CONTRIBUTORS

SECTION LEADER(S) FOR EACH SECTION

Executive Summary Alex Aja

Section 1 & 2 - AA
Section 3 - MA
Section 4 KA
Section 5 RA
Section 6.1 - MA
Section 6.2 AB
Section 6.3 AA
Sub-Section 6.3.3-6.3.6 - MA
Section 6.4 KA
Section 6.5 RA
Section 7 MA
All Other Tasks (Compilation of Weekly Reports, Format, Content Page, Contribution
Page, Submission) AB
 EXECUTIVE SUMMARY

Apple Inc. (Apple) is a multinational corporation based out of Cupertino, California. It was
founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne to develop personal computers.
It was incorporated in 1977. Today, Apple designs, develops and sells consumer electronics,
computer software, online services and personal computers. It is best known for its Mac line of
computers, the iPod media player, iPhone smartphone and iPad tablet computers.

Apple has since grown to be the worlds most valuable brand as of 2013 and is the worlds second
largest information technology company based on revenue behind Samsung Electronics. It
maintains 425 retail stores in 14 countries as well as an online stores Apple Store and iTunes
which has become the worlds largest music retailer.

Apple (AAPL) is the largest publicly traded corporation in the world by market capitalization with
an estimated market cap of $446 billion dollars as of January 2014. Its top line revenue growth
has averaged 39% over the past five years with bottom line growth fairing even better as 45%.

This marketing plan is for Apples soon to be release new product, the Apple Watch a
smartwatch that was developed using many different technologies in conjunction with
consumers iPhone to provide a personal technology that people can wear. The Apple Watch will
be available in three models with a wide array of case and band options. A major consumer
feature for the Apple Watch will be Apple Pay, a mobile payment service introduced in 2014
making payment at retail stores more convenient through its near field communication (NFC)
technology which passes information from the Apple Watch directly and securely to the point of
sale system. Additionally, the Apple Watch will be able to receive phone calls, SMS texts, can
serve as an Apple TV controller and a viewfinder for an iPhone camera.

In addition to the consumer oriented marketing focus, this marketing plan also explores its
application to the enterprise, government, education and healthcare as macro segments.
Currently, Apple and IBM are in a partnership to develop joint offerings into this sector with over
100 business applications already developed for the iPhone and iPad. It is assumed in this
marketing plan that there will be applications in this sector that will be interoperable and perhaps
specific to the Apple Watch. For example, in the manufacturing and retail segments of these
sectors may have unique applications for this technology (e.g. inventory tracking, price check,
etc.). Healthcare in particular may drive immediate adoption as the Apple Watch will target and
cater to health and fitness conscious consumers. A potential future application is recording and
transmission of health-related data from the user to a healthcare provider.

Apple has a reputation of following the market and leapfrogging the competition with improved
technology and design principles. The iPhone and iPad are examples of how Apple used a
follower strategy to become the market leader in smartphones and tablets. It is assumed that
Apple has leveraged this same strategy with Apple Watch. The global market for wearable
devices overall is still relatively nascent with only 20 million units (or $800 million) in 2012.
However, the wearables market is poised to be the next big opportunity and is expected to grow
to the 8 billion plus by 2018.

Apples leading competitor in the smartphone/smartwatch market is Samsung Electronics Co.,

Ltd. ("Samsung") (SSNLF). Samsungs Galaxy Gear smartwatch was introduced in 2013 with lack
luster results. Additionally, Microsoft has just entered this market with its own smartwatch called
the Microsoft Band. The Apple Watch was introduced to the market in September 2014 with an
expected release date of early 2015. By being a follower, Apple can capitalize on the design,
marketing and positioning mistakes of its competitors, namely Samsung, and is expected to lead
the market in 2015 with a broader scale market entry.
 TABLE OF CONTENTS
Section 1: Profile and Expectations of the Group Members .......................................................... 1

Section 1.1: Group Profile ......................................................... Error! Bookmark not defined.

Section 1.2: Group Member Expectations ................................ Error! Bookmark not defined.
Section 2: Introduction of Group project ....................................................................................... 3

Section 2.1: Company, Offering, & Target Market .................................................................. 3

Section 2.2: NAICS Code & B2B Characteristics ....................................................................... 3

Section 2.3: Mission and Long-term Goals............................................................................... 4

Section 2.4: Prodcuts Contriution to Corporate Mission & Goals .......................................... 5

Section 2.5: Macro Environment ............................................................................................. 5

Section 3: Industry analysis............................................................................................................. 7

Section 3.1: PLC Stage .............................................................................................................. 7

Section 3.2: PLC Characteristics ............................................................................................... 8

Section 3.3: Implications of PLC ............................................................................................... 9

Section 4: Competitor (SWOT) Anaylsis ........................................................................................ 10

Section 4.1: Major Competitors ............................................................................................. 10

Section 4.2: Competitors Strengths & Weaknesses .............................................................. 13

Section 4.3: Implications for Opportunities & Threats .......................................................... 15

Section 5: Customer Analysis ........................................................................................................ 17

Section 5.1: Customer Demographics & Behavorial Characteristics ..................................... 17

Section 5.2: Market Segments ............................................................................................... 19

Section 5.3: Market Potential & Sales Goals .......................................................................... 23

Section 6: Marketing Strategy ...................................................................................................... 25

Section 6.1: Branding, Positioning, and Entry Strategy ......................................................... 25

6.1.1: Branding .................................................................................................................. 25

6.1.2: Positioning .............................................................................................................. 26

 6.1.3: Market Entry ........................................................................................................... 28

Section 6.2: Product and Service Strategy ............................................................................. 32

6.2.1: Product Strategy and Decisions .............................................................................. 32

6.2.2: Service Strategy and Decisions ............................................................................... 34

6.2.3 Unique Service Features .......................................................................................... 36

Section 6.3: Channel Strategy ................................................................................................ 37

6.3.1: Channel Objectives & Constraints .......................................................................... 37

6.3.2: Tasks Expected by Channel Participants ................................................................. 41

6.3.3: Channel Alternatives ............................................................................................... 43

6.3.4: Apple Supply Chain Diagram................................................................................... 44

6.3.5: Importance of Supply Chain Management ............................................................. 45

6.3.6: Managing Supply Chain to Enhance Competitive Advantage ................................ 45

Section 6.4: Pricing Strategy................................................................................................... 46

6.4.1: Pricing Objectives.................................................................................................... 46

6.4.2: Upper and Lower Bounds of Prices ........................................................................ 48

6.4.3: Price Sensitivity of Demand .................................................................................... 49

6.4.4: Cost Dynamics ......................................................................................................... 49

6.4.5: Possible Competitive Response .............................................................................. 50

6.4.6: Entry Pricing Strategy & Implications Skimming vs. Penetration ........................ 51

Section 6.5: Communications Strategy .................................................................................. 52

6.5.1: Objectives, Budget, and Media Mix for Advertising ............................................... 52

6.5.2: Role of Mail, Email, and Website for Promotion ................................................... 54

6.5.3: Selection of Trade Shows ........................................................................................ 54

6.5.4: Sizing, Recruitment, Training, Assignment and Evaluation of Sales Force ............. 55
 6.5.5: Implications of Communication Strategy ............................................................... 56
Section 7: Contingency Plan & Concluding Remarks .................................................................... 58

Section 7.1: Potential Contingencies - Sources & Resolutions .............................................. 58

Section 7.2: Key Lessons Learned .......................................................................................... 59

Section 7.3: Limitations of Marketing Plan ............................................................................ 59

Section 7.4: Concluding Remarks ........................................................................................... 60

SECTION 1: PROFILE AND EXPECTATIONS OF THE GROUP MEMBERS

The group members consist of the following students: Michael Abreu, Khalid Abuhassan,
Alexander Aja, Richard Anderson, Mark Arrigo, and Adrienne Baker.

MA is working toward his MBA with a concentration in Accounting. He received his BS from
Merrimack College in 1997. He is currently the Director of Credit at a wholesale lumber company.
He has worked at Rex Lumber Company for 24 and decided to move out of his current job and
move into a senior accounting management position and realized that the market requires MBA
and/or CPA. He is currently studying for the CPA exam.

KA went to Liberty University in Lynchburg, VA and earned a degree in Business Administration.

He decided to join the MBA program at UMASS in 2013 and this is his last semester. Khalid has
had many positions in the past including Logistics Manager, Procurement Manager, Supply Chain
Assistant and finally business owner.

AA has had a long career at AT&T in product development, marketing and operations. He has
spent his entire 24+ years with AT&T in the B2B sector creating products, services and offers to
service this part of the market. He has been involved with creating marketing plans, business
cases and working with R&D to develop IP-based communications services for enterprises. He
also recently started his own business consulting practice which he is slowly transitioning into.
He holds a BS in Business Administration from Columbia Southern University, a Masters
Certification in Project Management from The George Washington University and a business
consultant accreditation through AASBC.

RA graduated with a BA in Accounting from Assumption College in 2011. He has worked in

accounting since graduation working on month end close processes, reconciliations, and process
improvements. With his accounting background, he will find an area where my finance skills may
come in handy in order to market the product in the best way possible.

MA grew up in Duxbury Massachusetts and went to FL for an undergrad in entrepreneurship and

now resides in Buffalo NY. His past work experience has only been running a small business doing
handyman work for about 10 years. He then moved into the life insurance field for a year and
currently works at Sampla Belting - a conveyor belting manufacturing where he has been for over
two years. He works as a salesman helping people meet their needs in major industries around
the world.

AB obtained her undergraduate degree at Fairfield University located in Fairfield, CT. She studied
Finance and Accounting at the university. She has worked in the banking industry for about 8
years; beginning her career on the retail side of banking and now works in commercial banking.
She currently works as a commercial credit analyst for a private bank in Boston, MA and is
responsible for underwriting and preparing timely and insightful credit requests for a diverse,
medium to high complexity, and sophisticated portfolio of commercial & industrial, commercial

1
real estate, and private banking / professional services commercial loan customers. She is
currently working towards completing her MBA at UMass Lowell with a concentration in
Accounting.
MA is expecting to learn how to fully develop and implement a marketing plan for his
woodworking company. His company has many products and a series of products in the design
stage that are ready for introduction to the market. Although the company has products already
available, it is struggling to increase sales.

KA wants to learn more about analyzing the market and creating a strong marketing plan. He
feels that learning the right analyzing skills will help him become a better business owner and will
also help him handle the required changes that his business might need.

AA is looking forward to learning about new strategic approaches for identifying marketing
opportunities. He is interested in understanding alternate approaches beyond what is typically
expected and accepted in a large corporation. He would also like to explore new research
methods that may be useful in his line of work.

RA expects to learn about how businesses communicate and interact with customers in order to
increase sales. He is excited to learn about this subject because he has always been interested
in marketing. He originally had trouble grasping the tenets of marketing as a student but has
recently starting seeing the bigger picture of marketing.

MAs expectations are to learn how to fluently come up with marketing strategies and ideas
without referencing a textbook or webpage. This will enable him to be fluent in core marketing
principles and have a full understanding on how to properly convey his message to
customers. He feels this course will be beneficial to create a marketing plan that will reach the
customer in a more efficient way on a more personal level. This course will also help him with
working effectively in groups collaborating information between classmates and compiling
information to come up with a comprehensive report/strategy.

ABfeels that each member of the group will have additional personal learning outlooks, the
groups overall learning expectations is to learn and apply the fundamentals of producing a
comprehensive marketing plan for a business. Additionally, the group expects to learn and
expand each members knowledge about Apple Inc., the Apple Watch, and the emerging market
of wearable technology in relation to B2B marketing.

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SECTION 2: INTRODUCTION OF GROUP PROJECT

SECTION 2.1: COMPANY, OFFERING, & TARGET MARKET

The subject company is Apple Inc. (Apple) and the subject product is the Apple Watch. Apple
designs, develops and sells consumer electronics, computer software, online services and
personal computers. It is best known for its Mac line of computers, the iPod media player, iPhone
smartphone and iPad tablet computers.

Apple is a company that has always demonstrated a unique and successful marketing strategy in
relation to its products and services. As described by the company, the Apple Watch will be
Apples most personal device yet.

Target Market: Remaining consistent with past products, we intend to advertise the product to
people of all ages. This will be ensured by varying mediums of advertising and the content within
the advertisements. For example we endeavor to appeal to the younger audiences through the
displaying of games available on the Apple Watch through TV advertising. Whereas for older
audiences 50+ we shall advertise to their age group through advertisements in the paper or via
radio describing the simplicity, functionality, and compact nature of the Apple Watch. Similarly
for middle aged audiences, the functionality, compact nature and the simplicity of the Apple
Watch will be advertised, however, through a different medium Social Networking Sites, Such
as Facebook, Twitter, and YouTube.1

SECTION 2.2: NAICS CODE & B2B CHARACTERISTICS

The NAICS code for this project is 334220 (Radio and Television Broadcasting and Wireless
Communications Equipment Manufacturing) and is classified as a designer, manufacturer and a
marketer of communication and media devices, personal computers, and portable digital music
players.2

Apple designs, manufactures, and markets personal computers, mobile communication devices,
media devices personal computers, and portable digital music players, and sells various related
software, services, peripherals and networking solutions.

Apple uses B2B marketing to sell its products through mobile communication service providers
such as AT&T, T-Mobile and Verizon Wireless.

As this project will focus on Apples upcoming product release of the Apple Watch, this code
remains an appropriate fit to the wireless communications equipment manufacturing industry.

1 http://appleinccasestudy.weebly.com/apples-target-market.html
2
http://www.census.gov/cgi-bin/sssd/naics/naicsrch

3
 NAICS Code: 334220 - Key Industry Statistics: United States3

Key Industry Statistics: United States

12-Jul
1997 2002 2007 2012
% Chg
Num ber of es tablis hm ents NA NA 939 836 -11.00%

Value of s hipm ents ($

NA NA 40,830 27,412 -32.90%
Millions )
Annual payroll ($ Millions ) NA NA 6,570 6,029 -8.20%

Total em ploym ent NA NA 95,131 67,868 -28.70%

Value of s hipm ents per
NA NA 43,483 32,790 -24.60%
es tablis hm ent ($1,000)
Value of s hipm ents per
NA NA 429 404 -5.90%
em ployee ($1,000)
Value of s hipm ents per $ of
NA NA 6.2 4.5 -26.80%
payroll
Payroll per em ployee ($) NA NA 69,067 88,835 28.60%
Em ployees per
NA NA 101.3 81.2 -19.90%
es tablis hm ent
Value of s hipm ents per
NA NA 130 91 -30.10%
capita ($)
Population per
NA NA 320,863 375,495 17.00%
es tablis hm ent
Note: Data for prior years are not shown when the information is not c omparable due to NAICS c hanges.
This 2012 NAICS c ode is c omparable to the 2007 NAICS c ode. This 2007 NAICS c ode is c omprised of part
of 2002 NAICS c ode 334220 (Broadc ast and wireless c ommunic ations equip.) and is not c omparable to
any 1997 NAICS c ode.

SECTION 2.3: MISSION AND LONG-TERM GOALS

Apple strives to create the best possible computer products available. They desire to be on the
cutting edge of technology and mobile devices, through its innovative hardware, software, and
internet offerings. Apple has been a consistent trend setter for the last decade in this arena and
is committed to maintaining this dominance by creating new innovative products that attract
customers. The Apple Watch is a new wearable device that Apple hopes will be a step towards
further development in the wearable technology market. Apple intends to further growth by
opening into this market. Apple also has a pledge to their customers in order to reduce their
impact on climate change and use green materials whenever possible.

