Apple VS Samsung

Apple VS. Samsung

Analysis to determine why should consumers favor
Apple over Samsung?

Prepared for:
Jenell Barnard-Keller
COM338-ENG338

Prepared By:
Sophia Minaudo, Hannah Pattison, Carson Whaley, Andrea Wright
University of Michigan-Flint

November 10th, 2017

Memo
To: Professor Keller, COMM-338

From: Group 6: Sophia Minaudo, Hannah, Pattison, Carson Whaley, Andrea Wright

Date: November 10th, 2017

Re: Apple: Why it is chosen over Samsung

As you have requested, here is an analytical review pertaining to Apple and why their customers chose
them over the competition- Samsung.

Researching about Apple, we have found that the company really separates themselves from others
when it comes to creating a brand for themselves. Apple has rounded themselves with both their
products and the image they carry as a producer. In efforts to connect with consumers, Apple does not
display themselves as a tech company but more of as a solution.

In our findings, we learned that Apple has built brand loyalty with their customers through appearing
more abstract, becoming an ideal, and always being innovate. It appears that apple strives to always be
creating something new. Whether this comes from frequent software updates, or the yearly release of a
new iPhone; Apple has proven to stay on top of the game.

As for the future, the process that Apple has going is almost a block-chain of steps and if they keep
building the possibilities are endless.

While gathering our information, analyzing our research and the data, Group 6 consolidated all our ideas
into one report. The work was balanced evenly making the project a smooth process. Each group
member was responsive, prompt, and brought good input to the team. As for future projects, we would
be more than happy to work together again.

In completion of this report, we want to thank you for the time you put forth into revising our work. We
put a great effort into both our research and the construction and formatting of the paper. For any
questions or further information please do not hesitate to email any of the group members.
 TABLE OF CONTENTS

INTRODUCTION .................................................................................................................................................. 1
HISTORY .............................................................................................................................................................. 1
INNOVATION .................................................................................................................................................. 1
LEADERSHIP .................................................................................................................................................... 2
PRODUCT DIVERSITY ...................................................................................................................................... 2
COMBATABILITY ................................................................................................................................................. 2
BRAND ............................................................................................................................................................ 3
LOYAL CONSUMERS ....................................................................................................................................... 4
ORGANZATIONAL STRUCTURE .......................................................................................................................... 4
DIFFERENCES IN CEOS .................................................................................................................................. 5
PROFIT MARGINES.......................................................................................................................................... 6
CONCLUSION ..................................................................................................................................................... 7
REFERENCES......8

LIST OF ILLUSTRATIONS
FIGURES
1. WHAT BRAND IS YOUR SMARTPHONE? ........................................................................................ 3
2. APPLE INC. ORGANIZATIONAL STRUCTURE ................................................................................... 5
3. PROFIT MARGINS...6
4. APPLES HISTORICAL GROSS PROFIT MARGIN JUNE 2015-SEPT 2017......7

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Apple VS Samsung
INTRODUCTION

From the birthing of the company in 1976 to now, Apple has quickly come to the top of
consumer electronics and software. In the begin, starting out in former CEO Steve Jobs garage,
they started with an idea for themselves. The original intentions where not to create a multi-
billion-dollar business but to create something that was of use for them.
HISTORY
Considering the history of apple, three things seem to stand out when it comes to the success of
the business: consistent innovation, leadership, and product diversity. Once the business took
off, innovation was a key factor. As stated in an article Why Apple is now No.1 in the world, each
new product has been over the top and has brought something new and never seen before to
consumers (Mcintyre Pp.2).

Innovation
Since the summer of 2016, Apple has dominated the phone industry over Samsung. Apple was
selling just over 50% of the global premium smartphones, and Samsung was selling just under
25%. By December 2016, those numbers had grown to 70% and 17%, respectively (Mills 2017).
A big component in the success of Apple is the cash flow that they have. Apple can make and
create a new version of the iPhone year after year because of the profit margins they have over
Samsung. Apple, because of its size and huge cash balances, can choose the best suppliers and
pressure them for the lowest component costs, (McIntyre 2011). The products that they put on
year after year are consistently changing and creating new ideas. They can do this because of
their cash flow. As far as the innovation of the company goes, and a reason Apple has been so
successful is because of iTunes and the Apple App store. These were new to the market and
allowed people to get their music without having to buy an entire CD. Apple came up with new
ways to bring in revenue by getting people to consume micro content, says Scott Anthony a
partner of Innosight, a growth strategy consulting firm. They found another way for people to
buy their products without having to rely on putting out a variety of different products. For
instance, if you know Apple, then you know that the iPhone is just the phone version of the iPod.
The iPad is just a large version of the iPod. Their devices dont stray too far from one in other.
However, as Scott Anthony was saying, iTunes and the App Store, and now Apple Music make
for this wider consumer base to reach too and create this other way for Apple to get more money
from their customers. Jobs saw an opportunity to target music fans who wanted affordable
music but didn't want to drive to a store to buy expensive CDs. In 2003, the iTunes Music Store
was launched and soon became the top music retailer, according to Rolling Stone (Umoh 2017).
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While Apple was not the first tech company to create an app, Apple certainly made it a lot easier
to find dozens of apps compatible with your phone. Before Apple other companies would
develop apps to use, however with the multitude of different phones released it was hard to find
an app that would work for your phone. Apple simplified this, if you had an iPhone any app you
picked from the app store would work, which was new to the time.

