Apple outlets across the United States

INTRODUCTION

During the launch of iphone 6, there was a lot of media coverage that led to attracted many customers to Apple outlets across the United States. More than 13 million pieces were sold during the first two days leading to high customer interest who desired a credit purchase plan in their iphone upgrade program. The upgrade program involves a combination of the retail price for iphone 6s with its Carl care plus warrant and spread in equal 24 monthly installments that do not attract any interest. After finishing the 24 months installments, the customer assumes total ownership of the Smartphone. After paying the twelve-month payment, the customer qualified for upgrading to another new phone where the repayment plan is rescheduled, which put the client on another 24-month installment plan. At this point, the phone is unlocked and gives the client the option of using his or her preferred cellular network all the time. The paper aims to provide insights into why Apple introduced the upgrade program and the effects the program had on its financials.

Why Apple introduced the upgrade program

Apple decided to offer the upgrade program because it had the objective to be the best multinational technology in the industry. It the effort to stay ahead in a competitive market, it decided to offer this upgrade program with a credit facility to attract more customers in the market (Craig S. Fleisher, 2015). It wanted to break the record of its sales in the market wherein the previous iphone launches; it was one million pieces sold in the first two days; thus, they tried to exceed the one million mark. The pricing strategy aims to promote growth through more sales. The upgrade programs based on two concepts, which are the actual unit price of an item and how consumers pay for it (David Dranove, 2017). Apple gave as much attention to the pricing of their smartphones as the mode of plan consumers would pay for it.

Many customers prefer dealing directly with apple since it has a good reputation across the globe. In the process of directly dealing with its clients, it develops a strong relationship that could enhance the promotion of its other products (Edward C. Baig, 2018). The plan was productive since it was attractive; hence it boosted the sale of other products like extended warranty. Apple needs cellular networks it upgrades program, and through starting its plan, it challenges the carriers to improve their services to maintain their customer base (Edward C. Baig, 2018). Apple rolled this program to foster competition n ion the wireless industry. Since it gave better buying alternatives, it made the carriers offer the best deals in the market. The upgrade program achieved enormous success since it increased sales.

Benefits of the iphone upgrade program from the customers’ perspective

From a customer perspective, the program has many advantages that benefit customers who want to own a smartphone. Apple offered the best deals compared to what a customer could get from a wireless carrier (Salah A. Al-Sharhan, 2018). The iphone had protection through Apple care, plus that made it attract many customers since it enhanced safety. For someone who needs a Smartphone for his daily work or pleasure, it gives one a chance to upgrade your phone to the latest version in the market. This allows customers to access the latest operating system hence providing a variety of capabilities for teach-savvy customers (Wei Wei, 2015). The upgrade plan spreads the financial costs of the phone over time, thus reducing the financial pleasure on clients. This spread of payments could also give a chance to those customers who could not afford a Smartphone in one way off fee.

The upgrade program also has got Apple care system that is advantageous to the customer since it caters for expenses like hardware repairs in case of damage within the period. The restoration of hardware eases the burden of costs; it is damaged within the period hence making it a secure method of purchasing phones (Salah A. Al-Sharhan, 2018). Apple care also gave software support to customers, thus giving the customers access to their preferred operating system at an affordable rate. Hence for people who use smartphones for either for job purposes or pleasure, a lot of capabilities. Customers are also through Apple offered free repair in case of accidental damage of the phone, thus adding value to customers in their experience with the firm. Customers also benefit from the program since the upgrade system develops a personal relationship with Apple, thus increasing customer trust and loyalty (Gong, 2015). An accident that occurs and leads to shattered phone screens are no worries to customers who are enrolled in the program as long as it not a regular thing.

How iphone upgrade program affected revenues iphone compared to what was sold outside the program

It is estimated that Apple sold around 249 million iphone in 2019 as a result of the upgrade program in the United States, where there was the upgrade program. It is estimated that the program has sold more than 50 million pieces where it is estimated about 16 percent of the customers buy their iphone on upgrade program, which has increased the number of sales to about 8million fragments in 2020. Apple has stated that it could maintain its present iphone revenue recognition approach since it is working with other partners to offer credit facilities to provide the gadgets on the upgraded program. The devices sold in this program increased sales compared to those that are not sold on the application (Craig S. Fleisher, 2015). Apple care and devise sales gives about $ 60 for every agreement for one year, it would yield to an estimated $400 million in yearly revenues.

