Review this week’s case, Apple Watch – Managing Innovation – HARVARD CASEAfter 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.Post your 5+ page (double-spaced) response. The page count is only from the Introduction to Conclusion. Do not add any extra blank lines in your paper – deliver a tight double-spaced paper using the spacing PLEASE USE THE ATTACHED TEMPLATE TO WRITE THE RESPONSESPLEASE MAKE SURE IT IS PLAGIARISM FREEPLEASE USE THE ATTACHED TEMPLATE TO WRITE THE RESPONSESPLEASE MAKE SURE IT IS PLAGIARISM FREEPLEASE USE THE ATTACHED TEMPLATE TO WRITE THE RESPONSESPLEASE MAKE SURE IT IS PLAGIARISM FREE
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BUOL 533
BUOL 533 – Marketing Management
Your Name Here
University of Cumberlands
Week Three – Apple Case Paper
1
BUOL 533
2
Introduction
Start your paper here. An introduction paragraph is a good idea. It should state the
TOPIC of your paper and provide a roadmap for the reader. Indent five spaces the first sentence
in each paragraph.
Innovation Characteristics to Leverage
Indent first sentence in each paragraph five spaces. Which innovation characteristics
could Apple leverage to manage resistance to future generations of Apple Watch? (In your
response to this question, be sure to look to the marketing strategies and concepts from your text)
Reducing Resistance to Apple Watch
Indent first sentence in each paragraph five spaces. Discuss questions as outlined in
assignment. Use research here. Cite your sources and recap in APA format in the reference
page. Discuss the role of propagation mechanisms in reducing resistance to Apple Watch?
Apple Consumer Characteristics to Reduce Resistance
Indent first sentence in each paragraph five spaces. Cite your sources and recap in APA
format in the reference page. What are the consumer characteristics that Apple needs to
influence to overcome consumer resistance to its smartwatch?
Barriers & Sources of Resistance
Indent first sentence in each paragraph five spaces. Cite your sources and recap in APA
format in the reference page. Discuss the barriers and sources of active and passive innovation
resistance in the context of Apple Watch.
Consumer Segments
BUOL 533
3
Indent first sentence in each paragraph five spaces. Cite your sources and recap in APA
format in the reference page. Discuss various consumer segments that arise from variation in
resistance.
Conclusion
Your final paragraph should provide a summary of your paper. This reminds the reader of
where you took them on your road trip. It is similar to reviewing your photographs after a
vacation. There should be no new information included in the conclusion. Make sure you have
FIVE pages minimum. The page count is only from the Introduction to Conclusion. Do not add
any extra blank lines in your paper – deliver a tight double-spaced paper using the spacing
provided in this template. No visuals allowed.
BUOL 533
References
APA format please – second & subsequent lines must be indented five spaces
Consider using this web site for assistance:
http://www.calvin.edu/library/knightcite/index.php
4
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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,
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2018 to Dec 2018.
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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. Besides its primary timekeeping function, the
watch was designed to link to other iOS devices, such as the iPhone, to push and receive content. Yet
consumer responses differed, such that, “For many it [was] an abhorrent square wrist-computer, devoid of
any style. To others it [was] sleek, opulent and classy.”9 Apple also sought to position the watch as an
alternative to a fitness tracker;10 the second-generation updates were strongly oriented toward advanced
fitness and health-related capabilities. The watch’s water resistance helped expand its target audience by
making the watch useful for swimmers, surfers, and others participating in water sports.11 At the launch of
the second generation watch, Jeff Williams, Apple’s chief operating officer, proclaimed,
We’re thrilled with the response to Apple Watch and how it’s changed people’s lives. We are
committed to fitness and health and think our customers will love the new capabilities of Apple
Watch Series 2. With a powerful new dual-core processor, water resistance [to] 50 meters and builtin GPS, Apple Watch Series 2 is packed with features to help our customers live a healthy life.12
Similar to the original Apple Watch, the Series 2 offered a choice of a lower-priced aluminum sport version,
available in silver, gold, space black, and rose gold, or a mid-priced stainless steel version, available in
silver and space black (see Exhibit 3). In addition, the Series 2 added the option of a high-end, glossy white,
ceramic model. Apple also collaborated with Hermès and Nike to offer exclusive software, bands, and
watch faces, attempting to make the watch into a “killer device,” even without a “killer app.”13
INNOVATIONS IN APPLE WATCH
Although not the first smartwatch to hit the market, Apple Watch was different.14 Its value could be
measured with a scientific metric: an economic value estimation (EVE), which reflected the combination
of reference value—the equivalent value offered by the next best alternative—and the differentiating
value—the distinctiveness of the product, which could be either positive or negative.15 For smartwatches,
the reference value varied across target markets, which could be classified broadly into potential buyers
who still wore traditional watches and those accustomed to using smartwatches who had adopted other
platforms (for example, Android Wear). The latter already had overcome any potential resistance to wearing
technology, but potential adopters posed a challenge.