In its 2013 Annual Report, Apple states its business strategy as committed to bringing the best
user experience to its customers through its innovative hardware, software and services. The
Companys business strategy leverages its unique ability to design and develop its own operating
systems, hardware, application software, and services to provide its customers new products and
solutions with superior ease-of-use, seamless integration, and innovative design. The Company

3Source: 1997, 2002, 2007, and 2012 Economic Census and Population Estimates;
http://thedataweb.rm.census.gov/TheDataWeb_HotReport2/econsnapshot/2012/snapshot.hrml?NAICS=334220

4
believes continual investment in research and development, marketing and advertising is critical
to the development and sale of innovative products and technologies. As part of its strategy, the
Company continues to expand its platform for the discovery and delivery of third-party digital
content and applications through the iTunes Store. As part of the iTunes Store, the Companys
App Store and iBooks Store allow customers to discover and download applications and books
through either a Mac or Windows-based computer or through iOS devices, namely iPhone, iPad
and iPod touch. The Companys Mac App Store allows customers to easily discover, download
and install Mac applications. The Company also supports a community for the development of
third-party software and hardware products and digital content that complement the Companys
offerings. The Company believes a high-quality buying experience with knowledgeable
salespersons who can convey the value of the Companys products and services greatly enhances
its ability to attract and retain customers. Therefore, the Companys strategy also includes
enhancing and expanding its own retail and online stores and its third-party distribution network
to effectively reach more customers and provide them with a high-quality sales and post-sales
support experience.

SECTION 2.4: PRODCUTS CONTRIUTION TO CORPORATE MISSION & GOALS

Apple reports that one of the companys goals is to make powerful technology more accessible,
more relevant, and ultimately more personal and as described by the company, the Apple Watch
will represent a new chapter in the relationship people have with technology.4

Since the Apple Watch is the very first product Apple has made that is designed to be worn, Apple
considers the product to be the companys most personal product ever made.

The Apple Watch will be a product that encompasses all aspects of the companys goal by
incorporating powerful technologies into something small enough to wear on the wrist (making
it more accessible), incorporating features that include health and fitness monitoring and apps
and services like Apple Pay that will make the technology more relevant and functional for
everyday use, and lastly by offering such a wide range of style preferences with three unique
collections in addition to a variety of faces from tradition designs to play characters. Apple
reports that most of the faces will be extensively customizable and one Apple Watch can
Apple Watch can have literally millions of different appearances.5

It is obvious that Apple strives to create the best possible products and continuously strives to
bring the best experience to its customers. The Apple Watch is an innovative product and is
expected to continue to prove that Apple is a trend setter.

SECTION 2.5: MACRO ENVIRONMENT

In relation to the Apple Watch, technological advances would be the primary macro environment
to create business opportunity and threats for Apple Inc. Apple states on its website that its goal

4 Apple Watch Overview - https://www.apple.com/watch/overview/

5 Apple Watch Design - https://www.apple.com/watch/design/

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has always been to make powerful technology more accessible, more relevant, and ultimately
more personal. Apple Watch represents a new chapter in the relationship people have with
technology.6

There are many technologies that will support the Apple Watch; however some of the key
technologies are described below:7

- Digital Crown: Allows users to zoom and scroll quickly and precisely, without obstructing
view. It can also pushed like a button to return to the Home screen.

- Retina display: Energy efficient. Provides clear and high pixel density to make numbers
and text easy to read at a glance. Provides high quality sharpness and contrast on images and
graphics.

- Force Touch: Uses tiny electrodes to allow the Retina display to distinguish between a
light tap and a deep press.

- Taptic Engine: A linear actuator inside Apple Watch that produces haptic feedback that
allows users to feel a tactile sensation.

- S1 SiP (System in Package): Apple custom-designed its own chip to include inside the
watch that essentially miniaturizes an entire computer architecture onto a single chip.

This macro environment could allow Apple to stand out among competitors that have already
entered or plan to enter the emerging wearable technology industry. There is really no telling
how big this emerging market of wearable technology will get and how much it can expand other
areas of Apples business. An article from Salesforces blog discusses the benefits and
opportunities in this industry and states that recent trends indicate that giants in the wearable
tech industry are now designing their products with business applications in mind. The recent
wearable tech influx in the business world was launched with the promise of improving
workplace productivity and the overall efficiency of organizations.8

With a lot of companys competing in this sector, the type of technology Apple uses for the Apple
Watch will play an important role in its success against competitors and in its B2B marketing.
Business customers will want to invest in the product that will be most product for their
companies but also most cost efficient in relation to the value being added.

6 Apple Watch - Overview. (2014, September). Retrieved from Apple: https://www.apple.com/watch/overview/

7 Apple Watch - Technology. (2014, September). Retrieved from Apple Inc.: https://www.apple.com/watch/technology/
8 Leung, S. (2014, July 1). How Wearable Technology Can (And Will) Change Your Business. Retrieved from Salesforce Blog:
http://blogs.salesforce.com/company/2014/07/wearable-technology-business.html

6
Although this will be the first product Apple has designed to be worn, it most likely will be the
first of many. Additionally, this new technology is allowing Apple to enter into another industry
other than mobile devices.

The watch industry will definitely be impacted by this new technology and product. An article
from the Wall Street Journal reports that the Apple Watch has been forecast to sell up to 30
million units in its first year of availability and is promised to be the biggest disturbance the Swiss
watchmaker industry has faced since competition from cheaper Japanese quartz watches in the
1970s.9 This could potentially lead to business opportunities with watchmaking companies to
collaborate with Apple on unique and innovated watch designs as technology advances.

Apples late entry in market as we will explore later, has allowed the company to learn from
competitors mistakes and develop the Apple Watch with key technologies that other competing
products on the market lack. However, now that the specifications are available to the public, it
is likely that competitors will now step up to improve its products to more closely compete with
Apple, which may provide additional challenges for Apple.

SECTION 3: INDUSTRY ANALYSIS

SECTION 3.1: PLC STAGE

Although Apple as a company is involved in the wireless communications equipment manufactu

ring industry as a whole, the Apple Watch breaks into a new and emerging industry of wearable
technology/devices. Due to the unique and emerging nature of this industry it would be most a
ppropriate to discuss the product life cycle in relation to the wearable technology industry.

As such, the wearable technology market is in the early/introduction stage of the product life
cycle (PLC). This market has been in this stage for many years. The first wearable technology
was the calculator watch, but never found favor with consumers. The miniaturization of electrics
over the last few years has allowed wearable technology industry to grow.

Although there have been a number of entrants into the market, adoption has been slow. The
wearable computing industry is in its infancy and according to a recent PRNewsire report
Wearable Computing: Technologies, Applications and Global Markets, 2014, have been a fringe
market of devices that have been impractical, bulky and unaesthetic for consumer
applications.10 However, the report also highlights that wearable computing as an industry is
poised to go mainstream and references a recent ReportLinker report which forecasts the global
wearable computing market to grow at a compound annual growth rate of 43.4% generating

9
Revill, J. (2014). What Do The World's Top Watchmakers Think of Apple Watch? Wall Street Journal. http://online.wsj.com/articles/what-do-
the-worlds-top-watchmakers-think-of-apple-watch-1410449406
10
Wearable Computing: Technologies, Applications and Global Markets. PR Newswire US [serial online]. May 7, 2014: Available from: Regional
Business News, Ipswich, MA.

7
approximately $30 billion in revenue by 2018. This growth will be driven by both consumer and
non-consumer markets such as healthcare, defense and aerospace, enterprise and industrial and
logistics industries.

Low cost sensors, wireless connectivity and active materials have made wearable technology an
affordable product for the mainstream market. This market is poised to be the next big
opportunity. The market is expected to grow to the 8 billion plus by 2018. The primary driver for
the explosive growth is the fact that smartphones is in the mature stage of the product life cycle11
the market has reached saturation and although it is not yet in decline, new revenue
opportunities are becoming scarce. A recent Gigacom Pro report indicates that as wearable
computing becomes more mainstream, smartphones will become more of a hub for information
for the various applications.12 The report further predicts that Apple will be the first to create an
early ecosystem to support wearable computing technology.

SECTION 3.2: PLC CHARACTERISTICS

The PLC characteristics for the introduction phase include the following:

- High Market Growth Rate

- High Technical Change in Product Design
- Moderate Segments
- High Competition
- Small Profitability

The Apple Watch is in the introduction stage of entering the wearable technology industry. As
previously noted, the Apple Watch will be available for sale in early 2015. There are some typical
PLC-related characteristics related to the introductory stage of the Apple Watch release. These
characteristics include: the expensive nature of the research and developing that goes into the
product, the initial lag in profitably due to these start-up costs, there are currently fewer
entrants into the market now than there potentially will be in the once the industry has reached
its growth and mature stages, and there will be higher technical changes in the product design in
this stage as Apple adapts to industrys needs and expectations.

However, Apple is unique in the sense that it has taken much considerable time to develop the
Apple Watch that the potential for its market growth rate will be high and profitability will
probably be higher than the small profitability that is considered the norm in the introductory
stages. This is evidence by the fact analysts predictions of Apple selling 30 million Apple Watch
units in 2015 as previously noted.

11
2014 Mobile Trends Report. 2014. Brightstar Intelligence. - http://www.brightstar.com/assets/uploads/docs/2014_Mobile_Trends.pdf
12
The Wearable Computing Market: A Global Analysis. (2012). Gigacom Pro - http://go.gigaom.com/rs/gigaom/images/wearable-computing-
the-next-big-thing-in-tech.pdf

8
Also, since Apple has taken its time and didnt enter the market right away, they have been able
to create an entire product line of Apple Watches with multiple types to choose from. Unlike
the smartwatches from companies like Motorola, LG, and Samsung, the Apple Watch is available
in different sizes and with different strap materials. It even comes with the ability to gold-plate
the exterior with pure 18 carat gold. Apple offers three collections of the Apple Watch to suit
every need.13

SECTION 3.3: IMPLICATIONS OF PLC

The marketing opportunity of the Apple Watch will change throughout three stages of the
Product Life Cycle: introduction, growth, and maturity.

Introduction: In the introduction stage of new technology, there are few competitors and the
consumer is usually high-income. The technology being introduced is non-standard and the
degree of innovation is the critical success factor in this stage. For the Apple Watch, Apple must
first overcome the fact that they are not the first to introduce such a product to the market.
Apple will need to market the product as a sleek, elegant alternative to the competitors products
(this was one major selling point for the iPhone). The target market should be the same Apple
enthusiasts who line up a day in advance for the release of the new iPhone, as they can easily
justify paying $350 for the product. Even if the first release isnt perfect, these Apple enthusiasts
will see the Apple Watch as the next big thing.

As has been previously stated, Apple has spent a considerable amount of money in the research
and development of their new product the Apple Watch. A company like Apple is able to make
these investments this type of development due to their superior balance sheet. Apple is able to
outspend many of their competitors. This type of financial flexibility allows Apple to take chances
on these new products and add more impressive technology compared to the competition.
Generally an issue with new products is that there is a low market for customers until demand
rises, however with Apple products, this is rarely the case. There is normally a significant level of
hype with new Apple product, as can be seen with the extremely long lines when a new iPad of
iPhone is released. I do not see Apple having any issue with the initial introduction of their
product into the market.

Growth: During the growth stage of the PLC Apple must increase its market share and market
penetration. Apples marketing strategy must be built to overcome the perception that wearable
technology isnt important or even desirable. During this stage it is also not enough for the Apple
Watch to just be the sleekest wearable. Apple must market the unique technological features of
the Apple Watch. This will be necessary to gain customers over the cheaper versions offered by
competitors. During this stage Apple will also probably employ a marketing tactic they have used
for almost all of their products; they rarely even acknowledge the competitors. In other words,

13
The Fuse Joplin. (2014, September 20). How Does Apple Watch Stake Up against the Competition? Retrieved from The Fuse Joplin:
http://thefusejoplin.com/2014/09/apple-watch-stake-competition/

9
the competitors do not exist because the Apple Watch is a completely different product.

After the initial release and the reaction by customers and other reviewing entities, the sales for
the Apple Watch will hopefully maintain growth over time. With few direct competitors in the
wearable technology market, Apple should be able to capture a significant section of the market.
Ideally, there will not be any issues with the product after the release but Apple will respond in
kind to fix any issues with the product or operating system. Apple has done a good job marketing
their new products as they introduce improvements to their systems.

Maturity: When the Apple Watch reaches this phase the market will already be knowledgeable
of its features and capabilities. There will be less effort in differentiating the product from that
of the competitors and more in improving the existing product. At this stage Apple will likely be
releasing new versions of the Apple Watch, much like it already does with the iPhone. Marketing
to new customers will mean not convincing customers that the Apple Watch is something they
want, but that it is something they need. This will require Apple to market the most utilitarian
aspects of the Apple Watch. There is also a chance that Apple Pay, if it is successful, could be a
large component of the Apple Watch marketing strategy when it gets to this stage.

As previously stated, Apple has significant capital to invest in the Apple Watch and improve the
operating system and other features of the product in order to meet customer demand. Apple
users are generally have a connection with their Apple products and are faithful with new
releases. Apple must maintain their high level of sales over time by consistently improving their
technology and staying ahead of their competitors.

SECTION 4: COMPETITOR (SWOT) ANAYLSIS

SECTION 4.1: MAJOR COMPETITORS

As previously noted, the Apple Watch is not the first smartwatch to be entering the market. As
depicted in the charts below based on research and analysis obtained from the Smartwatch
Group, Samsung was one of the leading companies in the smartwatch industry along with Sony
in 2013. Others on the list include some type of activity tracker/smartwatch devices, however,
Samsung and Sony are most relevant to the Apple Watch.

Top 10 Smartwatch Companies (Market Share) 14

14 Top 10 Smartwatch Companies (Sales) - http://www.smartwatchgroup.com/top-10-smartwatch-companies-sales/

10
 Top 10 Smartwatch Companies (Sales)15
Units Market Market
Company Headquarters Name of smartwatch shipped volume share
('000) (USD mill) (%)

Total 40 companies 3150 711 100

Samsung South Korea Galaxy Gear 800 240 33.8

Nike US Fuelband (incl. SE) 400 60 8.4

Garmin Switzerland Forerunner 220/620, D2, S4 200 60 8.4

Fitbit US Fitbit Force 450 59 8.2

Sony Japan SmartWatch 250 50 7.0

Pebble US Pebble Watch 300 45 6.3

Shanda/Geak China Geak Watch 100 30 4.2

Mio Alpha Canada Heart Rate Sport Watch 100 20 2.8

Yingqu Technology China InWatch One 50 13 1.8

Casio Japan G-Shock Bluetooth 50 10 1.4

Other 30 companies 450 125 17.6

The Smartwatch Group anticipates that the number of companies with smartwatch offerings will
grow from 40 to 200 until the end of 2014 based on insight from global research and

15 Top 10 Smartwatch Companies (Sales) - http://www.smartwatchgroup.com/top-10-smartwatch-companies-sales/

11
development activities.16 The reason for growth will be a result of advances in product design
and significantly improved use cases.

Despite the revenues produced by the smartwatch industry being currently mainly hardware-
based, the software aspect will be the primary value of the devices in the future as the
smartwatch advances. The Smartwatch group reports that Google and Apple will significantly
contribute to this trend with their own product offerings. Apps will enable use cases that
significantly outmatch todays activity monitoring and notifications. App developers and
hardware providers form a virtuous circle: the more relevant smartwatch apps there are, the
higher hardware sales, the better and more affordable hardware, which again attracts more app
developers. With 30,000 software developers working on smartwatch apps, the critical mass has
been reached now.17

The first major demonstration of this trend will be when the Apple Watch enters the market.
Considering the aspects discussed above, the following companies in the wearable technology
industry have been identified as major competitors for Apple: Google, Samsung, and Sony.
Google has created many products and services that could be considered direct competitors to
Apples devices and iOS platform.18 Google has been an innovator in the market with its early
introduction of.

A recent IDC ConsumerScape 360 survey of more than 50,000 consumers in 26 countries,
Samsung, which has already unveiled multiple wearable computing devices, was identified as the
most trusted brand for wearables, ahead of Apple, Sony, and Google.19 Additionally, Samsung
wants to spend more on wearable computing devices and operating systems. According Reuters
Samsung as with other device makers are seeing profit margins decline in the saturated
smartphone market. Samsung is looking for the next big thing and wearables will be crucial
the companys hopes of riding a new wave of extraordinary profit growth. Samsung has already
applied for a trademark for Samsung Gear in the U.S. for its range of wearable devices.20

Considering the market pressures and declines profit margins of the smartphone market,
Samsung will take advantage of the growing value of their brand and forge into the wearable
computing market. Its current status as a formidable competitor to Apple and huge market share
will prove to be a competitive threat to the Apple Watch and other wearable devices Apple
launches in the future.

