Factors in External Business Environment

Australia is one of the major developed economies in the current time with having favorable business and market opportunities. This is also leading to the increase in the business challenges for the organizations due to the increase in the new competitors in the market. One of the major sectors, which witnessed huge growth in terms of competition is the mobile devices especially the smartphone market (Kakihara 2014). Australia is having various global and domestic brands operating in this market with their diversified offerings. Apple is one of the global brands operating in the Australian market with their Iphone models.

However, apart from the business opportunities, Apple is also facing different challenges in terms of different business environments. One of the major challenges is the rapid technological development in this sector. If the latest Iphone model can be compared with that of first Iphone model, technological advancement can get determined. In addition, consumers are having upper hand in the decision making process in this sector due to the presence of huge number of competitors in the market.

This report will discuss about the factors in terms of external business environment being faced by Apple in selling their smartphones in the Australian market. Moreover, competitor analysis will also be conducted to compare the products of Apple against their competitors in the market. Target market for them will be identified along with the level of involvement of them and the positioning strategies that should be initiated in order to have maximum reach in the market. 

According to the report, smartphone market in Australia will witness growth in the next few years. It is estimated that smartphone users will reach more than 19 million by 2022. Thus, it can be concluded that with the presence of good number of brands in the market, smartphone market in Australia is still not saturated and business opportunities are still there in this market. 

As per the report, Android operating system is having majority of the market share with 55.7 percent. On the other hand, IOS is having 42.4 percent as of January, 2017. Thus, Apple is not having the market leader position. The above figure also shows that from May, 2017, Android is showing positive trend while IOS is going down. Thus, this will affect the sales revenue from the Australian market.

Political	· Australia is having mainly two political parties, which creates duopoly in the market. · Both the parties are having different ideologies and thus it is difficult for Apple to change their business approach after every political change. · However, the favorable regulations in order to attract foreign investments are helping Apple to have positive business environment. · However, introduction of stringent regulations for restricting off shoring businesses is creating trouble for Apple.
Economical	· Smartphone users are increasing in the Australian market according to the above data. Thus, market potentiality is there for Apple. · Australian economy is also enhancing that further increases the potentiality of the higher end products of Apple. · However, increase in the competition in the market is reducing the profitability of Apple.
Social	· Australia is having major section of their entire population as aged between 20 to 40. Demand for electronic gadgets will be more in this age group. · Being a developed economy, major sections of the population are aware about the latest technologies. · Initiation of the globalization leads to the increase in global customers in Australia. These customers are more attracted towards the products of Apple.
Technological	· Smartphone industry is driven by the latest technologies. · Customers are expecting more features and technologies from the products. · Research and development cost is increasing in order to have latest products in the market.

Thus, according to the above table, Apple is facing diverse business factors in their operation in Australia. One of the major factors is the entry of new competitors in the market. In the current time, influx of the Australian vendors in the smartphone market is posing threat for Apple (Chen and Wen 2016). Inflow of the new competitors is increasing due to the foreign investment policies of Australian government (McKissack and Xu 2016). However, Apple is having business potentiality in terms of the demography of Australia. This is due to the reason that according to the reports, Australia is having huge portion of their total population aged between 20 to 40 (McDonald 2016). This age group is consisting of college goers and professionals and they are having the majority of knowledge about the technological advancements in the market (Page 2013). However, in order to stay ahead in the competition, it is also important for Apple to have more investment in research and development.

	Strengths	Weaknesses
Apple	· Positive and niche brand value (Steenkamp 2014) · Having presence in different countries (Montgomerie and Roscoe 2013) · Having more average profitability from the products (Heracleous 2013) · Established loyal customer base (Vivek et al. 2014)	· Having limited market share · Not having presence in every country · Less market penetration of IOS compared to Android · Low in specifications compared to the competitors
Samsung	· Positive brand value · Having maximum global presence · Profitability is varied due to having both lower and higher end models · Having diversified customer base	· Having less niche and loyal customers. · Less distinctive products compared to others · Less brand equity compared to Apple
Lenovo	· Mixed brand value in the smartphone market · Having established market mainly in the Asian region. · Established in lower end market	· Absence of higher end models · Inferior quality of products · Average profitability is lower
LG	· Positive but limited brand value · Having huge market presence globally · Profitability is varied similar to Samsung	· Having less established market and loyal customer base · Not having notable market share and are trailing behind in the global market. · Not having distinctive brand image

Competitor Analysis

Apple is mainly competing with both the market follower and leader. This is due to the reason that some of the competitors such as Lenovo and LG are trailing behind Apple in the global market. Thus, they are the market followers. On the other hand, Samsung is having more market share compared to Apple.

According to the above data, Samsung is enjoying the market leadership status in the market. This is mainly due to the reason that, Samsung is having more diverse portfolio ranging from higher end to lower end models. On the other hand, Apple is having only the higher end models. Another point of difference identified is the market presence, Apple is trailing behind Samsung in terms of the market presence in different countries. This is also limiting their market share compared to Samsung. 

Segmentation analysis is important for Apple due to the reason that it will help to determine the target market along with their requirements and expectations from the brand. In this case, Segmentation, Targeting and Positioning (STP) model will be used. According to this model, the first step is the segmentation of the customers.

In terms of the demographic segmentation, customers aged 20 to 40 coming from affluent background the target segment. This is due to the reason that the stated age group will have both college goers and professionals. College goers will get attracted by the aesthetic value of Apple along with the sense of pride. On the other hand, for the professionals, it will offer seamless and lag free experience along with the latest and updated software (Hamka et al. 2014). In terms of gender, both the female and male customers will be targeted.

