Macro and micro environment of apple

Executive Summary
This report analysis the marketing strategy of apple watch series 4. As part of this report, all the factors which are influencing the sale of the product and the factors effecting its sale. This report also identifies the competitors of this product and about their strategies, their brand positioning.

This report also draws the major intention of the individual towards the factors which are differentiating the apple watch from other products. It also shows how the political and technological factors are influencing its sale. This report illustrates the ways to collect the information from the customers.

It is recommended that

· Due to tough competition in the market the apple company should use social media sites. So that the consumers can share their experience.

· Apple Company should upgrade their software so that more people can be influenced by their software and they will buy their product.

· They should reduce their price because there are a lot of competitors of Apple Company the market. If they will not reduce their price, then off course customers will shift their interest towards the products of its competitors.

· It should follow the rapid innovation process in which apple need to have partnership with other distributers which will lead to huge opportunities to build the brand reputation and loyalty.

Table of Contents
1 Executive Summary 2 2 Table of Contents 2 3 Introduction: 3 4 Section 1: The marketplace and influencing factors 3 4.1 The Micro-environment 3 4.1.1 Industry overview: 3 4.1.2 Tree diagram of the Brand and Sub-brand in the Market of Smart watches in the Consumer Electronics Industry 5 5 Competitors Analysis 6 6 Analysis of other Micro-Environment players 8 7 The Macro-environment; Other environmental factors influencing the company - 9 8 Section 2 Consumer segmentation 10 9 Section 3 Assess the attractiveness of each consumer segment 11 10 Section 4 Recommendations for additional research 12 11 Conclusion: 13 12 Recommendations: 13 13 References: 14

Introduction:
a) The authorisation of this report was commissioned by the Marketing Managers of Apple who contracted Marketing Consultants, and it is being produced, to gain an understanding, of the environmental analysis, consumer segmentation and marketing research to your clients, of the Apple Watch Series 4.

b) The primary limitations of this report are, data collection, availability of information and confidentiality issues. Due to lack of time and time table clashes of our team members we couldn’t perform our own surveys and hence all the information is gathered from resources which are publicly available on internet.

c) The scope of this report includes various aspects of marketplace and influencing factors, the environment (micro and macro), industry overview, competitor’s analysis, consumer segmentation. We have also assessed the attractiveness of every consumer segment added. We then provided some recommendations based on our research with an aim to improve the sale of our product through better market strategies., as well as a bibliography, will be included. The information is presented in an organised structure with well formatting, and the information is gathered from reports, journal articles, conference proceedings and documents from various websites. (“Reference List” at the end of the document).

Section 1: The marketplace and influencing factors
The Micro-environment
Industry overview:
Within the research this report provides number of key findings about “environment Analysis”: both “micro environment and “macro environment”, “consumer segmentation” and “market research” of the brand “Apple” and the sub brand of “Apple Watch Series 4”.

The scope of this section is to analyse the “Micro environment” of Apple watch series 4 of the electronic manufacturer Apple Inc. The Micro environment factors affect business strategy, decision making and performance. Customers, suppliers, intermediaries, public and competitors are some micro environment factors.

Apple watch includes in the “Smartwatch market” of the “Technology industry”. Players in the smartwatch market have been increasingly investing on the development of the product equipped with all the latest features and technologies.

According to ‘Forbes’ 2016 ranking, Apple remains the number one brand in the technology industry with $154.1 Billion which is 87% more than second ranked Google(Forbes, 2016).When the Apple first introduced Apple Smartwatch , the smartwatch concept was already in the market with the companies like Samsung, LG and Motorola.

The slightly late entry of Apple smart Watch was a great challenge to prove itself in the market which Apple successfully handled by becoming the leader in the ‘Smartwatch market’ with over 40% of market share according to ‘Apple Knowledge© full analysis’. Furthermore, Garmin and Samsung are the main competitors to Apple in the Smart watch market, and they keep on growing their market shares.

