Blue Ocean Strategy and Customer Satisfaction Circle - Apple Company - Case Study Example

Blue Ocean Strategy and Customer Satisfaction Circle Name Institution Blue Ocean Strategy and Customer Satisfaction Circle Apple Inc. Driving Competitors out of the Industry through Blue Ocean and Customer Satisfaction Circle Telecommunication industry suffer from the crowded market space; as a result, the competition is becoming very stiff pushing some investors out of the industry or focus on production of devices which do not attract customer value. However, through integration of Blue Ocean Strategy and Customer Satisfaction Circle, Apple is gaining its desired competitive edge, which makes it difficult for other competitors to produce effectively and efficiently. Introduction With the rising level of competition within the telecommunication industry, most businesses find it difficult to cope considering the ever needs of the customers. Within the industry, Apple is considered “The King of Innovation” through it various devices and applications developed for such devices. The company designs, manufacturers, and markets its computers, portable media players, mobile phones, hardware, and software of computers and peripherals. The company also owns its App Store, a retail store that it operates. In 2009, the company has about 283 stores located in 10 countries with an aim of bringing the services to the potential customers and penetrating the market further. Moreover, there are various products of the company sold globally through online stores, direct sales force, value-added resellers, and third party wholesalers and retailers. To ensure that it is ahead of competition, the developed music store, audio books, music videos, iPod games, movies, and episodes of television programs downloadable off the iTunes Store, Mac and Windows computers, iPhone, and iPod Touch (Breen, 2006). Currently, consumers are seeking for efficient and reliable services. As a result, security and traceability of the phone is vital. Consequently, to attract such consumers, the company developed iCloud services that enable the customers to store their documents and music for easy retrieval when needed. The Blue Ocean Strategy presents a new way of thinking and making the innovation possible for the entrepreneurs to increase their probability of seceding and extent their potential success. Therefore, the concept gives insights on the innovative positioning of the venture and tools of making it possible, which makes it significant in the modification of the business model, re-orientation of the products and services provided, changing the borders of the target market, and carrying out the venture in effective manner (Quirrow, 2011). Through the years, Apple Inc. focused on the integration of the Blue Ocean Strategy and various elements of Customer Satisfaction Circle such as the product, customers’ satisfaction, and impact on the organization. Through development of various products and iCloud program that is difficult to jailbreak even for the cybercriminals, Apple products are proving to be critical for the satisfaction of the needs of customers (Breen, 2006). The paper is vital for both the small and medium business with an aim of competing effectively within the highly competitive industry. Thorough the strategies, the business would have the opportunity of creating their market gap rather than focusing on the strategies used by the competitors. As a result, the businesses are likely to experience their desired growth and competitive market position. Apple Inc.’s Blue Ocean Apple Inc. is one the business enjoying the blue ocean strategy through creation of the uncontested market space and making the competition irrelevant. The telecommunication industry is crowded with businesses trying to diversify their products and services; as a result, the level of competition is becoming stiff making the rivals such as Samsung to fight over the shrinking the pool of customers. Even though major companies within the industry compete through red oceans, they have no ability to propel themselves to the exponentially profitable growth. By creating the uncontested market space, the company has been able to push its products and services to the immense level of creativity and innovation, which in turn is responsible for the production of powerful leaps in the value for both the organization and potential customers as in the customer satisfaction circle. As a result, the company has been able to render the competitors obsolete and unleashing the demand. The red oceans strategy used by many businesses represent the industries in existence especially the small and medium businesses; the known market space. Within the red oceans, there is definition and acceptance of industrial boundaries and understanding of the competitive rules that guides competition, which makes it difficult for the small and medium businesses to have their competitive breakthrough. As a result, the businesses try to outperform the competitors to grab the great share of the existing market demand. According to Kim & Mauborgne (2005), as the market