1.

Introduction
AftertheintroductionoftheiPodin2001,techgiantApplerevolutionisedandcreated
themostinfluentialandboldlydesignedconsumertechnologyproductsfrommobility
andwirelesscommunicationstodigitallifestyleandmusic.Itsmassiveinnovationsmade
itthemostrapidlygrowinglargestcompanyintheworldwithmarketcapofroughly
$672billion.Inthefourthquarterof2014,Applegenerated$18billioninnetincomeand
becamethemostprofitablecompanyonEarth.

ThecoreofApplessuccessisinitsresearchanddevelopment(R&D).Itshighrateof
innovation,strongemphasisonqualityandexcellenceinproductdesignarekeydrivers
inApplesgrowthstrategies.Applemaintainsitsleadershipasahighendandhighvalue
businesswithefficientgrowthdevelopmentthroughachievingastaggeringlylowR&D
expenditure.Thecompanysrevenuesoaredfrom$25billionto$43billiondespiteonly
spending$4.6billiononR&Doverthepastfouryears.

1.1AppleTVsHistory

ApplefirststartedoutintheTVmarketbysellingshowsfordownloadsthroughiTunesin2005.
ItthenventureintotheirfirstgenerationofappleTVin2007,secondgenerationin2010,third
generationin2012andfourthgenerationin2015.

1.2AppleTVsDevelopmentandGrowth

Applefocusesonproductdevelopmentasitsmainstrategyforgrowth.Apple'smostimportant
hardwaremarkethasprovedfickleovertime,asformermobilekingpinsBlackBerry,Motorola

andNokiawereallsweptasidebythechangingdesiresofconsumers(Shinal,2015).Thus,
productdevelopmentenablesAppletoremaincompetitiveandoffernewattractiveproductsto
growitsglobalmarket.ApplebuildsitsproductdevelopmentthroughinnovationinitsR&D
processes.Forinstance,ApplepursueddevelopmentplansforAppleTV,anewmarketto
conquer.ThefirstgenerationofAppleTVprovedtobelessfavourableascomparedtoits
counterpartIphone.AppleexecutivesevenreferredtoitsTVbusinessasahobby.However,in
2015,AppleannouncedamajorrevampedofitsAppleTVsettopbox.TimCookmentioned
ThefutureofTVisappsshowsApplesconfidenceandahugeopportunitytotapintothe
televisionindustry.

2.AppleTVExternalenvironment
http://panmore.com/appleincpestelpestleanalysisrecommendations
http://www.slideshare.net/siddharthabbi/presentation134209810

2.1.PESTLE(Context)
Economic

Social

Duetoinflation,Cablepriceshavegrowupanaverageof6.1
percentofthecompoundineveryyear.EveryNorthAmericans
willhavetopayanexpensiveamountfortheTvoperatoratan
estimatedamount$75permonthin2014.Hence,itwillreduce
thenumberofpeoplewhowantstoapplytowatchmorechannel
intheirtelevisionduetotheexpensivecost.Furthermore,
tremendousincreasinginconsumerscuttingthecordwiththeir
cableorsatelliteoperators.Besides,theamountthatthe
consumerspaidforthetvprovidersiscostlylikeDisney
channel.Thiswilldecreasetheconsumersbuyingpattern
throughtheTvproviders.
MostoftheTvviewerscamefromAmericanorNorth
American.Theyarewelleducatedandarewhitecollarasthey
earnhighermedianincomewhichiscategoryunderupper
middleclass.Hence,theyhavemorepurchasingpowerand
morebrandimagepeople.However,withmorepurchasing
powertheywillpurchasebetterquality,whichmeantheymight
notpurchaseappleTvbutcompetitorslikeRoku,Amazonand
GoogleTvsets.Thelifestylechangesbecausemostofthe
viewerswatch141perhoursontraditionalTvinsteadwatching

intimeshiftedTvorvideoininternetorsmartphone.Besides,
peoplelovesconvenienceofwatchingthroughthemobile
devicesbuttheystilldemandonwatchingbiggerscreentoget
moreexcitingexperience.Furthermore,mostoftheTvshow
neededtodownloadfromtheITunesstorewhichgives
inconveniencetotheconsumers.Thismayshowndispleasureto
theconsumersbecausesomeoftheTvshowsneedtopurchase
throughITunesstore.

Technology

AppleTvhopingtocreateanintegratedTvsetforconsumers.
Besides,atelevisionthatiseasytouseandhavesimpleuser
interfacetotransfertheirdatasfromtheirownelectronicdevices
totheappletv(icloud).Itmustbeeasyfortheconsumersto
accessedorganisedandstreamedtothetvwhichnotalotofthe
competitorshavedoneit.Furthermore,creatingatvwith
featuresofultrahighdefinitiondisplays,motionsensors,and
cameratopermitsvideocallswhichisatechnologyleadership
inthemarket.However,applehavegiveupanddispersethe
teamwhichgiveconsumersfakehopesandattractcompetitors
tocreateonesimilarideafortheTvset.Mostimportantlyisto
comeoutwithcordcuttingwhichattractmoreconsumersasitis
cheaperhavingcable,satelliteproviderorfiberintv.In
addition,usinganewtechnologywhichisOverthetop(OTT)
subscriptionbasedonlinevideowhichisinternetbasedinstead
ofbroadband.However,thereareothercompetitorsusingthis
technologywhichisOverthetop.Itmightnotattractnew
consumers.

2.2.Competitors
Thereareseveralcompetitorsinthesettopboxindustry,wherebyitallowsusersto
streamcontentintotheirtelevisionset.AppleTVencountersintensecompetitionfrom
bothdirectandindirectcompetitors.Itinvolvesseveraldirectcompetitors,includingthe
topbrandssuchasRoku,AmazonandGoogle,whichsolddevicesatlowpricesranging
from$35to$99.