16 Top 10 Smartwatch Companies (Sales) - http://www.smartwatchgroup.com/top-10-smartwatch-companies-sales/

17 Top 10 Smartwatch Companies (Sales) - http://www.smartwatchgroup.com/top-10-smartwatch-companies-sales/
18 Who are Apples 3 Biggest Competitors? - http://wallstcheatsheet.com/stocks/3-of-apples-competitors.html/?a=viewall
19 IDC (2014). Worldwide Wearable Computing Market Gains Momentum with Shipments Reaching 19.2 Million in 2014 and Climbing to Nearly
112 Million in 2018, Says IDC. Retrieved from http://www.idc.com/getdoc.jsp?containerId=prUS24794914
20 Samsung Electronics second quarter misses forecast as smartphone worries deepen. (2013, June 5). Reuters. Retrieved September 18, 2014,
http://uk.reuters.com/article/2013/07/05/uk-samsung-guidance-idUKBRE9630T720130705

12
Sony has been one of the most active companies in the smartwatch space so far according to the
Smartwatch Group. It launched a product called LiveView in 2008, a product called SmartWatch
1 in 2012, the SmartWatch 2 (SW2) in 2013, and the Core (to be inserted into a SmartBand) in
the summer of 2014. All these products are companion devices connecting to Android
smartphones via bluetooth.21 Sony is currently working on its next watch, the SmartWatch 3
(SW3), and will use Android Wear as its operating system.

SECTION 4.2: COMPETITORS STRENGTHS & WEAKNESSES

The table below highlights some of the relevant data of the major competitors identified.
Information regarding the product/offerings, strengths, and weakness are largely based on the
studies from the Smartwatch Group.

Competitors Product/Offering Strengths Weaknesses

Google22 Unlike Apple, Google is
currently focusing on
generating its revenues
on the service side
through Android Wear
rather than focusing on
hardware sales.
Android Wear is a way for Google No actual
to get to know its smartwatch
customers better, which is the hardware being sold
basis for Googles main revenue allow Apple to
driver selling advertisements. capitalize on this.
Googles strategy to
replicate Androids success to
smartwatches is highly promising.
The fact that Android Wear is
closely linked to Android which
is run on more than 80% of the
worlds smartphones and 60% of
tablets makes it difficult for
others to compete.

Various companies have

launched Android Wear based
smartwatches (Samsung, LG,
Motorola, etc.

Samsung23 The Galaxy Gear is a Strong market presence. In 2014, Despite being the
companion device which Samsung launched five biggest player in
communicates additional smartwatches. 2013, sell-through

21
Sony - Smartwatch Group - http://www.smartwatchgroup.com/sony/
22
Google, Smartwatch Group. - http://www.smartwatchgroup.com/google/
23
Samsung, Smartwatch Group. - http://www.smartwatchgroup.com/samsung/

13
 via Bluetooth to from Samsungs
smartphones. The watch Samsungs smartwatches distributors to end
has various integrated are targeted at the broad customers was slow,
sensors, a camera, and consumer market. The watches and many of the first
microphone/speaker to are mostly sold via Samsungs generation watches
do a phone conversation.powerful distribution network where given to end
around the world telecom customers for free if
Depending on the model, operators. they bought a
the watches cost Samsung smartphone
between $200 - $300 or tablet.
USD.

Sony24 While the SW2 is aimed
at the general consumer
market, the Core is
targeted at persons
interested in monitoring
their activity levels and
improving lifestyle.
The SW2 is sold via
online channels at a price
of around $200 USD. The
Core is sold at a price of
around $130 and the
SmartBand Talk is priced
around $210 USD.
Sony was a leading player in Despite being highly
2013s smartwatch industry with active in the
250,000 smartwatches shipped hardware market,
Sony has not been
Linking activation with gaming is able to come up with
an area with huge potential for convincing use cases
smartwatches, and one with real so far providing
product benefits. ample opportunity
for Apples market
entry.

Google Strengths: Google Glass product is currently in beta testing. Gigacom Pro predicts that
Google will have a platform advantage over other device manufactures and will integrate their
wearable technology with their content, storage and internet search ecosystem.25 In addition to
Google Glass, Google released in March 2014 a cross-platform Android OS for wearables called
Android Wear. 26 This platform will bring Google services such as maps, Google Now and
hangouts to smartwatches. The Android operating system is the ubiquitous platform for much
of the global markets smartphones. Google is currently working with device manufacturers such
as ASUS, LG and Samsung to make wearable devices that will run Android Wear. These
manufactures makeup the majority of the devices currently in the marketplace. Considering this,
it is clear that Google will certainly be a formidable competitor in the wearable computing market

24
Sony, Smartwatch Group. - http://www.smartwatchgroup.com/sony/
25
The Wearable Computing Market: A Global Analysis. 2012. Retrieved from http://research.gigaom.com/report/the-wearable-computing-
market-a-global-analysis/
26
The Street. (2014). Google (GOOG) Announces Android Wear Wearable Platform. Retrieved from
http://www.thestreet.com/story/12533894/1/google-goog-announces-android-wear-wearable-platform.html

14
Samsung Galaxy Gear Strengths: The major strengths of Samsung are its comprehensive product
portfolio and geographical reach, but the company has also gained in its financial stability.

Samsung has been a consistent competitor of Apple in many different product lines. Samsung
had been providing Apple with the screens for their iPhones and also computer chips for their
smartphone products. This was great for Samsung as they were still profiting off every one of
their direct competitors sales. Apple no longer uses Samsung as the vendor for their screens
and Apple has also found a new company to purchase computer chips from. This had been a
strength for Samsung over the past several years. Samsung sales have risen against Apple
products over the past several years however there is still a gap between the two.
The Samsung Gear S needs to be paired with the Samsung Galaxy smartphone, much like the
Apple Watch will need to be paired with the iPhone. However, the Gear does have a standalone
music player. The Apple Watch, unlike the Gear, will be able to support third-party apps such as
Facebook. Both watches feature Bluetooth but the Gear S has the additional feature of Wi-Fi. The
two watches both include a heart monitor.27 Unlike the Gear, the Apple Watch will have a built-
in camera. The Gear is only available in black and white whereas the Apple Watch will have
several other color options. The Apple Watch will start at $349 whereas the Gear is only $299.28

These two products are similar in features. The main difference is the lack of customization on
the Galaxy Gear compared to the Apple Watch. The Apple Watch provides users to choose
several different sizes and color combinations.

Sony SmartWatch Strengths: Sonys strengths are its mature value chain, good brand name, and
its intellectual properties holdings.

The Sony Smartwatch 3 is compatible with any phone using the Android operating system
whereas the Apple Watch is compatible with iOS and the iPhone. However, the SmartWatch does
have a few standalone features. Wearers will be able to use the built-in GPS for navigation and it
has a standalone music player. Both watches feature a removable band and a square face with
rounded corners. Both watches also have an accelerometer. Unlike the Apple Watch, the
SmartWatch allows charging through a micro USM port and is the first wearable to do so.29

SECTION 4.3: IMPLICATIONS FOR OPPORTUNITIES & THREATS

Opportunities: Wearable technology can be work for extended periods of time and enhances the
users experience. Wireless connectivity and independent processing capabilities are a must for

27 Cerdena, T. (2014, September 21). Samsung Galaxy Gear 2 vs. Apple Watch: Unique features from the latest smartwatches.
http://www.christiantoday.com/article/samsung.galaxy.gear.2.vs.apple.watch.unique.options.features.latest.smartwatches/40756.htm
28 Ralph, N., & Mitroff, S. (2014, September 10). Apple Watch vs. Samsung Gear S, Motorola Moto 360, and Pebble Steel - CNET. -
http://www.cnet.com/news/apple-watch-vs-samsung-gear-s-motorola-moto-360-pebble-steel/
29
Devine, R. (2014, September 3). Hands-on with the Sony Smartwatch 3 with Android Wear. -http://www.androidcentral.com/hands-sony-
smartwatch-3-android-wear

15
the market. There are several applications for this type of product, fitness and wellness,
healthcare and medical, industrial and military and infotainment.

The customer base is endless, as the electronic product demands are high. As this market is in
the development and introduction stages, the opportunity to take market share is great.
Producing products that the market needs and wants will gain favor for Apple. Driving factors for
these type of products is health, sports, fitness and gaming. There is an open field for products
to target these areas and the potential for growth and expansion is open.

The 2014 PWC report on the future of wearables suggest that as wearable technology becomes
cheaper and more sophisticated, and data quality improves, these devices and their associated
apps will become a part of consumers lives and the health ecosystem.30

Threats: One of the biggest threats Apple faces related to entering the wearable devices market
is the ongoing competition from major competitors. Companies like Samsung and Motorola have
Apple on its radar and are continuously working to beat Apple out. Entering this industry also
opens the doors for companies like Google Inc. to directly compete against Apple. These
companies have had the experience of competing with Apple through the smartphone market
and have done pretty well.

Another threat will be technology as companies fight to come out with the newest and most
innovative ideas before competitors. Apple has mitigated this threat slightly by taking its time to
enter the market and delivering a complete collection of the Apple Watch product.
Privacy in the technology world will also become a growing factor as items like smartphones and
wearable devices advance and continue to become more personal (i.e. health information).

Additionally, Apple has to maintain its reputation and reliability throughout this new product
implementation in order to continue to be known as a successful market leader and innovator.
Based on the PLC analysis, the Apple Watch has the potential to make a huge impact on the
market and there is plenty of opportunity to achieve great success if projections are correct that
sales of wearables could reach 130 million units in 2018, that opportunity is a big one.31

According to PWCs recently released research on the future of the wearable market, Apple
Google, and Microsoft topped the list of tech brands that consumers are excited to experience a
wearable device from.

30
PWC - Consumer Intelligence Series The Wearable Future - http://www.pwc.com/cis
31
PWC - Consumer Intelligence Series The Wearable Future - http://www.pwc.com/cis

16
SECTION 5: CUSTOMER ANALYSIS

SECTION 5.1: CUSTOMER DEMOGRAPHICS & BEHAVORIAL CHARACTERISTICS

We have to view demographic and behavioral characteristics of the current and potential
customers of our group market in two separate dimensions: 1) End-user/consumer buying
behavior and (primary) 2) B2B buying behavior (secondary).

Apple markets their products and services directly to the consumer. From an end-user macro
segmentation perspective, wearable computing devices in general will be comprised of early
adopters in the health and wellness areas. Much of the adoption that has taken place has been
in the application of health and wellness devices such as Fitbit pedometers, Adidas miCoach
athletic performance monitors and Under Armours E39 a shirt that can compute heart rate,
breathing rate, skin surface temperature and acceleration have catered to the small but zealous
global fitness buffs32. Although the market of early adopters is relatively small, the technology
will expand into other areas where it will be an enabler to applications that will benefit from its
always on, seamless and transparent characteristics. For example the healthcare macro
segment will be one in which there will be a number of applications that will improve the end-
user experience. Applications such as wearable skin patches that continually monitor glucose
levels, kidney functions and metabolite levels will expand the addressable market exponentially.

From a micro segmentation perspective, there are clear lines drawn between applications of
wearable computing by age groups. The fitness and gaming applications are geared toward
young adults while healthcare applications are geared toward the senior population.
Apple also partners with network carriers as a distribution channel. From a B2B perspective, the
behavioral characteristics are much different. This project will focus on the device-maker and
carrier relationship and its macro/micro level bases.

Carriers have a vested interest in wearable computing devices. Wearable computing will typically
require always available transmission of data a need that can only be filled by network
carriers with extended (even global) reach. Wearable computing represents a new data stream
for carriers as these new applications will drive incremental data usage on their networks.
Additionally, wearable computing is viewed as a way not only to drive topline revenue, but also
as a way to reduce churn of their customer base by offering a suite of devices as part of their data
plan pricing33. This is especially true for carriers that have exclusive distribution rights with the
device manufacture. Clearly, network carriers will leverage the wearable computing technology
as a competitive lever in the marketplace.

32
Wearable Computing: The Next Big Thing in Tech. (2012). Gigaom Pro. - http://go.gigaom.com/rs/gigaom/images/wearable-computing-the-
next-big-thing-in-tech.pdf
33 My 2014 predictions: Another great year for the wearable computing space. GizWorld. - http://www.gizworld.com/2013/12/31/my-2014-
predictions-another-great-year-for-the-wearable-computing-space/

17
From a demographic perspective, dominant carriers seek to expand their device portfolio and
provide a wide array of choices for the consumer. Purchasing behavior for the consumer focuses
mainly around the functionality of the device and secondarily around the quality of the network.
Therefore it is imperative that carriers enter into supplier arrangements with manufacturers of
devices that are in high demand. Purchasing decisions for network carriers (i.e. partnership and
device subsidies) are typically made at the highest levels within the CIO CFO and CMO
organizations within the company leading the decision. A view of the wearables demographics is
provided in figure below:

Demographic and Purchasing Timeframe of Wearable Market34

Additionally, each network carrier has different network characteristics and certification
processes that device-makers must adhere to. For example, does the network provider require
LTE and with 3G backup? HSPA or CDMA? What radio frequencies are required for each network
provider? These are all considerations that device-makers must consider and the diversity of
which will add to the costs of producing each device35. Hence, Apple could segment their B2B
target market into categories that align to each carriers technical requirements with perhaps
features that are supported by each.

34
The Whos and Whys of Wearable Tech. eMarketer. 2012. Retrieved from http://www.emarketer.com/Article/Whos-Whys-of-Wearable-
Tech/1010486
35
How phones are 'optimized,' and why you should care (Smartphones Unlocked). (2012). CNET. Retrieved from
http://www.cnet.com/news/how-phones-are-optimized-and-why-you-should-care-smartphones-unlocked/

18
Even with Apples large and loyal customer base, the Apple watch could be a difficult sell as a
new product. The wearable technology market is in its infancy and has room to grow. The main
challenge with wearable technology in general is that the products generally provide
convenience rather than completely new and exciting features that are not offered already with
cellular devices and tablets. In general, with the introduction of new products, customers line up
in the thousands outside Apple Stores in anticipation.

The reception to the Apple Watch has not been as positive and there is some negative reaction
by Apple users that they have little interest in the new product and do not see the value in the
wearable technology36. An analyst from RBC recently conducted a survey of 6,000 individuals
about if they were intending to purchase the Apple Watch and only 11% of the group stated that
they would. This is a small sample size and was not specifically compiled of heavy mobile users,
who are primarily target with this product, so these results do not show the full picture, however
they do tell a story about the overall segment of customers who arent overly excited about
wearable technology and the Apple Watch in particular.

SECTION 5.2: MARKET SEGMENTS

Apple is very effective in the way they cater to differing segments of the market. They are very
much attuned to the needs of a high school/college student, professional, and everyday users.

The market segment for the Apple Watch is the wearable computing segment which relates to
Cell providers, Government, Health care, and SMBs (small and medium business). This is a
segment that hasnt been fully tapped into by cell providers. Apple ability to market their
attractiveness to many demographics makes them a key player for cellular providers who want
to tap into the wearable computing market which has a potential for high growth. Apple has
taken their time entering the market which has enabled them to create a more user friendly
product with amazing features but also differing design to fit people of all ages and habits. Apple
has partnered up with 42 cell carriers in the US alone this speaks for itself when evaluating the
marketing effectiveness. Apples ability to market their products features attracts such a wide
array of people, that all cell carrier need to offer Apple just to stay competitive. Offering the
Apple Watch will only increase the revenue of cellular providers. The wearables segment is
predicted to be a 30 billion dollar market by 2018 that may create future opportunities other
than cell providers such as health care, home automation, travel, consumer, as well as teaming
up with watchmakers. This would allow Apple to integrate its technology with other businesses
and their technology to create a more convenient user friendly product for the consumer.