As quoted by ‘Apple’ as this is “Our most personal device yet”, the features and applications product offers seem to support this (Apple,2015). Apple’s technologically smart driven behaviour and innovativeness seem to be the reason for Apple products to standout from all the other alternatives.

Here, we have provided Apple’s key Competition in the smart watch industry through pie charts: 2016

2017

2018

Tree diagram of the Brand and Sub-brand in the Market of Smart watches in the Consumer Electronics Industry
Competitors Analysis
The market for Apple’s services has always been highly competitive and it has always been surrounded by aggressive threats in all parts of its business especially smartwatches because it’s a new concept making it a new opportunity for all the companies. After a tremendous success of Apple’s Smartwatch in its first year ‘2015’, Apple watch sales fell by 70% in the third quarter of 2016 when compared to the same quarter of 2015 (Jurevicius, 2017). But since the day when Apple released its first smart watch, it has always been the leader of the smartwatch market. According a report by the CEO of Apple, (Cook, 2018) Apple’s Smartwatches grew up by 74% in the first quarter of 2018 when compared to the same quarter of 2017. The following charts has been provided above for illustration. Some of the competitors of Apple’s Smart Watch are Xiaomi, Fitbit, Garmin, Samsung, Huawei etc. Out of these, Xiaomi and Fitbit are the closest rivals, according to all the surveys of 2018 in smartwatch industry.

A product comparison table has been provided below to confirm Fitbit’s and Xiaomi’s place in Apple’s strategic group.

P

Apple

Series 4

Fitbit

Versa

Xiaomi

Mi Band 3

Brand + Sub-Brand

The brand is an American multinational company “Apple” and the sub brand is the “Apple watch series 4”.

The brand is an American company “Fitbit” and the sub brand is “Fitbit Versa”.

The brand is a Chinese electronics company “Xiaomi” and the sub brand is the “Xiaomi Mi Band 3”.

Brand Positioning

The brand positioning is “Apple watch series 4 to start change within. Fundamentally redesigned and re-engineered to help you be even more active, healthy and connected”.

The brand positioning is “a Fitness watch for a best healthy life and fitness”.

The brand positioning is “a wearable activity tracker, clear and simple in design and execution”.

Product Specifications

Smartwatch with LTPO OLED Retina display with force touch.

Size : 10.77 mm thin.

Interface: Touch screen and both a digital crown and a side button right side.

Battery Life: 18-24 hour.

Fitness watch with LCD display with tapping touch.

Size: 140mm-180 mm in circumference.

Interface: Three physical button with Round edges.

Battery Life: 4+ day.

Activity tracker with 0.78-inch OLED display and single-point touch screen.

Size: 46.9 x 17.9 x 12 mm.

Interface: Capacitive button.

Battery Life: 22 days.

Place

Apple Store.

Any electronics store selling Fitbit products such as Harvey Norman, JB Hi-Fi, Rebel.

Any electronics store selling Fitbit products such as Dick Smith, GearDo Australia,

Price

From $599 AUD

From $249.95 AUD

From $43.99 AUD.

Promotion

Social media- such as apple Instagram and Facebook page, Television Advertising.

Social media like Facebook and Instagram pages, through special discount offers on Fitbit products, Television Advertising.

Social media like Facebook and Instagram pages, through special discount offers on Xiaomi products, Television Advertising.

Advantages & Disadvantages c/w our Brand and Sub-Brand

Advantage: Customizable options, such as band colour, material, face colour, finish, size.

Largest Apple watch display yet.

Disadvantages:

Expensive when compared to the competitors.

Compatible only with iOS.

Advantages: Large wristband, Super light geometric case.

Disadvantages: NO digital crown.

Not customizable.

Advantages: Best battery life until now.

Very cheap.

Disadvantages: Less profitable as the cost is less,

Not customizable.

Other factors important to prospective buyers

Buyers should consider the compatibility.

i.e. iOS only

Most reliable watch proven.