FromthePortersFiveForces,itallowsAppleTVtoidentifywhatarethethreatsof
substitutes,thethreatofnewentry,buyerbargainingpower,supplierbargainingpower
andcompetitiverivalryinthesettopboxindustry.

ByusingPortersFiveForces,itenablesAppletohaveaclearunderstandingofthe
characteristicsandstrengthofthecompetitivepressuresinthesettopboxindustry.It
allowsAppletoseekeffectivewaystodifferentiateAppleTVfromotherrivalsinthe
settopboxindustry.(Porter'sFiveForcesStrategySkills,2013)PortersFiveForcesalso
helpAppletofindoutitspotentialopportunitiesandthreatsinthesettopboxindustry.

Roku,amazon,google
http://marketrealist.com/2015/09/newappletvfarescomparisoncompetitors/
http://www.slideshare.net/sjavaad/team8apresentation

2.2.1.PortersFiveForcesModel

2.2.2.ApplesTVProductLIfeCycle


AppleTVfirstgenerationwasfirstintroducedin2007,wherebythepricewasinitiallyat
$299.IntheProductLifeCycle(PLC)Stage,thefirstgenerationofAppleTVthatwaslaunched
in2007,wouldbefallenundertheIntroductionstage,wherebyitisanewproductthatApple
cameoutwithasettopboxintheTVindustry.

WhenAppleTVwasfirstlaunchedin2007,uptill2015,AppleTVhavebeencomeout
thedifferentthegenerationwiththeupgradeofsoftware,revamptheremoteandasmaller
settopboxastocomparetothefirstgeneration.AppleTVpricehavebeendecreasefromApple
TVfirstgenerationtothefourthgeneration.

InthePLCstage,thelatestAppleTV,thefourthgenerationwillbefallenunderthe
growthstagewherebythereisanincreaseofsalesearly2015.Inthisstage,thereareseveral
characteristicsandresponses.AppleTVfourthgenerationmarketgrowthratewouldbehigh
wherebytheresanincreaseofsaleswhentheAppleTVfourthgenerationlaunchin2015.The
technicalchangeinAppleTVdesignwouldbemoderatewherebyAppleTVfourthGeneration
havedevelopanewtvOS,andrevampitsremotewithatouchpadanddualmicsforSiri.

ThestrategicchallengesthatAppleTVfourthgenerationfacewouldbeshare
maintenanceandsharegrowth.Wherebytheyhavetoretainfromitsexistingcustomersfor
AppleTVorcontinuetocapturethemajorportionofsalestothegrowingnumberofnew
customersenteringthesettopboxindustryforthefirsttime.

AppleTVstrategicmarketingobjectiveistobuildsharewherebytheyexpanditssales
fasterthantheoverallmarketgrowthrate.Duetothecompetitioninthesettopindustry,Apple
usesnumberofstrategiestoaccomplishtheseobjectivesforAppleTV.Applehavebeen
developingasuperiorproducttechnologyanddifferentiateitssettopboxthroughrapid
innovationsforAppleTV.AppleTVfeaturedAirPlay,whichallowedconsumerstodisplay
contentfromtheirdevices,likeiPhones,iPadsorMacsontotheirTVs.

2.3.Customers
2.3.1CustomerAnalysis
ThebelowdiagramwillhelpAppletounderstanditscustomerinternaland
externalinfluencesforasettopbox.ItalsoallowAppletofindoutwhatisthe
customerdecisionmakingprocesswhentheyarepurchasingasettopbox.

2.3.1.1InternalInfluences
ThetablebelowwouldhelpAppletoidentifythedifferentelementsofinternalinfluencethat
willaffectthecustomerbuyingdecisiontowardsasettopbox.Theelementsthatwillinfluence
thecustomertopurchaseasettopboxwouldbetheneedsandmotives,perceptionandlifestyle.

Elements

Needsand
Motives

MaslowshierarchyofneedshelpAppletoidentifythebasic
needsandwantsofitscustomerinbuyingasettopbox.We
identifytheneedsandwantstopurchaseasettopboxwillbe
belongingnessandSelfactualization.

Belongingness:Byhavingasettopboxitallowscustomerto
satisfyitsloveandbelongingnessneeds.Settopboxareableto
screenTVshows,moviesandvideosontelevisionsetwhich
enablestowatchwithfamilyandfriends

Selfactualization:AsettopboxareabletoscreenseveralTV
showsfromthedifferentmediachannelslikeDisney,21stCentury
Fox,CBSCorp,Discoveryandetc.,itwillgivecustomera
selffulfillmentwheretheyareabletowatchtheshowsand
moviesthattheydesiretowatch.

Perception

Exposure
Consumerareabletoexposetothesettopboxbydifferent
marketingadvertisementsandthroughwordofmouth.
Marketingadvertisementscanbeimagesandposterson
billboardsatpublicareasatbuilding,subwaystation,websites,
YouTubeAdvertisementandetc.

oAppleTVbillboard:


oRokubillboard:

WebsitefortheAppleTVandRokusettopbox
AppleTV:http://www.apple.com/tv/

Roku:https://www.roku.com/

YoutubeadvertisementforAppleTVandRokusettopbox

Appleadvertisement:AppleTVTheFutureofTelevision
https://www.youtube.com/watch?v=OON2bZdqVzs

RokuAdvertisement:RokuTelevisionCommercial
https://www.youtube.com/watch?v=pShDyu2iMQg

Interpretation
Therearemanybrandsofsettopboxintheindustry,likeApple
TV,Roku,Google,Amazonandetc.Whenconsumerpurchasea
settopbox,theywouldcomparethedifferentspecificationand
accessoriesthatthesettopboxoffers.Inthecomparison,there
willberesearchneedtobedonewhereconsumerareabletoget
throughexternalandinternalsources.

