Apple (Individual Written Case Analysis)

If the management is risk acceptant, the best idea would be focusing on Itunes competitive advantages and enhancing them. Previously I stated that Apple seems to be an expert in intuitive implementation of behavioral economics laws.
My hunch that Apple could capitalize on endowment effect by devising a system of
“achievments” for Itunes users. For instance, accounts could be upgraded due to the amount of purchases.
Another idea is to capitalize on so called “power of free” (Dan Arielly) buy offering different options like “20 song for free for buying new Ipod”. It is proven scintifically that our mind practically can`t resist such offers and views them as extremly lucrative.
Historically Apple choose pretty much the same path – enhancing online accounts. In 2009 Apple announced that ...

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The iTunes have been around for than a decade so we can safely assume that Apple managed to devise an adequate competitive response to market challenges. I firmly belief that apple competitive response was grounded in behavioral economics and was designed with a deep knowledge of consumer psychology. ITunes is called by analysts “one as the most strategic elements of the Apple pie”.
I think that the main competitive advantage of iTunes (rather frustrating though) is that it`s business model can be described as
closed ecosystem, hostile to everything external.
What is more, Apple made a strong bet on holding “keys” to the content rather than owning the content itself. This way Apple managed to capitalize on several biases of human thinking and several heuristics.
I speak about endowment effect, status quo bias and natural human desire to enforce its social status.
Endowment effect stands for tendency to overestimate what we already own without little or no regard to its real fair value. Statis quo bias, as it`s easy to guess, stands for tendency to maintain status quo.
The ecosystem can be broadly divided into four main categories that include users as the main consumers and content providers as primary content-generators. At the secondary level the ecosystem is covering business organizations and it is a critical level of this ecosystem. It is widely supported all other producers and consumers by promoting and disseminating a variety of products.
At the tertiary level, the ecosystem, the available resources are used to the full features of Itunes. Features include music, videos, App Store, TV, Pod cast and gift cards. Beside well-known opportunities, Itunes offers also catalogs and music store search engine where the users can choosd the songs and download them for a cheap price, ranging from $ 0.99 to $ 9.99. Depending on the demand cycle, specific album or artist cost options are adjusted for the market.

iTunes Vs MusicNet
MusicNet and Rhapsody should go beyond their existing subscription model. With the help of its relationship with AOL, MusicNet attracted 140,000 paying subscribers. But now he has to compete with Apple for music buyers in AOL. It should speed up development of the the next version. Similarly, Rhapsody Realone must go beyond subscriptions and subscribers.
iTunes Vs BuyMusic
BuyMusic is not a separate independant store. Unlike Musicmatch and Napster, BuyMusic is just a shop and is not able to properly manage music files. History will show that BuyMusic kept far behind its competitors in the market because of the lack of partners traffic to the site and its inability to manage music.
iTunes Vs Winamp
Itunes comes with an online store as a standard, where as built-in Winamp missing. The file that is created or played in Itunes is automatically added to the library, but this feature is not available in Winamp.
iTunes Vs Tesco Digital
Although Tesco Digital can not compete with the sheer volume of tracks available from Itunes at the moment, this webservice has created an impressive and useful site that offers a decent selection of tracks. It was a creative step to introduce Ipod-compatible tracks, and as soon as it contains more mp3 tracks available for it, it can be a real competitor for Itunes .
Other factors do not have that serious impact on the industry – except for the suppliers. In this case suppliers are called “labels”, but, once again their impact is equal for all the competitors and thus we are not going to pay it much attention.

Guru`s in management consulting have outlied the following framework for decision making about competitive measures.
We begin analyzing by asking ourselves about competitors`s new products, changes in the industry and changes in the market share.

(Mark Cosentino. Case in point)
In 2003 there was no any meaningful data about shifts in market share due to the arrival of iTune competitors. So the following actions would depend on Apples management toward risk.
If the management is risk averse, it would be prudent to somehow disrupt competitor efforts.