Best fitness watch proven until now. Hence highly recommended for fitness freaks.

Very good option if the buyers wants something cheap and with long battery life.

Things that differentiate these competitors from Apple:

Though Apple is the leader in the electronic wearable market.

· But Fitbit has the best fitness tracking system with push notifications. According to a recent report (Song, 2018),” Fitbit has a long way to go before it can match the Apple Watch’s notification, AI, And smart home control capabilities.”

· But Xiaomi has a main advantage “Price” which makes it a big threat for Apple as it is the affordable for most of the target audience. According to a recent report (Canalys, 2018) “Because of the less price, 90% of Xiaomi's wearable products are in the close to profitless end of the wearables market.”

Apple Watch Series 4

Fitbit Versa

Xiaomi Mi Band 3

Analysis of other Micro-Environment players
The key players of micro environment are the company, suppliers, marketing intermediaries, competitors and publics. Suppliers play an important role in the product lifecycle.

Apple products are made all over the world. According to the ‘Five forces analysis, Porter’s model’ done by Edward Ferguson (2019) for Apple Inc., ‘bargaining power of Apple’s Suppliers’ is weak due to high number of supplier availability, high ratio of firm concentration to supplier concentration. Apple works closely with their suppliers across the world to get the best out of their products.

There are some risks that can occur if the company fails to have a good relationship with the suppliers. Supply shortage or delays and labour strikes can cost lot more than it seems to the company. Events like this directly affect not only on the production process but also for the company reputation and most importantly the customer satisfaction.

Increasing items per order, reducing the number of the material returns ,convert more quotes into orders and making timely bill payments are good ways to leverage suppliers.

As per ‘Nikkie Asian Review’ ,working with a huge brand like Apple, encourages and support for their suppliers to grow better and this is an opportunity itself that suppliers would try competitively to work with the company.

“The rapid rise of Chinese companies in Apple's supply chain highlights the country's remarkable technological advancement over the past few years, as Apple demands world-class quality from the makers of parts going into its products, from iPhones and MacBook to Apple Watches and Air Pods.”(Cheng Ting-Fang, Lauly Li, Kensaku Ihara, 2019)

The Macro-environment; Other environmental factors influencing the company
Three Macro-environment factors:
Economic factors
The last economic recession affected Apple brand and its products negatively. Cost of labour changes in other countries, especially developing countries will have negative impact on the brand and the product. America seeks to make US companies more competitive in the global market (Castelnuovo, Lim, Pellegrino, 2018).

Politics factors
The recent trade wars between China and US has impacted Apple negatively (Farfalovskaya, 2018). The trade war might lead to increased tax or levies on American products (Meredith, 2018). On the extreme side, China can ban Apple brands on Apple watches on the accounts of breaching their security measures. With these kinds of political treats, Apple watches can have negative effects on sales.

Technological factors
Apple Watches are affecting but there has been a problem on their durability. Apple need to be aware of such external issues and develop products that are durable. By being independent brand refusing to be manipulated by politics of counters, customers will build trust of Apple watches and other product.

Recommendations
Apple can focus on other untapped markets to spread the risks associated political factors. Alternatively, Apple should try to be neutral politically with other countries like Russia. Apple should work on their hardware as they are ahead in software parts. If they can make their watches more durable.

Factor

Trend

Explanation

Meaning for strategy

Demand for smartwatches

More people are looking to buy smartwatches as part of their usage.

Increased health awareness and more people want to track their physical exercises

Apple’s digital watches should be more included to physical fitness.

Politics

Countries seek to ban products associated with some countries

Trade wars between countries.

Strive to be politically neutral.

Section 2: Consumer segmentation
The Apple Watch Series 4 does not sync with other devices, it is very important that non-Apple phone/computer users not purchase this device. In the table below, the segments were identified based on features of the Apple Watch Series 4, as well as profile elements, where general expectations were identified as use of the watch.