There is also income that is generated from the sale of the refurbished phone that clients trade-in, but they are assumed to cater to the interests that the business incurs in the process of financing the plan and transaction (Leonard J. Brooks, 2015). The devices in the program attract more customers and increase customer loyalty, thus has more sales than those programs that are not in the upgrade program. Upgrade programs in apple enable a customer to deal directly with the company, thus satisfying customer needs (Wei Wei, 2015). Many shoppers are attracted to an organization that offers credit facilities; hence it increases customer loyalty; these could make people be attracted to other gadgets that are not in the upgrade program. Goods that are not on an upgrade program could not attract huge sales as the iphone on upgrade.

How the changes affect the income statement and balance sheet

The changes could affect the income statement and balance sheet in many ways since the upgrade program builds a relationship with the customers since the contract enables the customers to deal directly with the company (Salah A. Al-Sharhan, 2018). This increases sales in the firm since they attract a considerable number of customers since customer loyalty is increased. The increased sales mean that business increased revenues. This could increase profit margins that it should be noted that the company incurs costs since they are the one who is responsible for hardware and software maintenance (David Dranove, 2017). The effects that directly influence the financial statement and balance sheet since there variable and fixed cost may affect the profits. Although they have incurred the expenses due to accidental damages, they are complemented through a high volume of sales.

The changes as a result of the program could lead to a shift in the incomes and balance sheet. The upgraded program increases customer loyalty since the customers develop a strong relationship with the company when they offer the iphone on a credit plan. Customer loyalty increases sales; thus, apple could be able to increase margins and incomes (Salah A. Al-Sharhan, 2018). As customer loyalty increases, it makes the company attract more customers who could be interested in other electronic gadgets that are not included in the upgrade program. The profitability ratios would indicate the ability to generate more income; hence it would suggest that if revenues increased during the period, then it automatically translates to the right position of income and balance statements of Apple.

How it affects investors in assessing Apple’s financial statement

Apple is one of the best brands in the world since it has experienced an increase in revenue for the last five years, increasing from $ 9 billion to 190 billion, which is recommendable. There are many factors that, as an investor that could be used to assess the financial statements. Although money is not the io0nly objective but also customers’ satisfaction and loyalty is an issue in Apple’s business objectives (Salah A. Al-Sharhan, 2018). As an investor, it could be challenging to assess financial performance since Apple partnered with other stakeholders in the market in offering these credit plans. Since there are many stakeholders to this program, there are many people who need to be consulted when it was assessing the financial performance of the organization (Craig S. Fleisher, 2015). The program is more customers centered as compared to stakeholders. Investors have found it difficult to assess the financial performances in Apple since there are no proper mechanisms to give the investors to know the levels of sales, income, and profit margins. The essential indicators are necessary to make an informed decision as an investor do that you could assess the financial statements.

An investor at Apple could do an analysis and assess the income and balance statements to show how it performed during the period of the upgrade program and project the future trends of the business (Wei Wei, 2015). Investors at the organization through assessing its indictors to know whether Apple could be able to meet its liabilities when offering the upgrade program using existing assets. The liquid ratios are accurate and precise when assessing income and balance statements. The level of liquid could differ depending on the period in the apple upgrade program. In analyzing and interpreting the financial statements, it could be clear from increased sales apple could be able to meet the short term liabilities due to its vast asset book (Dean Starkman, 2019). Since it has partnered with companies like AT &T, it gives them a solid base when it comes to offering the iphone upgrade since it helps in providing credit facilities. When it comes to analyzing the statements of a marketing strategy that gives credit plans, it could be difficult since it is not easy to find precise and factual data.

What factors to look for in apple finances in the future to assess the success of the program?