space becomes more crowded, there is reduction of the prospects associated with profits and growth., turning the products into commodities, and increasing the level of competition which to some extent becomes “bloody.” Development of iTunes With the launch of the iTunes, the company unlocked its blue ocean of the new market space within the digital music industry that has been dominant for many years. Music is becoming integral within the telecommunication industry with almost every phone and computers of the customers having music. Through the years, there has been flooding of the industry with illegal music file sharing hat commenced in the 1990s in the advent of technology enabling file-sharing programs like LimeWire, Kazaa, and Napster. In addition, by 2003, there were more than two billion illegal music files in circulation traded on monthly basis. Even though the recording industry tried to fight the practice with an aim of stopping cannibalization of the physical compact discs (CDs), technological advancement paved way for the continued growth of illegal music downloading. With the available technology for the consumers to download the music free digitally, it was clear on the war towards the digital music with the trend underscored by the increasingly growing demand for the MP3 that could play mobile digital music including iPod of the Apple Company (Blue Ocean Strategy, 2016). As a result, the company capitalized decisive trend with its clear trajectory through the creation of iTunes in 2003. Through the agreement with the major music companies such as Sony, Universal Music Group, BMG, Warner Brothers Records, and EMI Group, Apple ensured that its iTunes offered legal, flexible, and easy-to-use music downloads. The program allows the customers to buy the songs and strategically make the prices for them in a reasonable manner; as a result, the program breaks the key annoyance factor of the customers: the need of purchasing the entire CD while they need only a song or two. Moreover, iTunes also provide leap in the value that goes beyond the free downloading of the services through ensuring quality sound, intuitive navigation, browsing functionality, and search (Kim & Mauborgne, 2005). The unprecedented value of the iTunes gave the potential customers an opportunity to flock the programme with the involved parties winning including Apple, recording companies, and artists. Through the program, they receive 70% of the purchase price of the songs downloaded digitally. Moreover, the company also protects the recording companies through devising the copyright protection that would not inconvenience the users considered to have grown accustomed to the freedom of enjoying digital music but would satisfy the music industry. Currently, iTunes avails about 37 million songs, movies, books, podcasts, and TV shows. The program has sold about 27 billion songs with the users downloading about 15000 songs in a minute (Blue Ocean Strategy, 2016). It is estimated that iTunes account for more than 60% of the digital music download market globally. With the company dominating the market over the past years, various online stores are zooming into the market making it a challenge for the company to keep its sights within the evolving mass of the market without falling within the competitive benchmarking. Mobile Phones and Blue Ocean Strategy With increased technology, consumers are seeking for phones with quality services, classic, and attractive. The phones and tablets produced by the company have different features that attract the customers. In the market, Apple products have high value compared to those from the competitors with the converse strategy indicating that feature phones have variety of models exhibiting high PC-like performance, mobile internet, and business applications (Havard Business Review, 2014). iPhone is the major phone dominating the major markets and targets the affluent in need of the services that go beyond the normal moble phones. The blue ocean strategy suggests that the customers need mobile phone with unique features; as a result, businesses within the telecommunication industry have to respond through allowing the new phone to bear the anticipated features. Internet forms the basis of the new technology (Havard Business Review, 2014). Apple phones facilitate the accessibility of the internet. iPhones and iPads tend to offer competitive advantage to the to the customers. As the creator of the blue ocean, the company failed to use competition as its benchmark for all its devices. Instead of focusing on competing and beating the competition, Apple focused on making its competition irrelevant through the creation of leap in the value proposition for its potential customers across different dimensions; as a result, it managed to open new and uncontested market space. Application of the blue ocean strategy in its iPad played important in defining the current market of the device. Instead of the company segmenting, creation of a third-party category, and high-valued laptop to further on its PC industry as most businesses do, Apple Inc. focused on defining the