Lifestyle

InAmerica,peoplespentlonghoursinwatchingTraditionalTV.
Televisionsathomecouldserveimportanthomeandfamily
managementroles.(Scherba,2015)

AsettopboxenablescustomertostreammoviesandTVshows
(likeDisney,Fox,DiscoveryChannelandetc.)toatelevisionset.
ThisallowtheAmericanstowatchtheirfavouriteTVshowsand
movieswhenevertheywantathome.

2.3.1.2.Externalinfluences
Elements

Culture

Technologylover
TVhavebecomethedailyAmerican's
lifestyle.SurveyshownthatAmercian
spent141hourspermonthwatching
traditionalTV.Itmaybeduetothe
fastmovingandinteresting
entertainmentstylewhichcatchtheir
attention.

Demographics

SocialStatus

Uppermiddleclass
Middleclass

MarketingActivities

TVadvertisements

Family

Evidenceinthecasestudyshowsthat
generally,TVattractshouseholdwho
havekidsandyoungeragepeople.

2.3.1.3.Consumerdecisionmakingprocess

American
NorthAmerican
HighMiddleincome
Teen(1319yearold)
GenerationY
Kids(29yearold)

2.3.2Customerexperiencecycle
Inordertogaincustomerloyalty,satisfactionandvalue,itsimportantforAppleto
understandhowtheircustomerexperienceAppleTVfrompurchase,todelivery,whentheyuse
AppleTV,tosupplement,tomaintenanceuntildisposalandtopurchaseagain.Thebelow
diagramwillshowthecustomersexperiencecycleinrelatingtoAppleTV.

Sourceand
context

Purchase

FunctionValue

Convenience
Value
SenseValue

Delivery

Use

Maintenance

Disposal

SelfEsteem
Value

PriceValue

StatusValue

Entertainment
Value

LinkingValue

SelfExpansion

newvalueproposition

existingvalueproposition

2.3.3CustomerValue
Thebelowtableshowsthedifferentvaluethatthecustomerrespondedtotheimplication
forAppleTV.

Sourceofvalue

ImplicationforAppleTV

FunctionalValue

ConvenienceValue

Itenableusertosyncedallthedata
informationandfilestothesettop
box.
Simpletouseit
Userfriendlytechnology
Notonlyplaycontentthroughthe
mobiledevicesbutalsoincludesTV
channels
Itiseasyasthereisnoneedtoinput
USBorwireorcable
Itenablecustomertoplaytheir
downloadedmovies,TVshowsand
musicfromonestopapplication.
Playthroughthedatainformation
throughtheirdifferentdevices
Watchtheirentertainmentthrough
mobiledevices

SelfEsteemValue

Havingasettopboxboostcustomer
selfesteem

Pricevalue

Thepriceofasettopboxinthe
industryisbetweentherangesof$35
$299.

EntertainmentValue

Settopboxcanbeuseforleisure
activitieslikewatchingmovie,video
callwithfriends

StatusValue

Havingasettopbox,customer
allowstowatchTVshowsandmovies
withtheirfriendsandfamily,this
buildtheiracceptancecomfort.

SenseValue

Usesenseliketouchandabletowatch
theentertainmentthroughthesettop
box

LinkingValue

Selfexpansionvalue

2.3.4CustomerInsightsinAppleTV

Interactwithpeoplebyusingthe
cameraforvideocalls.
Bringbondingaroundthepeople
Itisanewproductusingtheadvanced
technologyofoverthetopfunction
tostreamedfromcomputers,mobile
devices,orinternetenableTV.
DifferentfromthetraditionalTV

2.3.6Sizeofthemarket
Thereare62millionofsubscribersintheworldthatpurchasechannelstowatchentertainment
channels.HalfofthesubscriberscamefromU.Shouseholds.Moreover,63percentofthepeople
preferredtowatchvideoshowonalargestscreen.Furthermore,45.6billionpeopleinU.S,paid
expensivesubscribechannelstowatchtheirfavouritechannels.

2.3.7Segmentation
Segmentationelements

Detail
Americas
Europe
Asiapacific
Japan

Howprofitable

Geographic

Sellingtodifferent
regionearnprofitin
differentdifferent
currency
Marketshares
increase
Globalization

Demographic

540yearold
(children,teens,
adults,seniors)
Family(Working
adultswithchildren
orwithoutchildren)
Highermedian
income
Middleclass
Highclass

Cantargettheright
marketandmake
benchmarkonthe
pricing.
Onepersonwill
affecttheother
aroundthemwhich
meaninafamily,a
memberwhoneed
theproductwill
influenceothers
purchasedecision

Behavioral

Benefitsought
work,leisure,home,
Usageratemedium
tohigh(e.g141
hoursofwatching
Tv)
Userstatusportray
aclassicstatus
towardthe
consumers
Loyaltystatus

Consumerwillbuy
moreduetothe
benefitgivenbythe
appleproducts
Somecustomerwill
stayloyaland
purchasemoreapple
product
Gainmore
customers
Consumerswillbuy

theproducts
Psychographic

Personalityluxury,
cool,trendy,unique,
technologylover,
creative,tvlover,
convenience
Motivelifestyle
leisure.

Withthelifestyle,it
impactthecustomer
topurchase
somethingthatneed
itintheirlifestyle.
Targetintothe
innovative
personality,amaze
thecustomerwith
theirexpectation.
Hence,customers
willbuymoreand
trusttheproductis
theleadershipinthe
marketoftechnology

Whydocustomersbuyandwhatfactorsinfluencetheirdecision?

