Professional Documents
Culture Documents
PRODUCT DEVELOPMENT
ID: TP016888
INTAKE: UC4F1501ME
Percentage
Question 1
1 Background of the case should be clearly discussed. 10%
In depth discussion of market entry and launch activities of Apple
2 20%
Watch and its impact.
Able to relate to and discuss the brand management strategies of
3 20%
Apple products.
Total 50%
Question 2
Thorough discussion of the internal and external factors affecting
1 20%
industry. (SWOT)
Feasible application of analysis to develop growth strategy
2 20%
(Ansoff).
Use of proper formatting, structure, language, grammar,
3 10%
referencing, and acknowledgement of external sources.
Total 50%
i
EXECUTIVE SUMMARY
This report analyses the Apple watch market entry, launching activities, brand
management, product platform, brand extensions, market evolutions, competitive
evolution, external and internal factors, and growth strategies. From the analysis it
emerges that Apple watch is a successful brand which positions itself as a luxury and
fashionable product and product a healthier lifestyle. It also emerges that, Apple is a
follower as far the smartwatch business is concerned that has managed to exploit
advantages of that of being a follower to gain the largest market share of smartwatch.
An analysis of the current Apple watch platform reveals that enhancement needs to
be made so to meet customers satisfaction, an enhancement that will lead to the
Apple watch next generation that will probably be named Apple Watch 2, equipped
better features. It has emerged from customers review that Apple needs to invest
more in research and development as they have been many complaints pertaining to
the quality of the watch. Though Apple watch market segment consists of people who
already have an iPhone, analysis shows that can also benefit from increasing it market
segment by making a cheaper version of apple watch for college students, and by
widening its geographical market. The analysis also shows that Apple faces internal
and external factors that influence its revenues positively and negatively.
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CONTENTS
EXECUTIVE SUMMARY.................................................................................................... ii
CONTENTS .......................................................................................................................... iii
TABLE OF FIGURES .......................................................................................................... iv
TABLE OF TABLES ............................................................................................................ iv
QUESTION I ......................................................................................................................... 1
1.1 Introduction to Apple as a company .................................................................. 1
1.2 Introduction to Apple Watch .............................................................................. 2
1.3 Background of the case ...................................................................................... 2
1.4 Market Entry ...................................................................................................... 2
1.5 Launching Activities .......................................................................................... 4
1.6 Brand management ............................................................................................. 6
1.6.1 Buyer Behavior ....................................................................................... 8
1.7 Product Platform and Brand extensions ............................................................. 9
1.8 Market Evolutions and Competitive Evolution ................................................ 10
QUESTION 2 ....................................................................................................................... 13
2.1 External Factor - PEST Analysis ..................................................................... 13
2.2 Internal factors Analysis ................................................................................... 15
2.3 Strengths ........................................................................................................... 15
2.3.1 Weaknesses .......................................................................................... 15
2.4 SWOT Analysis................................................................................................ 15
2.5 Growth strategy ................................................................................................ 20
2.5.1 Market Penetration ............................................................................... 20
2.5.2 Product development ............................................................................ 21
2.5.3 Market development ............................................................................. 21
2.5.4 Diversification ...................................................................................... 21
Conclusion ........................................................................................................................... 23
References ............................................................................................................................ 24
iii
TABLE OF FIGURES
Figure 1-1 : Global Smartwatch Vendor shipment and market share in Q2 2015(Source
Strategy Analytics) ................................................................................................................. 6
Figure 1-2 : Global Smartwatch Vendor shipment and market share in Q2 2015(Source
Strategy Analytics) ............................................................................................................... 10
Figure 1-3 : Numbers of billions dollars. Source: Apple financial statement. July,
2015(macworld.com, 2015) ................................................................................................. 12
TABLE OF TABLES
iv
QUESTION I
1
1.2 Introduction to Apple Watch
2
Table 1-1 : Advantages and disadvantages of the follower
Advantages
Tweaks and Apple had the opportunity to observe early movers difficulties
Improvements and made adjustments before jumping into the business. This not
only reduced risks for losing money, but it also positioned Apple
to quickly introduce its own new and improved version of
smartwatch
Disadvantages
Acceptance of Buyers may not accept Apple smartwatch as they may view it as
the market imitations
follower must Wining market share via imitation is difficult for a follower. As
play catch-up a result, Apple had to design an innovative smartwatch to allure
customers, innovation which can be expensive.
Having decided the type of market entry, Apple had to outline the launching
activities for its smartwatch.
3
1.5 Launching Activities
4
Table 3 : Other activities involved during the Launch
Considering all the activities involved in the Apple smartwatch launch, it can safely
asserted that the launch was mostly web based.