market for its iPad. In such segment, the product is not much of a competitor within the established market considering that it sails through clear and pristine Blue Ocean. Both iPad and iPad 2 indicate that the company is trying to replace the manner in which the customers use the computing devices and ensure adequate extension of the tablets usage to larger and wider audience. By the end of February 2003, the company had sold 2014 million units. Rather than competing head on with the laptops or tablets PC, which are the market leaders, the iPad defined its market and space boundary through showing its applications and usability within the industry. Instead of focusing on mitigation of its weaknesses especially on the price and specifications, it harped on its strengths: designs and satisfactions. Just like the Windows developed the operating system (OS) on the PC mainstream, the company needs to move technology from such mainstream as it wants the customers to iOS devices, iTunes, purchase apps from the App Store, use iPads to read books, and iPods in listening to music, and making calls through iPhone. Through moving the consumers in the market that the business defines using the blue ocean strategy, it does not have to focus on fighting Microsoft directly. Apple Watch: Disruptive Innovation Many starts up businesses that claim to be disruptive in nature; however, such claims often fail in withstanding the closer examination. In most case, Apple Watches are viewed as disruptive innovations. Blue Ocean involves defining the uncontested market space where there is demand but not fought over (Hartung, 2014). Technically, the company failed to discover entirely the new sea through the introduction of the Apple Watch. Major competitors such as Samsung, Sony, and Nike kept the market niche through competition; nonetheless, they have never been successful in the expansion of the market into the required mainstream. Looking through the history at various products of the company such as iPod, iPhone, and iPad, the company was neither the first in inventing the portable music player, tablet, and touch screen smartphones. Nonetheless, the company was the first in captivating the mainstream markets through re-definition of what the products means to the customers. iPod, iPhone, and iPad are successful Apple products but not effective examples of the blue ocean strategy for being entirely new products but for being solution to some of the problems of customers in a manner that no existing product ever did (Low & Ang, 2013). Hence, whether the Apple Watch could be the break through to blue ocean strategy depends on the ability of the company in re-defining the manner in which the smart watches fit within the consumers and appeals to the whole market. Focusing on the features of the Apple Watch, it does not different significantly from the normal Android smart watches that for more than years have been in the market. The Apple Watch is similar to the Android rivals, as it tends to extend the functionality of the mobile phone. The value of the Apple Watch, which also differentiates it other smart watches, is that it has the ability of repackaging in the same old functionality in an enchanting manner through designing the sooth experience of the user, which is unique to the wearable technology (Low & Ang, 2013). The watch has a raised wrist displaying time and new notifications. Moreover, it has a gentle tap that users feel with each of the incoming alerts. The Digital Touch feature within the Apple Watch presents new ways of connection: it enables the users to send out their personal sketches and heartbeats to the friends. Besides the accelerometer and heart rate sensor, the watch came with the three rings of Activity app that uses the visual graphics and interface considered user-friendly for the presentation of personalized information regarding the physical activities of the user. It is clear that such attractive feature presented by the watch is the key to the translation of the appeal of the watch in mainstreaming the taste and the changing impression on the smart. With such features, it is clear that Apple Watch is a disruptive innovation, which is a blue ocean strategy to the company as it serves the underexploited market. According to the disruption model, the disruptive productivity often tends to cannibalize the existing market through charging the lower price with an aim of moving upmarket (Brookes, 2013). Moreover, Apple Inc. has different watches with the prices ranging from US$349 to US$17,000 reflecting that it considers economic status of different market segments, which threaten to disrupt various industries. Build Execution into Strategy There is an effective relationship between organizational satisfaction and customers’ satisfaction. At Apple Inc., customers come first; as a result, its products are customer focused. Based on the circle of satisfaction, customer, organization, and products are linked greatly. The needs of the organization depend on the satisfaction of the customers, which is reached through provision of the valuable products to the customers. All