Leadership

According to an online article by CNBC, Steve jobs can be directly linked as one of apples
biggest innovators/consumers. From the beginning, Steve Jobs had always created something
because of his desire for push for better and better. In one certain incident, Google had an
Android phone very similar to the iPhone. As quoted Im going to destroy Android because its
a stolen product and Im willing to go thermonuclear war on this (Umoh Sept 2017). Clearly
showing the dedication, he has for his products, Jobs was always in innovator and proud of his
work. No company has consistently produced as much as Apple has.

Product Diversity

When it comes to product diversity, both the app store and iTunes were both of their kind. As
stated by CNBC in the article The No.1 reason apple is successful can be traced to Steve Jobs
Nothing like the app store has existed before, and it has fundamentally changed the world
(Umoh Pp8.). The app store aloud millions of developers an opportunity to make quick money.
Drawing innovation driven by monetary reward, the app store has been under constant
competition for better apps every single day. iTunes being developed as a software to hold all
your music and for the first time being able to buy a song from your computer and saving you a
trip to the store. Ultimately, iTunes created ease for music lovers by giving them access to all
their favorite music all right in front of them downloaded with the internet.

COMBATABILITY
Apple has created a fantastic ecosystem by changing the ways its products interacted with one
another. Todd Hazelton said, the more Apple devices you used, the better they worked
together. Apple created FaceTime and you could use it on an iPad for an iPhone. Later they
expanded that to Macs and Apple TV. When they launched Siri, you can use her on every Apple
product, even the Apple Watch. Apple has made it so that you can use any of their devices and
they all work together to create the best experience.
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BRAND
Apple appears more abstract to customers from the physical features of an iPhone or iPad to the
seamless gestures provided though Apple software. According to Author Barbara Findley a
brand is a promise that consumers can believe in (Barbara Findley, CNBC, 2015) Most
consumers are attached to a brand with loyalty as the brand is an ideal. When it comes to
advertising, Apple promotes a feeling of smart, fun, and sleek. As for brand loyalty, there are a
lot of different brands out there to choose from. Users age 20-60, ~ 80% are Apple and Android
users (SurveyMonkey.com, Partner of CNBC, Dec 2014). Of that ~80%, roughly 48% of those
are Apple consumers and 33% are Samsung.
Figure 1: What brand is your smart phone?
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LOYAL CONSUMERS
Since the simplicity of the Apple iPhone and the Apple MacBook got people in the door, the next
big key to the constant success of Apple is due to their loyal following. The brand loyalty stems
from intimacy of the company with their consumers through the late Steve Jobs. Steve was very
passionate about Apple products. He wanted to ensure they are the best quality and a high-end
design (Goodson 2011). The passion that he has rubbed off on the customers of Apple. Scott
Goodson stated that by creating this very emotional connection with their own customers it
acquired a loyal following. Of course, Steve Jobs was a big part of the success of Apple but the
seemingly transparency and dedication to their consumers is what makes the customers
upgrading each iPhone year after year. Consumers also need a place to go for support. If you
break your Samsung smartphone, youre going to be on the phone with your smartphone
insurance provider. If you have an iPhone, just walk into an Apple store. Apple may charge you
a premium depending on your warranty status, but youll have some sort of solution from the
company you bought your phone from (Hazelton p.1).

ORGANIZATIONAL STRUCTURE
With their organizational structure Apple tries to focus on three things, the first being the spoke-
and-Wheel hierarchy, which has worked for them for years. (Myers 2017) When the late Steve
Jobs was in charge, everything had to go through him. Now with Tim Cook in charge he
modified the spoke- and- wheel hierarchy where its now run a little looser. He opened it up to
where different departments are able to brainstorm and join forces with one another. The second
focal point in their organizational structure, is function-based grouping. This allows upper
managements to actually focus on what they specialize in, instead of being pulled into different
areas just because you are the senior vice president. If you handle the business function of design
than your mainly just focusing on the design function. Lastly, is product-based grouping. Very
similar to function-based grouping, but this focuses on the actual products and designating vice
presidents to a specific product ex: iPhone, iPad, IWatch. (Myers 2017)
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Figure 2: Apple Inc. Organizational Structure

Difference in CEOs styles

While the late Steve Jobs and new CEO Tim Cook both aimed to achieve excellence at Apple,
they both had different personalities to get there. Steve Jobs was known as a passionate, albeit
abrasive leader. (Investopedia 2015) He seeked excellence and didnt sugar coat much on how
he felt to get there. While Tim Cook tends to have a very calm demeanor, and he is much more
approachable than Jobs (Investopedia 2015) He wanted his employees to feel comfortable to be
able to reach out whenever they needed to. Cook likes to keep the focal points on products that
are already doing well in the market and find new ways for those already successful products to
branch out, while Steve Jobs wanted to continuously introduce new ideas or products.
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(Investopedia 2015) With them both showing great success as the CEO of Apple, Steve Jobs
couldnt have hand picked a better replacement for himself before his passing.

