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Operations Management iPhone Case Study

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Apple’s success lies in deploying existing technology in ways that meet consumers’ needs (Kay, 11). Apple has many competitors that will limit its life cycle even if the product is innovative unless the company can develop new innovations associated with the iPhone. Strategic leaders at Apple and those in operations, namely marketing, must consider the longevity of the device with their target markets and then create supplementary applications to support it in order to keep customers loyal and gain new sales ground. Apple does this to try to extend the product’s life cycle. The case study describes the many different ringtones and music downloads that were offered under consumer pressures, however it is these network externalities that provide the most long-term value for the iPhone. Network externalities represents the availability of different, yet related products that supplement an existing technology (Hauser, Tellis amp. Griffin, 688). This new provision of externalities was part of the strategy at Apple to boost customer demand and satisfy their needs, which was previously described as a success factor in operational marketing for the company. …
d capitalize on these touch screen enhancements to further give the product a competitive edge and increase its life cycle on the consumer and business marketplaces. There were many complaints about pricing that still continue to linger when referring to the iPhone. Another recent survey of 1300 cell phone users returned data that showed 77 percent of these participants did not buy the iPhone because they considered it too expensive (Kane, 2). This was also identified in the case study. Pricing is a major operational consideration as buyers seem to be turned off by the high costs in comparison to competing products in relation to the functions the iPhone provides. Pricing was a factor criticized in the United States and in Europe, as identified in the case study. This was surprising considering that most buyer demographics for this particular product come from wealthier target groups (Stephan, 2). Personally speaking, the costs associated with this technology are considerably high, considering the many different competitors are launching similar technologies with different applications and functions. Apple is using their long-standing brand reputation to justify this high price tag which worked during the initial launch. However, there have been no pricing reductions made to satisfy new markets or current brand loyalists despite the rising availability of competing products. Even though Apple attempts to offer new network externalities to improve the long-run value of the device, pricing is a major factor especially considering even more costs are incurred for phone subscriber services as part of a monthly payment obligation. It is recommended that Apple conduct more market research on existing or potential markets to determine why the pricing is considered to be too