2.4.AppleTVsOpportunitiesandThreats

PotentialMarketOpportunities
Theirsuccessinotherproductsallows
consumerstopaymoreattentionto
AppleTVlaunches.
Appleareintalkstocollaboratewith
severalmediacompaniestousetheir
contentonAppleTV
Consumersareabletousethesettop
boxforotheractivitiesotherthan
watchingTVsuchasgames,music
andsocialmediaapplications

PotentialExternalThreatstoAppleTV
FutureProfitability
Regardlessofthetrendin
cordcutting,traditionalbroadcast,
cableandsatellitetelevisionstill
remainthemainwaythatAmericans
accessedtothetelevisioncontent.
AppleTVfacehighcompetitionits
competitorswhereitscompetitorsare
sellingtheirdevicesatpriceslower
thanApple
TheTVindustryisquiteunstable
Elderlyconsumerswilllikelytobe
moreresistanttoonlinevideo
streamingservices

 PayTVoperatorsarealsooffering
internetbasedstreamingservices

3.AppleTVInternalAnalysis
3.1AppleTVsStrengthandWeaknesses
VRINTesting

Valuable

ThemainobjectiveofAppleproductsistoincorporateasmanyfunctionsaspossibleineach
product.Thisenablesuserstoenjoygreatervalueandbenefitachievedfromthemerchandise
purchased.ThenewlyrevampedAppleTVoffersabroaderrangeofentertainmentincluding
gamesandalsoallowsconsumerstorentorpurchaseaTVandmoviecontentcomingfrom
popularchannelssuchasNetflixandHBONowthroughAirplayoriTunesStore(Apple,
2016).ItcanseamlesslysyncalldevicesandiCloudandallowuserstoplaygames,play
music,andwatchvideosevenwithlimitedinternetservices.AppleTVwillhavethesimplest
userinterface,usingappstobringwatchingtelevisiontoawholenewlevel.

Rareness

Appleproductraritylieswithitsdesignandinnovationstrategy.AppleTVisthefirstinthe
industrytouseanewoperatingsystemtvOSwhichallowsuserstonavigatethroughits
touchbasedremoteandSirivoicecommands,simplifiedinterfaceandcustomizationoftheir
appsandcontent.Inaddition,AppledevelopedAirPlaytowirelesslystreamcontentfrom
multipleAppledevicestoAppleTV.Thus,thisallowsuserstoplaytheirmusicorvideoson
biggerandbetterspeakersandscreensaroundthehouse,attheirconvenience.

Inimitability
AppleplanstolicenseitscontentwithTVchannelsandnetworksandothermedia
companiessuchasDisney,21stCenturyFox,CBSCrop,ESPNandtheDiscovery
Channel.

ApplewasauthorizedbyICANNtobetheregistryoperatorforTopLevelDomain
(TLD)whichenablesAppletomanageandsetpoliciesexclusivelyforAppleowned
websites(Apple.com,2016).
On31May2007,mediacontentcompanyViacomwelcomestheopportunityto
licenseitscontenttoAppleforitsTVsettopbox(Anon.,2007).
AppletvOSsoftwarelicenseagreement(singleuselicense).

Nonsubstitutable

AmongthefirstfewonlineservicesintheindustrytoofferbothliveTVanda
streamingcatalogofshowsandmovies(leeetal.,2015).
Airplayistheonlywirelessstreamingfeaturetoallowcustomerstodisplayapproved
contentsfromiPhones,iPads,orMacsontotheirTVs.
AirplayandSiriVoicetocommandthetelevision.
AppleTVremotewithglasstouchsurfaceenablesswipefunctionforeasynavigation.

3.2.PortersValueChain(JustinaChew)

SupplyChainManagement
Globalsupplierseachsuppliersareproducingoneormoreappleproductsrangingfrom
AccessoriestoMacbook.ThisposesachallengetoAppleinmaintainingsamestandardand
qualityofeachproducts.Inaddition,quotedfromMcCarterandNorthcraft,2007Themore
alliancesthefirmbecomesinvolvedin,themoreuncertainitbecomesforpartneringfirmsto
knowwhetherthatfirmwilldowhatisbestfortheirpartnership.Hence,Applehastodepends
onthesupplierstoadheretosupplierscodeofconduct.Ontheotherhand,havingaglobal
suppliernetworkhelpsAppletocontinueitsproductionevenoneacountryisfacingunforeseen
circumstances,thesuppliersinothercountrycanstillproducewhatApplerequires.

Resellersmightbedistributingproductsfromthesamesupplier,henceApplesupplierswerenot
allowedtoleakanyinformationtoathirdpartytokeepAppleproductscompetitive.

Distribution
Appleproductsaredistributedinvariousformssuchas,retailstore,roadshowsandonline
store.Companysinventoryisalsoreducedfromamonthto6daystopreventoverstockingand
productsfrombeingobsolete.

SalesandMarketing

Appleiswillingonmarketing,fortheLaunchofapplewatchaloneapplespends$38millionfor
TvadvertisingandforiPhone6Applespends$42milliononTvadvertising.Inaddition,Apple
alsousesPrintingadvertisingonMagazinestomarketApplewatchwhichcostabout$2.2
million.

ApplebrandnameisbuildbytheiPodsthattheyproducedin2001.FollowingsuccessfulApple
productsarethesmartphonesandtablets.ThiscouldhavecreatedHaloeffectsfortheother
Applerelatedproducts,thatthepastknowledgeofAppletechnologicalsuccesswillleadto
consumermakingrapidcognitiveassociationwiththeupcomingAppleproductanddeemitto
beonethatwillbesuccessfulaswell.(CARDELLOandNIELSEN,2016)

Applehadproventheirmarketingstrategytobeeffectivethroughtheirhighsalesrevenueeach
yearshowninexhibit1.InApplesfinancialreportitisalsoshownthatApplegeneratesahigh
netincomeof$18millionin2014.