The Apple website does not have any explicit positioning statement for the
Apple smartwatch; however, considering the price starting at $349, considering all
the leading luxury fashion publications such as vogue, Self, Style, East touch, etc in
which the Apple smartwatch was advertised, considering the choice of premium
materials Leather, stainless steel, even solid gold and styling for the watch, it can
be asserted that Apple positions its Apple watch as a luxury fashion product.
The analytics results of the global smart watch vendor shipment and market
share in the second quarter of 2015(Figure 1-1) reveals that, Apple gained a massive
75.5% of the global smartwatch marketshare in the second quarter of 2015 with the
launch of the Apple Watch in late April. It also shows that Apples entrance stole a
huge portion of Samsungs marketshare as the previous smartwatch market leader
dropped 66 points from 73.6% marketshare to a single digit 7.5 %( Strategy
Analytics, 2015); therefore, it can be safely asserted that the launching activities were
successful in positioning Apple Watch.
5
Figure 1-1 : Global Smartwatch Vendor shipment and market share in Q2
2015(Source Strategy Analytics)
Providing the product or service to the customer, the marketing team outlines
the best set of characteristics to attract customer (Solomon et.al, 2012). A single
marketing activity does not work to reach the organizations objective; thus, the
independent attributes of product, price, promotion and place sets the target to meet
that objective (Solomon et.al, 2012).
The Apple has designed the watch by considering the vast extend of
consumers and their options; thus, the 3 variants of Apple
Product smartwatch: the Apple watch sport offers a causal, sporty and elegant
look. The 2 different sizes of this watch allows men and women to
get the one that suits them. The vast variety of straps allows
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consumers to interchange straps, making them look fashionable and
opulent.
The cheapest option, the 38mm Apple Watch Sport, is available from
299, despite costing Apple just 55 to build, while the larger 42mm
model costs 339. The more expensive Apple Watch version is
available from 479, going up to 949 depending on the case and
band combination. For instance, a 38mm Apple Watch with a Black
Classic Buckle strap costs 559, while the 42mm model is 50 more
Price
expensive. The Apple Watch Edition, which is crafted from rose or
yellow 18 carat gold, is the most expensive. It's available at the Apple
website from 8,000, going up to 13,500 for the most expensive
version ((Theinquirer, 2015). Proving a large array of price like this,
Apple ensures that each of its customers can get a watch according to
their budget.
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Table 1-5 : product, price, promotion and place(Continuation Table1-2)
Other claim that it is not about fashion, but about the real value the integrated
apps within Apple Watch bring more closely into our lives (Anon, 2015).
Other say that they like to exercise and Apple watch tracks how much they
move, exercise, and stand. Then converts this information into beautifully visualized
data and provides tools for analysis as well as guidance for how they can be healthier.
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1.7 Product Platform and Brand extensions
Although this platform makes Apple Watch one of the best smartwatches on
the market, it can still be enhanced; for example, the next series of Apple watch may
have larger memory and screen, along with an upgraded operating based on the this
platform so as to improve the speed and make the user experience a lot more
enjoyable.
With the trust that Apple has already with its customers from the first watch
coupled with the enhancements mentioned earlier, along with the luxury and
fashionable aspects of Apple watch maintained, Apple can extend its brand by naming
its next Apple watch generation Apple Watch 2. Naming the next Apple watch this
way will convey to the customers that the new watch is faster, better, more stylish
and fashionable than the previous one.
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1.8 Market Evolutions and Competitive Evolution
Figure 1.1 shows the analytics results of the global smart watch vendor
shipment and market share in the second quarter of 2015, according to strategy
analytics, a company specialized in Data and Analysis. Business Consulting. Custom
Research. According to this companys data, Apple claimed a massive 75.5% of the
global smartwatch marketshare only within the 4 months of the Apple Watch launch
(in late April 2015). It also depicts that Apples entrance stole a huge portion of
Samsungs marketshare as the previous smartwatch market leader dropped 66 points
from 73.6% marketshare to a single digit 7.5%(Strategy Analytics, 2015); therefore,
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it can be conjectured that there will not be a lengthy introductory before the any rapid
growth.
There are 3 variants of Apple watch; although all of them target people who
already have an IPhone, each of them focuses on a specific market segment:
according the Prezi(2015), the Apple watch Sport targets dedicated physically active
consumers between 25 and 50 years old, technological fans, with middle income; the
Apple watch focuses on early adopter consumers, between 25 and 50 years old,
technological fans with mid/upper income; and the Apple watch Edition focuses on
consumers with high income, between 30 and 50 years old, that use watch as a luxury
on a daily basis. According to Forbes (2015), teens and people in their early 20s
demonstrate the most interested in wearing smart watches, but they fall behind those
in their late 20s and 30s when it comes to ownership, likely because theyre priced
out of the market; therefore, Apple may consider in the future developing an
affordable, fashionable Apple watch for this demographic market segment.
