Apple Corp. manufactures and markets a variety of computers and consumer electronics products, including smartphones, tablets and music players. The investment analyst firm Market Realist identified brand strength, innovation, supply chain management and premium pricing strategy as key factors in the company’s competitive advantage.
Brand Strength
Apple was the world’s leading brand in 2017, ahead of Google, Coca-Cola and IBM, according to annual rankings published by brand consultancy firm Interbrand. Brand strength gives companies like Apple great visibility in the marketplace and helps build consumer loyalty. The company’s strong branding, and the interrelationships between its products, encourage customers who buy one Apple product to try another. Products such as the iPhone, iPad and Mac share the same software and applications, and operate in a similar way, making Apple a natural choice when customers are considering another device.
Innovative Products
Apple has a long-established reputation for innovation and a commitment to developing new products. The company developed the graphical user interface, first used in its own computers, and, more recently, pioneered the iPod music player and introduced new levels of performance for smartphones. A key competitive advantage for the company is its ability to develop innovative products that share the same operating system, software and applications. This minimizes the risk, timescale and costs of product development, enabling the company to introduce a stream of new products and stay ahead of competitors. Apple’s innovative strategy of developing products that complement each other strengthens customer loyalty and helps build a barrier to competition, according to the website Innovation Excellence.
Strong Integrated Supply Chain
An ecosystem of suppliers, developers and business partners provides Apple with a strong competitive advantage. The company owns chip manufacturers, controls manufacturing, follows extremely strict software standards and operates its own stores. Deals with leading music and entertainment companies provide a vast source of media for all the company’s products. It also has a community of more than 6 million independent software developers creating applications for Apple products. This gives Apple control over the entire process of product development, manufacturing and marketing – an advantage that competitors find difficult to match.
Premium Pricing Strategy
Apple sets premium prices for its products and minimizes discounts to wholesalers to keep prices consistent across the market. The company aims to offer customers a high-quality product with unique features and uses high prices to reinforce the perception of added value and maintain profitability. The high-pricing strategy also sets a benchmark for competitors, which must offer equivalent features to match Apple’s perceived value without losing money.