When compared with a traditional watch, the reference value offered by Apple Watch included its ability to
act as a regular, accurate timepiece. The immense differentiating value encompassed multiple dimensions.
For example, the smartwatch offered easy access to common activities that users likely already undertook,
such as making calls with electronic devices, which was enabled in Apple Watch with a voice calling feature.
Texting, another common activity, also became easier because Apple Watch allowed users simply to tap their
wrists to respond quickly to incoming messages. The watch also gave wearers a quick visual summary of
information they had selected as important (notifications). Its ability to function as a navigator, pinging
directions to a chosen location while the user was en route, was unanticipated from a wristwatch.
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2018 to Dec 2018.
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Categorically, Apple Watch sought to function in the shadow of the iPhone,16 while also supporting the digital
wallet service offered through Apple Pay, which transformed the watch into a mobile wallet.
However, Apple emphasized the watch’s ability to act as a fitness tracker as its core differentiating value.
In pursuit of discerning value, Apple managed to develop powerful health and fitness applications,
integrating data captured by sensors built into both iPhones and Apple Watches. It embraced programs such
as HealthKit, ResearchKit, and CareKit, which enabled consumers to monitor their personal health, support
medical research, and help identify appropriate care for medical conditions.17 Such value led Cook to
anticipate that “one day, this is my prediction, we will look back and we will wonder: How can I ever have
gone without the watch? Because the holy grail of the watch is being able to monitor more and more of
what’s going on in the body.”18
RESISTANCE AND ASSOCIATED CHALLENGES
Resistance, an active behaviour that appeared in every adoption process, could take three forms: outright
rejection, postponement, or opposition. It did not always lead to non-adoption or rejection.19 Initial market
research revealed a mixed response to Apple Watch: in the target market, a few rejected it and several
opposed it, but many were prepared to adopt it in the future.20 Apple thus anticipated that market acceptance
for upcoming versions would increase, due to the immense value offered. An industry reporter described
the broad value of the watch as follows:
The Apple Watch is actually more like a framework or series of products than a single product.
Whereas, previously, Apple’s new product launches have centred around single monolithic models
(some of which were later extended, as in the case of the iPad Mini or iPhone 5C), the Apple Watch
debuts with a dizzying range of aesthetic and functional options, resulting in millions of possible
permutations. . . .
With the debut of [Apple] Watch, Apple is making a major move into the health-monitoring space
pioneered by devices like Jawbone Up, Nike Fuelband and Fitbit. . . .
Apple is also betting that [Apple] Watch will become a remote control for the growing range of
Internet-enabled devices—the so-called “Internet of Things”—in the home and beyond. . . . [T]he
Apple Watch will also incorporate near-field communication (or NFC, the technology used in London
Transport’s Oyster cards or contactless bank cards, for example) to enable easy mobile payment. With
Apple Pay, . . . Apple’s stated vision is to replace the wallet. Indeed, with hundreds of millions of
credit cards already on file, Apple could well become the definitive mobile payment system.21
However, industry experts suggested that “consumers don’t actually see the need for [smartwatches]. The
reality is the phone pretty much does everything you want.”22 This inability to realize the value of the watch
was likely the result of an information asymmetry between Apple and its potential customers. Without a
change, the problem would only grow: uninformed buyers would continue to be reluctant to pay a price
premium for a differentiating value they did not understand. The cascading impact challenged Apple’s
leadership; the company needed to draft a more meaningful value proposition and supporting
communication strategy that could reduce the information asymmetry and improve buyers’ willingness to
pay the positive price differential to obtain an Apple Watch.