the products of the company are of great quality and manufactured specifically to meet the needs of the potential customers. Even though there are many potential customers seeking the devices from the Apple Company, the prices tend to send them off (Quirrow, 2011). The cost of the products relates to its quality which one of the goals of the company. Therefore, customer satisfaction reflects organizational performance on the expectation of the customers. Apple Company believes that to be the best placed in satisfying its needs then it has to satisfy the needs of the customers first through production of quality gadgets and program. The days are gone when the consumers were passive believers with the brands no longer reflecting on the organization but the reflection on the needs of the market. The major factors defining the marketing strategy used by Apple Inc. are effectiveness and giving equal attention given to obtaining the satisfaction of both the needs of the customers and organization (Hartung, 2014). Moreover, the organizational growth is based on its understanding of the past, present, and future behaviours of the consumers with the relationship marketing acting on the premise that similar growth is available through the development of long-term and sustainable relationship with the customers as opposed to attracting the new ones. Focusing on the history of the Apple in the last one and a half decade, the company made things different through its colourful first iMacs in the late 90s to reflect the colourful life presented by the Macs. In addition, the company failed to pursue the grey and dull tones used in Dells, Acers, and HPs. Apple Inc. the made the iPod using the great circular touch sensitive dial in making the user interface more satisfying instead of pressing on the buttons and dials (Brookes, 2013). With its iPhone, the company showed the great touch screen phone which cracked open the market. The sexier Mac desktops and laptops gave Apple Inc. an appeal to the fashionable and fashionable personas with the Mac of the company predominantly featuring in the Hollywood blockbusters. Moreover, the products are also great in photo and video editing. Conclusion Blue ocean strategy contributes in assisting the company to come out of the ocean of bloody competition through the creation of the market space which is considered uncontested and making the competition irrelevant. Within the telecommunication industry, competition is very stiff as various businesses are focusing on diversifying their products, which in turn overlaps in other industries. Apple Inc. is one of the businesses that been able to thrive in such a highly competitive market through investment in the market gaps rather than competing directly to the other competitors such as Samsung and Sony. Considering that dividing the existing demand and benchmarking the competitors could lead to unsustainable competitive edge, Blue Ocean involves growing the demand and breaking away from the competition. The business universe could be thought as a composition of two kinds of ocean: Blue Ocean and Red Ocean. In most business, especially the small and medium business, they focus on the red ocean, which involves competing for the available market demand. Through launching iTunes, Apple unlocked the untapped potential within the digital music industry as its blue ocean strategy. Through iTunes, the consumers are able to buy their favourite songs instead of purchasing the CDs in which they could only need one or two songs, and ensuring that both the producers and artists gain from the purchased songs. In the advent of technology, the company has been able to develop its Apple Watches, which presents many advantages to the customers. References Blue Ocean Strategy. (2016). iTunes | Music Industry Case Study | Blue Ocean Strategy Example. Retrieved from https://www.blueoceanstrategy.com/bos-moves/itunes/ Breen, C. (2006). The iPod & iTunes pocket guide: All the secrets of the iPod, pocket sized. Berkeley, CA: Peachpit Press. Brookes, I. (2013, June 10). Apple, bobbing along in its own Blue Ocean Strategy space. Retrieved October 26, 2016, from http://www.cakesolutions.net/companyblogs/2013/06/10/apple-bobbing-along-in-its-own-blue-ocean-strategy-space Hartung, A. (2014). Surface 3 and Apple Watch – Red Oceans v Blue Oceans | Adam Hartung. Retrieved October 26, 2016, from http://adamhartung.com/surface-3-and-apple-watch-red-oceans-v-blue-oceans/ Havard Business Review. (2014, July 15). From Blue Ocean Strategy to Blue Ocean Leadership. Retrieved October 26, 2016, from https://hbr.org/2014/07/from-blue-ocean-strategy-to-blue-ocean-leadership Kim, W. C., & Mauborgne, R. (2005). Blue ocean strategy: How to create uncontested market space and make the competition irrelevant. Boston, MA: Harvard Business School Press. Low, K. C., & Ang, S. (2013). Blue Ocean Strategy and CSR. Encyclopedia of Corporate Social Responsibility, 4(2), 179-188. Quirrow. (2011, March 3). Apple And Its Blue Ocean Strategy. Retrieved October 26, 2016, from https://quirrow.wordpress.com/2011/03/03/apple-and-its-blue-ocean-strategy/ Read More