Advances in Economics, Business and Management Research, volume 314th International Conference on Management Science and Management Innovation (MSMI 2017)Apple Products: A Discussion of the Product Life CycleEwa Więcek-JankaFaculty of Engineering ManagementPoznan University of TechnologyPoznan, Polande-mail: [email protected]łosz PapierzFaculty of Engineering ManagementPoznan University of TechnologyPoznan, Polande-mail: [email protected] KorneckaMichał NitkaFaculty of Engineering ManagementPoznan University of TechnologyPoznan, Polande-mail: [email protected] of Engineering ManagementPoznan University of TechnologyPoznan, Polande-mail: [email protected]—This publication details the life cycles of Apple’smobile products. Its aim is to present their influence on thelife cycle of the entire brand.howstrategies should be modified according to the lifecycle’s phase. Porter describes the product life cycle as alandmark concept and one of the major theories forpredicting industry changes [10].Smallwood in 1978 [11] noticed that the product lifecycle concept can be used in many marketing fields suchas: predictions, price strategies, promotions andproduction planning. He remarked that “in many ways,the product life cycle concept may be considered as themarketing equivalent of the periodic table of elements inthe physical sciences”. It creates a possibility for groupingproducts into families in order to predict results to variousmarket stimuli.Lambkin and Day [5] say that there are few marketingconcepts which are so commonly accepted and at thesame time criticized aspects of the product life cycle.In 1976 Dhalla and Yuspeh [6] point out a causalitydilemma within the product life cycle. They claim that theshape of the product life cycle’s curve is heavilyinfluenced by a manager and their marketing choices, thusit is inconsequential to recommend strategies dependingon the phase. Instead they propose usage of marketingcommunication models. Dhalla and Yuspeh also questionthe essence and even existence of product life cycle andargue that it “ ( ) has done more harm than good ( )”.Changes in consumer markets have led to a shorteningof market life cycles, as noted and described by Cliffordin 1971 [12]. Already then he spoke about companies thatignored the concept of product life cycle when planningmarketing strategies of products and noted that theproblems will become even more destructive forcompanies the more life cycles shorten.Shortening of product life cycles is one of the mostprominent changes in the global economy in the lastdecade. In 2015 Horn [13] stated that fifty percent of theannual income of companies from various market areascomes from products released within the past three years.This fact may suggest that the so-called cash cows(products that have been profitable for a company forKeywords-Apple; MacBook; iPad; iPhone; product lifecycle; brand; sales strategy; marketing strategyI.INTRODUCTIONThe literature that first outlined the concept of theproduct life cycle analysis can be dated to the 1950s. Oneof the most widely recognized early descriptions of theproduct life cycle is Levitt's 1965 concept, inspired bybiological life, which illustrates the life cycle of a producton the market as a normal distribution of sales volumeversus time with four distinct phases: birth, growth,maturity and decline [1].Kotler [2] says that the concept of the product lifecycle can be used by marketers to define the behavior ofproducts on the market as well as the market itself.Additionally, when appropriately used, it can help withchoosing the right marketing strategy depending on thelife cycle’s phase. According to Kotler [2], the concept ofproduct life cycle may concern the product class, productform or a brand. Similarly Wind [3] stated it can bepracticed at the product class, form, line or the brand level,whereas Day [4] and Lambkin and Day [5] maintainedthat the product life cycle is legitimate only at the productclass level. Dhalla and Yuspeh, however, argued that theproduct life cycle can’t be considered at any of thementioned levels in their 1976 work [6]. For Moon (2005)[7], the product life cycle issues can be discussed by usingindividual brands.Hofer (1975) [8] considers product life cycle to be thefundamental variable in choosing the right businessstrategy Similarly, Biggadike in 1981 [9] placed theproduct life cycle concept in his work amongst the fivemajor contributions of marketing. He theorizes thatproduct life cycle most importantly “enables marketersto think dynamically”, thereby allowing them to predictCopyright 2017, the Authors. Published by Atlantis Press.This is an open access article under the CC BY-NC license 59

