undamentals of Marketing Assignment 1- Apple Watch Series 3
On the 22nd September 2017, Apple launched its series 3 edition of the Apple Watch which was brought out with the intention to enable consumers to stay connected, track their workouts and monitor their health daily. (Apple, 2017.) The newly built-in water-resistant feature enables consumers to partake in light swimming activities of up to 50 metres below water surface. (Apple, 2018). The several models which were introduced the same year saw differences between them such as different sized watch faces, a series of different colours and the option to purchase either the cellular or noncellular model.
The orginal price of the noncellular model retailed in at £329.00 prior to the release of the Apple Watch series 4 at the end of September 2018 which caused the retail price of the series 3 Apple Watch to drop by £50.00. Nonetheless, this did not prevent Apple from obtaining a $10 billion revenue over the last four quarters from their “wearables” department which refers to the sale of both Apple’s Airpods and smartwatches. (9to5mac, 2018.)
The series 3 Apple watch presents several different strengths within the device itself, whilst others may view these as weaknesses or even opportunities for threats to occur. Firstly, one of the built-in advanced features is the smartwatch’s compatibility with Apple Pay(Luckerson. V, 2014). This attribute of the watch enables Apple as a company to stay on top of current trends and demands such as the increased use of contactless payments. (GBN, 2014). As a result of this feature, consumers are now able to make multiple purchases and payments of up to £30.00 “in stores, within apps” and “on the web in Safari;” further providing customers with greater flexibility and choice with regards to methods of expenditure and payment processing. (support.apple,2018).
Due to the limited compatibility of the Apple Watch to Apple products only; Apple can piece this as one of the smartwatches strengths as this builds brand and product awareness, allowing room for potential growth in other areas such as iPads and iPhones, overall increasing the company’s revenue at the end of the financial period. This comes after the company successfully obtained a $10 billion revenue in their “wearables” department alone which consists of the company’s sales of both the Apple Watch and other wearable classified technologies such as the Apple Airpods.
Despite the several strengths that come with the ownership or obtainment of the series 3 Apple Watch, there are also many weaknesses and limitations associated with it also. The main one of these is the fact that the watch is only compatible with additional Apple products. This instantly minimises Apple’s target audience to existing Apple users or potential Apple users only rather than the wider community of Android users internationally who proceed to use brands such as Samsung, Huawei and Sony etc. A limited target audience may result in Apple losing foothold in the market and losing consumers to competing companies as a result of more option and variety being offered elsewhere.
Apple’s premium price range on the majority of products instantly sets them apart from other technological retailers in the industry, and the release of the Apple Watch series 3 is at no exception. Previously retailing in at £329.00 prior to the release of the series 4 Apple Watch, Apple attract a great amount of competition from cheaper retailers such as Fitbit and Garmin whose products inevitably perform equally as well as the Apple Watch with regards to its fitness tracking aspect.
After a cholesterol expenditure of $1.8 billion in advertising in 2015; Apple choose not to release the following years’ marketing disbursement. However, in the event that it has maintained its trend of doubling from previous years (businessinsider,2016) then it is vitally important for a large company such as Apple to pay close attention to the price of competing products in order to maintain a loyal consumer base for the company’s smartwatch department.
The “promisingly evolving” (Dehghani.M, 2016) growth of wearable technologies means that there is a substantial amount of room for Apple to continue making tweaks and improvements to their watches as time goes on. This poses a series of great opportunities for the company to hone heavily in on in order to assist them to maintain a foothold in this highly competitive and continuously expanding market.
The current generation of consumers grew up using technology and are therefore are less ignorant towards newly introduced technologies such as they Apple Watch. Therefore, there is a larger target audience for Apple to market their innovative products at, with the greater opportunity to increase sales in these areas. The introduction of new technologies such as the Apple Watch will result in future generations using such devices that would’ve been unimageable to previous generations. As a result of this, they will grow up in a society that is more accepting towards innovative and pioneering technologies that an older generation may find irrelevant.
Due to the fact that Apple Watches are a relatively new introduction to the market, Apple are able to market them at a premium price therefore are able to extract as much profit as possible. This profit can be further invested into improvements and future versions of the device in order to keep the Apple Watch as a strong competitor in the smartwatch market.