36 http://www.iphoneincanada.ca/news/11-percent-customers-want-apple-watch/

19
 SEGMENT BASIC VALUES PREFERRED FEATURES

Require high level of tech and user

Cell Service Providers Wide Variety of demands friendly simplistic features for
others

The Government Features/Support Specific Technology and features

Specific Technology and features

Real time monitoring of
Healthcare Providers that allow compatibility with other
patients
devices.

SMB Functions/Cost Effectiveness Specific, Durability, Battery life

Segmentation, Targeting, and Positioning Analysis

CATEGORIES CONSUMER GROUP AGE CHARACTERISTICS REQUIREMENTS

Price, Appearance,
College students Accepts new things
Photos, Internet,
Entertainment and early career 18-30 easily, Weak
Capabilities, &
workers economic capability
Entertainment

Passion for
electronics and
High configuration,
IT workers and technology, Will
Exploration 20-30 Strong functions &
technology buffs make full use of
applications
functionality of the
device

Data security,
Business Middle upper class,
Business 30-45 Convenience, Social
Professionals Stable income
appearance or status

Targeting
Apples target markets for the Apple Watch are everyday watch wearers, fitness oriented or active
people, and a high end market with their Edition watch. Since they have such a great ability to a
wide variety of consumers they have created themselves a necessity for a cell carrier to provide
Apple products. Large cell carrier like Verizon and AT&T know that revenue will increase with
the release of every Apple product. However the uniqueness of the Apple Watch attracts
business professionals with stable incomes who may not have upgraded to the new IPhone but
will buy the Apple Watch.
20
Positioning
The Apple watch is a high tech commodity that will bring convenience to peoples lives in good
fashion. Being a symbol of status the Apple Watch attracts people who have stable incomes
and can afford the watch and its additional service charges37.

Suggested Target Markets

The two markets that are the most attractive are cell providers and SMBs. Apple already does a
fantastic job in the way they market their product by showing its user friendly features to all
differing demographics. With partnering up with cell providers they also want to be the ones
that you the consumer buy the Apple Watch through. Cell carriers actively market new products
that come into the marketing mix making it a good source of initial exposure.
SMBs are an attractive segment because of the potential for large sales and service
accounts. Indirectly they could create industry standard software that could boost revenues and
profits as well38.

The market segments for the Apple Watch are:

1. Cell phone service providers: Apple will target cell phone providers such as AT&T, T-
Mobile and Verizon Wireless to sell its Apple watch. This will be the largest segment
because it can include the other segments. Cell phone providers can offer the Apple
Watch for free or for a discounted price when the consumer signs a one or two year
contract, this way the demand on this product will increase and the sales will grow rapidly.
2. The government: Apple will offer its new wearable technology to some government
agencies that can benefit from the Apple Watch. Apple will also sell its watch at a special
discounted price for government personnel using the The Apple Store for Government39.
3. Healthcare providers: Apple Watch has the ability to take the vital signs of its users who
can share it with an app called HealthKit and then transmit the data to their doctors
offices. This is a great and convenient way to stay connected with personal doctors. Apple
can target insurance companies who care more than anybody about the health of their
clients40.

Outside of individual consumers, Apples B2B customer market segments are primarily: SMB
(small and medium-sized businesses), education, and enterprise and government markets. 41
However, as far as the Apple Watch is concerned, the primary segment markets should be similar
to and in alignment with the existing segment markets that the the Apple iPhone products are
currently sold in primarily due to the fact that the Apple Watch will be compatible with Apples

37
Source: http://prezi.com/socvdh42tm32/apple-iwatch-marketing-plan/ (Slides 4&5 STP Analysis)
38
iPhone 6 Unveiled at Apple CBS - http://www.cbsnews.com/news/iphone-6-unveiled-at-apple-2014-event/
39
Apple Governmenthttps://www.apple.com/r/store/government/
40
Apple Watch and HealthKit - http://www.newrepublic.com/article/119385/apple-watch-and-healthkit-could-help-spur-mobile-medical-
revolution
41 Apple Inc. Form 10-K (For the Fiscal Year Ended September 28, 2013)
http://files.shareholder.com/downloads/AAPL/3502782974x0xS1193125-13-416534/320193/filing.pdf

21
existing iPhone 5, iPhone 5c, iPhone 5s, iPhone 6 or iPhone 6 Plus running the latest version of
iOS 8.42

For the purposes of the group project, from a B2B standpoint, the initial target markets should
be primarily SMBs and commercial enterprise and government markets.

The U.S. Small Business Administration defines a small business as one that is independently
owned and has 1,500 employees or fewer and sales less than $21.5 million, depending on the
industry. Less-formal definitions of a small business vary widely.43

According to SMB Group, (a technology industry research, analysis and consulting firm focused
on technology adoption and trends in the small and medium business (SMB) market), the broader
SMB market includes commercial companies with 1 to 999 employees, and upper midmarket
with 1,000 to 2,500 employees. In the chart depicted below, the SMB market is composed of
many smaller, more discrete markets. For instance, 72% of all businesses in the U.S. are home-
based businesses, and 27.6% employ fewer than 100 employees.44

Source: SMB Group estimates, U.S. Census Bureau data, and World Bank estimates accessed via http://www.smb-gr.com/company/smb-market/

Small- and medium-size businesses dont have the financial resources of large corporations to
create dedicated HR, marketing, sales, IT, advertising, PR and promotions departments, hire
experts in each field, purchase the latest technology and buy all of the advertising that might help
increase sales. These businesses look for vendors and suppliers that can provide them with

42Apple Unveils Apple WatchApples Most Personal Device Ever: http://www.apple.com/pr/library/2014/09/09Apple-Unveils-Apple-Watch-

Apples-Most-Personal-Device-Ever.html
43 What Is SMB Marketing? Chron.com: http://smallbusiness.chron.com/smb-marketing-61844.html
44 SMB Market; Smb and mid-market business market research; SMB Group - http://www.smb-gr.com/company/smb-market/

22
expertise and less-expensive options in these areas, often outsourcing services they dont use
every day or in which they have little or no expertise.45

As far as commercial enterprises and government markets, the popularity of the iPhone and iPad
among employees is prompting corporate tech managers to rewrite policies and change
traditional buying patterns. The iPhone has replaced the BlackBerry as the mobile phone of
choice, as the iPad assumes tasks once reserved for PCs. Apple won about 8% of global business
and government spending on computers and tablets in 2012, Forrester Research says, up from
1% in 2009. By 2015, Forrester estimates that figure will climb to 11%. The numbers exclude the
iPhone, which may be the most widely purchased Apple product by corporate customers. It is
often Apple's gateway into a business.46

SECTION 5.3: MARKET POTENTIAL & SALES GOALS

According to a September 2013 report from NextMarket Insights, the growing adoption of
smartwatch software and wireless technologies by traditional watchmakers, the continued
advancement of screen and mobile processor technologies and the strong expansion of
smartwatches in the children and health/active lifestyle segments will drive the overall
smartwatch market from 15 million watches shipped in 2014 to over 373 million by 2020. Refer
to chart below.47

Outside of the individual consumer market, the market potential from SMBs and commercial
enterprises is highest. It can be anticipated that all mobile service carriers/providers that carry
the iPhone will also carry the Apple Watch once released. The companies include Verizon
Wireless, AT&T, Sprint, and T-Mobile. Additionally, retailers like Best Buy, Nordstrom, and
Walmart will also be likely carry the product as well. These companies typically carry the types of

45 What Is SMB Marketing? Chron.com: http://smallbusiness.chron.com/smb-marketing-61844.html

46 Apple Devices Flow Into Corporate World - http://online.wsj.com/news/articles/SB10001424052702304244904579278560822979176
47 NextMarket - Smartwatch Market Forecast to Grow From 15 Million in 2014 to 373 Million by 2020 http://nextmarket.co/blogs/news-
1/9278081-smartwatch-market-forecast-to-grow-from-15-million-in-2014-to-373-million-by-2020

23
products that align with the innovation-focused customer market that the Apple Watch will
also attract.

Based on Apples reputation for setting trends and being innovative coupled with the rising
interest in wearable devices and fitness and physiological tracking measures, the demand for the
Apple Watch product should be largely welcomed by the existing business buyers of Apple
iPhones in hopes to increase their own product and customer mix and positively affect profits.
Smartwatch Group (SWG) an independent research company based in Zurich / Switzerland has
already included and placed Apple as number three on its list of Top 50 Companies in the
smartwatch industry after the press release that the Apple Watch would be launching in early
2015.

Source: BI Intelligence
Katy Huberty, an analyst at Morgan Stanley, in July 2014 said Cupertino-based Apple may sell as
many as 60 million of the new wearable devices in its first year on the market, adding as much as
$9 billion in revenue for fiscal 2015. At the time, she estimated the company would charge about
$300. Sales on that level would far exceed the existing market for both smartwatches and activity
trackers. Global sales of activity trackers reached 13.6 million last year, according to researcher
Parks Associates, while smartwatch sales rose to 3.15 million in 2013 from 300,000 a year earlier,
according to Zurich-based researcher Smartwatch Group.48 Apple has reported that the product
will be priced at $349.

There is some historical market data and trends available for analysis as the smartwatch and
wearable devices industry has existed for a while. Although demand and sales can currently only
be speculated, the various reported trends of the market and predictions are deemed relatively
more reliable than simpler subjective techniques.

48 Apple Sticks to Premium Prices With Watch at $349 and Up Bloomberg: http://www.bloomberg.com/news/2014-09-09/apple-sticks-to-
premium-prices-with-watch-at-349-and-up.html

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SECTION 6: MARKETING STRATEGY

SECTION 6.1: BRANDING, POSITIONING, AND ENTRY STRATEGY

6.1.1: BRANDING

There are 4 steps to brand building strategys, first is to develop a brand equity or following,
establish the meaning of the brand through associations, market testimonials of positive
feedback, and build brand relationship with customer characterized by loyalty.49

A brand is the symbol that identifies your product or services. The way people perceive you
brand is the value that has been built into it over the years through careful planning. Value of a
brand brings substantial competitive advantage or SCA. SCA is build off many attributes that
Apple has created for itself. Apple has a reputation for quality, excellent customer support, high
financial resource, technical superiority, as well as a good mix of products. All these attributes
create value in the eye of the customer.

Apples brand identity and brand value are both already very strong. Apple is one of the most
renowned and well-known brands in the world. The Apple Watch will continue to grow the brand
into the wearable technology marketplace. Customers have been able to depend on Apple
products due to their superior durability and lifespan in everyday use. The customer is aware of
how useful these products can be and are generally willing to try new products.

The corporate competency of the branding strategy has been unique for Apple throughout its
entire existence. They have pioneered and created new market and products changing the way
that people interact with one another and creating a new technology and new revenues. Apple
sets themselves apart with their superior branding capabilities and wide product range. They
have established a culture that is full of innovation and the ability to enter the market on their
own time and still have huge success.50 Apple has created value through its core competencies;
they have created a technology that has a similar interface throughout its entire product
mix. Apple is a prime example of leveraging their competencies which requires evaluation of
customer interface, research of new technologies, competitors positioning, and current and
future possibilities of the industry.51

Refer to the positive trend of corporate competency the Apple has shown throughout the life of
the company. For years, Apple has generated an enormous fan base and has created memorable
products that have sculpted technology for years. The companys linked products introduce a
lifestyle of technology that enables constant connectivity. Additionally its products continually

49 Hutt, Michael D., and Thomas W. Speh. Business Marketing Management: B2B. Mason, OH: South-Western Cengage Learning, 2013. Print.
50 http://www.corporatepsychologists.com/solutions/competency-modeling
51 http://www.entrepreneurial-insights.com/core-competencies-overview

25
achieve great success and the loyal fan base is strong. Apple is clearly competent in their
marketing strategy for all of their products.

As reported by a case study on Apple, the Apple brand is defining itself more broadly than being
just a devices company as it has blended its digital content services (iTunes, iBooks and App Store)
to be a key part of the value proposition to Apple device owners, and (with iCloud in the
background) is making many services and functionality which consumers use accessible on
whatever Apple device they happen to be using at the time, be it at their desk, lap, fingertips or
wrist.52

6.1.2: POSITIONING

Product positioning involves tailoring an entire marketing programincluding product attributes,

image, and price, as well as packaging, distribution, and serviceto best meet the needs of
consumers within a particular market segment (Encyclopedia of Business, 2012). The Apple
Watch can be positioned in many different ways, it can be offered for a competitive price for
many cell phone service providers who can offer it to their customers in many ways. The Apple
Watch can also be offered to government agencies and healthcare providers since it has some
helpful features which can be used in many fields. But since the biggest segment Apple will target
is the cell phone service providers segment, Apple will do its best in creating a strong marketing
program to target that segment and satisfy its business needs.

Product positioning is a technique to present products to the market in the best possible light to
different target markets. This will hopefully get your product to the maximum amount of
consumers. The position of the product has two possibilities as introduction to the market. The
Apple Watch can be introduced as a companion to the iPhone or introduced as a stand-alone
product.

A perceptual map for Apple will be placing current products on a XY quadrant where you have on
the X, low price to high price and on the Y you have low quality to high quality. Apples products
fall in the upper right hand quadrant where the Apples products are high quality and are usually
priced higher than competitors products.

52 http://www.marketingminds.com.au/apple_branding_strategy.html

26
After researching various sources, the advantages and disadvantages of introducing the Apple
Watch as a companion to the iPhone versus as a stand-alone product are considered and
described below:

As Companion product As a stand-alone product

Advantages
Extends the functionality of the iPhone
Easy access to devices and notification
center (messages, calendar
Disadvantages
Limits potential market to iPhone
users
Does not address Apples long-term
growth needs
Perceived as a lower value product
Perceived as a high price
Advantages
More disruption potential to the cell
phone market
It is positioned as a replacement for
the low end smartphone market
Purchase the Apple Watch and hold
onto your old cell phone price
Disadvantages
Limited battery life, must charge
frequently
Needs access to the internet and
stand-alone apps
Small screen

Strengths
Product Differentiation (Design, Operating System, Features..etc)
Strong Brand Name
Good Customer Service

27
 Innovative Idea
Weaknesses
Death of Steve Jobs
Recent problems with iPhone 6 plus
Limited experience in this new product
Opportunities
Can be used as a payment method using NFC technology
Can be used in healthcare and medical offices
Can be used as a fitness device
Threats
Top smart watches in the market such as Galaxy Gear, Sony Smartwatch, Motorola 360,
LG G Watch and more
New entrants to the market

Apple has a widely accepted reputation for being an innovator and trendsetter in the mobile
technology realm. In the case of the Apple Watch, its first wearable device product release,
Apples entry-time strategy is a following strategy.

6.1.3: MARKET ENTRY

Apple has chosen to enter into the wearable technology market after existing pioneers and
competitors have already released products such as the Pebble. Pebble was the world's first
smartwatch for iOS and Android. It was the follow up to the previously developed InPulse
smartwatch created for Blackberry by the same team that developed Pebble. In April of 2012,
Pebble took the tech world by storm. Pebble held the #1 position in smartwatch devices and
technology for over two years. 53 Currently there are now hundreds of companies that have
entered into the wearable device/smartwatch realm and include some of Apples existing
competitors: Google, Samsung, Motorola, LG, and Sony. There are also additional market
entrants outside of the smartphone market that have introduced products that are considered a
part of the wearable device market like: Jawbone, FitBit, and Nike.54

Now with as much as 70% of the market for smartphones saturated in developed markets, gadget
makers have released a slew of smartwatches in the past few years to try and create appetite for
a new type of device. In 2013 9.7m wearables, including fitness trackers and smartwatches, were
sold worldwide according to data from research firm CCS Insight. That number is expected to
reach 22.3m in 2014.55

53Here's How the Pebble Smartwatch Became the Most Funded Project in Kickstarter History -
http://www.huffingtonpost.com/michaelprice/heres-how-the-pebble-smar_b_5798406.html
54 Smartwatch Database, Smartwatch Group - http://www.smartwatchgroup.com/smartwatch-database/
55 Apple Watch: Apple's first wearable device and smartwatch - http://www.theguardian.com/technology/2014/sep/09/apple-watch-iwatch-
wearable-device-smartwatch

28
As various reports point out, despite demand, wearable technology has struggled to become
widely mainstream as market strategies tend to lack in the area of convincing consumers that
this product is of practical use, adds value, etc. Additionally, many consumers feel most of these
products have unattractive, bulky, and unfashionable compared to the vast varieties of existing,
traditional wrist watches currently worn by consumers.