Table 1. Consumer segmentation table

Benefits sought

Occupation

Need for social esteem, need to be seen as

Need for contact with others

Need for synchronisation with phone and/ or Apple computer

Calendar

Busy, organised

Organised and efficient

High - work

Essential

Health features

Medically concerned

Health conscious

Medium

Not necessary

Email

Up to date occupations

Organised, efficient, responsive

High – work and social

Essential

Message

On call positions

Important and

efficient, on the

go

High – work and social

Essential

The acid test, ‘for successful market segmentation is to demonstrate that the derived segments respond differently to variations in the marketing mix. Unfortunately, many market segmentation schemes fail this key test’ (Wurst 2001). This includes, each person should only be able to go into one segment only because when we are separating users based on their purchase experience, only one person can be used per band.

To justify the chosen segmentation base and 4Ps, the firm has to evaluate the various segments, through five key factors, including measurable, accessible, substantial, actionable and differentiable from one another.

1) Measurable; this includes the size and purchasing power of the segments within the base, to be measured, through frequency of use, by means of marketing research through surveys.

2) Accessible; segments can be reached and served, that is, product can be distributed to where consumers live, and through advertising and promotions, for example, testing features of watch in store.

3) Substantial, segments are large or profitable enough. For example, use with a marketing program is effective, through a homogenous group. Here, all segments are large enough for an active market, where the segments will prove effective.

4) Actionable; effective programs can be designed for attracting and serving the segments. These programs will be effectively marketed to users on the go, and those medically concerned, through segments such as email and health features.

5) Differentiable; can distinguish this segment of consumers from others and deliver different marketing mix to them. For example, each segment, delivers certain requirements to the consumer, where communication will deliver a different marketing mix to them, and be satisfied with the purchase.

As an example, from the base of benefits sought, the segment of health features, will react to offers of better health benefits, which causes a variation in the marketing mix by buying the brand, or their reaction. Whereas consumers in other segments will not buy the brand just because of the health features offer. They will buy because of other benefits, such as email and message. The segment is very attractive for the brand and sub-brand, targeting the segment/ s.

Section 3: Assess the attractiveness of each consumer segment
Size and Growth

This is a low margin segment due to strong brand because of their high availability of resources that can afford to target a low market segment. Apple is a strong brand with a huge global presence. The digital product industry is fast growing. For example, Apple Watch sales comprised of more than half of smartwatch markets in the world as from 2018 (Hall, 2018). Because Apple has enough resources that include technical ability, human capital and funds, it can therefore strive to fulfil the larger market demands. If Apple can strive to satisfy their customer, they will continue to dominate the smartwatch market and therefore make huge profit.

Structural attractiveness

Apple communicates to their potential consumers within the segment on a moderate basis due to the fact that it only communicates with the Apple brand only. “Apple uses promotional methods using special short-term techniques to persuade members of a target market to respond or undertake their products” (Apple Analysis, 2012). In regard to competitors, in the table below, Apple faces with many competitors, such as android, meaning the Apple brand is its own brand.

Matching of resources

The Apple brand has substantial resources, with high sales, where their objectives include, maximising sales and market share. Fast-growing segments would be a good match for Apple and the Apple Watch Series 4, because of the high sales, as well as expanding their distribution network.

Segments

(potential use frequency)

Size and Growth

Structural attractiveness

Resources and objectives

Low

Small: X

Many Competitors:

XX

Moderate

Large: ✔︎✔︎

Many Competitors: X

✔︎✔︎

High

Medium: X✔︎

Many Competitors: ✔︎

✔︎✔︎

Maximum

Medium: ✔︎✔︎

Many Competitors: ✔︎

✔︎✔︎

In the table above, the Tick(✔︎) means suitable in the above table, and the Cross (X) means not suitable.

The apple brand is only purchased on the proviso of buying the Apple computer or iPhone.