Profit Margins
With all the successful break throughs and large amounts of revenue, Apple stands on top when
it comes to suppliers. Even though most parts come from the same suppliers, Apple has more
than enough capital to squeeze suppliers for cheaper prices. According to a graph that shows
profit margins provided by Ycharts.com, Apple has had an average profit margin of almost 40%
consistently for the last 20 or so years. With such high profit margin, investors become more and
more attracted with Apple and drawing more capital due to investors stock.
Figure 3: Apple Gross Profit Margin
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Figure 4: Apple Historical Gross Profit Margin June 30th,2005-September 30th, 2017

CONCLUSION
Apple may be considered another consumer technology company amongst a pool of many, but
their early success and product dedication led to high profits and demand creating a business
model circled by innovation and consistency. As of July, of 2017, the company is worth $750
billion and approaching a value of $1 trillion (Umor 2017) While Samsung was only at $300
billion. (Sanks 2017).
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References
Barajin, T. (2012, May 7). 6 Reasons Why Apple Is Successful. Retrieved from
http://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/
Goodson, S. (2011, November 27). Is Brand Loyalty the Core to Apple's Success?
Retrieved from https://www.forbes.com/sites/marketshare/2011/11/27/is-brand-
loyalty-the-core-to-apples-success-2/#4befcbcd8a0a
McIntyre, D. A. (2011, August 10). Why Apple is now No. 1 Company in the world.
Retrieved from http://www.nbcnews.com/id/44090899/ns/business-
us_business/t/why-apple-now-no-company-world/#.WeKVOoRQtFI
Mills, C. (2017, February 3). Apple is destroying Samsung Where It Really Matters.
Retrieved from http://bgr.com/2017/02/03/apple-vs-samsung-sales-2016/
Umoh, R. (2016, November 10). The No. 1 reason Apple has been so successful can be
traced to Steve Jobs. Retrieved from https://www.cnbc.com/2017/07/13/the-no-1-
reason-apple-has-been-so-successful-can-be-traced-to-steve-jobs.html
Umoh, R. (2017, September 12). The No. 1 reason Apple has been so successful can be
traced to Steve Jobs. Retrieved November 10, 2017, from
https://www.cnbc.com/2017/07/13/the-no-1-reason-apple-has-been-so-successful-
can-be-traced-to-steve-jobs.html
Meyer, P. (2017, January 29). Apple Inc. Organizational Structure: Features, Pros & Cons.
Retrieved November 09, 2017, from http://panmore.com/apple-inc-organizational-structure-
features-pros-cons
Investopedia (2015, October 29). How Does Tim Cook's Management Style Differ from Steve
Jobs? (AAPL). Retrieved November 09, 2017, from
https://www.investopedia.com/articles/professionals/081715/how-does-tim-cooks-management-
style-differ-steve-jobs.asp
SurveyMonkey Follow. (2014, December 18). Trends in Smartphone Behavior. Retrieved
November 10, 2017, from https://www.slideshare.net/SurveyMonkey/trends-in-smartphone-
behavior
Federico-O'Murchu, L., & CNBC, S. T. (2015, January 20). Why people pick Team Apple
versus Team Android. Retrieved November 10, 2017, from
https://www.cnbc.com/2015/01/19/why-people-pick-team-apple-versus-team-
android.html
Canada, A. (2012, November 12). Take A Lesson From Apple: A Strategy to Keep Customers in
Your Ecosystem. Retrieved from Forbes.com.
Haselton, T. (2017, may 1). Here's why People Keep Buying Apple Products . Retrieved from
CNBC.com.
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Sanks, M. (2017, November 10). Samsung Reports Record Quarterly Earnings. Retrieved
November 10, 2017, from https://www.zacks.com/stock/news/266871/samsung-reports-
record-quarterly-earnings

Illustration Reference
Apple Organizational Structure - A Hierarchical Structure that May Change in Near Future.
(2017, March 12). Retrieved November 09, 2017, from https://research-
methodology.net/apple-organizational-structure-a-hierarchical-structure-that-may-change-in-
near-future/

Apple Gross Profit Margin (Quarterly): (n.d.). Retrieved November 10, 2017, from
https://ycharts.com/companies/AAPL/gross_profit_margin
SurveyMonkey Follow. (2014, December 18). Trends in Smartphone Behavior. Retrieved
November 10, 2017, from https://www.slideshare.net/SurveyMonkey/trends-in-smartphone-
behavior