Market Model for Change

Introduction Apple store is one of the leading chain retail stores solely operated and owned by Apple Inc. Its core business function is selling electronics and computers. Some of these electronics include third-party accessories, Macintosh personal computers, iPods, iPhones, iPads, and software. In marketing its accessories, the store has an exhibition center, and a boardroom, and undertakes workshops and presentation to inform its consumers of new accessories. Though variety of stores across the globe, operate inside a shopping mall, Apple store uses a different approach. The organization’s brand strategy is unique, and it is one of the pioneers’ strategies of modern technology. Apple stores operate in a competitive environment that is characterized by different market models and structures (Duane et al., 2008). Changes in the Market Model Economists have differentiated the market into four structures: monopoly, perfect competition, monopolistic competition, and oligopoly. The drastic changes that affected the economy over the last decades have enhanced changes in the market models. In a globalized economy, monopoly and perfect competition models are losing ground. Taking, for instance, perfect competition, there has been drastic change in this market model. Business entities have attached less significance to this model because business sectors have realized that perfect competition is being overtaken by oligopoly and monopolistic competition (Sadeghi, 2012). In addition, organizations operating in a particular industry have differentiated their products in an attempt to realize competitive advantage; this was not the case with the traditional organizations as their products were homogenous (Pride & Ferrell, 2012). When organizations and business operations succeed through product differentiation of products, then the market transforms to an imperfect competition. As such, differentiation has always characterized the activities of the perceived ‘perfect’ competition. With differentiation, the consumers would get quality products at affordable prices, the cost outlay associated with increased advertising on an attempt to realize competitive advantage would decline, and the economy would experience a healthy competition (Pride & Ferrell, 2012). Market Model Pattern for Apple Store Globalization has ensured that large-scale organizations dominate activities in the economy. In the case of Apple stores, it has established approximately 400 stores in United States and across the globe. The market structure that defines the operations of Apple store is Oligopolistic. The huge costs attributed to entry into the global market bar new entrants. The technological economy is characterized by few sellers that are sensitive to changes in the market trends—including marketing and pricing strategies. Oligopoly model, as demonstrated by Apple store, shows difficulty in entering the market by new entrants. Apple is involved in investment in new technological changes and marketing strategies in order to be relevant and competitive in the industry. Indeed, concentrating in the company’s core competencies and acquisition of new competencies by involving in new alliances, networking, and mergers would necessitate realization of its strategic goals and objectives. Oligopoly market structure has also ensured that Apple store dominates the current technological and electronics market either through involving in less capital intensive strategies or mergers and acquisitions. Over the past decade, Apple store has demonstrated its ability to network and partner with small scale firms when it is entering a new market. Oligopoly market demonstrates both the short run and long run behaviors. Oligopolistic organizations tend to have a common behavior in the economy. The most crucial and significant oligopolistic market behavior includes rigid prices, mergers and acquisition, collusion, interdependence, and non-price competition. In the case of interdependency, Apple stores monitors the activities of other firms,—either the rivals’ short-term or long term strategies—in an attempt to realize competitive advantage. As competition is confined within few organizations, decisions that are taken by one organization have an effect on the decision of other rival companies. Hypothetically, the success of one organization, in an oligopoly market, depends on the operations or activities of its competitors. Secondly, price rigidity is a short-term behavior of an oligopoly industry. The market structure aims at maintaining relatively constant prices, as industries prefer to compete in an environment with constant prices. In this scenario, when an organization increases the price of its commodities, it will lose its market share and customers to its competitors as firms are competing to match the increase in prices (Smith, 2011). Consequently, non-price competition is a long-term behavior of oligopoly market. As Apple store have realized that price competition can be ineffective in harnessing market share in the economy, reliance to non-price competition has been a common strategy for these firms. The common methods that non-price competition