ProfitMargin
Theprofitmarginofeachproduct,itmightbearound30%.Calculatedreferencingto
theAppleTVdropinpricefrom$99to$69.Itisabout30%droppedinprice.Whichalso
meansifAppleweretosellAppleTVatoriginalpriceApplewillhaveearnaround30%
ofthecostpriceforeachproduct.

Productresearchanddevelopment
AppleInvestedheavilyonresearchanddevelopmenteachyearhoweverthereturnof
salestoresearchanddevelopmentdoesnotshowthatresearchanddevelopment
activityofAppleisimprovingforthepastyears.TheR&D/saleshasbeenmoreorless
stagnantforthepastyearswhiletheresearchanddevelopmentcosthavebeen
increasing.

HumanResourceManagement
Throughouttheyearsthenumberofemployeeinthecompanyhadincreasedgradually,
eventhoughthereisnoexpensesoccurfromtraininganddevelopmentofthe
employee,teamsareformedtoexploreonandcreateindifferentindustriesand
productsthatApplewastofocuson.Researchhasshownthatteamlearningismore
effectivethanindividuallearning(Kilburn and Kilburn, 2016), whichmightbeoneofthe
reasonthatAppleistrainingemployeesthroughteamings.Theincreasenumberof
employeesalsoshowsthatAppleisabletoattractpeopletojointheircompany,this
givesAppletheabilitytochoosethebestpersontojointheteam.

Procurement

ApplehassuccessfullygottenstandalonescreeningofHBONowexclusivelyonApple
devices.Thisshowsalsomarkstheopeningfordifferentchannelsandservicestobe
screenonappledevices.

3.3.Collaborators

SupplierRelationship
Applemaintainsrelationshipwiththeirtopfewsupplierssuchas3MCo,AACTechnologies
HoldingsInc.andAKMSemiconductorInc.Thesesuppliersarealsoknowntobetheir
componentproviders.Appleinstilltheirsupplierresponsibilityactsin2006,statingthatthey
workonsitewithsuppliersfrequentlytoaddressissuesandtakenecessaryactiontoresolve
them.Theyareinvolvedinengagementstomakeimprovementinsuppliersoperations.(Apple
2016)ThecollaborationbetweenAppleandtheirsupplierscanbewellmaintainedwithboth
partiesassistingeachotherintheiroperations.

LateralPartnership
ThereareseveralapplicationsthatAppleTVcarriesandhaveapartnershipwithApple.These
applicationsproduceexclusivecontentsforAppleTV,whichinturnprovidevalueadded
servicestoviewers.SomeoftheseapplicationsincludeNetflix,Hulu,HBO,Bloomberg,CBS
Sports,Flickr,NBA,YoungHollywood.InMay2007,YouTubecollaboratedwithAppleTVin
which,YouTubevideosarestreameddirectlytoAppleTV.(Apple2016)Therearealso
companiesinvestinginAppleTVasacustomershoppingsolutionandengagement,suchas
Airbnb,Zillow,QVCandHouzz.BothAppleandthedeveloper(s)ofsuchapplicationwillbenefit
fromeachotherthroughthesuccessofsuchcollaborationandAppleTV.

InternalPartnership
Applepartnerswithcorporateresellerstodelivertheirproductstocustomers.Theyare
consideredtobeintermediarieswhoareexperiencedinthemarketsegmentthattheproduct
willbesoldat.ExamplesofcorporateresellersareNuboxandiMore.

CustomerRelationship
Tomaintainrelationshipwithitsendcustomers,AppleprovidesAppleTVconsumerswithan
aftersaleprotectionplanwhichenablesthemtoreachouttoitssalesemployeesandask
questionspertainingtotheproductpurchased.EveryAppleTVconsumerisentitledtoayear
productwarrantyand90daysofcomplimentarytelephonetechnicalsupport.(Apple2016)

TofurtherenhanceitsCRM,Applecandevelopasystemwhichenablesconsumerstoprovide
feedbackastowhattypeofcontenttheywouldliketohaveontheirTVboxandotherwaysof
improvement.ThiscanhelpAppletounderstandtheircustomersneedsbetterandtolengthen
customersusagetotheproductandthebranditself.

4.SWOTAnalysis

EvaluatetheSWOTanalysis

ThefollowingSWOTAnalysisisinreferencetothecasestudy.
SWOTAnalysis
Strengths

Opportunities

Theirsuccessinotherproductsallowsconsumersto
paymoreattentiontoAppleTVlaunches.
Appleareintalkstocollaboratewithseveralmedia
companiestousetheircontentonAppleTV
Consumersareabletousethesettopboxforother
activitiesotherthanwatchingTVsuchasgames,music
andsocialmediaapplications

Weaknesses

Risingcablepricesaremakingconsumersnotconnectto
cableTV.

IncreasingbroadbandinternetaccessinUShomesallows
moreconsumerstohavesubscriptionvideoondemand.

Earningsinentertainmentandmediabusinessindustry
havebeenincreasingfrom2010to2014

ThesuccessofAppleTVchangingthewayconsumers
perceptionofwatchingTVislikelytogainahighermarket
sharethanitscompetitors

Threats

Appledidnotestablishthemselvesasasignificant
businessby2015

AppleTVcompetitorsaresellingtheirdevicesatprices
lowerthanApple

AppleTVsettopboxusedtobeatahigherprice
thantheircompetitorsandloweredtheirpriceonlywhen
itseemslikeappleistryingtocleartheirinventory.

