Wednesday, April 13, 2011

The Strong Differentiation Strategy Lock Customer In

Based on the analysis of Porter genetic strategy, we can clearly target the apple’s product in the corner of the Focused Differentiation Strategy. They use the different operating system with the window and developed their own operating system with high designed hardware and software. In the market, although their target customers are relatively much smaller than windows, they locked their customer by the unique operating system and design. From the last year’s profit comparison of the mobile phone market, apple use its 4% market share to acquire almost 50% profit in this market. This is the successful differentiation strategy. Apple thinks the price is not a good way to attract customer. And this way will lead to a negative impact on the company’ financial statement. So, they insist their high quality, excellent design, superior user experience and horizontal and vertical integration system to attract customer. This method cultivates the strong customer loyalty and gives a halo effect of other product of apple. Once the customer get used to Apple’s unique operating system and like it, it represent that apple success to lock this customer and keep this customer consume in their ecosystem, which include all the Apple’s product, like from iPhone to iPad, from Mac to iTV, etc. The successful differentiation strategy brings the huge profit margin this industry. Also, the strong financial condition provides a company more flexible to put more capital and resources to develop their technology innovation and design.

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