Apart from widening its demographic target market segment, Apple can also
do so for its market geographic scope: according to the Macworld (2015), the graph
depicted in figure 1-3 indicates that most of the revenues of Apple comes from
Americas, Europe, and China. This implies that Apple is not well implanted in regions
such as Africa, Asia, etc, and therefore; can, in the future, can consider reaching that
potential market with its wearable.
11
Figure 1-3 : Numbers of billions dollars. Source: Apple financial statement.
July, 2015(macworld.com, 2015)
12
QUESTION 2
External factors are the possible political, economic, and social-cultural and
the technological influences on the organization:
Factors Descriptions
13
Table 2-2 : External Factors Analysis(Continuation of Table 2-1)
Factors Descriptions
14
2.2 Internal factors Analysis
2.3 Strengths
2.3.1 Weaknesses
Apple relies too much on product launch to create attention for its products.
Furthermore, the company has weak relations with its key counterparts in the market
that has the potential to take Apple to new heights if it was willing to partner with
these organizations such as Microsoft Corporation. Finally, unlike the other
competitors who own strong presence in various markets, Apples presence is mainly
confined to in Japan, China, America and Europe.
15
Table 2-3 : SWOT Analysis
Characteristics Descriptions
16
Table 2-4 : SWOT Analysis(Contination Table 2-3)
17
Table 2-5 : SWOT Analysis(Contination Table 2-3)
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Apples direct online sales channel will continue to grow,
helping improve their already impressive gross margins. The
Apple Watch was been sold direct allowing Apple to cut
retailers out of the launch revenues.
Apple Pay is gaining traction and provides a new recurring
revenue stream for every transaction it processes.
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2.5 Growth strategy
Market penetration occurs when a company tries to sell its current product to
the existing customers. It can be achieved in various ways. For example, by changing
pricing, adding minor features, changing the packaging, highlighting alternative uses,
sales promotion (Marketing equity, 2011). It helps companies Maintain or increase
the market share of current products, Increase usage by existing customers,
Restructure a mature market by driving out competitors (Tutor2u, 2014). The current
Apple Watch on the market is a new product; therefore, this strategy is not applied to
it. However, after some time, Apple may exploit this strategy by providing variant
apple watch colours, lowering the prices, introducing customer loyalty schemes and
promotions.
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2.5.2 Product development
It occurs when a company develops new products for the existing market. This
strategy involves significant new product developments and not minor changes in an
existing product of the firm. It helps companies counter competitive entry, perpetuate
the company's reputation as a product innovator, utilize new technology, and to
preserve the overall market share (Papers4you.com, 2009). Apple watch is a new
product and its target is the existing customers of apple products (people who already
own an iPhone); thus, this strategy is applied to the current Apple watch.
This strategy occurs when a company tries to sell its existing products into
new market. It often involves selling into new international markets. This may
require new geographical markets, new product dimensions or packaging, new
distribution mediums, different pricing policies to entice various customers or
develop new market segments(Tutor2u, 2014). Though apple watch is a new product,
this strategy is applied to it, as Apple exports its smartwatch to Europe, China, Japan,
etc;
2.5.4 Diversification
From this analysis, it can be asserted that Apple pursues multiple strategies
for growth at the same time in order to achieve their strategic objectives.
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Table 2-6 : Apple watch Ansoff Matrix
Product
Existing New
Apple may after some time Apple released the Apple Watch for its
release an upgraded version of the existing iPhone customers as an option
current Apple watch. for a device that will allow user to keep
Existing
Better camera, bigger and sharper their phones in the pockets and do
screen, faster processor, faster almost everything from their watch.
Market
Apple exports its Apple watch in This strategy is not applicable to apple
New
22
Conclusion
This work has analyzed the Apple watchs case to look at its market entry,
launching activities, brand management, product platform, brand extensions, market
evolutions, competitive evolution, external and internal factors, and growth
strategies. It can be concluded that Apple watch is a successful brand which positions
itself as a luxury and fashionable product; that Apple is a follower in the smartwatch
business; that being follower Apple has managed to exploit advantages of that
position and gained the largest market share of smartwatch; that the current Apple
watch platform could be enhanced to meet customers satisfaction, that Apple watch
next generation may be called Apple Watch 2, equipped larger screen, faster
processor, etc, that Apple needs to invest more in research and development as they
have been seen complaints from customers regarding the quality of the watch,, that
though Apple watch market segment consists of people who already have an iPhone,
Apple can have more segment by making a cheaper version of apple watch for college
students, and by widening its geographical market, that Apple faces internal and
external factors that influence its revenues positively and negatively, that combining
three strategies Apple to gain more market share of smartwatch.
23
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