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Will Apple's (AAPL) New Marketing Strategy Drive Sales?

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Reportedly, Apple (AAPL - Free Report) has undertaken new marketing strategy like promotional discounts and trade-ins to bolster iPhone sales in the holiday season.

This move comes in view of lower-than-expected demand for latest iPhones, which were launched in September and October. Waning demand was evident from the fact that total iPhone unit sales of 46.89 million remain unchanged year over year in the last reported quarter.

Moreover, adding to the concerns, U.S. President Donald Trump has threatened to impose tariff on all remaining imports from China, which is expected to include Apple’s flagship iPhone that has so far been successful in avoiding tariffs. Notably, the company assembles iPhone in China, primarily to take advantage of the country’s abundant low-cost labor.

Although the temporary truce is a relief for Apple, there is still uncertainty over the conclusion of the trade war. This does not bode well for the company. Moreover, sluggish demand has forced many of its suppliers like Lumentum (LITE - Free Report) and Cirrus Logic (CRUS - Free Report) to lower their outlook.

Per Bloomberg, the company has been shifting its marketing staff as well as lowering price to revive dwindling sales of iPhone just around the launch of iPhone XR in October. Notably, this strategy had been implemented by the company in 2007 when it reduced the price of the most popular iPhone model with 8GB of storage from $599 to just $399 to boost sales.

However, we believe that aggressive marketing strategies may just not be enough to drive sales.

Apple Inc. Price and Consensus

New Avenues for Growth is the Need of the Hour

Apple’s excessive dependence on iPhone is a risk to overall growth and the company needs to look for newer avenues to boost revenues for the company.

The company has started penetrating the healthcare market and is gaining traction with Apple Watch by making it clinically relevant health information available to the users. It continues to add more features to lure customers. Apple Watch 4 promises ECG capabilities, enabling users to obtain a 30-second ECG reading to gain more insight into their health.

Apple has also started to focus on autonomous vehicles, augmented reality/virtual reality (AR/VR) and Artificial Intelligence (AI) related technologies through its acquisitions.

Moreover, the company is also foraying into the streaming space. The company has created 24 quality shows which will feature the works from big directors of The Hunger Games, Crazy Rich Asian and La La Land.

Reportedly, the company is also looking to launch a low-cost streaming TV dongle, which is likely to be free for Apple device owners only. The price of dongle is expected to be cheaper than its premium set-top streaming box, Apple TV. This is expected to aid the company in competing with existing streaming dongles like Alphabet’s (GOOGL - Free Report) Google Chromecast.

Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

More Stock News: This Is Bigger than the iPhone!                  

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