Maintaining the development practices Apple are currently following with regards to their consistent software updates allows consumers to get the best out of their purchase
The continuously changing technological society individuals have inhabited, instantly becomes one of the factors of threat for a product such as the Apple Watch. This is due to the fact that each consumer’s ever changing tastes and spending behaviours all lead back to the ideology of trends and keeping up with the market. Due to this, Apple would need to continuously update the usability of the Apple Watch in order to keep up with the changing trends and demands of consumers. This can be a costly procedure and exercise and one which may not portray any benefit as consumer demands can be hard to predict. If the Apple Watch series 3 is developed in the wrong direction or marketed towards the wrong audience then this could result in a plummet in demand.
As a result of the ever changing market, the Apple watch series 3 was only a success temporarily and this was always going to be inevitable due to the release of the series 4. From this, it was anticipatable that the time, resources, money and market research conducted and implemented into the production of the Apple Watch was going to be a short term investment.
The continuous growth in popularity regarding smartwatches and fitness trackers has exceeded the sales of the Apple watch to over $10 billion. However, in saying this, other companies such as Fitbit, Garmin and even Samsung have honed in on this trend and have produced a series of smartwatches/ fitness trackers with similar features to that of the Apple Watch, at much cheaper prices. This can be viewed as a major threat to the sales of the Apple Watch series 3 as other companies are offering cheaper dupes, providing them with a great cost advantage.
in terms of manufacturing, Apple are heavily dependent on China to produce their products such as the Apple Watch series 3 at a much lower cost in comparison to other countries such as America, where the cost of labour is much more expensive than the alternative. In the event that China comes into any political or social unrest or difficulty such as workers campaigning for better pay or working conditions; then Apple may find that their labour and manufacturing costs will increase. As a result of this, the cost of the Apple Watch series 3 could potentially inflate also which could subsequently deter potential sales from this product due to the fact that it is classified as more of a luxury product than a necessity and therefore consumers may be less willing to invest great amounts into the purchase of an iWatch.
Moreover, there have also been calls to restrict Chinese imports in the United States in an effort to boost American manufacturing. This comes after many Americans wanted to see more jobs being distributed within their country rather than several thousand occupations being provided overseas. In the event that the American Government limit imports from particular countries where Apple produce their products such as China, Apple may be forced to move their manufacturing process to America resulting in increased labour costs. Apple may therefore increase the price of their products in order to preserve their profit margin. This could have the effect of the price of the Apple Watch being driven up and may be at the detriment of the reputation of the product as even though the price is being increased, there are no internal or external improvements being made to the product itself.
During periods when the economy enters recession or takes a downturn it is inevitable that consumers will have less disposable income to spend on luxury classified products such as the Apple Watch series 3. This would lead to a decrease in demand and therefore sales in Apple’s “wearables” department.
The government may decide to amend its economic policy to increase corporation tax in order to extend their budget. This may increase Apple’s expenditure in terms of tax meaning that they will have less money available to be invested into the advertisement and marketing of the Apple Watch. If a competitor is able to establish a stronger marketing campaign, Apple are likely to lose their Apple Watch sales to similar products in the market. Another area of the government’s economic policy is a potential increase in interest rates. This may result in consumers putting money into savings as they will gain more interest, preventing consumers taking out substantial loans in order to buy products such as the Apple Watch as the increased interest rate will result in a higher percentage of money having to be repaid. This has the potential to negatively impact the sales of the iWatch, thus causing a decrease in the amount of profit being made in this department.
Socially, consumer’s trends, needs and spending habits may vary in accordance to their culture and climate. Therefore, what is applicable in the US may not necessarily be applicable in the likes of the Middle-East or further afield. As Apple are a dominantly American brand , it is vitally important that they proceed to acknowledge and establish these differences within their products in order to assure the Apple Watch will gain coverage globally and not just throughout specific countries. To do this, Apple need to recognise the different inclinations trending in each culture to enable themselves to market the product correctly and get the desired message across, which in the majority of cases is to drive sales.
In doing this, Apple will be able to maintain their smartwatch sales and hold a high profit margin
In the event that a competitor develops a new innovative smartwatch within this market then customers may be drawn to buy this product in the place of the apple watch. This means that the competitor’s brand may improve, having an adverse effect upon Apple’s brand image. This may further result in consumers being compelled to purchase competing products causing a decreased amount of sales with regards to the series 3 Apple Watch.
One of the first hand examples of ever changing technological environment is Apple’s latest release of the series 4 watch which saw a chain of multiple differences. With added features such as a faster processing power; upgrading from the S3 processor to the dual-core S4 processer that (Apple, 2018) claim to be “up to 2X faster than the S3 processor” immediately sets sales of the series 3 back.
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