Heeeeey you - a loyal reader of this blog. You have stuck with me this far and I've got a treat for you - my thoughts and speculations on the mighty Apple corporation. Even though u might have expect me to pick Google I purposefully decided not to transcend their monopoly in the real world into my blog. Plus, I think Apple is an interesting company to discuss.
All in all company has a bright future in my opinion and I'd like to discuss two (currently three) product lines.
The first and most prominent at the moment is the line of iPods. Apple has done a tremendous job in infiltrating and taking over CD and mp3 players with their portable players. In fact, iPod nano is the most popular player that has ever been sold. You can see white headphones all over the city now - in fact I have 3 iPods myself. Despite their current success I believe that iPods as they are right now are going to be fading away and giving way to musical phones. Cell phone manufacturers are building better phones that integrate everything from cameras to music/video players to personal computers into cell phone. They are making phones with bigger memory capacity, better video quality and convenience ways to download music. That is why I think it is just a matter of time that people won't be using a separate device to play their music. I personally am not an early adopter but I go with the flow and common sense. Why carry around an phone and an iPod when I can have an iPhone (or smth similar). [probability of this happening is around 85% - just to be safe]
That brings me to the second product line, soon to replace the ipods in my opinion. The new iPhone offers all of the entertainment features that users are looking for and combines them with sleek design. And Apple introduced the product just at the right time. Thus it was swept from the stores in no time. I think that with a few modifications this product holds great potential. However, cell phone market is very tough because of tremendous competition. Apple is not experience in cell phone industry - this is in fact their first phone. With Google phone coming out and HTC, Nokia perfecting their product lines it will surely be a tough game. [ehh i'm not sure about probability for this one. I guess I can tie it in with Apple completely switching to iPhone and eliminating ipods at 85%].
To clarify, by eliminating ipods I do not mean that there will not be a product that Apple sells called and ipod that looks like smth what we have right now. I mean switching the role of an ipod as a "walkman" player and handing it over to iPhone.
Another reason I think that Apple will succeed and be around for a while is because they have a loyal customer base. Apple has a very distinct style and they are always looking for innovations and approaching things from a different angle and perspective. And hey - what do you know! - the third product line, Mac Computers, comes into play. Recently Apple has made a brilliant move - offering Windows as an option for operating system of Mac computers. I think this is a great idea because Microsoft does dominate software and OS market right now and the only way Mac can push their computers is if they offer Windows as an operating system as well. Also, I really like their iMac - a sleek computer where all of the components are inside the monitor. That's right - no more annoying Desktop towers. while it offers limited flexibility this computer is an excellent option for consumers willing to pay top price for top of the line product.
As I'm getting tired and losing concentration i think it's time to end this post. True, there is much to say about Apple but I am confident that this company will thrive even if it encounters drawbacks and obstacles.
Sunday, November 25, 2007
Wednesday, November 14, 2007
What does it take to stand out from competition?
Aha! I was reading professor's mind when writing my last post about competitive advantages. Maybe I should consider being a psychic... who knows. But anyways.
I bet that if you conduct a survey among business students or business owners about what a firm must do in order to succeed in business Competitive Advantage will be in top 3 for almost everybody. Now why isn't every company applying these principles to their business? Is it because people don't practice what they preach? Maybe... But most likely, and again stating the obvious, competitive advantage is not easy at all to achieve.
Since I am involved into internet marketing I have to touch on Google to examine its competitive advantage. They are a multibillion dollar market leader and are involved into so many projects that it is hard to count or state in this blog entry. But their main product and advantage is their search engine. They are by far the market leader - according to stats over 60 percent of all searches are conducted through Google. Yahoo follows with numbers close to 20 percent and MSN is in the 10s and the rest are traling far behind. The reason they were able to acquire such great results is because instead of focusing on getting paid off right away from displaying paid advertisement as free relevant search results they created a search engine that focuses on fast and accurate results. Multiple algorithms, checks and balances were and are being created as we speak to guarantee that users get the best and most relevant websites pertaining to what they are looking for. In order to maintain speed Google developed an intricated system spiders that scan your website and store data on servers all over the country. Once the system was developed and market share was acquired Google introduced a platform to monetize their search engine - Pay Per Click system: which at this moment is one of the most cost effective and relevant advetising systems.
