Apple has always been dealing with the issue of providing customer services, since it has decided to reach out the customers through various channels, the number of issues arising from various platforms has also increased over the years. Apple has basically addressed this issue by hiring reliable and suitable representatives’ various parts of the country. One of the best ways to ensure that the customers are getting world-class support is by constructing a world class team.

Now talking about the challenges faced from Grey Market, Apple has decided to address this issue through a very innovative way. Talking about a recent launch, iPhone 8, the company basically decided to launch its product in India just as week after it was launched globally, this strategy impacted the grey marketers in a major way.

Addressing the issue of competitors, the company has always kept it a fact to deliver regularly through its innovative strategies and ideas. Taking into consideration that how customers in India are price conscious, Apple basically believes that even the cost of its recent launch iPhone X was around 80,000-90,000, it would be acknowledged. Highlight one more fact that Apple uses is that it also focuses on another side of differentiation which majorly helps it to stand out from its competitors. While the company centres around the top of the line smart phone and set it at a top-notch value, it occasionally also introduces a lower and a much cheaper version of the high-end smartphones. For instance, their recent launch iPhone SE2.

Talking about the last challenge which the company faces i.e. different cost structure across different channels, there was not much information regarding how the company has addressed this issue. However, according to me, a suggestion which I would like to give to the company would be that they should basically decide on a price that can remain standard across different channels. Since, wrong, or inadequate pricing across different channels would not only affect the company’s customer base but will also lead them to lose on their customer loyalty aspect.

HOW SUCCESSFUL HAS BEEN THE APPROACH?

As mentioned above, the company has been dealing with several challenges over the past years through their distribution channels. With the idea, of introducing a much lower and a much cheaper version of the high-end smartphones, has helped them to increase their profitability. Even with a high pricing the company can extract a higher revenue as compared to other companies in competition leading them to in making higher profit margins.

Talking about the strategy which Apple used to deal with grey marketers, benefited the company in a major way during the launch iPhone 8. Its idea selling iPhone8 and 8plus in India, just a week after its global launch, impacted the grey marketers in a major way as there was a significant reduction in the pre-bookings for the phone. (Mukherjee & Malviya, 2017). This also impacted the price which was set by the grey marketers for iPhone 8 as it got reduced by 8,000-12,000.

Apple has always kept customer service as a statement for their business. The company’s APPLE (Approach, Probe to understand, Present a solution, Listen and End), strategy has increased the company’s retention as well as conversion rate over the years. However, according to survey conducted, iPhone loyalty rate got reduced by 15% in 2019, as unhappy customers have started to switch other companies which offer the same features at lower price and better customer service. (Malinga, 2019).

ROLE OF TECHNOLOGY

Apple has always been providing with well-constructed, uniquely designed products to its customer. The company has invested heavily in its research and development sector to provide their customers with latest options to make their purchases and their applications for existing product lines, depending on customer preferences. Earlier customer used to visit company’s retail outlets to buy a particular product but due to emergence of e-commerce the whole dynamic has changed. Customers now prefer to make their purchases through online services and that has led to the problem of inconsistent price structure across different channels.

With the emergence of technology in various sectors, company’s have now started coming up with new innovations and ideas in order to gain a competitive edge over its competitors. They often try to provide their customers with new incentives through their respective distribution channels in order to drive more customer engagement.

Now, as I mentioned above, more the distribution channels more will be expected customer services. Customer expectations basically increases as a company grows, now since Apple has made its presence on various e-commerce firms like Amazon, Flipkart, Paytm Mall (recently) (Mukherjee, 2019), the company needs to render services equally on every platform. However, I feel, technology has offered many solutions to the issue of customer service faced by Apple. First of all, it increases the speed of customer interaction. Many customers now don’t have to wait on call to speak with a representative. Instead, the live chat facility of Apple, allows them to convey their issues in a more convenient and faster way.

However, in the issue of grey markets, technology hasn’t really played a major role in providing a solution or in creating challenges. However, since the company has decided to utilise its innovative ideas which can differentiate their product or service in a such a way that the grey market products cannot offer only. Because of this, Apple has seen a major decrease in the percentage selling of iPhones through unauthorised sellers after the launch of Apple 8and 8plus.

ACTIONS RECOMMENDED

  • Since Apple is a high-end pricing company, it should continue to deliver regularly with uniqueness and valued properties. The company should be aware of its competitor’s future and past both on online as well as offline platforms.
  • Apple should come up with more strict policies and norms to avoid imitation and selling through unauthorised sellers (grey marketers).
  • As I recommended earlier also, Apple should try to maintain a standard price for its products through all of its distribution channels. The wrong price would lead the company to sell more products at wrong prices. This might be beneficial at the beginning but will affect the company’s brand image in the long run.
  • As discussed earlier, the company has witnessed a drastic change in its customer loyalty rate which implies that is a lot of work that needs to be done in the customer service area. This can be achieved by many ways by improving the representative’s technical knowledge, communication skills, understanding the needs etc.
  • Increasingly significant, Apple could consider improving its distribution channels and networks in the Indian market to bring the items near to the customers. Utilizing nearby retailers who understand the dynamics of the Indian buyers is a stage towards integrating client tastes and requests in the manufacturing procedure. It will ensure that it satisfies the needs of the customers in the market.

Cite this page

How Apple Addressed These Issues. (2021, Dec 31). Retrieved from https://studymoose.com/how-apple-addressed-these-issues-essay

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