A corporate strategy article by Thunderbird students.
With $100 billion in cash and closing in on the richest market cap in history, many feel that Apple is at the top of its game.[i] Nevertheless, at some point, Apple’s products will reach saturation levels at the high-end of the market in developed countries. To keep the top spot, Apple will need to direct its growth efforts to emerging markets and find ways to make its products both relevant and widely available to customers outside of its traditional target markets.
In spite of its strong worldwide sales, Apple has long ignored an underserved market segment that, if tapped, could enrich its coffers even more. Far away from high end markets in developed countries, lay the “poor” representing 65% the world’s population.[ii] On average, individuals in this “bottom of the pyramid” (BOP) group earn $2,000 per year or less; however, because of the large number of consumers in this group, their aggregate purchasing power is immense.[iii] This BOP segment represents a tremendous opportunity for Apple to serve a market that currently relies on second-tier technology for mobile devices and media platforms, yet is eager for lower-priced, high-quality goods and services. In spite of their low incomes, those in the BOP segment often spend 10% to 500% more than those in higher-end segments on similar goods.[iv] By offering a high end brand at a price competitive with second-tier products, Apple could drive tremendous sales volumes and acquire a large share of the BOP market.