Smartwatches have also been shown to have a high rate of abandonment too, with one third of
Americans ditching the devices within six months of trying them according to research by
Endeavour partners. Many devices have launched in time for the Christmas market, but the Apple
Watch will not launch until 2015.56

The advantages of Apple pursuing the following strategy over the pioneering strategy are that
they are able to address the issues and flaws that the current market is experiencing. According
to the Smartwatch Group (an independent research company based in Zurich / Switzerland that
provides strategic insights about key players, innovations, best practice, and the impact of
smartwatches on other industries), the Apple Watch will be the first smartwatch to be accepted
by the broad consumer market based on good design and intuitive handling.

Apples late entry into the market has allowed the company to take its time to develop a wearable
device/smartwatch into what the company anticipates will be more attractive, practical, and
fashionable compared to the products of existing market entrants. The Apple Watch will reflect
a wide range of stylistic preferences with three distinctive collections (described in chart below)
to help consumers find the right fit.57

The Apple Watch collection features highly polished stainless steel and space
black stainless steel cases. The display is protected by sapphire crystal.
Apple Watch Theres a choice of three different leather bands, a link bracelet, a Milanese
loop, and a band made from high-performance fluoroelastomer. Collection
features 18 models.
The Sport collection cases are made from lightweight anodized aluminum in
silver and space gray. The display is protected by strengthened Ion-X glass.
Apple Watch Sport
The matching fluoroelastomer band comes in five different colors. Collection
features 10 models.
The Edition collection features six uniquely elegant expressions of
Apple Watch. Each has a watch case crafted from 18-karat gold that our
Apple Watch Edition
metallurgists have developed to be up to twice as hard as standard gold. The
display is protected by polished sapphire crystal.

No other market entrant has created a complete collection of wearable devices so diverse. This
unique full scale offering coupled with Apples reputation for quality and late market entry has

56 Apple Watch: Apple's first wearable device and smartwatch - http://www.theguardian.com/technology/2014/sep/09/apple-watch-iwatch-

wearable-device-smartwatch
57 Apple Apple Watch - http://www.apple.com/watch/overview/

29
also provided the company with the ability to price the Apple Watch higher than competitors in
anticipation of capitalizing on their existing design flaws, old technology, product positioning
mistakes, and promotional mistakes.

Upon entry into the market, it is reasonable to anticipate that competitors will be very aggressive
in efforts to research, develop, redesign, and improve its products in efforts to put out wearable
devices that will be capable of more directly competing with the Apple Watch. It will be Apples
job to continuously innovate its watch collection.

Now that suitable hardware is getting available, improved use cases will be the core driver of the
smartwatch industry. Smartwatch Group expects the smartwatch industry to grow to USD 60
billion in 2020. In a few years, smartwatches will be a valuable tool for many people around the
world. From the outside, it will not be possible to differentiate smartwatches from conventional
watches. In 2018, the global smartwatch industry will surpass the size of the conventional watch
industry, says Pascal Koenig.58

Apple has established itself as a technology innovator and a pioneer with introducing cutting
edge consumer devices and applications. Apple also has a reputation of following the market
and leapfrogging the competition with improved technology and design principles. The iPhone
and iPad are excellent examples of how Apple used a follower strategy to become the market
leader in smartphones and tablets.59 It appears that Apple is taking the same approach with
Apple Watch. The global market for wearable devices overall is still relatively nascent with only
20 million units (or $800 million) in 2012. 60 Apples leading competitor in the
smartphone/smartwatch market is Samsung, Electronics Corp. (SSNLF:OTC US). Samsungs
Galaxy Gear smartwatch was introduced in 2013 with lack luster results.61 The Apple Watch was
announced to the market in late 2014 with unit sales expected to begin during the first quarter
of 2015. By being a follower, Apple can capitalize on the design, marketing and positioning
mistakes of its competitors and is expected to lead the market by 2015 with a broader scale
market entry.

The underlying assumption is that by leveraging Apples extensive content platform ecosystem,
and by designing a more functional smartwatch, Apple will leapfrog its competitors and take
market share. Figure 1 denotes that application service providers (ASP) such as Jawbone and
Nike, will make new health and fitness applications available on the Apple Watch and it is

58 State of the Smartwatch Industry: Fall 2014 - http://www.smartwatchgroup.com/smartwatch-industry-fall-2014/

59 Kopytoff, Verne. (2014). Smart watch makers are dreaming big. The public? Yawn. Fortune. September 8, 2014. Retrieved from
http://fortune.com/2014/09/08/smart-watch-consumer-interest/
60 Wearable Computing: Technologies, Applications and Global Markets. PR Newswire US [serial online]. May 7, 2014:Retreived from:
http://libproxy.uml.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bwh&AN=201405071329PR.NEWS.USPR.BR22308
&site=eds-live
61 Despite Galaxy Gear Yawn, Samsung Tries Another Watch, May 27, 2014. Forbes. Retrieved from:
http://www.forbes.com/sites/nigamarora/2014/05/27/despite-galaxy-gear-yawn-samsung-tries-another-watch/

30
estimated that potential revenue could reach $15 billion assuming an iTunes penetration rate of
60% and ASP pricing in the $100 - $200 dollar range.

Apple has substantial brand identity and awareness across the globe. It is generally viewed as
representing technology innovation and has a cool factor in the consumer electronics sector.
Apple has also made substantial strides in the enterprise market with the launch of the iPad with
especially high adoption rates in the financial sector (refer to the below chart).

Brand positioning will play an important role in marketing the Apple Watch. Apple will need to
leverage its brand to differentiate its smartwatch from competitors. This can be done through
brand performance that is, an association with better product performance, 62or through brand
imagery through association of how the brand meets psychological or social needs.63 In either
case, Apple should make clear points of difference with its competitors and leverage its
application and device ecosystem to market the Apple Watch. It should focus on important
customer judgments about the Apple brand in terms of quality, credibility, consideration set and
superiority.64 The Apple brand already elicits feelings of quality and usability and this should
translate well to the Apple Watch.

62 Hutt, Michael D., and Thomas W. Speh. Business Marketing Management: B2B. Mason, OH: South-Western Cengage Learning, 2013. Print.
63 Hutt, Michael D., and Thomas W. Speh. Business Marketing Management: B2B. Mason, OH: South-Western Cengage Learning, 2013. Print.
64 Hutt, Michael D., and Thomas W. Speh. Business Marketing Management: B2B. Mason, OH: South-Western Cengage Learning, 2013. Print.

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SECTION 6.2: PRODUCT AND SERVICE STRATEGY

6.2.1: PRODUCT STRATEGY AND DECISIONS

Apples product strategy and product attributes for the Apple Watch is very aggressive in all
aspects. This is evidenced by the many technologies being used to create the device, in addition
to the wide range of styles and bands that will be offered, in conjunction with all the unique
features not current present in other devices on the market, and pricing at a premium. As a late
entrant Apple took note of what consumers may be looking for and incorporated as much of that
into the Apple Watch. Like typical Apple fashion when launching a product, the goal is to wow
the consumer and give the market a great product like no other.

In addition to being a wearable technology device, the Apple Watch is somewhat of a fashion
statement as well. Apple has chosen to develop an entire Apple Watch product line with three
different collections giving consumers a choice of several colors and bands to choose from. Apple
is also releasing the watch with an 18k gold option. This is a high end option that could
potentially cost upwards of $2,500.00.65 This would be an increase from their previous releases,
especially as an accessory. Apples choice to release the watch with this type of option gives us
some insight to how they feel overall about the product they are selling. It is intended for the
Watch to be used in many different ways and not just merely another gadget to have. Whether
the Apple Watch is used by more users who are interested in its functional capacity or users who
are interested in its fashion alone, Apple will surely meet the demand.

The Apple Watch is unlikely to cannibalize other Apple products due to its inherent quality of
developing more value in current Apple products rather than replacing one product with the next
(iPhone to the iPod).66 Purchasing the Apple Watch practically cements the user in the Apple
environment. This strategy presented by Apple shows they are interested in keeping the Apple
Watch around for the long-term. Since the product must be linked with an active iPhone, Apple
Watch sales will not be detrimental to overall sales. Apple has also decided to include the
companys newly developed Apple Pay (a contactless payment technology) as a feature and
function of the Apple Watch. Apple Pay will provide users with mobile payment options using the
wrist devices. Apple Pay will be able to store users major credit and debit card information and
can be used in popular stores like Macys, McDonalds, Panera Bread, Nike, WholeFoods, and
more.67

The Apple Watch also is designed to enable users to improve their business functions. The Apple
Watch has potential to be very useful for warehouse and in-store customer services workers. For

65 Apple Watch strategy is a winner: we figure out price and release info BGR.com: http://bgr.com/2014/09/18/apple-watch-price-cost-
release-gold-edition-sport/
66 Apple Watch is a Radical Shift in Apple's Strategy (AAPL) - http://www.fool.com/investing/general/2014/10/06/apple-watch-is-a-radical-
shift-in-apples-strategy.aspx
67 Apple Pay Apple - https://www.apple.com/apple-pay/

32
example, the scanners used by Wal-Mart that track inventory, locations of items, and can even
purchase additional inventory could potentially be replaced by wearable technology such as the
Apple Watch. Apple certainly has the vision to embrace this opportunity and will modify the
watch accordingly. Product features such as the Apple Pay system will provide benefits in almost
every transaction that occurs on a daily basis of a users life and can certainly be another game-
changing product from Apple. Salesforce CEO, Marc Benioff told interviewer Michael Arrington
he believes the wearables are going to be deeply integrated into the enterprise experience. He
didnt say when, but given his company has already announced Salesforce Wearables, he sees it
as a near-term goal and one he seemed genuinely excited about.68

In addition to the unique functions and features that the Apple Watch will offer, other product
related issues and decisions involve Apples brand and reputation for quality, product warranty,
product price, and product operation. All these factors will be critical to the success of the Apple
Watchs market entry and penetration.

Brand: Apple has created a brand that is known worldwide, consumers have come to expect
quality products and expect that any new products will meet the Apple standards. Apple has
one of the most recognizable names and Logo in the business. Apple started off making personal
computers and moved into consumer electronics, and has produced products that consumers
want and can easily use. The Apple name and their logo of an apple with bite missing have a
reputation of quality products and Apple has almost a cult like following, introduction of a new
product creates its own buzz and loyal consumers are willing to wait in line for hours to be the
first to have it.

Quality: Consumers have a belief that Apple will produce quality products and will expect the
Apple Watch to meet the high standards they have come to expect. Consumers will be paying
close attention to the success of the companys recently released iPhone 6 and iPhone 6+ and
will be watching to see if quality issues are handled effectively.

Product Price: Apple has decided to price the Apple Watch higher than any other existing
smartwatch on the market. Apple doesn't want to sacrifice quality for price. 69 For example,
Apples laptops and tablets are typically much more expensive than competitors products;
however, Apple consumers have proven they are willing to pay high prices for the right quality
product. It will be critical for the quality of the Apple Watch to match the price the company is
demanding. Otherwise it could lose out to competitors.

Product Operation: Consumers will expect the Apple Watch to have easy, user-friendly
functionality just like existing Apple products. If the Apple Watch is too difficult or burdensome

68 Apple Watch Will Drive Wearables Into The Enterprise | TechCrunch - http://techcrunch.com/2014/09/09/apple-watch-will-drive-
wearables-into-the-enterprise/
69 Apple CEO Explains Why Apple's Products Are So Expensive (Sort Of) -http://www.huffingtonpost.com/2013/02/12/apple-ceo-tim-cook-
expensive-products_n_2670366.html

33
for users to incorporate into their daily routines, successful market entry and penetration could
greatly suffer.

Warranty: Apple products typically include a standard warranty with the purchase of one its
products. Apple has not yet announced if the Apple Watch will have different or additional
warranty options but consumers will definitely need some assurance from the manufacturer that
the Apple Watch will be appropriately protected. Luckily, Apple has a reputation of backing its
products if there are any problems.
Despite all the potential product related issues that could impact the success of the Apple
Watchs market entry and penetration, it is our belief that the Apples specific decisions and
strategies have positioned the company and the product to be highly successful. In particular,
Apples decision and strategy to enter the market late, create a full Watch collection line with a
variety of watch designs, and offer other unique functions and features specific to Apple Watch
like the products digital crown, Apple Pay, Activity and Workout Apps will all be key mitigating
factors and will improve the products potential for success.

6.2.2: SERVICE STRATEGY AND DECISIONS

Although Apple is widely known for consumer technology innovations, the service elements of
the company have proven to be a critical component of the companys success. A recent Time
news article explores Apple's success in the marketplace from a service perspective as one in
which it partners with the customer to help them apply the technology to perform desired tasks.

Apples design philosophy has been to hide the technologys complexity through simple, intuitive
designs. The complexity, the article states, is created from the variety of things people want to
use the technology for. For this reason, for example, sales staff at the Apple Stores greet
customers with the phrase What would you like to do today? instead of How can I help you?70
Usually, once the customer explains the need or issue, they get a resolution right on the spot.

This level of service will be critical in support of Apple Watch. This is particularly true as the Apple
Watch will be Apples first entry into the smartwatch market. Aside from the tangible dimension
of the offering, Apple must provide a good service experience to their end-users through remote
software updates, app availability and services through iTunes and seamless interaction with
other devices. As both consumers and enterprises find innovative uses for the watch, Apple must
be quick to support customers with technical knowledge and a what if approach to its
application.

Apple must also continue to provide award-winning customer service when end-users encounter
hardware or software issues. As one example, customers have come to expect expert care and
advice from Apples Genius Bar. Apple Watch customers must be able to get help and answers
to their questions through this service channel as well. This should be easy to accomplish as Apple

70 6 Reasons Apple Is So Successful. 2012. Time. Retrieved from http://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/

34
has already built a world-class service infrastructure through its call centers, retail outlets and
online support tools. Additionally, Apple encourages an understanding of its products through
in-store training sessions that customers can attend. It also applies this approach to the
enterprise market through dedicated account teams that provide a view into Apples technology
roadmap, new service offerings, and potential applications within the enterprise to increase
productivity. An example of how Apple promotes its products in the enterprise market is its
alliance with IBM. Apple announced this alliance in 2014 as a push to transform enterprise
mobility. The goal is to make Apple smartphones, tables and mobile devices pre-eminent in the
enterprise.71 As Apple drives into the enterprise space, the same service strategy should prevail
with a focus on the unique needs of enterprise customers.

Apple has spent a decade at the top of PC customer satisfaction which gives them a good image
in any market they enter. The American Customer Satisfaction Index scores include expectations
pre-sales, perceived quality, perceived value, customer complaint incidents, and customer
loyalty. 72 All this enables then to enter into any market with knowing that the market has
confidence that they will support the new product that they buy.

In order to be successful in providing service support for Apple Watch, Apple must pay close
attention to issues with non-standardized output. An end-users experience can vary from a
support perspective (for example at the Genius Bar) depending on the employee. One employee
may be more knowledgeable for example and may be able to resolve the customers issue while
a different employee may not have the same training or insight. It will be important that all
service employees are trained on the new hardware and understand how to resolve issues in a
consistent manner with as little variation as possible.