For all segment’s Apple will find it easier to communicate with apple users of apple computer and phone users, via email and text, as well as organising and reminding.

The best segment for Apple is the “high use frequency”. This is because it is relatively large in size. The profiling attributes (price, features), consist with the sub-brand. This is the best option because it has relatively high competitors suited to this demographic. We conclude that need for the watch is for busy lifestyles, affairs etc. that enjoy an emotionally high lifestyle.

Section 4: Recommendations for additional research
The information that we want to find out what is influencing the customers to purchase the apple series 4 watch over the other competitors and how can we offer new services to customers. We want to know how customers will react to the many different factors ranging from different ways.

· Would customers like to pay more for the same product?

· Would customers like this product or not?

We want this information for the reason so that we can distinguish our competitors and ourselves which will help to increase the sale to the customers, and which will definitely lead to increase in market share. And ultimately it will lead to high brand reputation in market, which will lead to shape up the market strategy and which will attract more and more customers and will enable us to try new and new programs.

The most effective way to gather information about the sale of our product is the surveys. The reason behind conducting surveys is that the surveys provide the valuable feedback and provide the important data about consumer’s opinions and their attitude towards the product.

The information gathered through surveys is a lot beneficial to the marketing managers in decision making market strategies because these market strategies would provide the decision to the managers about the statistics. When managers are provided the statistics then that statistics is helpful for the managers to shape up the marketing strategy and helpful to target the customers and to know how the customers react to their strategy. In this way the targets can be achieved, and the resources will not be wasted.

There are many advantages of using surveys like surveys can be done in a very short time period. They always provide a numerical data and they are very cost effective. They provide open and honest feedback and meaningful opinions, comments and feedbacks. The disadvantages of surveys are like they are not accurate means they are less qualitative. The reason why the disadvantages of surveys are overweighed by the advantages is people always look for the qualitative data than the quantitative one. And utilising so much time on one thing which will not be having a good result is not worth.

Doing research interviews which can be structured or semi structured one and even a conversation. The short interviews with public can help us to know that what they think about this product, their attitudes and many other things. There is also one more method of doing the research that is the sampling method. When the marketing researchers determine the plan for sampling than they should decide how they going to contact people means whether they will contact people via mail/ telephone/online. Telephone is the good way to collect the data because this is a quick way and it’s not too personal. If they will use the online method is not very expensive and faster than the telephone and in this method people will try to be more honest than other method and this is also the versatile method but in this samples can be small in this because of the technological problems.

Conclusion:
In conclusion, it can be seen that Apple Watch series 4 operates in a highly competitive industry which recently evolved due to advancement in technology.

Due to the high competition, Apple also experienced downfall but it managed to evolve with a tremendous growth. According to the recent annual surveys of 2018, Xiaomi has been identified as the biggest competitor of Apple followed by Fitbit.

All the facts and specified sources in this report makes it very clear that Apple has always been the leader in the smart watch industry from the time it released its first Apple watch (2015).

Further, this report has adequately tackled all the areas stated by recommending our own marketing strategies to increase the sale of Apple Watch. Our primary recommendation was “Discounts and promotions”. All our findings contributes to a complete knowledge of Apple’s marketing environment which serves as a foundation for the development of future marketing plan.

Recommendations:
Some strategies from our analysis of the Marketing environment are:

1. Apple has a disadvantage i.e. Affordability, a part of target audience doesn’t consider Apple at all because they find it expensive. Hence Apple should spread awareness through advertising campaign, that the Apple Watches are costlier in the market because of its high quality and reliability.

2. The Brand positioning should be updated regularly and should be targeted to maximum possible audience by entering more social media platforms like Pinterest.

3. By influencing consumers by discount promotion on television/in store. According to our research, Apple has very less Promotional offers when compared to the other competitors like Samsung.

4. Keeping technological upgrades, establish partnerships with more distributors, would increase opportunities to build brand reputation and loyalty.

References:
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