Apple's Lifecycle Concept
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Lifecycle concept recognizes the stages that products have to go through while they are in a competitive market. These stages include introduction stage, growth stage, maturity stage and decline stage. At the introduction stage, a product is still new in the market, and thus a company only produces one or few products. Its sales are also low. At the growth stage, a company earns high revenues since consumers are aware of the product. At the maturity stage, brand awareness of the product is high and thus companies focus on differentiation in order to gain market share (Grieves, 2006). At the decline stage, profitability of the product reduces due to high competition. The case study on Apple Inc tries to show how Apple was able to gain the market share of personal computers. It shows how Apple moved from its small market share through its Mackintosh to an industrial leader after the introduction of the concept of digital hub by Steve Jobs. This concept led to the development of iPods, iPhones, iTunes and iPads that changed the information technology market.
Apple has gone through the introduction stage of the lifecycle concept from the many products that it produced. At this stage, companies spend a lot of money on developing a product. Furthermore, the products starts with slow sales volume, and most companies practice high skimming strategy (Stark, 2011). Apple spent a lot of money on introducing Macintosh in 1984, but its sales were low, and this caused a decrease in Apple’s income. Furthermore, it partnered with IBM to form a new operating system in 1992 and spent around $500 (Kim & Yoffie, 2011). However, these products did not yield many profits due to the high competition in the personal computer mainly from Microsoft’s Windows and IBM’s personal computers. Apple also underwent through the growth stage of the lifecycle concept. At this stage, a company earns rapid revenues since consumers become aware of the market dominance of a particular product that this company offers. Companies also expand their distribution points in order to deal with the high demand of that particular product. Apple introduced iPod in 2001. In 2005, this product underwent through the growth stage, and it increased the revenues of this company by a huge margin. After the introduction of iTunes, iPod’s sales role from 113,000 per quarter to 733,000 per quarter showing the immense growth of this product. iPhone also underwent through the growth stage in 2009. It was able to account for 30% of Apple’s revenue.
Some of Apple’s products underwent the maturity stage of the lifecycle concept. At this stage, sales increase at a declining rate due to high competition in the market. In addition to this, most companies consider differentiating their products in order to deal with the high competition due to similar products that are introduced by the rival companies in the market. Companies also reduce the price of their products in order to retain and encourage switching of customers to their products (Stark, 2011). Apple passed through this stage after iTunes faced stiff completion from Amazon.com and Napster. In addition to this, Internet sites such as Pandora and Last.fm started offering free music. Steve Jobs responded to these challenges by acquiring Lala.com and introducing iPhone that helped this company to increase its music sales in iTunes (Kim & Yoffie, 2011).
The last stage in the lifecycle concept is the decline stage. At this stage, sales of a product decline significantly. This is mainly due to market saturation or obsolesces of a particular product due to improvements in technology. Most companies are faced with the option of discontinuing the production of a certain product in order to reduce losses (Grieves, 2006). Apple passed through this stage when it decided to end the partnership of producing Taligent and Kelinda with IBM after incurring high losses.
To conclude, it is evident that Apple has passed through the four stages of a lifecycle concept. It passed through the introduction stage when it introduced Macintosh. It also passed through the stage of growth after its iPod sales increased massively in 2005. Furthermore, it passed through the maturity stage after iTunes started facing high competition from Amazon.com and Napster. Lastly, it passed through the decline stage after the projects of producing Taligent and Kelinda failed.