Apple’s product mix is mostly confined to consumer electronics and online services. As is the case with Amazon, however, Apple is expanding into other industries.
Wearables, Home, and Accessories – such as Apple TV and Apple Watch.
Advertising.
AppleCare.
Digital Content.
Payment Services, and
Cloud Services.
Most of these products form part of the Apple ecosystem that supports the company’s competitive advantage and makes each product more attractive to consumers.
In other words, Apple products sync with each other so consumers can easily copy media and other preferences across multiple devices.
Price
Apple’s pricingstrategy relies on product differentiation. With a proven track record of innovation and stable consumer demand, the company has power over its pricing.
New product launches are invariably hyped, which means Apple can focus on selling its products for a premium price instead of increasing unit volume.
The company also designates a minimum advertised price (MAP) to prevent retailers from selling its products below a certain amount.
This protects profits and, to some extent, increases the brand’s prestige and the desirability.
This involves setting a much higher price for new model releases before gradually lowering it over time as each model is superseded.
Promotion
Apple’s ability to market and promote its products is almost as legendary as its ability to innovate. Its marketing strategies focus on the power of simplicity in product form and function.
Simplicity can also be seen in the way that Apple structures the ads themselves.
They tend to be “to the point” and do not contain irrelevant information while still making an emotional connection with the target audience.
The company also loves to mention its superior user experience, whether that be its immersive product ecosystem or the professional customer service and visual layout of an Apple store.
In terms of building its brand organically, Apple relies on positive review building and subtle product placement in movies.
The company also markets its new products via traditional channels such as television, billboards, and print media.
But in line with its pricingstrategy, Apple products are never promoted on sale or as part of a limited-time offer.
Place
Apple utilizes multiple avenues to reach customers and make its product more visible on the global stage. These include:
Apple stores – these stores embody the Apple brand and are placed in strategic locations with high foot traffic. Stores are designed in such a way that consumers can freely interact with demo products and Apple support staff. There are now approximately 518 stores in 25 countries around the world.
Online stores – for those who prefer to order their products online or do not have access to an Apple store nearby.
Retailers – countless retail businesses are also authorized to sell Apple products and services. These include many consumer electronics retailers, telecommunications companies, and department stores.
Authorized enterprise resellers – these entities provide procurement, deployment, app development, and other services that help enterprises incorporate Apple products within their organizations.
As of 2024, major Apple shareholders comprised Warren Buffet’s Berkshire Hathaway with 5.92% of the company’s stock (valued at nearly $170 billion as of February 2024). Followed by other individual shareholders like Tim Cook, CEO of Apple, with about 3.3 million shares, and Artur Levinson, chairman of Apple, with over 4.5 million shares. Top institutional investors comprise The Vanguard Group with 8.27% ownership and BlackRock with 6.66% ownership.
Apple has a business model that is divided into products and services. Apple generated over $383 billion in revenues in 2023, of which over $200 billion came from iPhone sales, $29.36 billion came from Mac sales, $39.84 billion came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $28.3 billion came from iPad sales, and $85.2 billion came from services.
iPhone and Services sales represented the main revenue drivers in 2022. Within the service revenues, the fastest growing sub-segment was the advertising business Apple built on top of the App Store, followed by the Mac, Accessories & Wearables, and the iPad.
In 2023, most of Apple’s sales (63%) came from indirect channels (comprising third-party cellular networks, wholesalers/retailers, and resellers). These channels are critical for sales amplification, scale, and subsidies (to enable the iPhone to be purchased by many people). In comparison, the direct channel represented 37% of the total revenues. Stores are critical for customer experience, enabling the service business and branding at scale.
Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized, among consumers. The three fundamental value propositions of Apple’s brand leverage the “Think Different” motto; reliable tech devices for mass markets; and starting in 2019, Apple also started to emphasize more and more privacy to differentiate itself from other tech giants.
By February 2024, Apple was worth nearly three trillion dollars. Apple generated over $200 billion from iPhone sales in 2023, which accounted for over 52% of its net sales—followed by services revenues at over $85.2 billion, wearables and accessories at over $39.84 billion, Mac sales at $29.36 billion, and iPad sales at over $28 billion.
In 2023, iPhone sales represented 52% of Apple’s net sales, the same in 2022. Yet in 2023 revenue from the iPhone slightly slew down to over $200 billion in sales, compared to over $205 billion in iPhone sales in 2022, still a growth compared to almost $192 billion in iPhone sales in 2021.
Apple generated nearly $97 billion in profits in 2023, compared to almost a hundred billion dollars in profits in 2022, $94.6 billion in 2021, and over $57 billion in 2020.
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
It costs Apple $501 to make an iPhone 14 Pro Max, and the company sells it at a base price of $1099. This makes Apple’s base markup on the latest iPhone model at 119% Apple is the only tech company able to sell its tech products at such a premium, thanks to a combination of hardware, software, and marketplace.
While Apple Tim Cook’s salary has been $3 million since 2016, most of Tim Cook’s compensation is performance-based. For instance, in 2023, while the salary of Tim Cook was $3 million, he had total compensation of over $63.2 million, which comprised stock awards and other incentives and bonuses.
Tim Cook’s net worth is primarily comprised of his Apple stocks. As of 2024, he owned 3,28 million shares of Apple worth over $600 million at the current rate. However, Tim Cook has sold part of his Apple stocks over the years for hundreds of millions of dollars, making him a billionaire.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