TheTVindustryisquiteunstable

AppleTVhasweakersalescomparedtoother
businesslines
AirplayonlyavailableforAppleuser

PayTVoperatorsarealsoofferinginternetbased
streamingservices

Elderlyconsumerswilllikelytobemoreresistanttoonline
videostreamingservices

ActiveSWOTAnalysis

Strengths:

Weaknesses:

Theirsuccessinotherproducts
allowsconsumerstopaymore
attentiontoAppleTVlaunches.

Appledidnotestablish
themselvesasasignificant
businessby2015.

Appleareintalkstocollaborate
withseveralmediacompaniestouse
theircontentonAppleTV

Consumersareabletousethe
settopboxforotheractivitiesother

AppleTVsettopboxusedto
beatahigherpricethantheir
competitorsandloweredtheir
priceonlywhenitseemslike
appleistryingtocleartheir
inventory.

thanwatchingTVsuchasgames,
musicandsocialmediaapplication.
Opportunities

Risingcablepricesaremaking
consumersnotconnecttocableTV.

Increasingbroadbandinternet
accessinUShomesallowsmore
consumerstohavesubscription
videoondemand.

Earningsinentertainmentand
mediabusinessindustryhavebeen
increasingfrom2010to2014

Threats

Developastrategicgoal/actionusingits
strengthsandopportunities:

Applecollaborationwithseveral
mediacompaniesallowsthemto
havehigherearningsin
entertainmentandmediaindustry.

AsuccessofAppleTVlaunchwill

Developastrategicgoal/actionby
usingitsopportunitiestoovercomeits
weaknesses:

Increasedbroadband
servicesintheUShomescould
leadtobettersalesofthesettop
boxwhichwillindirectlyimprove
AppleTVbusiness.

Betterearningsin
entertainmentandmediaindustry
couldallowAppletolowertheir
pricestoensurecompetitiveness

behypedupbysuccesslaunchesof
otherappleproduct.

ThepotentialsuccessofApple
TVchangingthewayconsumers
perceptionofwatchingTVislikelyto
gainahighermarketsharethanits
competitors
Developastrategicgoal/actionusingits
AppleTVcompetitorsareselling strengthstofightagainstthreats:

theirdevicesatpriceslowerthan
Applecouldmakeuseoftheir
Apple
brandingtoensurestablesales
TheTVindustryisquiteunstable

Elderlyconsumerswilllikelyto
Appleexpertiseintheirsoftware
bemoreresistanttoonlinevideo
andotherapplications(eg.games)
streamingservices
allowsthemacomparative
PayTVoperatorsarealso
advantageoverpaidTVoperators.
offeringinternetbasedstreaming
services

AppleTVhasweakersales
comparedtootherbusinesslines

Developastrategicgoal/actionto
minimizeweaknessestocopewith
threats:

AppleTVcanlowertheirpriceto
remaincompetitive.

Applecanfocusmoreonthe
salesofAppleTV(eg.likewhat
theydoforiPhonesorApple
Watches)sothatotherpaidTV
operatorswillnotbeableto
establishthemselvesonthe
onlinestreamingservicesso
easily.

5.Businesslevelstrategy

5.1.ApplesMissionandGoals
MissionAppledesignsMacs,thebestpersonalcomputersintheworld,alongwithOSX,iLife,
iWorkandprofessionalsoftware.AppleleadsthedigitalmusicrevolutionwithitsiPodsand
iTunesonlinestore.ApplehasreinventedthemobilephonewithitsrevolutionaryiPhoneand
Appstore,andisdefiningthefutureofmobilemediaandcomputingdeviceswithiPad.
(Investopedia,2015)


Asaleaderininnovation,Apples100,000employeesarecommittedtomakingthebest
productsonearthusingitsfoursoftwareplatformsiOS,OSX,watchOSandtvOStoprovide
seamlessexperiencesacrossallAppledevicesandempowerpeoplewithbreakthroughservices
includingtheAppStore,AppleMusic,ApplePayandiCloud(Apple.com,2016).Appleaimsto
achievesuperiorproductsandservicesthroughinnovation,atacostthatprovidesthebestvalue
tocustomersandshareholders.Appleiscommittedtomeetthehigheststandardsandqualityof
allgoodsandservices.

5.2.SinglebusinessCompany
AppleTVisunderthetelevisionindustryandsolelyfocusedonsettopbox.Thus,its
competitivegenericstrategyistodevelopinnovativebuiltinappsandstrongsupportsystem(i.e.
Siri)atanaffordablecostforthemassmarket.PortersGenericStrategyandMilesandSnow
typologyareusedtoanalyseAppleTVsbusinesslevelcompetitivestrategies.

5.3.AppleTVPortersGenericCompetitiveStrategy

Portersuggestedthreestrategiesthatbusinessescanpursuetogainandmaintaincompetitive
advantagesoverallcostleadership,differentiationandfocus.Afirmthatlacksdistinctive
strategyisstuckinthemiddleandmostlikelytounderperform(Porter,1980).

Hence,AppleTVfocusesonthedifferentiationstrategyaccordingtotheirproductandcompany
strengths.TheyhavedevelopeduniquesoftwareandsystemfeaturessuchasAirPlayandtvOS
thatallowcontentfromappledevicestobedisplayedonusersTVwirelessly.Weneedtonote
thatthetelevisionindustryisverycompetitive,facingcompetitionfromtraditionalbroadcastand
OTTvideostreamingservice.Nevertheless,AppleTVisabletocarveoutanichemarketforits
settopboxinsteadofventuringintothesaturatedTVsetbusiness.Thisavoidsdirect
confrontationwithincumbentTVmanufacturersinthemarket.AppleTVfocuseddifferentiation
strategyemphasizesontechnologicalimprovementsandcreatingsophisticatedproductfeatures
foritstargetmarket.