relies upon include barriers to market entry, product differentiation, and advertising. Increasing the prices of commodities would not necessitate increase in the market share for an organization rather relying on efficient commercial advertising would increase its operations. Finally, merges and collusions are long-term behavior of this market model. Merging with other renowned organization would ensure that it safeguards its profitability level; thereby, increasing its competitive advantage in the economy. The assumptions underlying this model is that when an organization increases the price of the commodities, other business entities would follow suit thereby making the firm to lose business dealings. In oligopoly market structure, demand is elastic or responsive to changes in prices; preferably increase in prices. On the other hand, when the prices are lowered, other organizations in the industry would follow suit, as such, the business entity would not gain in its business operations. Therefore, it is assumed that the demand is inelastic or unresponsive to the decrease in the prices of the commodities. Degree of Competition In a growing economy, competition is healthy for business organizations. However, not all the organizations would appreciate competition in the economy. Since its initiation into the market, Apple store has faced competition across the globe (Pride & Ferrell, 2012). As such, the company has been undertaking strategies that will enable it to realize competitive advantage in regard to its competitors. Some of the factors that necessitates Apple’s degree of competitiveness includes; the number of rival organization in the industry, product uniqueness, and technical specifications. In the case of product uniqueness, Apple Store is known for its unique products in the market. The introduction of iPhones, and iPads was a clear strategy that enabled the organization to outwit its competitors. As the current economy is characterized by adventurers’ consumers, new and unique products would attract new customers to the organization. This is demonstrated by high production level of the company. Secondly, technical specifications of the company’s production system have provided Apple with a competitive advantage over its rivals. The company is sensitive to technological advancement, and it has used this strategy to increase its production and revenue outlay over the last few decades (Wooldridge & Schneider, 2011). Finally, the number of organizations in the sector determines the level of competitiveness of an entity. Limited number of firms necessitates an organization to increase its revenue outlay and market share in the economy. Currently, Apple store enjoys wide scope of customer base, as it is amongst the most recognized firms in technology and electronics industry. Apple’s Store Competitors Currently, the organization faces stiff competition from various entities. Some of them include Dell and Cisco. Dell is involved with manufacture of computers, software, and laptops, while Cisco is involved in networking—an operation in which Apple is currently undertaking. Dell relies on price discrimination strategy when pricing its products. The discrimination is based on age, location, and gender. Different regions have different price tags for its commodities depending on the economic endowment of the region. The other pricing strategy that Dell uses is the mass customization strategy. In this case, the management listens to customers’ demands and delivers the product to their door steps. In so doing, one can determine the price to be charged for the services offered without affecting the purchasing power of the customers. Cisco, on the other hand, deploys OnPlus to its clients and monitors their activity through managing the clients Local Area Network (LAN) and Wide Area Network (WAN) (Bach, 2007). Sadeghi (2012) posits that understanding the pricing strategies for these two competitors, Dell and Cisco, the company can easily devise strategies that would realize a competitive price in the economy. Apple store can combine both mass customization strategy and OnPlus in order to realize effectiveness in its pricing strategy. However, I would recommend Apple store to incorporate market penetration strategy of pricing its products. This will ensure that the company attracts new clients; thereby increasing its revenue outlay. This will go a long way in maximizing the profit level of the company. References Bach, B. (2007). Implications of enabling technologies for Apple Inc.: Cybermarketing& enabling technologies, Berlin: GRIN Verlag. Duane, R., Hoskisson, R., &Hitt, M. (2008).Understanding business strategy: Concepts and cases, London: Cengage Learning. Pride, W. & Ferrell, O. (2012).Foundations of marketing, London: Cengage Learning. Sadeghi, S. (2012).Defensive strategy—Apple’s overlooked key to success, London: Routledge. Smith, T. (2011).Pricing strategy: Setting price levels, managing price discounts, & establishing price structures, London: Cengage Learning. Wooldridge, D. & Schneider, M. (2011).The business of iPhones and iPads app development: making and marketing apps that succeed, New York: Apress.