Advances in Economics, Business and Management Research, volume 31many years, usually also financially supporting the rest ofthe company’s portfolio) have ceased to exist. The curvesof modern product life cycles have changed from flat andshallow to peaked and short lived. According to Goyal thehighest percentage of sales occur almost immediatelyafter product’s release [14]. Today's market requiresreplacement of products or services nearly every secondyear. A company that does not respond immediately toconsumers’ needs will be replaced by its competitors [15],thereby becoming marginalized in such a rapidly growingmarket.II.METHODTo better visualise the influence of Apple's flagshipproducts on the shape of the brand’s life cycle, a methodof graphical representation was utilised. The data used inthe study comes from Apple's quarterly reports and athorough analysis of the literature on the sales volume ofthe three most profitable assortment lines and their shareof total Apple’s sales. The purpose of the study was todetermine the influence of the life cycles of three ofApple’s flagship products in shaping Apple's life cycle:MacBooks, iPads, and iPhones.1Research focuses on three lines of mobile products:which collectively share 81% of Apple's profit. Each ofthem plays a different role in shaping Apple’s brand lifecycle. This is due to differences in the cost of theirfinancing (one of the main factors is certainly the cost ofproduct promotion), differences in targeting products tiveness and dynamics where these products aresold, thus the difference in income from their sales andconsequently in the share of each line in the profit of thecompany.III.RESEARCH SUBJECTS CHARACTERISTICSiPhone is a line of Apple’s smartphones which since2015 consists of two products, a 4.7” and a 5.5” modelnamed iPhone Plus. Apple's smartphones have an averageof lifecycle of 2 years and their new models are usuallyreleased once a year (based on models’ release dates). Themost expensive model is the iPhone 7 Plus costing 769and the cheapest is, released in march 2016, iPhone SEcosting 399. Quarterly sales volume of iPhones has beenincreasing steadily with the release of each newgeneration. In the first quarter of 2017, Apple sold 79.3million iPhones, generating revenue of 54.4 billion.Each new device has been becoming more and morepopular, and this phenomenon, coupled with a suitablyhigh price for the product, has made the iPhone the mostimportant product in Apple's product range. iPhone’s1Using the Apple sales literature was necessary to conduct this study,as Apple does not provide detailed information about the sales of itsproducts and their profits’ share. For the first few years since therelease of the first iPhone, Apple had been providing a summary ofthe sold items and the profit resulting from their sale for eachproduct line together. The data should be interpreted keeping inmind that sales reports of MacBooks and iMacs are groupedtogether.success is mainly based on its stylish design, intuitiveinterface and innovative technology. The iPhone users hasbecome accustomed to Apple's unique ecosystem, but alsoto the design that ensures social recognition and makesthe iPhone, despite its popularity, still a premium product.iPad is a line of Apple’s tablets- touchscreen devicesoffering functions of phones as well as computers. TheiPad line consists of three models: iPad (rebranded to iPadAir in 2013), iPad Mini (smaller iPad version) and iPadPro (larger iPad version, designer for professionals).Apple tablets have a varied life cycle length starting fromhalf a year (of the imperfect iPad 3) up to 3 years (iPad 2).New models are released around once every year. iPadsales had grown steadily since the third quarter of 2010(3.27 million units) to the first quarter of 2014 (26.4million units), after which sales began to fall and in thefirst quarter of 2017 reached 13.1 million units. iPadprices range between 1129 (iPad Pro) and 399 (iPadmini 4). iPads are considered to be easy to use, useful andconvenient in all parts of life and fields of work.MacBook is a line of notebooks that are part of theMacintosh computer line. The line consists of threemodels: MacBook Retina (classic model), MacBook Air(light and mobile) and MacBook Pro (designed forprofessionals). Apple laptop products have an average lifecycle of 3.5 years, with new models released around onceevery 1.5 years (calculated using model release dates).Quarterly sales of the Mac family are almost constant andremain at 4-5.5 million units and generate profit ofapproximately 5-7 billion per quarter. MacBooks are themost expensive mobile products sold by Apple and theirprice range falls between 999 (MacBook Air 13") and 2399 (MacBook Pro 15"). MacBooks are positioned inthe market as stylish, handy and mobile computers as wellas efficient, durable and easy to use.IV.RESULTSThe analysis of the sales graphs clearly shows Apple’stendency to regular launching of the flagship models.iPhones are released once a year, about a year after theprevious one. The regularity is recognized by customersthrough smartphone naming that alternates between theclassic and the S versions. The only exceptions to this rulehave been the