In order to accomplish this, Apples strategy should institute strict servicing processes for
employees to follow and properly train employees on the new product and its features. Apple
can monitor and keep track of when common issue arises and be proactive and warn other users
via email or through the media in order to stay ahead of the problem and provide outstanding
customer service in connection with the new Apple Watch product.

As mentioned, training will be key for all service employees when the Apple Watch is launched.
Procedures to handle service issues should be standardized and knowledge made widely
available. Additionally, Apple can automate the resolution to some of the more common issues
and allow the customer to use self-service tools to resolve issues more quickly and conveniently.

A key service aspect that Apple should continue to pursue in support of the Apple Watch is
remote updates. Today with iPhone and iPad, service personnel can push information and

71 Apple, IBM Alliance Capitalizes on iPhone, iPad Enterprise Adoption. 2014. eWeek. Retrieved from
http://www.eweek.com/mobile/slideshows/apple-ibm-alliance-capitalizes-on-iphone-ipad-enterprise-adoption.html
72 A decade at the top: Apple tops PC customer satisfaction ratings for the 10th year running | 9to5Mac. - http://9to5mac.com/2013/09/18/a-
decade-at-the-top-apple-tops-pc-customer-satisfaction-ratings-for-the-10th-year-running/

35
updates and fixes to resolve questions and issues that users may have. Apple should continue to
pursue this strategy with Apple Watch.

All of these aspects are definitely critical to the success of not only the Apple Watch but also of
future Apple products and the company reputation itself. If Apple is unable to successfully
implement the proactive strategies for addressing service related issues, the market will be
buzzing with disapproval after the launch of the Apple Watch. Although most consumers are
reasonable and anticipate that there be a few service related issues connected to the Apple
Watch, as with any other new technology release, the key factor will be how effective and
proactive Apple tackles and addresses the issues.

6.2.3 UNIQUE SERVICE FEATURES

The unique features of service marketing and strategies relevant to the Apple Watch is the
companys AppleCare programs and reputation and proven demonstration for providing support
and service strategies that are easily accessible to consumers.

As reported on the companys website, Apple offers a one-year limited warranty and up to 90
days of complimentary telephone technical support included with the purchase of all Apple
products. Apple also offers free workshops at Apple Store locations for all products to help
consumers learn how to use their products. This unique feature will be especially important in
the service strategy and market entry of the Apple Watch because the product is something the
company has never offered before and many will benefit from the trainings and workshops
offered. This unique feature of Apples service marketing will allow consumers to get a positive
hands-on experience with their new product and will hopefully increase success of market
penetration.

Additionally, Apple also offers users the option to purchase services that will extend the stand
coverage; these additional options are called the AppleCare Protection Plan or AppleCare+. These
services are a unique and valuable factor to any Apple product because it allows users to get
support services from the company making the hardware, operating system, and many
applications. 73 Various service support packages can be purchased for not only individual
consumers but for businesses of any size. This is important to note as the group projects focus
is on the business customer of the Apple Watch.

It is reasonable to anticipate the Apple Watch will have similar service support offerings as the
existing iPhone and iPad products, especially since the Apple Watch will be require the use of an
iPhone. Considering this factor, the purchase of an AppleCare+ protection plan would extend the

73 Apple Support AppleCare - https://www.apple.com/support/products/

36
original warranty coverage for two year from the original product purchase and additionally will
offer options for accidental damage coverage. It is important to point out here that many
traditional warranty and protection plans from manufacturers do not provide or offer coverage
for accidental damage.

Apples strategy to continue offering their protection plans and support services will contribute
to the Apple Watchs successful market entry and penetration. Business consumers will value the
support services and this is supported by the fact that only AppleCare+ provides one-stop service
and support from Apple experts, so most issues can be resolved in a single call, mail-in repair,
carry-in repair to Apple Retail Store or other Apple Authorized Service Provider, and express
replacement service.74 These service strategies coupled with the companys reputation for high
quality products and reliable service improves the total perception that the business consumers
will have resulting in more success related to market penetration.

SECTION 6.3: CHANNEL STRATEGY

6.3.1: CHANNEL OBJECTIVES & CONSTRAINTS

The most important objective of any channel strategy is to accomplish the marketing objectives.
The options are many and will vary by customer segment; and in the B2B sector, could involve
multiple concurrent channels. 75 Apples channel strategy for the Apple Watch will involve a
primary focus on consumers with a secondary focus on the enterprise market. The consumer
strategy will mimic that of Apples other consumer products namely iPhone, iPad and Mac. In
fact, according to an All Things Digital article, Apple Stores in particular generate more revenue
per square foot than any other retailer in the Unites States.76 Additionally, Apple products are
sold through retail outlets such as Amazon, Best Buy, Walmart, Target, eBay and others. Its
mobile devices are sold through agreements with network providers such as AT&T, Verizon and
Sprint that has also proven to be very successful. The figure provides a breakout productivity by
channel and by product:77

74
Apple - Support - AppleCare+ - iPhone - https://www.apple.com/support/products/iphone.html
75
Hutt, Michael D., Speh, Thomas W. Business Marketing Management: B2B. Mason, OH: South-Western Cengage Learning, 2010. Print. p.254
76
2 All Things Digital. 2012. Breaking Down Apples Retail Distribution Strategy. - http://allthingsd.com/20121003/apple-stores-get-the-glory-
but-retail-partners-shoulder-load/
77
2 All Things Digital. 2012. Breaking Down Apples Retail Distribution Strategy. - http://allthingsd.com/20121003/apple-stores-get-the-glory-
but-retail-partners-shoulder-load/

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 Apple Channel Productivity78

Interestingly however, it is important to note that although Apples stores are the most
productive, its retail partners provide the volume of sales it needs to succeed. Ultimately, these
partners are as critical to Apples success as its own stores and it is imperative that Apple
leverages these channels for the Apple Watch. Apple Watch should be made available through
both brick and mortar/online retail outlets and through its network providers as an add-on to the
iPhone and as a standalone mobile device. This strategy has proven to be successful in meeting
the needs of consumers that want simple and fast online transactions along with support from
experienced personnel for more complex transactions and support. A diagram of the channel
structure for the consumer segment is provided:

78 2 All Things Digital. 2012. Breaking Down Apples Retail Distribution Strategy. - http://allthingsd.com/20121003/apple-stores-get-the-glory-
but-retail-partners-shoulder-load/

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 Apple Watch Consumer Segment Channel Structure

As noted, the Apple Watch will also be made available to the enterprise segment as there are
potential applications in manufacturing and service industries. As Hutt and Speh outline,79

Apples direct channel will be used to service customers:

That are large and well defined
Insist on direct sales
That will require extensive negotiations
That require selling to be controlled

Through Apples partnership with IBM80 to provide enterprise solutions, Apple will leverage IBM
as an indirect channel as it incorporates Apple Watch and other Apple devices into its enterprise
solutions. Apple and IBM will provide mobility and computing solutions for the enterprise that
will incorporate Apple Watch along with iPad, Mac and iPhone devices. IBM will be a source of
leads that will prove to be a major contributor to Apples success in this segment.

Additionally, Apple actively recruits channel partners through www.apple.com, seeking solution
professionals that provide independent consulting, sales, service and training. They actively seek
out professionals that meet one or more of the attributes in figure below:

79 Hutt, Michael D., Speh, Thomas W. Business Marketing Management: B2B. Mason, OH: South-Western Cengage Learning, 2010. Print. p.254
80 Apple Channel Programs. 2014. Retrieved from http://salesresources.apple.com/cp/channel/?cid=oas-us-domains-
channelprograms.apple.com

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Apple Channel Program Attributes81

There are several specific channels that Apple has provided on their website that they use in their
sales division that are primarily targeted for B2B sales.82

Sell This channel is for business that specialize in the reselling of Apple products to their
customers. Examples of these businesses would be Wal-Mart, AT&T, Verizon, Best Buy, etc.

Service Apple does a significant amount of servicing for their products themselves. With their
network of Apple Stores and Genius Bars, customers have been able to easily locate service
stations.

81 Apple Channel Programs. 2014. Retrieved from http://salesresources.apple.com/cp/channel/?cid=oas-us-domains-

channelprograms.apple.com
82 Apple Channel Programs. 2014. Retrieved from http://salesresources.apple.com/cp/channel/?cid=oas-us-domains-
channelprograms.apple.com

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Train This channel is designed for companies who provide training for Apple users. There are
many Apple approved training centers (AATCs) worldwide, including over 50 in the United States.
These businesses train users on operating systems and new products.

Consult These companies provide consulting services for other businesses on the use of Apple
products. The companies may work with other businesses who are interested in providing
company iPhones to their employees or using MacBooks instead of traditional PCs in the
workplace.83

The Apple Watch could potentially make significant inroads on the B2B market with wearable
technology. As we have previous stated, the medical community, construction and many other
sectors could find this product useful. The above channels will enable Apple to use their
traditional strategy to implement this new product to the market. The B2B market may even be
larger than the individual market and using this channel strategy Apple will continue to succeed.
The Apple Watch should be part of the product portfolio that is supported by resellers, service
providers, training centers and consultants. The figure below provides a view of the channel
strategy for enterprise:

Apple Watch Enterprise Segment Channel Structure

6.3.2: TASKS EXPECTED BY CHANNEL PARTICIPANTS

Apple has a wide range of channel participants and it is important that those participants
promote and aim for the same standards and goals that Apple has. If channel participants are not

83 Apple Channel Programs. 2014. Retrieved from http://salesresources.apple.com/cp/channel/?cid=oas-us-domains-

channelprograms.apple.com

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on the same page, this could cause issues related to Apples brand and reputation, quality control,
service, pricing, and more. This is a risk that all companies take when dealing with channel
partners and participants. Fortunately, Apple has taken steps to mitigate problems that may arise
when working with channel participants.

As described on the companys website, Apple has established a Principles of Business Conduct
code that defines the way they do business worldwide in addition to the way they expect channel
participants to operate.84

The expectations require that both Apple and the channel participants to meet the same level of
standards. The principles include the following areas: Honesty, Respect, Confidentiality,
Community, and Compliance.

Apple requires businesses that associate themselves with their brand through the resale or
distribution of our products to uphold the standards described in its Channel Member Code of
Conduct agreement.85 This demonstrates Apples commitment to its business and demonstrates
how important the company views managing channel strategy is in order for the company to
have continued success.

The code of conduct agreement also allows Apple to perform due diligence and periodic
monitoring of channel members to ensure compliance with the Code and with other Apple
policies - including (but not limited to) its FCPA/Anti-Bribery & Anti-Corruption policy, and Export
Compliance policies. Any violation of the Code or Apple policy will constitute the basis for the
immediate termination of a channel participants agreements with Apple.86

Channel participants that are working with or plan to work with Apple need to understand the
standards it will be held to and will need to make sure that their own company policies,
procedures, and employees all understand and line up with the appropriate standards as well.

All channel participants involved with the Apple Watch will be expected to follow suit and meet
the same expectations as the channel participants involved in Apples existing product lines.

The Apple Watch must be synced with a phone in order to use the product to its highest
capabilities. The cellular providers are expected to reach the customer through marketing and
create the availability of the product on a large scale while providing technical support. Cellular
partners are going to market to the customer, provide them with product availability, and deal
with the large majority of customers giving them advice and emergency service. The Apple store
will provide the customer with the product and technical support but cant set up the cellular
contract. However the Apple store facilitates the buying process in its stores and also through

84 Apple Channel Programs - http://salesresources.apple.com/cp/channel/pdf/ChannelCodeOfConduct.pdf

85 Apple Channel Member Code of Conduct - http://salesresources.apple.com/cp/channel/pdf/ChannelCodeOfConduct.pdf
86 Apple Channel Member Code of Conduct - http://salesresources.apple.com/cp/channel/pdf/ChannelCodeOfConduct.pdf

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its website with access to product that are licensed to specific cellular provide who offer differing
features to the customer. Cellular providers would be considered general line distributors
because they sell a vast variety of phones and the Apple store is a specialist only providing Apple
products.

6.3.3: CHANNEL ALTERNATIVES

Marketing channels are the set of practices or activities necessary to transfer ownership of goods.
There are four types of channel strategies:87
1. Intensive distribution- stock in a majority of the outlets.
2. Selective distribution- relies on intermediaries to carry their products.
3. Exclusive distribution- the producer selects only a few intermediaries.
4. E-Commerce distribution- internet sales only.

Intensive distribution is when you use numerous amount of outlets to sell your product. In
essence you flood the market with your product and consumers have the ability to purchase the
product anywhere. Selective distribution is when your product is available to a select type of
intermediaries, usually large retailers and outlets. Exclusive distribution is when your product is
only available thru one or two retailers. E-Commerce distribution is when your products directly
over the internet.

The disadvantages of these alternatives are as follows: Intensive distributionthis type of

distribution floods the market with your product and because there a large amount of your
product in the market at numerous locations, sales at every location will be hindered. Your
product can be obtained anywhere. Selective Distributionthis type product limits the amount
of outlets that carry your product, large retailers which require consumers to make a trip to these
locations which in some cases be out of the way. This might limit sales as consumers cannot get
to these outlets easily. Exclusive distributionthis type of distribution extremely limits where
your product can be purchased and in some cases be out of the reach of consumers.

Companies can use all four or a mix of the above distribution channels. Each company has to
determine what will work best for their product. All companies must keep in mind that the
strategy they use does not cause conflict between the distribution channels. That is: one
channels should not cause another channel to not meet their goals.

Apple has developed their own strategy. Apple has a direct sales force that targets large retailers
(AT&T, Verizon, Walmart, and BestBuy). Apple also sells their product thru their own retail stores
and in this environment, competitors are removed from the point of sale. Apple also sells thru
some retailers which allows the consumer to compare competitors and Apple products side by

87 https://www.boundless.com/marketing/textbooks/boundless-marketing-textbook/marketing-channels-11/marketing-channels-in-supply-
chain-76/selecting-marketing-channels-388-4052/

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side. This enables Apple to reach consumers that they might not reach otherwise. Apple strategy
also allows the pricing to be controlled and not governed by the market or demand.

Distribution strategy of APPLE products88

6.3.4: APPLE SUPPLY CHAIN DIAGRAM

The supply chain diagram below highlights the existing supply chain infrastructure already in
place for Apples devices. This infrastructure has proven to be successful and will be leveraged
for the Apple watch. It is implied that the existing manufacturing 3rd party will develop the Apple
Watch and that the existing warehousing facilities in Elk Grove CA and Fedex/UPS intermediary
warehouses will also be leveraged for the Apple Watch.

88 Distribution strategy of APPLE products - http://www.slideshare.net/jinupvarghese5/distribution-strategy-of-apple-products

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6.3.5: IMPORTANCE OF SUPPLY CHAIN MANAGEMENT

Apple has been fortunate to have many successful product lines that have been introduced into
the market. As a result, Apple is very experienced and good at developing, maintaining, and
enhancing sustainable supply chain partnerships. We can assume that many of those supply chain
partnerships that they have created over time will continue to be an important strategic process
for Apple and its B2B strategy of the Apple Watch. The introduction of the Apple Watch has likely
formed new partnerships with suppliers and has likely enhanced existing partnerships. These
relationships will be very important for successful marketing of the Apple Watch.

Similar to the Channel Member Code of Conduct, Apple has a Supplier Code of Conduct. Apples
website states that their Supplier Code of Conduct was already one of the toughest in the
electronics industry and compliance of it is ensured through conducting hundreds of audits per
year worldwide from the manufacturers of tiny components to the facilities that assemble the
companys final products.89 The goal for Apple would be to continue enforcing, maintaining, and
enhancing the SCM strategy that has proven successful through many product introductions.

6.3.6: MANAGING SUPPLY CHAIN TO ENHANCE COMPETITIVE ADVANTAGE

As a new product, actual demand can only be estimated. As such, Apples supply chain will need
to be managed in such a way that participants will be ready with the appropriate inventory,
production capacity, etc. that will be required to handle any unexpected demand or service issues
related to the market entry of the Apple Watch to ensure smooth delivery and transactions with
business customers.

