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IVETA MARTINKOVA STUDENT ID: 26005029 FASHION MARKETING AND MANAGEMENT

Virtual Private Theater Video Glasses with 52 Inch Wide Screen Display by Apple Inc. Product Report


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CONTENTS • Executive Summary

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• Introduction

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• Target Market

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• The Process of Launching a Product

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• Competitors

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• PESTEL Analysis

10-13

• SWOT Analysis

14-15

• The Four Ps of Marketing

16-17

• Porter’s Five Forces

18-19

• Communication Platforms

20-21

• Bibliography

22-23

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Executive Summary This report explores the launching of the Virtual Private Theater Video Glasses with 52-inch-wide screen display by Apple Inc. The project discusses the target market of the product, its competitors, the marketing models used for analysing the item, as well as the successful business strategies and communication platforms through which the brand communicates with its consumers. The project summarises the main features of the Virtual Glasses and tracks its development on the competitive market.

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Introduction The purpose of this report is to present the most useful ways to launch Apple’s new innovative product - Virtual Private Theater Video Glasses with 52-inchwide screen Display on the current marketplace, adding it to the wide range of the company’s popular items. The analysis will examine the following marketing models to provide an in depth research of the origin and future development of the device – PESTEL, SWOT, Porters Five Forces and Four P’s. Using these models, the report will then select the most effective communication platforms through which Apple will introduce and connect the product to its future consumers, building a successful strategy for its prosperity on the market.

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Target Consumer According to a new analysis by the second largest market research organisation in the United KingdomIpsos MORI, virtual reality engages a wide range of people, set to become a $1bn (ÂŁ710m) industry by the end of 2016. The data is based on the attitudes towards technology of adults aged 16 to 75. Unsurprisingly, younger adults indicate an extensive interest in exploring the virtual world, with 63% of the 16 to 24 age group showing excitement for the technology, contrasting 33% of 55- to 75-year-olds. Baring in mind the given statistic, it is clear that the Virtual Private Theater Video Glasses will appeal the most to the younger consumer aged 16-24, allowing them to explore further development to their area of interest, either in the entertainment or educational sphere. In particular, gamers are one of the key target consumers, being the most interested in the potential of digital technology. However, the product is likely to be used among the youngest consumers as well by amusing them it allows their parents to do other activities while looking after their children.

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The Process of Launching a Product “Innovation distinguishes between a leader and a follower.” (“The Innovation Secrets of Steve Jobs,” 2001). Apple has a legendary history of its products’ launches and earned profit through the sustainable sales the company maintains. However, in order to protect its dominative position on the market place, it needs a firm strategy to keep its consumer base satisfied and interested in the upcoming products. Apple uses several marketing models in order to analyse the brand’s features and new product itself, the current marketplace and the competition that takes place on it and it also helps the company to establish a strong marketing strategy which will earn a good r eputation for its product.

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Competitors Competitors

Due to the arising of the virtual reality era and high interest in to the arising of the virtual reality era and high technology as aDue whole, the best known and not so famous compainterest in technology as a whole, the best known and not so famous companies nies have been competing severely in the past few years, launchhave been competing severely in the past few years, launching similar products ing similar products 2016, withfora2017. lot more expected throughoutthroughout 2016, with a lot more expected for 2017.

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One of the biggest competitors of the Apple’s Virtual Private Theater Video Glasses is Oculus Rift. This is considered one of the most thrilling VR systems that can be found on the market, with a price of £549.

Another competitor of Apple is Samsung Gear VR, designed to work with a smartphone, rather than needing a connection to a PC and being at a more reasonable price for around £100.

The cardboard VR-reality printed by Google is by far the most affordable similar product on the marketplace, offered for less than $ 17. The set may be not as durable as the other products on offer because of the material it is made of but judging by million orders of Android users it’s a satisfactory item.

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“I felt strongly that marketing managers, in order to make better marketing decisions, needed to analyze markets and competition in systems terms, explicating the forces at work and their various interdependencies.� ~Philip Kotler, Kotler on Marketing: How to Create, Win, and Dominate Markets

P O L I T I C A L

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E C O N O M I C A L

S O C I O C U L T U R A L


T E C H N O L O G I C A L

E N V I R O N M E N T A L L E G A L

PESTEL analysis is an acronym for Political, Economic, Socio-cultural, Technological, Eco-environmental and Legal elements which allow us to identify possible key changes in the macro-environment that usually affect business activities and performance.

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P Political

An example of the political influence on Apple’s products is the unexpected result of the United Kingdom’s referendum on leaving the European Union. The subsequent significant drop of both Euro and British Pound sent the price of the company’s shares downward by 2.8 percent and the The NASDAQ stock market (where Apple’s shares trade) was down by more than four percent. As a result, the company used the launching of iPhone 7 to increase the prices of many of its products in Britain, which directly concern the pricing of the Virtual Glasses as well.

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E Economical

As the lower pound results in higher prices of the Apple’s products, the UK citizens will experience lower buying power and demand for the company’s products and services. However, the drop of the Pound also means that firm can hire employees and expand the number of the offices and retail stores in the UK at a discount.