Government protection can be applied to roads and utilities. It only makes sense that one company manages electricity in certail large areas in order to maintain an effective system and be able to handle emergencies in a more efficient manner. Even though it does make sense to me that this has to be done and government protection does provide competitive advantage to companies I do not personally like using it as an example because it is imposed rather than earned. Sure it takes time, resources and enormous amount of paperwork to apply and secure patents but once you get them nobody can touch you (at least for a certain amount of time). In a business world situation is much more dynamic and that's what I love about it.
That's all for now folks... come back later :)
I bet that if you conduct a survey among business students or business owners about what a firm must do in order to succeed in business Competitive Advantage will be in top 3 for almost everybody. Now why isn't every company applying these principles to their business? Is it because people don't practice what they preach? Maybe... But most likely, and again stating the obvious, competitive advantage is not easy at all to achieve.
Since I am involved into internet marketing I have to touch on Google to examine its competitive advantage. They are a multibillion dollar market leader and are involved into so many projects that it is hard to count or state in this blog entry. But their main product and advantage is their search engine. They are by far the market leader - according to stats over 60 percent of all searches are conducted through Google. Yahoo follows with numbers close to 20 percent and MSN is in the 10s and the rest are traling far behind. The reason they were able to acquire such great results is because instead of focusing on getting paid off right away from displaying paid advertisement as free relevant search results they created a search engine that focuses on fast and accurate results. Multiple algorithms, checks and balances were and are being created as we speak to guarantee that users get the best and most relevant websites pertaining to what they are looking for. In order to maintain speed Google developed an intricated system spiders that scan your website and store data on servers all over the country. Once the system was developed and market share was acquired Google introduced a platform to monetize their search engine - Pay Per Click system: which at this moment is one of the most cost effective and relevant advetising systems.
Government protection can be applied to roads and utilities. It only makes sense that one company manages electricity in certail large areas in order to maintain an effective system and be able to handle emergencies in a more efficient manner. Even though it does make sense to me that this has to be done and government protection does provide competitive advantage to companies I do not personally like using it as an example because it is imposed rather than earned. Sure it takes time, resources and enormous amount of paperwork to apply and secure patents but once you get them nobody can touch you (at least for a certain amount of time). In a business world situation is much more dynamic and that's what I love about it.
That's all for now folks... come back later :)
Thursday, November 1, 2007
The sweet smell of competitive superiority
I betcha that this term is in the minds of every successful businessman. How do I distinguish my business from competitors? What is needed to separate my brand from others and let the customer know that I am different? How do I determine my pricing and operation policies in order to effectively support the policy? These and many many more questions are being asked on a daily basis by CEO's all over the world. With all the books written on the subject one could wonder which of the three most prominent strategies - low cost, differentiation or focus - is the best. I personally don't think that one or the other is superior in general but it depends on a specific company and objectives that it's trying to achieve. The most important thing is to determine the strategy correctly and then show consistency. This will ensure that both the customers views and company operations are consistent and working towards the same goal.
Cost leadership strategy is a very obvious one where a company cuts all of the expenses to produce and deliver product to the customer and as a result is being able to offer products of cheaper prices. An obvious example of such company is Walmart and if you think that I will shy away and try to be original on this one - you are mighty wrong! Not because I don't want to be original but because I'm cutting my expenses and rather use this extra research time for my presentation so that i could differentiate on that one :) So, back to shamelessly abusing an obvious example: Walmart is focusing on providing customers with cheapest prices for the product and they are doing everything in order to cut costs on internal operations. They are doing it within reason though. For example, even though they are trying to cut on prices they still invest into advertising. However, they only invested 1/3rd or what their competitors did on average in 2005.