model released in 2013, along with theiPhone 5S, iPhone 5C, and iPhone SE from 2016.Each iPhone model has a very long life cycle in themarket. The longest life cycle belongs to the iPhone 4Sbecause long after its release it was still produced in abudget version of 8GB capacity. The life span of eachmodel does not depend on the popularity of the device onthe market. It shouldn’t be affordable for the company toproduce and update two older iPhones, but almost everyyear Apple decides to keep two or three iPhones on themarket at the same time. This way, the companycontinues to be a luxury goods maker, launchingsmartphones priced above 649 (now iPhone 7), but alsooffering previous generations at a discounted price,typically 100 lower compared to the previous iPhone’sprice as well as those which were supposed to become160

Advances in Economics, Business and Management Research, volume 31budget versions, even more than 200 cheaper (at thistime it’s iPhone SE for 399). Thanks to this strategyApple gives the opportunity to buy their unique productsto people wanting to spend less money on an iPhone.A very big jump in the number of sold pieces occurredwith the launch of iPhone 6. The overall design changeand diagonal screen size has been very warmly receivedby the consumers.The phenomenal success of these devices is reflectedin the sales results. Every new device is becoming moreand more popular. A change in the life cycle of theproduct can be seen in the analysis of the sales of thesuccessor of the iPhone 6- iPhone 6 S, which didn’tmanage to get the same approval from the market as itspredecessor. Critics have been speculating about thefuture of iPhone 7 which after the success of the iPhone 6and with the radical changes such as the removal of thejack input and introduction of the wireless headphonesmay not get the same kind of recognition on the market.Nevertheless the iPhone has helped consumers becomeaccustomed to Apple's unique interface, but also to thedesign that makes the iPhone, despite its popularity, still apremium product.iPad devices can certainly be consideredgroundbreaking. It was the first such successfulcombination of a computer and a phone features thatrevolutionized the mobile industry. The first iPad 1,released in 2010, has been a great success, with manypeople wanting to see the convenience and functionalityof the device. The life cycle of the first generation is quiteshort because it was withdrawn with the release of thesecond generation, a year later. iPhone has come to life ofthe consumers and has accustomed them to Apple'sunique ecosystem, but also to the design that makes theiPhone, despite its popularity, still a premium product.iPad devices can certainly be consideredgroundbreaking. It was the first such successfulcombination of computer and phone features thatrevolutionized the mobile industry. The first iPad 1,released in 2010.The iPad 2 has become the model for the nextgeneration in terms of the design and technology. It hasbeen the longest-supported system and also has had thelongest life cycle (3 years).In the third generation released in 2012, the newlyintroduced high-resolution display showed great promisebut it was withdrawn half a year after the launch due toimperfections, which resulted in a negative feedback. Thesame year another, fourth-generation, was released whichfixed the faults of the previous generation making thosetwo models redundant. At this time iPad 2 was still soldon the market offering similar parameters to iPad’s 4 butwith a slightly worse display.When the line of full-size iPads had found its place inthe maturity stage, they became "cash cows" so Applecould afford to release another line of potential "stars,"the iPad mini. It was released together with iPad 4 andwas basically a technological copy of the secondgeneration of the classic iPads in a smaller, more handyversion. iPads mini have been released every year sincethen.In order to maintain the classic iPad in the profitablematurity phase, it was necessary to refresh the device.Apple rebranded it into the iPad Air (the name suggestslightness and comfort), which helped only for a couple ofyears and after the release of iPad Air 2 the line enteredthe decline phase. At the same time, the iPad 2 Mini cameout, competing on the market with four other iPad models.It resulted in the highest quarterly sales of 26 million units.Considering the continuous decline in sales, Appledecided to expand its lineup with a new product line andlaunched its iPad Pro in 2015. Conspicuously larger thanall previous versions, but bringing new possibilities andapplications, especially for the professional work. Theline is currently in the growth phase. The first classicMacBook was released in 2006 (Fig. 1), another, with thealuminum unibody, two years later followed by the plasticcase MacBook, a year later in 2009. The line managed tosurvive to 2011 (2012 on the education market) andearned the title of the