Apple consumer behaviour case study

Review this week's case, Apple Watch – Managing Innovation - HARVARD CASE

After your analysis of the case, prepare a response to the following questions:

1) Which innovation characteristics could Apple leverage to manage resistance to future generations of Apple Watch?

2) Discuss the role of propagation mechanisms in reducing resistance to Apple Watch?

3) What are the consumer characteristics that Apple needs to influence to overcome consumer resistance to its smartwatch?

4) Discuss the barriers and sources of active and passive innovation resistance in the context of Apple Watch.

5) Discuss various consumer segments that arise from variation in resistance.

In your response to these questions, be as thorough as possible. In case analysis, you always want to support your answers with a cited source. In addition, utilize material from the chapter readings in your response.

Use the the Attached template and case.For the exclusive use of P. Chaudhari, 2018. W18034 APPLE WATCH: MANAGING INNOVATION RESISTANCE1 Tania Bucic and Gaganpreet Singh wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Copyright © 2018, Ivey Business School Foundation Version: 2018-01-24 Apple Inc. (Apple), one of the most innovative companies in the world, embarked on a brand extension strategy to enter different industries. After affirming its place in the computer, phone, and music markets, Apple shifted its focus to wearable technologies,2 including Apple Watch, which launched in April 2015. The watch integrated fitness and other health-related capabilities with Apple’s mobile operating system (iOS) and other Apple products and services. Because Apple owned the necessary hardware, software, and services that were augmented through its ecosystem, the watch was virtually inimitable.3 The innovation thus appeared poised to be a true game changer. However, in mid-2016, Tim Cook, Apple’s chief executive officer, acknowledged that Apple Watch had not created quite the market impact Apple had expected. Quantitatively, Apple Watch recorded 55 per cent lower sales in the second quarter of 2016 than in the previous year (see Exhibit 1), suffering from restricted product utility, high prices, low perceived value, limited social acceptability, and late market entry.4 The concerns appeared even more problematic for consumers in developing countries, who had less disposable income than those in developed economies. Yet Apple had already been strategizing to expand its presence in developing countries in response to stagnant growth prospects for Apple’s traditional products in developed economies.5 Apple management had limited options. One proposal was to reconfigure the marketing mix to realign Apple’s marketing strategy to reduce resistance to Apple Watch. SMARTWATCHES The wearables industry included fitness bands and smart eyewear as well as smartwatches, which constituted the leading product category and accounting for 59 per cent of total wearable device shipments in 2016. This share was estimated to exceed 70 per cent by 2019. The global wearable industry as a whole appeared poised to increase by a compound annual rate of 35 per cent over the coming few years.6 The high-tech, computerized watches were positioned to go beyond traditional timekeeping, offering extended utilities, such as making calls, sending messages, and surfing the Internet, by incorporating operating systems that could combine multiple functions in the small devices. Continued innovation resulted in great strides in the smartwatch market, especially relative to the first commercially successful smartwatch, the Pebble, This document is authorized for use only by Paresh Chaudhari in Marketing Management Summer IIG 18 taught by Stephanie Thacker, University of the Cumberlands from Jun 2018 to Dec 2018. For the exclusive use of P. Chaudhari, 2018. Page 2 9B18A005 launched through Kickstarter in 2012. The five common smartwatch platforms included Apple’s watchOS, Tizen, Pebble OS, Android, and Android Wear (an Android spinoff).7 Of the five, the watchOS became the most popular, with a momentum that was expected to persist, while Android Wear remained in second place (see Exhibit 2). The “finely tuned design, the use of premium materials, the fluid software and the luxury feel” of Apple Watch and its watchOS platform gave Apple a competitive edge.8 APPLE WATCH Apple Watch was the first product produced during Cook’s leadership period. A year later, in mid-2016, the company launched a second generation of the watch.