S Socio-cultural

Apple is one of the biggest companies supporting The ConnectED initiative, which aims to establish high-speed digital connections to U.S. schools and libraries, making sure that 99 percent of the students can benefit from these advances in their education. The contribution of Apple is a donation of $100 million in MacBooks, iPads, and other products. The initiative is a great opportunity for the Virtual Glasses to become the next professional development tool which can enrich learning in disadvantaged America’s schools.


T Technological

The virtual private theatre glasses are a representation of the incredible level of developing technology in the digital world. Combining comfort and unrivalled multimedia experience for its dimensions, the product is a proof for the revolutionary innovation that the technology possesses. The highly developed software generates realistic images and sounds which simulate user’s physical presence in the particular environment.

E

L

Environmental

“The making of an environmental strategy should preferably be an explicit process. This creates awareness, unleashes creativity and provides the necessary links with other business processes.” (Stevels, 2012). Apple has a strong policy of following eco-friendly strategies in the development of its products. In 2015, 93 percent of the company’s energy came from renewable sources and it’s constantly looking for ways to reach a hundred percent. (Inc, A. (2017)) New solar energy projects were created to reduce the carbon footprint. Greener materials are used for the production of safer products and manufacturing processes and innovative robots are used to recycle devices.

Legal

An example of an important legal factor is the complete embargoes the U.S. holds against Syria, Sudan, and North Korea. It is strictly prohibited the exportation, reexportation, sale, supply, directly or indirectly, from the US, or by a U.S. person wherever located, of all kind Apple goods, technology (including technical data), software, or services to any of the listed countries without prior authorization by the U.S. Government.

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SWOT

Analysis SWOT analysis is a business review model, used for product development, marketing, strategic planning, competitor evaluation, as well as research reports. The acronym stands for business’s strengths and weaknesses, along with opportunities and threats it meets in the marketplace, helping the development of a strong business strategy.

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“The most exciting option is the product that is new to the company and new to the market; it represents a completely new idea that has never been offered before.” (Brassington, F. and Pettitt, St., 2006, p.383). Being “the world’s largest information technology company by revenue, the world’s largest technology company by total assets, and the world’s second-largest mobile phone manufacturer” (wikipedia), Apple has a well-known established reputation, with a pre-existing client base. By introducing one of the first of its kind digital products, the brand gains a significant advantage over its competitors.

“One problem with this category of new product is that potential buyers might be suspicious of a totally new concept – will it be reliable, will it be superseded, will I look a fool in two years’ time for having bought it?” (Brassington, F. and Pettitt, S.(2006), p.383). Another problem concerning the successful launching of the product is persuading the future consumers that they actually need the product after spending their lives without it up to the present moment. What’s more Apple’s product offerings are usually among the priciest items on the market which means that a restricted consumer group would be able to afford the Virtual Glasses.

A chance for the future development of the smart technology is by targeting a different customer base. The new consumer could use the product for scientific researches for example, by exploring, gathering information and reaching further analysis of the points of interest. Being an already established brand which offers an original product could help Apple outstrip the competition and earn considerable profit of the production’s sale.

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One of the biggest threats for the product’s prosper is being copied by other brands and offered at a lower price at the marketplace. An example for this is the already mentioned Google’s cardboard VR-reality which can seriously intimidate the success of the Apple’s product.

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hreats

pportunities

W S

eaknesses

trengths

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The 4Ps of Marketing 16


Product

The establishment of the device put focus on people’s personal interests, aiming to enrich their daily routine by providing quality cinematic experience of movies, TV shows, video games, music and education. The product gains customer’s attention by offering revolutionary innovations, such as the feeling of being in a real theatre thanks to the crystal clear virtual cinema screen.

Price

“Pricing is part of the marketing mix, and therefore pricing decisions must be integrated with the other three P’s of the marketing mix.” “The other elements of the marketing mix all lead to costs” (Hollensen, S., 2013, p.535). Apple’s pricing strategy consists of relatively high prices. These maintain the high-end image of the company and its production, while aiming at people from middle and upper classes. The product’s cost is £350 which is a normal price for a new-launched Apple’s item, and places it in the middle of the similar products on the marketplace.

Place

Apple Stores are the most visible places that offer the company’s products. Apple possesses 463 stores worldwide (Apple, 2017), which altogether get more than 1 million visitors per day (Kovach, 2015). The multifunction device can also be found in the official online Apple Store and App Store shopping. Apple also uses authorised retailers, such as Walmart, Best Buy and Target, as well as telecom companies like Verizon, Sprint and AT&T, which sell iPhone units. Additionally, Apple uses fulfillment services from companies such as eBay and Amazon.com, through which third parties sell Apple items online. Apple’s marketing mix explores different types of online and non-online distribution channels, providing its customers buying options from which they can choose.

