Apple Distribution Channel
Distribution Apples upstream partners are the manufactures Foxconn Technology Group, which also manufactures Apple's iPod, iPhone and Mac Min. It is headquartered in Tucheng, Taiwan but it manufactures the Apple products in its largest plan in Shenzhen, China. However Apple does not disclose the makers of its components, research shows that various parts and suppliers include:
- Apple A4 SoC: Samsung.
- NAND flash RAM chips: Toshiba; except Samsung for the 64 GB model.
- Touch-screen chips: Broadcom.
- IPS Display: LG Display
- Touch panels: Wintek. (Got the job after TPK Touch Solutions was unable to fulfill its orders, delaying the iPad's release from late March to early April.)
- Case: Catcher Technologies.
- LCD drivers: Novatek Microelectronics.
- Batteries: 60% are made in Taiwan by Simplo Technology, 40% by Dynapack International.
- Accelerometer: STMicroelectronics.
However Apple has many more downstream partners, even though it has its own personal retailers with select Apple stores in various locations. Apple also takes advantage of the many outside retailers to make sure its product is received by their consumers at convenience. A few of their biggest retailers are the big technology suppliers like Best Buy, Wal- Mart, Target, Radio Shack, and Sam’s. By doing this Apple is able to reach an array of customers while also providing them the option to visit a specialty Apple store to get the full effect and experience that the Apple Stores offer.
Apple’s channels of distribution are indirect marketing channels, containing one or more intermediaries. Apple designs, manufactures, and markets smart personal devices addressing the consumer electronics space through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers. Apple now allows its largest distributors to provide all six models of the iPad to authorized resellers across the U.S., continuing the company's meticulous and methodical expansion of iPad availability.
For example, Tech Data Corporation revealed that Apple has allowed it to sell the iPad to its customers for the first time. The step is significant because Apple has been very protective of the iPad's image -- and third-party availability -- since the device's launch. To date, select online resellers have been offering the iPad only over the phone, as Apple has not yet allowed online purchases. Some resellers have indicated to AppleInsider that Apple requires even the slightest changes to promotional graphics on their website to be approved, a process that those people say has been tedious and frustrating.
Apple's slow expansion of iPad availability is evidence of the company's careful control of how the touchscreen tablet has been marketed, and who has been able to sell it. Despite the expansion to Tech Data, Apple is still not yet allowing resellers to sell the iPad online. Tech Data is a major Apple distributor, providing products. Best Buy has been allowed to expand sales of the iPad to all of its American retail stores. Target, Sam’s Club, and Walmart has also been allowed to expand sales of the iPad. Expansion of the iPad to more retail outlets is expected to increase Apple's sales of the device significantly. Expanded distribution channels, along with international rollout and increased supply, it will be beneficial for Apple. By widening its distribution Apple is able to fight off competitors.
Apple chose to use indirect marketing channels to bring their products to market. Using indirect marketing channels help make the iPad available for use or consumption by the consumer or business user. Channel intermediaries are firms or individuals such as wholesalers, agents, brokers, or retailers who help move a product from the producer to the consumer or business user. Apple also uses multichannel distribution system which is a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments. This is also called a hybrid marketing channel.
Multichannel distribution systems offer many advantages to companies facing large and complex markets. With each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products to the specific needs of diverse customers. Multichannel distribution systems, however, are harder to control, and they generate conflict as more channels compete for customers and sales. Without distribution even the best product or service fails. Distribution is important because, firstly, it affects sales - if it's not available it can't be sold. Most customers won't wait. Secondly, distribution affects profits and competitiveness since it can contribute up to 50 percent of the final selling price of some goods.
This affects cost competitiveness as well as profits since margins are squeezed by distribution costs. Thirdly, delivery is seen as part of the product influencing customer satisfaction. Distribution and its associated customer service play a big part in relationship marketing. Businesses choose to use more than one channel because it helps to reach multiple consumer groups. Consumer groups needing the same product buy from different channels because they live in separate areas or have individual shopping preferences.
For example, one shopper may prefer to shop online while the other shopper feels more comfortable at a physical store. This increased market coverage leads to a rise in sales. Company marketers can integrate the sales channels and design a distribution system that works in harmony. Integration techniques include allowing each channel unique offerings and splitting up territories to limit competition. Apple Ipad multichannel distribution systems
Technology lovers Some of the current and potential issues with the channel structure are as follows:
- apple has many value added resellers they also sell through retailers. They also sell directly from the apple store and website. The problem is that the indirect and direct channels may end up competing with each other
- when you are buying an ipad from a bestbuy or walmart, you are unable to receive the full buying experience than if you would have purchased the tablet from an actual apple store
- With using intermediaries apple is losing intermediaries. Apple has to sell the ipad to these intermediaries at a lower cost than they would sell to a customer directly.
- When you have a multichannel distribution system it is more difficult to control and manage the different channels than if you were using just a single channel.
We believe this is the best solution for us because it will allow us to reach the most customers at the largest level. In turn, we feel that in using this method of distributing the IPad, we can make the most money, even after we pay our fees to our distributors.