Miles&SnowTypology

Asananalyzer,AppleTVfocusesongrowththroughthedevelopmentofitssettopboxto
reinventthewaypeoplewatchtelevision.AppleTVbringsvaluebybeinganintermediatetype,
makingslowerproductmarketchangesfromitsfirstgenerationAppleTVin2007tointroducing
theAirPlayfeaturein2015.AppleTVstimulatesthemarketdemandbygeneratingnew
technologicaladvancementsforitssettopbox.Theymaintainastableandlimitedlineof

servicesbyworkingwithproviderssuchasNetflixandHulu.AppleTVisalsoabletodefendits
corebusinessbyleveragingoncordcuttingtrend.

ACombinedTypologyDifferentiatedAnalyzer

Figure:CombinedTypologyofBusinessLevelCompetitiveStrategies

AppleTVispositionedasadifferentiatedanalyserAstrongcorebusinessinprovidinghighly
advancedsettopboxwithnumerousupdatedfunctions,whileactivelyseekingtoexpandtheir
broadentertainmentcontentforitsusers.AppleTVpursuedadifferentiationstrategybyoffering
AirPlayandtvOSsystemtoenablecustomisedcontrolandstreamcontentfromappledevicesto
usersTV.Asananalyser,AppleTVisonlylimitedtoitsentertainmentappsbutwiththe
growthofoverthetop(OTT)viewing,Appleislookingintoenteringthetelevisionstreaming
service.Theycarefullyfollowaselectedsetofpotentialnewdevelopmentstoimproveits
serviceofferingsinordertoremaincompetitive.Withsuchstrategies,AppleTVhastheability
toovercomethethreatsintheindustry.

5.5.FunctionalStrategiesofAppleTV

5.5.1SalesandMarketingStrategy

Marketing
Toensureeffectivecommunicationbetweenmarketersandconsumers,Applehastoleverageon
itsstrongonlinemarketingfunctions.Anexampleofitisthatconsumersareabletoeasilyaccess
informationaboutAppleTVjustbyconductingasimple"Google"search.Itleadsconsumersto
Apple'sofficialcompanywebsitewhichservesasahugemarketingresourceforApple's
promotionoftheirAppleTV.Itisabletorelayquickinformationsuchasvideotutorialonthe
usageofAppleTV.Itsonlinemarketingplatformprovidesconsumersaprimaryspotforthemto
readupontheproductbeforeseekingforhelpwiththeAppleprofessionals,andevenbeforethe
informationisuponmediaadvertisements.Thismarketfunctioncanbeeffectiveinincreasing
customersdemandthroughonlinepulladvertising.

Sales

Dis

5.5.2FinancialStrategy

Duetorisingcableprices,Applecanchoosetooffertheirconsumerstohavethebestofboth
worldswhichallowthemtowatchshowsthroughOTTandcablesubscriptionservices.Apple
soldtheirfirstversionoftheirsettopboxat$299.Subsequently,theyreducedtheirnext
generationofsettopboxto$99andlastly,theymadeuseofpromotionaltoolswhichallowed
themtosetitatafinalpriceof$69.Thepricereductionmakesitmoreaffordableforconsumers.

5.5.3.R&D,technology,productdesignstrategy
ResearchandDevelopment

AppleteamhavebeenworkingonaTVfornumerousyears,experimentingwithultrahigh
definition(HD)displays,motionsensors,andcamerastoallowvideocalls.However,Apple
dispersetheteamworkingontheprojectin2014.Applefoundoutthatthereisagrowing
numberofconsumerscuttingthecordwiththeirsatelliteorcableoperators.Thereisawide
availabilityofbroadbandintheindustryanditisthemostimportantenablersofCordcutting,
wherethereisnotaneedtousethedifferentcordtoconnecttowatchtheirTVshowsormovies.

EventhoughApplearenotabletomanufactureatelevisionset,Applehadlaunchedthefirst
generationofAppleTVsettopboxin2007.

AppleTVisasettopboxthatallowuserbeingabletostreamTVshows,moviesanddisplay
approvedcontentfromAppledeviceslikeiPhone,iPads,orMacsontheirtelevisionsetor
projector.

AfterAppleTVlaunchitsfirstgeneration,itcameoutwiththesecondgenerationAppleTVin
2010.InthesecondgenerationofAppleTV,itmovedfromalargeharddrivetoasmallhard
drive,whereitiseasytocarryaround.Italsomovefromastorageandplaybackmodeltowardsa
streamingmodel.AfterthereleaseofthesecondgenerationAppleTV,Applelaunchathird
generationoftheAppleTVintheyearof2012.In2015,AppledevelopanewtvOSandrevamp
theremotewithadualmicsforsiriandatouchpadinthefourthgenerationofAppleTV.

AlternativeStrategicOptions

NichePenetration

AppleTVistargetedathighermedianincomeandyoungerhouseholdsthataremorelikelyto
havechildren.TheycanmaximisethenumberofadoptersbytakingadvantageofthehugeApple
market,makingAppleTVcompatiblewithAppledevices.Customerswhoarefamiliarwith
AppleproductsareabletoadoptAppleTVrelativelyquickly,thusthereisshortadoption
process.

AppleTVusespenetrationpricingstartingathighpriceinitiallyat$299butlowereditspriceto
$69inanticipationofcompetitiveentriesfromRoku,AmazonandGoogle.Inordertoincrease
appealtotargetsegment,AppleTVmadeimprovementssuchasremovingitslargeharddrive
andmovingtostreamingmodel.Itsadvertisingandsalesappealsstresstheproductbenefitsof
newsoftwarefeaturesAirPlayandtvOSandtouchscreenremote.