best-selling notebooks. Due to theclassic MacBook line’s good reputation Apple decided torefresh old MacBooks by giving them new shapes, colors,features and innovative use of modern technology, andreleased it as one of their flagship products in 2015.Apple could have decided to withdraw the MacBookfrom the market for several reasons. Apple is a companythat is well aware of the future market’s needs and hasadapted to these markets the other two product lines:MacBook Air and Pro. The introduction of the super-slimMacBooks Air and super-powered MacBooks Prooutperformed relatively larger and slower classicMacBooks. It would be difficult to maintain those threelines of the same product on the market, especially whenthe MacBook was not distinctive enough compared to therest of the series, therefore it was directed to theeducational market, where it also found applaud andfaithful followers.The modern MacBook line has a chance for a successin the market as it was released while the Pro line was atthe maturity stage, and the Air line is likely to be in thedecline phase. The purpose of introducing such a uniquenotebook (appearance, parameters and appliedtechnologies) is probably the desire to replace the Air linein the market with a product as innovative as the Air wasin 2008.161

Advances in Economics, Business and Management Research, volume 31Figure 1. The life cycle of all the iPhone modelsFigure 2. The life cycle of the iPad linesFigure 3. The life cycle of the MacBook linesThe first MacBook Pro was released in 2006, anotherrevolutionary model- MacBook Pro Unibody- two yearslater, MacBook Pro Retina after another four years, andthe last released model- the MacBook Pro Touch Bar- in2016. Throughout ten years Apple has released four fairlydifferent models in the same line of notebooks, the firstone after two years, the following models every four years.Apple tries to keep this line on the market mostly byregularly releasing revolutionary models. MacBook Pro'smarketing is primarily based on the positive opinionamong professionals and users of this type of MacBook.MacBook Pro is in the maturity stage and is the longestliving line of Apple notebooks.The MacBook Air line consists of two distinctivemodels; the first released in 2008 and the other in 2010.Since then the MacBook Air, after many updates, is stillon the market. During its first few years of existence it setthe course of the development for other notebooks on themarket (as predicted by Jobs). Consumers, Apple fans,and even celebrities were all talking about the incrediblythin and futuristic notebook, providing free advertisementfor the product. Since then many more laptops which arethinner and, more importantly, less expensive haveappeared on the market. For quite a long time, despite thelack of paid advertising, it was Apple's cheapest “go-to”model, for people who need a fast and portable notebookand want to be the part of Apple's luxury products’ users.One of the reasons why MacBook Air did so well on themarket could be the fact that between 2012 and 2015Apple did not release any new notebooks, so the line didnot have to compete with the company's own products(like in the case of classic MacBooks and Pro). The mostrecent update of the MacBook Air was held in early 2015.Waiting for a hardware upgrade for almost two years isnot common for Apple, which updates its hardware atleast once a year. The release of the new line of eventhinner, even more beautiful and even more powerfulMacBooks (Retina) should decrease MacBook Air’s saleseven more. Apple does not try to rescue this line, butinstead focuses on the more promising refreshed, classicand professional MacBooks. The Airseriesis in thedeclinestage.V.CONCLUSIONThe life cycle of the discussed products is two to threeyears for the iPhone. The first generation of Apple’ssmartphones was sold for only one year after itsintroduction to the market. The company’s decision toquickly withdraw the first, weak and faulty version of thephone, and to launch another, improved model at the sametime of the withdrawal of the previous one, proved to bethe key to the success of this product. iPhone 3G and thenext generation 3GS, thanks to their reliability, havecreated a brand for themselves and gained many loyalcustomers (which proved to be crucial for Apple’smarketing purposes). The 3GS, 4 and 4S models remainedon the market for three years, battling for customers withtheir predecessors and successors. An interesting momentin the marketing of Apple’s products was the release ofiPhone 5, which was at that time the best-selling iPhone,162

