There are several reasons why Apple decided to open its own retail stores all around the world, which now accounts for slightly more than 500 physical establishments (McCarthy, 2021). First of all, the company’s choice is explained by the desire to provide a better buying and product usage experience (Macaholic, 2006). In this regard, Apple-owned retail stores can ensure that the organization’s managers have direct control over these two factors. Additionally, the provision of better experiences as well as the ability to use physical stores as a marketing tool leads to an improved brand image and increased customer loyalty. Last but not least, the company-owned retail stores bring additional revenue to the company (Macaholic, 2006). As such, from the perspective of the 4 Ps, Apple’s decision to open retail stores led to increased control over the product, price, and place and opened additional promotion opportunities.
The decision to open the physical stores increased the material (mostly financial) costs that the company has. The most important expenditures that were added to the company’s financial books are the rent of the space for the retail store, maintenance costs, and salary for new employees.
Most of the concepts covered in the attached file apply to Apple. For instance, the company is quite good at managing its product life cycle by ensuring the release of new iPhones, iPads, laptops, and computers frequently. For this reason, the company avoids the significant profit reduction that may occur during the product decline stage. Moreover, the company puts considerable efforts into branding strategy and markets itself as an innovative and creative organization.
Apple’s decision to open its own stores paid off. For example, in 2018 and 2019, the share of the Apple store sales in the company’s revenue was equal to 29% and 31%, accordingly which can be considered a big success (Owen, 2019).
If I were one of Apple’s retail partners, I would have a negative reaction to such a decision if one of their stores were in close vicinity to my business. However, considering that the brand’s popularity would grow, I would continue the partnership and develop a pricing strategy that would attract more price-sensitive customers. For instance, it can be done by offering better credit terms.
References
Macaholic. (2006). Steve Jobs CNBC interview, 5th ave. Apple Store [Video]. YouTube. Web.
McCarthy, N. (2021). 20 years on: The global Apple Store empire [Infographic]. Forbes. Web.
Owen, M. (2019). Apple Store revenue grows to 31% of Apple’s income for 2019. Apple Insider. Web.