Brand Extension Assignment
The brand considered in this extension is the iPhone. The iPhone is very popular in North America, Europe, and China. However, despite its global appeal, it has yet to make inroads in Africa and most of the Asian market. The reason for the company not considering these markets is the low disposable income of the residents in these countries. The Apple products are premium priced and manufactured with precision for the high-end market (Kazeem, 2017). This has made Apple corporation to overlook the markets in the countries that are considered weak when compared to North America and Western Europe markets.
The economies of the various countries in Africa and most of the Asian countries are small relative to that of the western nations. Hence, their market is expected to perform poorly. Another possible cause for the low penetration of this brand in Africa and a substantial portion of Asia has to do with the infrastructure that has been put in place by the carriers in these countries. iPhone primarily relies on broadband network to function optimally. However, the penetration of the broadband network in these markets has been low in the recent years (Kazeem, 2017). The use of 3G and LTE networks is gaining traction in these countries steadily making them ripe for the introduction of iPhone.
Extension Idea Justification
Extending the market of iPhone into Africa will be a good move, as most of the countries are establishing the broadband infrastructure that is needed for optimal operation of the phones. Further, the iPhone is a recognized status symbol in the market. Many people desire to own an iPhone and having it at a price that they can afford will be a welcome move. African countries and a considerable number of Asian nations have friendly tariff schedules when imports are considered. This makes it possible for the company to introduce the brand to the market at much lower prices that are affordable to the population and at the same time realize profits.
This market is also an opportunity to sell used and refurbished iPhone to consumers that will appreciate them. Because of that, there will be no possibility of the company experiencing price disparities for its products. A good section of the populations in the markets targeted is getting wealthy and will afford the high-end Apple products comfortably. With the growth of the middle class and malls in the cities of various African countries, it will easier for Apple to lease and have shops from which it will distribute its products. The distribution channels and infrastructures of the African and Asian markets are easy to understand and adjust the approach accordingly (Kazeem, 2017).
The majority of the population in these markets is comprised of young people who have grown in the technology era. They are appreciative of technology and thanks to the internet and pop culture; they are aware of the iPhone and other Apple products. They recognize this product even before it is in distribution and their social media activities reflect their desire to own an iPhone. There is feeble competition against the iPhone, as most of the other smartphones found in these markets are budget phones whose performance is less than optimal. Further, the consumers in these markets are not sensitive to the recency of the iPhone model they are purchasing (Kazeem, 2017). They are more than happy to afford the device.
Expanding to this market will save the company from the continued dumping of electronic waste in the western countries and China and in the process extend the lifetime of the devices as new and better methods of handling electronic wastes are researched and developed. The wealthy individuals in the targeted marketed crave to have iPhones, but they have to travel abroad to purchase this brand. The most significant purchase destinations are the United States and the United Arab Emirates. The relatively strong currency of the UAE and the tariffs that have been set to ensure that the iPhone is much cheaper compared to other developing countries. Making the iPhone available to the relatively affluent consumers in Africa and the greater Asia will likely result in a positive effect on the sales of this brand.
Some of the issues that Apple has to consider when expanding the sales of iPhone to Africa and Asia that have not been previously considered include the prevailing culture, the trade relations between those countries and the US, the plan for management of the electronic waste that will result from the use of the devices in the countries and the communications regulations in the countries within which the market exists (Linshi, 2014). These are the aspects of the market that will determine how ethical the company is when dealing with the consumers in the new market.
Once in the new market, the company will have to popularize the product using the conventional media and digital marketing. The output that the company makes needs to resonate with the culture of the market population. The new markets, this company is foreign. The marketing tactics that are used in the US and Europe are not likely to be effective in the new markets (Linshi, 2014). There is also a possibility of offending the consumers if the company applies the western mode of marketing to Africa and Asian markets. Therefore, the firm will need hire consultants who are conversant with the cultural nuances of the targeted market to help in creating effective marketing campaigns.
The relations between the home countries of the markets and the United States will be considered in deciding whether to introduce iPhone locally. There are some countries in Africa such as Sudan, Congo, and Ethiopia that the US has trade embargos against. An example of a country experiencing trade restrictions from the US is North Korea. Being a US corporation, Apple is not allowed to export or reexport its products and technology to such countries (Linshi, 2014). This requires that Apple pay attention to the trade relations between the targeted markets and the US to prevent possible penalties in its resident country.
Most of the Apple devices that will be for sale in the new markets will either be used or refurbished iPhones. The lifetime of these gadgets will be limited to a few years given the fast pace at which communications technology is advancing. Very soon, the phones will be disposed of and replaced by the users. Apple has to come up with a plan to handle and manage the electronic waste that its products will contribute to the new markets environment. This plan has to be approved by the regulatory authorities in the host countries. The communication laws in the host countries need to be studied and understood by Apple to determine the communication capabilities of the phones and technology that is allowed by law.
In conclusion, the iPhone, a flagship product of Apple company, is usually sold in western developed countries. Though a high-end product, it is in high demand in Africa and Asia. Exporting these phones to African and Asian markets in higher volumes and placing price considerations has a high possibility of improving the bottom-line for the company.
Kazeem, Y. (2017). These countries sell the world’s cheapest iPhones. Retrieved from https://qz.com/886408/the-worlds-cheapest-iphones-are-sold-in-angola-a-report-says/
Linshi, J. (2014). Why U.S. Sanctions Mean Some Countries Don’t Get Any iPhones. Retrieved from http://time.com/3502453/apple-iphone-sanction-tech/