Advances in Economics, Business and Management Research, volume 31and taking it out of the market just after a year. This was aplanned operation designed to prepare consumers marketfor the next two models: 5S and the multicolour 5C. Thenext three models of 5S / 5C, 6 and 6S remained on themarket for two years.The life cycle of iPads range from six months (iPad 3)up to three years (iPad 2 and Mini 2). The strategy of aquick withdrawal from the market is understandable in thecase of the first iPad (which after gaining acceptanceamong the customers quickly needed another modelfixing all of the first version faults) and iPad 3, another ofApple's technological setbacks, replaced in half a year’stime by iPad 4. A rather unusual operation was the releaseof the 2014 iPad 3 Mini, which was an almost unchangedversion of its predecessor and was replaced by animproved model- iPad 4- after a year. It would seem thatthe release of the third Mini version was only provisional,aimed at maintaining Apple’s regular market penetrationwith new products. The optimal lifespan of an iPad on themarket lasts about two and a half years. The classic iPadline, which was rebranded in 2013 and has changed itsname to iPad Air, has begun its seventh year on themarket, but the chart analysis indicates its futurewithdrawal. The empty space on the market will betherefore taken by the Pro line. Currently it is in thegrowth phase being little over one year old. The iPad miniline has been on the market for more than four years, andthe life cycle curve points to the decline stage. Appleprobably does not intend to release any further iPad Minis,so it's likely that the brand will "die" over two consecutiveyears or be rebranded to the iPad Mini Pro.For a long time MacBook Air and MacBook Pro were,according to the BCG matrix, Apple’s “cash cows”.Despite the position of the MacBook Air at the stage ofdecline, it cannot be said that it is the company’s “dog”.Sales, though not growing, are sufficient enough to fundthe series itself and to support products that require moremarketing effort that Air does not need anymore. The newMacBook definitely fits the definition of a “questionmark”, which is close to becoming a star if Apple followsthe success with a good update, but it can also become afailure when the update does not offer consumersanything better than already exists on the market.Figure 4. The life cycle of Apple’s mobile products brandsThe strategy for product lines of iPhone is to introducenew models to the market not only in the growth phase,but throughout their maturity stage. This causes a directresponse in market because of the activation of the loyalcustomers who cannot afford to miss the latest model andneed to be up-to-date with the new technology. In thisphase prices are unchanged, each next released model issold at the same or even higher price than its previousversion. The maturity phase brings smaller, lighter, moreefficient models of products to the market and makesthem available in a variety of colors. It’s easy to seeApple’s product development has changed from makingonly black and white products to a brand that has inventedits own unique color names for marketing purposes. In thematurity phase not only does the price increase, but alsothe quality and quantity of the offered services whichmakes the maturity stage longer and therefore providesthe company with a steady income. Marketing at thisstage is based on whisper marketing, sponsorship (iPadsand MacBooks in education) and in some cases productplacement. At the end of the saturation phase Appledecides to introduce another product line (iPad Pro in thesaturation phase of the iPad and MacBook Retina in thesaturation phase of the MacBook Air) to capitalize on the“cash cow's” financial potential for funding the rest of theproducts in the lines. Apple does not try to keep allproduct lines on the market at all costs. Seeing their salesdecrease, it does not release any new models, but insteadfocuses on the development of the other products from theproduct range.The curves of the brand life cycles show the need thatApple has had for two years to retain its reputation as aninnovator on the market, activating new customers, andencouraging loyal customers to buy its products byintroducing brand new products with new names, look orfeatures (like iPad Pro, MacBook Retina, MacBook ProTouch Bar and iPhone SE). By analyzing the data, we cansay that MacBooks, iPhones and iPads as brands havefairly long life cycles (eight to ten years) especiallyconsidering the rapidly changing electronics market. Itseems though that the downturn is unavoidable, as salesdata confirm: iPhone sales have been going down sincethe release of iPhone 6S, alongside decreasing quarterlysales of iPads, and the inevitable withdrawal of MacBookAir from the market. Apple is aware of this and thereforefocuses on the promotion and development of the new163

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practiced at the product class, form, line or the brand level, whereas Day [4] and Lambkin and Day [5] maintained that the product life cycle is legitimate only at the product class level. Dhalla and Yuspeh, however, argued that the product life cycle can't be considered at any of the mentioned levels in their 1976 work [6]. For Moon (2005)