Many factors could be used to give indications that could be used to assess the financial assessment of the project (Wei Wei, 2015). The elements to look for apple to know to determine the future success include cash flow as it is essential would be sure to understand so that it can give the position of the organization to pay for costs and regular operating expenses like the upgrade system although was based on credit plan it gives more sales that could provide revenues that could run the business. It could indicate whether the company is generating revenues to support the business investment to continue the business. It should give a clear position of ht financial position through an analysis of the ratio of operating cash flow and the capital of apple (Salah A. Al-Sharhan, 2018). These effects could help in understanding profits and making decisions regarding capital investments.

The working capital is also a critical indicator that could indicate the apple upgrade system’s success through understanding the cash that is immediately available from the program. It could be easily accessed by getting the difference between the company liabilities from the available assets. It would show how effective the program contributes to the operating cost (Dean Starkman, 2019). This could be a result of the program’s increased sales and business loyalty; thus, these financial indicators could show the success of the program. The current ratio is also another factor that could give the financial position to understand the factors that could enhance success in the future since it provides the status of a solvency of the business. It takes into consideration of the assets and liabilities divided (David Dranove, 2017). It would give the capacity of the company to meet the financial requirements and maintain a credit rating that could foster business expansion.

The ability to satisfy customers’ needs and expectations is another factor that could indicate the success of the business in the future. The long term success in terms of putting into the quantity of customer needs satisfaction. It could be noted through the feedback given by customers to indicate their achievement of the program; for example, it is estimated that the Apple upgrade systems meet 85percent customer satisfaction (Craig S. Fleisher, 2015). It gives the precise rate of customer retention in regards to the financial performance of the business since it could indicate the revenue generation potential and the possibility of getting referral business leading to the long term objective of business growth.

Inventory turnover also is a financial key indicator since it gives the position of the flow of goods getting in and out of business. It could be determined at the outlets and warehouse. It provides the company with the number of products it has sold. For example, in the upgrade program, Apple was able to know that it sold over 240 million pieces of the iphone over five years (Edward C. Baig, 2018). It would be calculated through the sales in the five years by the average inventory during the time. It could be able to give the Apple upgrade sales strength and the effectiveness achieved in production in the production. The debt-equity ratio is an indicator that could show the financial position between the business liabilities concerning the stakeholders’ equity (Gong, 2015). This is a useful indicator as a result of the upgrade program since it could assess the success of the business in the coming days.

Conclusion

In conclusion, it is evident that Apple created a very effective marketing strategy for the iphone and achieved enormous success since it managed every aspect thoroughly. I phone, like many products in the markets, had its shortcomings and drawbacks. Still, Apple was able to offer a unique product that attracted many interests from tech-savvy consumers since they were able to make a customer understand the product through upgrade marketing strategy and advertisements. It was able to create excitement among its loyal customers hence led to the growth of its sales. Apple satisfied customers’ expectations since it partnered with other institutions like AT&T, to offering the upgrade program. Also, the firm gave the benefits from the strategy to overseas outlets and manufactures. All these activities increased apple’s stock price, which increases its reputation and put it ahead in a competitive market since it emerged as the best in the selling of consumer electronic gadgets. The business that offers credit facilities attracts more customers since they develop a direct relationship that, in the long term, leads to more customer loyalty and increased revenues. Financial statements and profit analysis are essential to assess the financial performance of marketing strategies since, for example, the use of iphone upgrade programs achieved enormous success; hence it could give information that could be used to design the right pricing strategies in the future. Apple used the iphone upgrade pricing strategy and achieved success in becoming a leading technology firm and made them stay ahead in a competitive market.

References

Craig S. Fleisher, B. E. (2015). Business and Competitive Analysis. Berlin: FT Press.

David Dranove, D. B. (2017). Economics of Strategy. New York: John Wiley & Sons.

Dean Starkman, M. M. (2019). The Best Business Writing 2019. Colombia: Columbia University Press.

Edward C. Baig, B. L. (2018). iPhone For Dummies. London: John Wiley & Sons.

Gong, Y. (2015). Global operations strategy. New York: Springer Science & Business Media.

Leonard J. Brooks, P. D. (2015). Business & Professional Ethics. Oxford: Cengage Learning,

Salah A. Al-Sharhan, A. C. (2018). Challenges and Opportunities in the Digital Era. New York: Springer,

Wei Wei, W. Z. (2015). Approaching business models from an economic perspective. London: Springer Science & Business Media.

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