Promotion

In order to promote its products, Apple uses advertising through the company’s website and Apple Stores, as well as advertising via other firms, such as technology news websites. Apple store employees also provide personal selling, giving productspecific information to the customers, in the aim to convince them to make a purchase. In addition to the company’s marketing mix is sales promotion, which takes place at the firm’s stores, offering some old models at discounted prices when the more expensive products take place. 17


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Supplier power Apple runs one of the most successful supply-chain management systems. It maintains capital assets at many of its suppliers’ facilities and participates in inventory prepayments at negotiated prices. Many of its suppliers are overseas, producing the high quality components and products the company and its consumers expect. Some of the major ones are Analog Devices, Inc, Glu Mobile, Inc, Jabil Circuit Inc, Micron Technology, Inc. etc. However, there is a risk of a belated delivery as the company’s purchase commitments can take up to 150 days. Industry-wide shortages are also not uncommon as some of Apple’s products demand components that are custom for the company, so suppliers have to make an accurate forecast of its purchaser’s requests.

2 Porter’s Five Forces

Buyer Power “Satisfied customers buy again and tell others about their good experiences.” (Armstrong, G., Kotler, P., Harker, M., Brennan, R.(2012)). Although there are already plenty versions of the product on the market which attract customers with lower prices and even advanced functions, Apple is a well-recognizable brand which has proved the quality of its products. That helped the company establish a strong connection with its customers which makes them stay loyal to the brand when choosing what products to buy next.

Porter’s Five Forces is a model of analysis, developed by Michael E. Porter, a Harvard Business School professor, used to examine the industry structure and corporate strategy of a company. It provides an understanding of the strength of the current competitive position and attempts to develop a successful business scheme. 18 18


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Competitive Rivalry Apple experiences a high level of direct competition in the technology sector with major companies such as Google, Inc., Samsung Electronics Co., Ltd, Amazon, Inc and the Hewlett-Packard Company. The relatively low switching cost is one of the reasons that make the industry so highly competitive, which Apple takes into consideration and continues to develop innovative technologies to protect and strengthen its share position on the marketplace.

Threat of Substitution The threat of substitution is relatively low for Apple due to the limited capabilities the most potential replacement products have compared to the company’s product. Although there are already substitutes to The Virtual Private Theater Glasses available on the market, many consumers would rather choose the Apple’s product, because of the company’s proven reliability.

Threat of New Entry There is a relatively low threat of a new entrant to the marketplace that could displace Apple’s product, due to the extremely high cost of setting up a company and further expenses of establishing brand name recognition within the industry. However, it is vital for the company to keep on strengthening its competitive position and domination within the business by developing new products and building brand loyalty, assuring that it is the preferable consumers’ choice.

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“With the ascendency of social media and its platforms for communication and business development, brand managers are faced with the challenge of aligning offline and online strategies, each of which has varying methods of measuring business success.” (D’Arienzo, William; p.256)

In order to put its new product into the spotlight, Apple needs to establish a reliable advertising strategy, which will guarantee the successful launching of the product. This could happen through various communication platforms including online display advertising, mobile marketing, buzz marketing, Apple’s website and the social media.

While Apple has one of the world’s most efficient product launch strategies, according to AdAge, the company’s advertising spent is actually lower than its competitors (just 0.64% of Apple’s revenues went to marketing in 2013, whereas Samsung invested 1.82% of global revenues on ads and 3.51% on sales promotion).

Communication Print and Media Advertising

The company uses print and media advertising extensively for the promotion of its new products. For example, iPhone 6 has been exposed on more than 10,000 billboards in 73 cities in 25 countries which is most probably going to be a good strategy for the popularization of the Virtual Glasses as well.

Mobile Marketing Mobile marketing is one of the most effective ways to reach the consumer now, when the average person spends 8 hours 41 minutes on media devices (Davies, 2015). 20 20

The App-based marketing or QR codes are one of the quickest and most effortless ways to provide the customers with the newest information about the product, as well as future releases or promotions of the company.


Celebrity endorsement Another marketing strategy the brand could use for the launching of its new product is celebrity endorsement, as it can considerably spread the product’s popularity and deliver the right message to the consumer.

Some of the stars who have already influenced the advertising of the company’s products are the NBA basketball player Stephen Curry, promoting iPhone 6, the comedian Bill Hader, exposing Apple’s new hands-free Siri, musicians such as Jimmy Fallon & Justin Timberlake who have partnered with Apple on a series of ads for iPhone 6 as well.

Platforms Apple’s Official Website Apple’s personal website is a proven method for providing users with the right information and products’ access in the easiest way. It also engages and excites its visitors with positive messages and beautiful pictures which can be crucial for the releasing of the glasses.

Social Media Appe has minimalist presence on social media, as it has generally positive perception among consumers. However, even difficult to be found on Facebook, an unofficial page for an Apple Inc. “computer store” has more than 24.5 million “Likes”.

When it comes to Twitter, the App Store is approaching 4 million followers, Apple Music has 7.5 million, iTunes -806,000, and the recently launched Beats1 account already has more than 314,000 followers (Kapko, 2015). This information clearly proves that it would be a successful step if the new product is promoted through social media. 21 21


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Sheffield Hallam University


Virtual Private Theater Glasses