An excellent example of differentiation is Mercedes Benz. They have invested significant amount of money into portraying an image of an exceptional car for exceptional people. Mercedes Benz promotes their image as a premium auto maker and they are differentiating themselves from other car makers. They spend significant amount on research and development to make cars safer, more reliable, luxurious and comfortable. At the same time, they make sure that cars have the latest gadgets and invest into design to make their cars look beautiful [if you don't think CL63 AMG is a work of art then u r just a prejudiced against Mercedes, u Mercedes hater!] . Because of this differentiation of course the customer is willing to pay a higher class. In addition to technical/design innovations, Mercedes established their brand to be an indicator of a certain style and even class - another important step toward differentiating the car. (as I have written this I noticed we were only supposed to describe department stores - whoops!)
In terms of focus strategy - and speaking of beautiful - Victoria Secret definitely qualifies. They are focusing on Women's clothing and in particular underwear (not exclusively though) - a very narrow product line. In this market they are differentiating their product from other underwear manufacturing focusing on quality and the image of sexy. They invest into sponsoring and arranging fashion shows, employ gorgeous models to wear their underwear in front of cameras and appealing not just for women to buy them but for men to get their underwear for women. That is an extremely smart idea because a lot of times when it comes to men thinking "sexy" they lose a sense of "stingy" and are willing to dig into their wallets - after all who doesn't want their woman to look like a Victoria Secret model at least once in a while [don't kid yourself - YOU DO! and no offense to women reading this post - personality and connection are extremely important too]
So here you go - I have masterfully described these brands and now it is up to you and leave cool and insightful comments - GO! GO! GO!
Cost leadership strategy is a very obvious one where a company cuts all of the expenses to produce and deliver product to the customer and as a result is being able to offer products of cheaper prices. An obvious example of such company is Walmart and if you think that I will shy away and try to be original on this one - you are mighty wrong! Not because I don't want to be original but because I'm cutting my expenses and rather use this extra research time for my presentation so that i could differentiate on that one :) So, back to shamelessly abusing an obvious example: Walmart is focusing on providing customers with cheapest prices for the product and they are doing everything in order to cut costs on internal operations. They are doing it within reason though. For example, even though they are trying to cut on prices they still invest into advertising. However, they only invested 1/3rd or what their competitors did on average in 2005.
An excellent example of differentiation is Mercedes Benz. They have invested significant amount of money into portraying an image of an exceptional car for exceptional people. Mercedes Benz promotes their image as a premium auto maker and they are differentiating themselves from other car makers. They spend significant amount on research and development to make cars safer, more reliable, luxurious and comfortable. At the same time, they make sure that cars have the latest gadgets and invest into design to make their cars look beautiful [if you don't think CL63 AMG is a work of art then u r just a prejudiced against Mercedes, u Mercedes hater!] . Because of this differentiation of course the customer is willing to pay a higher class. In addition to technical/design innovations, Mercedes established their brand to be an indicator of a certain style and even class - another important step toward differentiating the car. (as I have written this I noticed we were only supposed to describe department stores - whoops!)
In terms of focus strategy - and speaking of beautiful - Victoria Secret definitely qualifies. They are focusing on Women's clothing and in particular underwear (not exclusively though) - a very narrow product line. In this market they are differentiating their product from other underwear manufacturing focusing on quality and the image of sexy. They invest into sponsoring and arranging fashion shows, employ gorgeous models to wear their underwear in front of cameras and appealing not just for women to buy them but for men to get their underwear for women. That is an extremely smart idea because a lot of times when it comes to men thinking "sexy" they lose a sense of "stingy" and are willing to dig into their wallets - after all who doesn't want their woman to look like a Victoria Secret model at least once in a while [don't kid yourself - YOU DO! and no offense to women reading this post - personality and connection are extremely important too]
So here you go - I have masterfully described these brands and now it is up to you and leave cool and insightful comments - GO! GO! GO!
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