89 Apple Supplier Responsibility: https://www.apple.com/supplier-responsibility/

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Apple was able to take steps early to manage and developed a formalized list of expectations for
its suppliers. Apple has relationships with its supplies which has enabled Apple to quickly scale
operations to meet customer demands.
Apple has worked with their supply chain and has helped develop new manufacturing processes
(Apple has filed for patents on some of these processes). Apple has also has placed high volume
pre-orders with suppliers which guarantees manufacturing processes.

Supply Chain Process90

The above diagram shows how the supply chain works. In order to have a successful introduction
of the Apple Watch, Apple must continually analyze each aspect of categories and make
adjustments as needed to meet demands of Apple Watch. Apple has a well-established supply
chain and integrated the Apple Watch should be simple. Apple has long term relationship with
its supplier, so sourcing and manufacturing the product will be done in a timely manner. Apple
has well established distribution channels and their marketing plans have been established.
Apple must maintain their established plans and adjust accordingly to market changes and
demands.91

SECTION 6.4: PRICING STRATEGY

6.4.1: PRICING OBJECTIVES

The pricing objectives for the Apple Watch will be satisfy three basic principles:
Pricing will be based on the value it creates for Apples customers

90 Supply Chain Management | Business Transformation Consulting - http://www.cgnglobal.com/supply-chain-management

91 Apples SCM make it a Global Supply Chain Leader - http://www.usanfranonline.com/resources/supply-chain-management/apples-process-
improvements-make-it-a-global-supply-chain-leader/#.VELYlhZ8PTo

46
 Pricing will be proactive and adjust to competitive threats, negotiation with customer and
technology changes
Pricing will be driven by profits and not only on revenue.92

Additionally, the pricing objectives for the Apple Watch will based on Apples overall marketing
and corporate objectives. This will involve achieving the desired return on investment, pricing
the Apple Watch to meet the stated market share and competitive goals. Apple has historically
employed a pricing strategy that capitalizes on the loyal technology adopters that buy Apples
products almost exclusively and who find these products to be of high value and likely to pay a
premium93. Pricing for the Apple Watch should follow suit and be geared toward this target
market initially. This will give Apple the flexibility to adjust pricing over time to meet competitive
threats or to increase market share.

Pricing for the B2B segment will strive to create demonstrate the value of the Apple Watch in this
sector and will revolve around developing longer-term relationships built around value and
return on investment. Sales channels in this sector will emphasize collaboration, commitment,
flexibility and trust in these relationships and pricing will be based on the value these
relationships create.2 Additionally, it will be critical for the sales channels to demonstrate the
value of the Apple Watch in terms of the cost and revenue benefits derived by the customer. For
example, improved productivity and time-to-market are value drivers that the pricing strategy
should reflect. As shown in the figure below, pricing will go beyond cost-plus-margin and will
reflect the product and service benefits as well as the brand value to capture the total pricing
opportunity as indicated by the dotted line.

Optimized Value Pricing Strategy94

92 Hutt, Michael D., Speh, Thomas W. Business Marketing Management: B2B. South-Western Cengage Learning, 2010. Print. P301
93Hutt, Michael D., Speh, Thomas W. Business Marketing Management: B2B. South-Western Cengage Learning, 2010. Print. P302
94 Adams, Isiah. 2014. How to Shift From a Cost-Plus to a Value-Based Pricing Strategy. -http://blog.optimizationgroup.com/how-to-shift-from-
a-cost-plus-to-a-value-based-pricing-strategy

47
For these key customer segments, Apple must isolate the value drivers through depth interviews.
This is especially true for enterprise, manufacturing and retail applications. Apple must
understand the application of the Apple Watch in these vertical markets and how customers can
benefit from its technology. The pricing strategy should capture the value derived from both cost
and revenue drivers i.e. any cost savings and revenue uplift generated by the Apple Watch.
Illustrated below is the approach Apple will take to capture value in its pricing strategy:

Approach to Value Based Pricing95

Once value is captured and quantified, pricing will be compared to the next best alternative and
the differentiators mapped out. It will be critical that Apple understands where the unique value
is compared to its competitors value that cannot be provided elsewhere and to ensure that
the pricing captures this unique value.

6.4.2: UPPER AND LOWER BOUNDS OF PRICES

Apple has already indicated that the base model price of the Apple Watch will be $350.When
defining the pricing strategy, value capture is derived from both cost and revenue drivers. It
requires significant research, interviews, and development to define the various data points
along the steps of the value based pricing algorithm. The most recommended approach for
understanding customers willingness to pay and the value of the Apple Watch would be found
through Indirect Questioning Approaches like Conjoint Analysis.

95 Hutt, Michael D., Speh, Thomas W. Business Marketing Management: B2B. Mason, OH: South-Western Cengage Learning, 2010. Print. P304

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Based on this, it's best to suggest pricing the Apple Watch in line or ahead of the competition in
order to maintain the brand image of having a superior product for a superior price. A rough
value may be $300 at the low end and $600 at the high end, for their top watch. 96

6.4.3: PRICE SENSITIVITY OF DEMAND

Demand of a product varies from customer to customer; each places a different value on a
product and you as the manufacturer need to understand each market segment. 97 Apple has
segmented the Apple Watch into its standard Watch, Sport, and Edition. Each caters features
that are attractive to the differing segments who value different features. Demand can be
associated with the whole buying process. Customers place a value on the life of the product
and if they are given additional services after purchasing they will pay more for a company that
has good product support. The Apple Watch has an inelastic demand, customers that want the
Apple Watch will purchase it whether the price was higher or low they are going to buy it for its
functionality and superior support.98

6.4.4: COST DYNAMICS

Apple is a large company with significant overhead costs from their extensive manufacturing and
transportation operations. A positive not for Apple is that they have limited the lanes to which
they offer their products, meaning there are only so many storefronts that are able to sell Apple
products, which help eliminate additional shipping costs. This in turn drives up costs on most of
their products, and this increase in cost is also widely accepted among its customers due to the
high amount of goodwill customers give to Apple. Apples superior research and development
operations enabled them to create and design the Apple Watch, which also come at a higher cost
than their competitors as Apple strives to maintain its innovative and creative product line.

Manufacturers will tend to lower their wholesale prices when dealing with a company such as
apple for a brand new product such as this in order to establish a working relationship with the
electronics giant. Apples costs are likely to be relatively similar to their competitors costs when
it comes to distribution. I believe the biggest difference in costs associated with the Apple Watch
come from the research and development. Apple will spend more on research and development

96 Adams, I. (n.d.). How to Shift From a Cost-Plus to a Value-Based Pricing Strategy. - http://blog.optimizationgroup.com/how-to-shift-from-a-
cost-plus-to-a-value-based-pricing-strategy
97 Hutt, M., & Speh, T. (2013). Business marketing management: B2B (11th ed., pp. 302-304). Australia: South-Western, Cengage Learning.
98 Yoon, E. Demand analysis. [PowerPoint slides]
https://uml.umassonline.net/webapps/blackboard/execute/content/file?cmd=view&content_id=_4726794_1&course_id=_53442_1

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due to the higher standard they hold their products to. Apple is not releasing the Apple Watch
simply to list another product on their website, they are attempting to break into a completely
new market and they need to start off right. With the price of the Apple Watch potentially
significantly more than their competitors for some models, there has to be the innovation and
quality usually associated with other Apple products.

Costs of the Apple iPhone 6 are reportedly as low as $200 with a selling price of $64999. We
would be safe to assume similar margins with the Apple Watch, however as the bands get higher
in specialty such as the gold option, customers can expect the margins to shrink for Apple. Since
the Apple Watch will have somewhat similar technology as the Apple line of iPhones, the cost
dynamics should be alike to a certain extent. The main fundamental cost difference between
the two products will be apparent in the engineering and development phases, as there is nothing
similar currently being offered by Apple and the varied design will cause additional costs.

Costs for customers will vary between the styles of Apple Watch. The base model, will cost the
consumer roughly $500, and the top line gold edition could potentially cost the consumer up to
$5,000100. With the many variations of bands and face size available to the consumer, the end
cost will obviously vary, however customers can expect to pay a premium for this product
compared to other wearable technology market entrants, mainly caused by the brand name itself.

6.4.5: POSSIBLE COMPETITIVE RESPONSE

Do nothing: Competitor assumes that their customer base is loyal and will not move to purchase
your product.

Cut prices: This strategy will work in the short run and cannot be a long term solution. This
strategy does not take into account cost structure and margins.

Differentiate the product: Competitor can highlight the benefits of their product as compared to
ours. They can show what makes their product different from ours.
Go head to head: Competitor can show how and why their product is better than ours. They can
develop a marketing plan on how the product is better and the benefits of purchasing their
product.

The last two responses are done in conjunction with each other. Going head to head will always
show how your product is differentiated from yours.

In order to properly anticipate and address the possible responses, a competitor analysis should
be done. The following areas to address are as follows:101

99 How much does the iPhone 6 really cost Apple? http://time.com/3426087/apple-iphone-6-cost/

100 Apples gold watch to sport a 5k designer price tag http://nypost.com/2014/11/05/apples-gold-watch-to-sport-5k-designer-price-tag/
101 http://blog.clientheartbeat.com/competitor-analysis-template/

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Competitor objectives: What are they? Are they different from ours? Are they concerned with
growth rate or market share?

Competitor assumptions: This is based on past experiences and how they reacted to new
products, changes in the market place and industry.

Competitor strategy: Information is hard to develop for this, but if it is a public company, you
can use public records, financial reporting, social media and blogs of any kind.102

Competitor capabilities: Does you competitor have the ability to continue to compete with you
against your product? Do they have the financial ability? The best way to develop answers is to
do a SWOT analysis on your competitor.

Some of the major competitors to Apple Watch are Google, Samsung Gear S, Motorola Moto 350,
LG G watch R and Sony smart watch 3. Each of these competitors including Apple have a loyal
following.

These competitors do not need to cut prices as their products are always priced lower than
Apples products and the market will adjust to the demand and price change accordingly.

Competitors have an advantage now that Apple has exposed the features of the Apple watch.
Competition now has the choice and opportunity to differentiate their product, keep the low
price, and add features that the Apple Watch has, and/or market their products as is and
highlight the lower price. The market results will quickly tell the consumers wants and behaviors
and will require the competitors to act and change accordingly to meet the ever changing market.

Going head to head is essentially what all competitors do day in and day out. The key aspect is
to get consumers and the market to favor your product, through features, marketing, pricing and
brand recognition. Apple has success in this area for many generation of products and is
anticipated to do so again with the Apple Watch.

6.4.6: ENTRY PRICING STRATEGY & IMPLICATIONS SKIMMING VS. PENETRATION

The entry pricing strategy that best fits the Apple Watch is skimming. As previously noted, the
base/starting price for the Apple Watch will be $349 which is priced higher than the existing
competitors products currently on the market. Based on the current market of smartwatches
and the fact that there is huge opportunity for market domination, Apple is choosing to set the
price of the Apple Watch high (higher than competition) to take advantage of the introductory
growth stage of this new technology, product, and market. Using this strategy greatly support
Apples marketing strategy to dominate the smartwatch arena because the demand for a

51
smartwatch that has both functionality and attractive design is high. Consumers are looking for
this type of product and since Apple will be the first to introduce something like this, setting the
price high at the beginning stages will enhance revenue relative to expected demand.

We do not anticipate that this market reaching the growth or maturity stages any time soon.
However, once smartwatches eventually become a thing of the norm as society anticipates and
demand has plateaued the pricing strategy will likely adjust accordingly and lower price point
options will be available as new models are introduced as the product evolves.

An article by Tim Bajarin in PC Magazine called Understanding Apples Watch Strategy,

supports our view as well as evidenced by the following statement, The iPod was $499 when it
first came out and over time Apple drove the price down dramatically. Apple's strategy seems to
start at the premium market to cover its initial R&D costs for the first two years or so before
dropping the price. While it will never be at the low end of smartwatches, Apple will eventually
settle the pricing into mid and premium categories and do quite well.103

SECTION 6.5: COMMUNICATIONS STRATEGY

6.5.1: OBJECTIVES, BUDGET, AND MEDIA MIX FOR ADVERTISING

The objectives for the Apple Watch marketing plan will be to formulate a marketing plan for the
Apple Watch based on pricing principles and overall marketing and corporate objectives. This
document will serve as a skeleton of the algorithms used to determine the various aspects of the
marketing plan.

The overall communication strategy for the Apple Watch will entail promoting the idea of a
device that is worn and that is so personalized that it enhances the overall relationship the
consumer has with technology. Short term objectives will include establishing realistic and
practical use cases that will promote consumers to buy the product on a more widespread basis.
In the long term communication strategies should gear more towards specific industries and key
target markets like healthcare, businesses, and government in order to sustain the anticipated
market share and sustain competitive advantage.

Apple is well known for delivering an exceptional experience through well designed hardware
and user interfaces, and they leverage this to demand a luxury price point from the market.

For budget, one data point is that Samsung, a top rival, spent 31 million in 2013 advertising their
Galaxy Gear smart watch according to Kantar Media. 104 It is also noteworthy to point out that

103 Bajarin, Tim. Understanding Apple's Watch Strategy. PC Magazine - http://www.pcmag.com/article2/0,2817,2468477,00.asp

104 Perlberg, S. (2014, September 9). Apple Enters The Smartwatch Market But Will Its Ad Dollars Follow?
http://blogs.wsj.com/cmo/2014/09/09/apple-watch-marketing/

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Apple spent ~$350 million in ad spending on their wireless phones, up 5% year over year. This is
~$50 million more than Samsung in the same time period, who is down ~$25 million in ad
spending over the same time period. Without analyzing their full product lines and product
release dates, you wouldnt want to read too much into this. However, it does demonstrate a
baseline for marketing spend.

It may also be important to point out that the price point of the Apple Watch is expected to be
priced at $350. Sales estimates have a wide variance, from a few million to as many as 40 million
in year 1.105

As far as media mix, one other thing I would like to point out is that it appears you need an iPhone
5 or newer to use apps on the watch, as the apps will require integration with a tethered iPhone.
The ideal customer for the smart watch may be primarily the current owners of an iPhone, and
secondarily early adopters of wearable technology. Also, the smart watch space is extremely new,
so there is no charted path to success. Smart watches have a ways to go.

For the marketing mix:

Marketing Communications - Product details: detailed information on the smart watch,

including technical details, videos, white papers, FAQs, etc.

PR Apple traditionally has not provided the media with much tech gear for review.
However, this may change as the space is new and there is a lot of new competition rising.
Apple has also done a great job over the last 10+ years of getting their products into media.
TV shows, movies, news, celebrities they are often pictured with Apple devices and
these are often paid sponsorships. This is a great way to disseminate your product into
the consciousness of the public at large.

Advertising Print, SEO, resellers

Much more would go into a marketing mix for a product launch as large as the Apple Smart Watch.
A suggestion would be consulting the 7 Ps of marketing (Product Promotion Price Place People
Process Physical Evidence) if looking for additional ideas. In additional suggestion would be
leveraging celebrity endorsements, podcasts, and traditional media. Reusing methods of past for
product launches may also be considered.

105 Pressman, A. (2014, October 3). Is the Apple Watch the Next Huge, Medium, or Mini Hit? - https://www.yahoo.com/tech/is-
the-apple-watch-the-next-huge-medium-or-mini-hit-99057906709.html

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6.5.2: ROLE OF MAIL, EMAIL, AND WEBSITE FOR PROMOTION

Apple has a three prong promotion, pre-launch strategy, launch strategy and post launch strategy.

In the pre-launch strategy, Apple uses PR, blogs which uses opinion leaders and specialized sites.
Apple also gives sneak peeks on R&D information and creates a buzz on social media and creates
viral marketing as everyone starts talking about the products.

In the launch strategy, Apple utilizes the traditional marketing outlets. Apple advertises on their
website, Apple.com, they use printed media such as newspapers and magazines, television,
billboards and they continue using social media.