Differentiation&Analyser(meihui)

Startfocusingonthemarkettargetsegment
Constantlyadvertising

Segment

Recommendations

ProductVel
ApplecanmakeAppleTVmoreuserfriendlyforthemassmarketwhichincludes,elderlyandto
includecontentsthatarewelllikedbyviewers.Improvethequalityofcontentandtailor
packagestotasteofthemassmarket.Example,consumersthatlikefootballwouldprefer
packagesthatincludesonlyfootballchannelsratherthanapackagethatincludesavarietyof
sportchannels.

ApplecanimplementvaluepropositioninAppleTVbyreleasinguniquefeaturessuchas
welllikedTVchannelsthatareexclusivetoAppleTVonly.Theycanalsoconsiderintroducing
4KresolutionintotheirsystemforamoreenjoyableexperiencewithTVviewing.
Withregardstocompatibility,AppleTVcontentscanbemadeavailableonpairingdevicessuch
asiPhoneandiPadsothatconsumerscanconvenientlyaccessitonthego.

PriceKatherine
Wewillbeusingthe5typeofpricingstrategies.Thesestrategieshelptoincreasesalesand
marketshares.Thefixedandvariablecost,competitors,companyobjective,targetthegroupand
theamountthecustomerwanttopurchasetheappletvboxarethefactorsthatweneedto
considerwhencomingupwiththepricing.

PenetrationPricing

Applecanreducethepricebecausethereareafew
competitorslikegoogleandRoku.
Usingthismethodthecustomerswillpurchaseit
becausethebrandingimageoftheappleishigh
andtheycangetitatthelowerprice.
Afterthesettingthelowprice,ifthemarketshare
increase,Applecanchoosetoincreaseprices.

SkimmingPricing

Applebrandimageishigh.Hencethevalueofthe
productcanbesethigherprice.Thevalueofthe
pricecanbereducedafterthenewversionofthetv
setboxhavecreate.

CompetitionPricing

tvsetboxhavedifferentcompetitorslikegoogle

whichisastrongcompetitor.inordertoattract
newcustomer,Applecanchoosetolowertheprice
thengoogleisselling.aftergettingstable,Apple
cantrytohighertheprice.
BundlesPricing

appletvsetboxcontentmostlyisfoundiniTunes
likethemoviesorvideo.Applecantrytohave
bundlespricinglikehavingfreechannelsviewor
freemoviestowatchtoattractconsumersto
purchasethetvsetbox
besides,Applecancomeoutwithfreeaccessories
withdamepricepurchasetogetherwiththetvset.

PsychologicalPricing

lastly,Applecansetpricewhichispsychological
like2.99pervideoormovielike10.90..thisallow
consumerstopurchasewithathinkingoflowprice
andhighdefinitionquality.

PlaceKatherine
Thefloorplanoftheservicecenter.Whenthecustomersentertotheservicecenter,theywillbe
greetbythehelpfulApplestaffsforguidance.Whilewaitingforthenumbertobecalled,the
consumerscansitdownonthesofaseatsandwatchtheTvprograms.therewillbe4televisions
set,customerscanchoosethechanneltowatch.ontheotherhand,therewillbe4tablesfor
customertotryonthetvsetaswell.Therewillbemanycountersfortheservicingofthespoilor
otherrequirementsregardingtheproduct.ifconsumersisbored,theycanshoparoundthe
accessoriesareatolookfortrendyorcoolaccessoriestodecoratetheirTVsetproductsaswell.
Therewillbecollectionpointaftertheconsumershavecompletethedocumentoftheirdamaged
tvsetbox.TherewillbeOnetooneexchangeofthedamagedtvsetboxwithabrandnewtvset
box.

Thefrontviewoftheservicecenter.


Thecounterofcustomerserviceandrepairconsultant.Themorecountersopen,itwillspeedup
theprocessofwaiting,Hence,customerswillnotspendalotoftimewaitingaimlesslyfortheir
turntobecalled.

PromotionsVel
Applecancollaboratewithmediacompaniestoreducethepriceofthecontentbroadcaston
AppleTV.TheycanalsoputthesameamountoffocusonmarketingAppleTV
ApplecantieupwithITexhibitionstoshowcasetheirAppleTVandthecontentsthatcomewith
ittoallowconsumerstoexperiencebeforemakingadecision.Promotionssuchasdiscountscan
begiventocustomersduringthesalestoenticethemtopurchaseit.


Implementation&ControlJustina

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WallStreetJournal2014,
http://www.wsj.com/articles/SB10001424052702303949704579457554242014552
Appleinsider2015,
http://appleinsider.com/articles/15/10/03/appletoopenappletvuniversalsearchapitot
hirdpartydevelopers

ScrippsNetworksInteractive2016,
http://www.businesswire.com/news/home/20151221005270/en/ScrippsNetworksInterac
tiveLaunchesChannelsAllNewApple
Appleinsider2015,
http://appadvice.com/appnn/2015/10/newapiwillallowmorecontenttofeatureinapple
tvsuniversalsearch
Boomberg2014,
http://www.bloomberg.com/news/articles/20140212/applesaidtoplannewsettopbox
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APPLEANDCOMCAST
http://www.digitaltrends.com/hometheater/applecomcastdealmeantvnetneutrality/
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Hboandappletvpartnership
http://variety.com/2015/digital/news/hbonowtolaunchonappletv1201448842/

lee,a.,lawrence,c.,Yeh,A.,Caen,C.,Curwin,T.,gerber,s.,Curwin,T.,asay,m.and
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Apple.com.(2016).ApplePressInfoFY16FirstQuarterResultsConferenceCall.[online]
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Textbook
Walker,O.C.&Walker),J.W.M.(.,2014.Marketingstrategy:adecisionfocusedapproach.
Eighthed.s.l.:McGrawHillIrwin.