In terms of the geographic segmentation, segmented market of Apple will be the developed economies and part of the developing countries. This is due to the reason that in the developed western economies, Apple is already having established market. In addition, in the developing countries such as India and China, market of Apple is growing rapidly. Thus, these geographical areas will be targeted.

In terms of the behavioral segmentation, customers who are in fond of latest and updated products along with having great aesthetic value will be the target customers for Apple. This is due to the reason that these customers expect their smartphones to carry a sense of pride and class in exchange of premium price (Cross, Belich and Rudelius 2015). All these values are being offered by Apple.

Australian Smartphone Market Potential

Targeting is the second step in the STP model. According to this step, organizations should have effective policies and strategies in order to target the identified customer segments (Zenkar and Beckman 2013). In case of Apple, the primary target market is the customers between the ages of 20 to 40. They are the core customers and in relation to them, Apple’s Iphones are aesthetic superior compared to their competitions and are priced in premium.

On the other hand secondary target market for Apple is the probable customers above the age of 50 and the customers from the countries where Apple is still not having their business. Due to having greater utility of the models of Apple and their usefulness in the business, aged people are also being attracted. Moreover, there are influential and affluent customers in the countries where Apple is not having the market presence. These customers tend to import the Apple Iphones.

In case of Apple, primary target customers of them are having high involvement. This is due to the reason that products with having higher price will find higher involvement of the customers. They will get more involved in their buying decision due to the involvement of huge money. On the other hand, the differences in terms of product qualities, aesthetic value and user experience of Apple compared to their competitors are also enhancing the involvement of the customers in their buying decision (Vega-Vazquez, Angeles Revilla-Camacho and Cossio-Silva 2013). Thus, the high involvement of the customers will increase the short listing criterion. This will be difficult for Apple to meet all the criterion of the customers. Another key reason behind having high involvement of the customers in buying Iphones is high risk associated with the buying decision process. This is due to the reason that price of the Iphones is high compared to their competitors. Thus, customers are taking more financial risk in buying Iphones and it is motivating them to get more involved in the buying process.

The last step in the STP model is the positioning strategy. This refers to the position of the particular brand in the mind of the customers. In the case of Apple in Australia, a perceptual map will be drawn in order to determine the position of Apple compared to their competitors.

According to the above positioning map, it is seen that Apple is positioned as premium products with premium pricing. Thus, the niche marketing strategy of Apple is effective enough to position Iphones as the premium offerings. It should also be noted that, the marketing strategies involved by Apple is also contributing in positioning the Iphones in premium category. The advertisements promoted by Apple are more inclined towards prestige and class rather than the informative advertisements (Kanagal 2015). This shows that Apple is willing to position their products as more prestigious offerings for the customers rather than being another utility smartphone in the market.

Segmentation Analysis

The positioning statement of Apple will be “symbol of success”.

From the above perceptual map, it is also seen that the major point of differences between Apple and their competitors are product quality. Majority of their competitors are having inferior quality compared to Apple. This is one of their major competitive advantages for Apple and it also justifies their premium pricing in the market (Hinterhuber 2013). The closest competitor for Apple is Samsung as identified in the above perceptual map. Samsung is the only brand that is competing with Apple in the higher end category and in major countries. In addition, brands such as Lenovo are competing in the emerging markets such as India and China with their lower priced products (J. Contractor 2013). It is important for Apple to have strategies in order to compete with the Samsung in the flagship category and with Lenovo in the emerging markets. 

• It is recommended that Apple should increase their market presence in the emerging economies. This is due to the reason that majority of the developed economies is becoming saturated and on the other hand, demand for premium products are increasing in the developing economies. Thus, having more market presence in these markets will help Apple to compete with Samsung more effectively. In addition, it should also to be noted that Apple should having manufacturing facilities in the emerging countries. This is due to the reason that in the emerging countries, customers are more prices sensitive. Having manufacturing facilities in these countries will enable Apple to offer their products in more affordable price.
• It is also being recommended that Apple should at last have their Iphones in the mid range price level. This is due to the reason that having only higher end products will not help Apple to increase their sales volume in the global market. On the other hand, Samsung is beating Apple in terms of the sales volume and market share. Thus, Apple should have their products in the mid range category, which will maintain their premium tag and also increase the market share.
• In the competitor analysis, it was identified that Iphones are having great aesthetic value along with having latest technology and innovations. However, they are short of specifications when compared to their android powered smartphones. For instances, a smartphone with having half of the price of an Iphone is having more specifications that the later. Thus, they are losing competitive advantages in the market by offering fewer specifications. It is recommended that Apple should offer more specification in their Iphones in order to stay in the competition. In addition, more new competitors are coming to Australian market with their competitive offerings. Thus, offering more specifications in their smartphone models will help them to retain the existing and attract new customers respectively. 

Conclusion 

Thus, it can be concluded that Apple is having different challenges in the market with one of being is the increase in the number of the competitors. Competitor analysis in this report helped to identify the areas for improvement and strengths for Apple in comparison to their major competitors. This report also discussed about the segmentation, targeting and positioning strategies of Apple. This helped to identify the target customer base along with identifying the current position of Apple in the Australian market against the competition. This report concludes that Apple is having both weaknesses and competitive advantages. The recommended steps discussed in this report will help them to overcome their weaknesses. 

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