In the post launch strategy, Apple enlist carriers and use handheld advertisement, uses website
to promote and show off customer satisfaction. Apple uses independent review websites and
digital campaigning to disseminate all the positive write ups.106

The Apple Watch currently has a dedicated page on the Apple site with all information, pictures,
and films related to the new product. This is current the primary source of information in the
launch phase. The website is really informative and elaborate and entices consumers to want to
purchase the product when released.

6.5.3: SELECTION OF TRADE SHOWS

Apple Inc. as a policy typically does not attend trades shows. The philosophy is that there is
nothing to gain as the trade shows have limited time frame, usually 2-5 days and all the
competitors are there. Attention to Apple will be limited as attendees to the trade show try to
visit all the companies that have booths. Apple has their own show, this guarantees 100% of the
attention is all on the Apple products.107

Apple attends Machworld/IWorld expo. This tradeshow is everything Apple. Software and App
developers, tech gurus, tech writers and experts all attend and talk about everything Apple.
Apple uses this expo to introduce new products such as the Apple Watch (introduced a 2014
expo), introduce enhancements and improvements to current products and what is on the slate
for the future. Apple loyalist attend these expos to be the first to learn, educate themselves on
upcoming products. This is an advantage to Apple as these consumers leave and blog about

106 http://www.academia.edu/2647488/The_Analysis_of_Apple_Inc._Marketing_Mix

107 http://blog.sabbir.me/post/10763499898/why-apple-doesnt-attend-trade-shows-and-probably-why

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6.5.4: SIZING, RECRUITMENT, TRAINING, ASSIGNMENT AND EVALUATION OF SALES FORCE

From a B2C perspective, all of Apples success has been driven through brick and mortar, online
and channel partner sales. Through these channels, Apple has achieved explosive growth and,
according to a recent New York Times article, has even impacted the enterprise sector with
almost 92% of all Fortune 500 companies using Apples iPhones and iPads. 108 With the launch of
the Apple Watch, Apple will continue to leverage these channels for the consumer market. No
additional salesforce is required for the consumer go-to-market strategy.

From a B2B perspective, Apple already has a direct salesforce and account managers aligned with
large enterprise companies. Apple has also announced a wide-ranging partnership in 2014 with
IBM.109 The partnership is intended to increase Apples share position in the enterprise market
while strengthening IBMs position in business software. This partnership has already developed
100 business-centric apps developed exclusively for Apples iOS operating system which will
interoperate with the Apple Watch. These applications will be geared toward specific industry
verticals such as retail, health care, transportation, banking, insurance and telecommunications.
Additionally, Apple will leverage IBMs Cloud infrastructure to integrate business applications
across the enterprise and platforms.110 By adding the Apple Watch to the list of devices available
to the enterprise, Apple will leverage both its direct sales channel and IBMs sales channel to
drive adoption of the Apple Watch into the B2B sector.

Apple will not need to increase its salesforce with the launch of the Apple Watch as much of the
sales forecast is based on consumer sales. But with increased enterprise adoption of Apple
devices in this sector, Apple may need to recruit more direct sales resources. Recruitment will
follow the current hiring rigor and qualifications for direct sales namely, a BS/BA degree and a
minimum of 8-12 years of direct outside sales experience in technology based products. 111
Training for these candidates will include enterprise solutions and applications to the Apple
Watch as well as integrating technologies such as cloud-based infrastructures, wireless platforms
and Wi-Fi. Candidates must also be trained in the enterprise-specific applications developed for
the Apple devices and their applications to the Apple Watch. The salesforce must be equipped
to integrate the Apple Watch into potential enterprise solutions that drive cost reduction,
productivity improvements and incremental revenue.

Apple must successfully train their sales staff in both avenues of sales, B2C and B2B. The B2B
sales staff must have an approach that is specific for business who are looking to implement

108
http://www.nytimes.com/2014/07/16/technology/apple-and-ibm-in-broad-software-deal-for-
businesses.html?_r=0
109
http://www.nytimes.com/2014/07/16/technology/apple-and-ibm-in-broad-software-deal-for-
businesses.html?_r=0
110
http://www.nytimes.com/2014/07/16/technology/apple-and-ibm-in-broad-software-deal-for-
businesses.html?_r=0
111
Jobs at Apple. 2014. Retrieved from https://jobs.apple.com/search?job=36367315&openJobId=
openJobId=3636731536367315#&

55
wearable technology in their industry. The B2B sales are expected to be significant for Apple and
should be a serious consideration for the sales force. As this will be a new opportunity for Apple
sales, managers should be thoughtful of how they should approach potential customers and
prepare to be innovative to break into this market.

Evaluation of the salesforce will include penetration of Apples devices into this sector and
specifically, Apple Watch sales as part of larger B2B solutions. Sales will be measure in terms of
actual device sales and add-on applications that are unique and specific to Apple Watch. Account
Managers will be given a quota based on the number of account he or she has in their sales
module and based on the revenue potential of their base of accounts. Quantitative measures will
include:
Lead generation
Bid and proposal generation
Properly qualified prospects
Closed sales
Number of contract renewals into their base of accounts

6.5.5: IMPLICATIONS OF COMMUNICATION STRATEGY

Apples overall communication strategy is in alignment with the companys goal to make
powerful technology more accessible, more relevant, and ultimately more personal.

Despite the Apple Watch not being available for sale yet, the Apple website has already included
a section for the product on its website that details key information sought by the potential
market. The details provides an overview of the Apple Watch in addition to the following: design,
features, technology, photo gallery, and even short films that visually present the information.

It appears that the overall message Apple is trying to send to the market regarding the Apple
Watch is driven on making technology more personal and proving that they have a smartwatch
for everyone as competitors do not currently offer or cater to the fashionable aspects of the
smartwatch/wearable devices. Apple saw an opportunity and capitalized on the fact that
competitors are merely just producing a piece of technology that happens to be wearable rather
than designing a piece of technology that is intended to be worn and customers actually want to
wear.

Apples communication strategy is to advertise the product in real life use. Showing people using
the product in various ways showing people how it will benefit them. This leaves the consumer
saying I think that would help me or I could see that coming in handy. Communicating
directly to the end user through its distributors gives Apple to make the most of the market. A
lot of people like the cell carrier that they have been with for whatever reason better service
better price etc., and Apple has teamed up with all the major cell providers in order to get their
products to the market faster and more efficiently through its channel partners. Using such a
wide distributor base will allow them to reach their sales goals effectively because, of the ability

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for Apple to have double marketing. Apple markets the Apple Watch themselves and then
individually with each distributor creating widespread viewing opportunity on many differing
billboards, venues, and TV networks.

Apples communication strategy will also show consumers that Apple understands the distinction
from a smartwatch device that is intended to be worn versus a smartphone that is usually carried
around in a bag or pocket or sitting on a desk/surface. Apple describes the Apple Watch as a
very personal expression which is why they created a various range of styles to cater to
customers preferences. This will be one of the key communication points to effectively deliver
in order to optimize sales goals and market penetration.

Equally important to successful market penetration will be Apples ability to communicate the
usefulness of the product, other than being a fashion accessory. The positive to this is that Apple
is not new to the product launch game and has demonstrated successful marketing campaigns
with each product release. Just recently in September 2014, the company launched its bigger-
screen iPhone 6 and 6 Plus smartphones. These newest iPhones have attracted a record number
of buyers and according to the companys October 20, 2014 press release, this was the biggest
iPhone launch ever in the companys history.112

In addition to the new iPhone launches, Apple also unveiled new iPads and refreshed Macs during
a more low-key event in mid-October, as well as launching its Apple Pay mobile payments system
that same month.113 While all these products are significant to Apple's overall continued growth
in the mobile market, the communication strategies and success of the iPhone and Apple Pay will
be an essential part of the Apple Watch successfully penetrating the market penetration and
reaching its sales goals. This is evident, as formerly noted, because the Apple Watch is entering
the market as a companion product to the iPhone (models 5 and newer), therefore, the customer
base will already be limited to those with the iPhone. As a result, it is likely that the more positive
of an experience that customers have with the iPhone, the more likely Apple will be able to
attract and retain customers and hopefully turn them into to purchasers of the Apple Watch. The
same is true with Apples new feature, Apply Pay, its success could correlate into more demand
for the Apple Watch.

It should be noted that during its quarterly conference call for the fourth quarter of 2014, Apple
announced it will introduce new financial reporting methods that lump Apple Watch and iPod
with Apple TV and other accessories, with CEO Tim Cook suggesting the move is a good way to
shield details on the upcoming smartwatch from competitors.114

112 Apple - Press Info - Apple Reports Fourth Quarter Results - http://www.apple.com/pr/library/2014/10/20Apple-Reports-Fourth-Quarter-
Results.html
113 CNET - http://www.cnet.com/news/apple-marketing-exec-predicts-apple-watch-is-going-to-be-huge/
114
http://appleinsider.com/articles/14/10/20/apple-may-not-break-out-apple-watch-ipod-and-retail-sales-
starting-q1-2015

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SECTION 7: CONTINGENCY PLAN & CONCLUDING REMARKS

SECTION 7.1: POTENTIAL CONTINGENCIES - SOURCES & RESOLUTIONS

The first source of contingency is if the Apple Watch fails to meet the value of the customers
needs. Consumers purchase product to fill the personal or necessary need, the Apple Watch
encompasses and compacts features of several products on the market today and address the
current philosophy of consumers and what they are looking for.

The second source of contingency is a strategic choice due to the customers necessary and
desired relationship with the device collaboratively. This would result in a need to target differing
markets that can make use of key features that are valuable to a corporate and everyday setting.

A third contingency source is the market conditions. If the Apple Watch enters the market and
conditions are not good, such as recession, down turn in the economy, other similar products
entering the market at the same time. If consumers are in a saving mode because of the economy,
and discretionary income is limited, the Apple Watch has a possibility of failing in the market
place.

The first source of contingency has to do with the value that the Apple Watch brings to the
customer. The situation is that the assumptions made through marketing research fell short of
what customer expectations where but more importantly what they needed in order for the
Apple Watch to add value to their daily lives through better assimilation with the device for
everyday use. If the product does not meet the consumers need then Apples strategic partners
such as wireless carriers will stop selling, marketing, and supporting the Apple Watch. The
resolution would be to get immediate feedback that would result in a product recall as well as
R&D costs and a new marketing campaign. Apple could also bow out of the wearables sector but
that would be far too valuable a sector and Apple would take the initiative to stay true to its roots
and provide customers and consumers with a product that will add significant value to everyday
life and use of your mobile device. This would result in a significant market share of the wearables
industry resulting in delayed profits but satisfied customers.

The second source of contingency is a necessary revision of brand strategy. If Apple customers
find the device less appealing while paired with a phone but more as a standalone device. This
would affect their distribution channels from cellular providers to Apple stores and as well as
professional sectors such as medical and many other professional applications. This will create
an added expenditure as Apple would have to redesign it marketing plan as well as their support
structure and add new innovative platforms for professional settings. These types of relationship
and contracts would be a bulk purchase and would likely drive down the profitability on the Apple
Watch but it will create another impression sector of what the Apple brand has to offer.

The third source of contingency comes from a scenario. If the target market results in a recession
or economic condition then the product price point will have to come down for consumers. R&D

58
will have to implement new technology that appeals to a new much more cost conscious market
or tailored for business sectors that have the capital to purchase devices for employees. This will
ultimately end up lowering profits through the recession but enabling them to be prepared when
the economy picks back up.

SECTION 7.2: KEY LESSONS LEARNED

Whether a company is expanding into a new country, a new market or diving into a new
demographic, the company is entering a new culture which the company has never operated in
before. It usually pays to take the time to not only understand the environment, but also the
new pressures that will be placed on operations. When creating a new innovative product such
as the Apple Watch, the company is expanding into a new market which it has never operated in
before. Therefore, the company needs to study the market dynamics such as the supply, demand
and the prices which consumers are willing to pay. Apple also has to look at the current
competition to create a competition strategy which leads to strong competitive advantages.

The biggest lesson we learned from this project research is that any innovative company should
use marketing intelligence research before deciding to enter a new market to sell a new product
or service. Marketing researchers study consumer trends and reactions to different products by
collecting and analyzing data about the markets in which they are situated. 115 To complete this
project research about the Apple Watch, our group members had to act as marketing researchers,
and this has led us to learn more about Apple, its competitors and the wearable technology
market in which they operate.
Another lesson learned from this research is the importance of a business completing its due
diligence in terms of market research. Apple has spent millions of dollars and countless hours
projecting and estimating the expected value of their product on the market and the amount of
market share they can capture with the Apple Watch. Apple needs to understand precisely what
their target market is and how exactly they will connect with them with the intent of creating a
long lasting customer relationship. Development of a new product and advertising in such a way
to attract new customers is absolutely a grueling task, even for extremely large and talented
organizations such as Apple. All of the factors we have researched in this project have
enlightened us to the massive tasks it is to release a new product, especially in such a competitive
environment.

SECTION 7.3: LIMITATIONS OF MARKETING PLAN

The main limitation of this research and plan lies primarily in that it is based on external research
and assumptions based on Apples past performance. Because the Apple Watch has not launched
at this time this researched was conducted and because none of the authors have access to
Apples marketing strategy for the Apple Watch, much of the assumptions made are speculative.

115
Palermo, E. (2013, June 26). What is Market Intelligence? - http://www.businessnewsdaily.com/4697-market-
intelligence.html

59
Additionally, during the time this research was conducted, an additional entrant to the wearables
market was announced namely Microsoft with a plan to launch a smartwatch before Apples
entry into the market. It is assumed that this entry into the market will have an effect on the
assumptions made in this search.

This current research and market plan is primarily limited by speculations made from various
secondary resources and a wide array of studies with different thoughts regarding the future of
wearable technology. There is no telling how the market will actually respond to the entry of the
Apple Watch, we will just have to wait and see how everything plays out. It is anticipated that
while many of our conclusions drawn will come to fruition, there will also be factors that are
unexpected that only Apple will be able to address and prepare for.

An additional limitation is that the project is based on the expectation that the Apple Watch will
be released early 2015 (rumored around February). However, in recent news, Apple Retail
SVP, Angela Ahrendts, suggested that the Apple Watch launch will happen during the spring of
2015 in a video message to Apple employees. This is a time frame some may interpret as later
than the official early 2015 timeframe shared by the company thus far. 116 This change in
market entry timing could impact the decisions and strategy of the plan as it stands now.

SECTION 7.4: CONCLUDING REMARKS

At the start of the marketing project, we were all eager to learn more about the fundamentals of
a marketing plan. We were also excited about taking a look into some new cutting edge
technology that was coming from one of the most innovative companies of our generation. Our
overall expectations were to gain a better understanding of key aspects of developing a
marketing plan and using the information and research we obtained to apply to our daily lives,
professional careers, and potential entrepreneurship endeavors.

After completing this extensive group project, we all have achieve our learning expectations and
will take away some very valuable lessons involving the process of creating and understanding a
complete marketing plan. We are particularly grateful for the knowledge about how to enter the
market with a new product and how important it is to consider many strategies and resolutions
in all aspects possible for optimal and successful market entry and penetration.

With more time and data we could have done more research on the competition and isolated
what key pros and cons about older model smartwatches and the improvements Apple has made
and why. Also we could have looked into what competitors are doing in terms of a product

116
Fitbit fitness tracking lineup dropped from Apple Online Store - http://9to5mac.com/2014/11/07/apple-store-
drops-fitbit/

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revamping or new product launches to overcome areas that they are weak in and responses to
Apples entry into the market.

In accomplishing this group project we have all sharpened our team work skills and our ability to
see others point of views which will definitely help us all in our careers. The project allowed us
practice with better understand people and listening to others opinions before we are quick to
discard someones point of view in addition to contributing thoughtful analysis. We learned
valuable lessons on about business marketing and strategies and a great deal about the company,
Apple, as well as the emerging wearable technology industry. It was interesting to learn about
an industry that is sure to impact the way we use technology in our daily lives, the business world,
and healthcare. The knowledge we have gained will make us more aware and better prepared
for this future.

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