The presence of all three forms of resistance—rejection, postponement, and opposition—made Apple’s
challenge particularly complex. Rejection, as the most extreme form of resistance, could prompt an organization
to enter a modification and relaunch process, hoping that the improved product would be accepted or at least not
This document is authorized for use only by BHARGAVA YALAMANCHILI in Marketing Management Summer IIG 18 taught by Stephanie Thacker, University of the Cumberlands from Jun
2018 to Dec 2018.
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Page 4
9B18A005
rejected outright.23 The nature of consumer resistance varied depending on the attributes of the innovation;
therefore, to proactively manage the threat of potential consumer resistance, Apple needed to consider various
consumer and innovation characteristics when developing future Apple watches.
Postponement—a very common form of resistance—allowed potential customers to delay their adoption
of an innovation. These customers were a prime target for Apple; it was imperative to encourage them to
try Apple Watch, and using external (non-Apple) sources of motivation or propagation mechanisms might
be useful in providing arm’s-length enticement to try the product.24
Finally, resistance could arise at either a pre- or post-persuasion stage, which made marketing even more
difficult. In the pre-persuasion stage, a negative attitudinal outcome—referred to as active innovation
resistance—followed an unfavourable evolution of a new product.25 Broadly, this type of resistance was a
result of two main causes: first, potential customers considered the device to have low value due to its
limited utility; and second, customers could be unable to change their established traditions and norms, and
thus, their resulting perception of the watch. The problem of limited utility constituted functional barriers,
which consisted of the derived value, usage patterns, and risks associated with the device. The problem
with adhering to established traditions and norms revealed psychological barriers.26
In the post-persuasion stage, consumers could be predisposed to resist innovation; this was referred to as
passive innovation resistance. This type of resistance was driven mainly by two factors: an “adopter-specific
inclination to resist changes” or a “situation-specific status quo satisfaction.”27
Reducing the impact of both types of innovation resistance was vital for Apple. Both barriers were
consumer specific; thus, the intensity of the barriers or sources varied across consumer segments. This
variation segregated potential consumers into multiple groups, further complicating the challenge for
Apple. Managing the individual resistance of each group with separate communication strategies then
became central to Apple’s revamped approach for managing resistance to its smartwatch.
MOVING FORWARD
To maintain a global leadership position, Apple needed to strengthen its market share in both developed
and developing economies. It also needed the ability to manage multiple challenges that were likely to
create obstructions. For innovative products, a major task always revolved around managing resistance.
The associated challenges spread across multiple dimensions and included incorporating desired innovation
characteristics in future generations of the watch; managing consumer characteristics that could influence
resistance; drafting value propositions and accompanying configurations of the marketing mix to shape
communication strategies that showcased the superior value created by Apple Watch; and formulating
marketing strategies and tactics to overcome these resistance barriers.
Tania Bucic is an associate professor at University of New South Wales.
Gaganpreet Singh is an assistant professor at OP Jindal Global University.
This document is authorized for use only by BHARGAVA YALAMANCHILI 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 B. YALAMANCHILI, 2018.
Page 5
9B18A005
EXHIBIT 1: SMARTWATCH MARKET, SALES PERFORMANCE
Vendor
Apple
Samsung
Lenovo
LG
Garmin
Others
Total
2Q 2015 Unit
Shipments*
3.6
0.4
0.2
0.2
0.1
0.6
5.1
2Q 2015
Market Share
72%
7%
3%
4%
2%
11%
100%
2Q 2016 Unit
Shipments*
1.6
0.6
0.3
0.3
0.1
0.6
3.5
2Q 2016
Market Share
47%
16%
9%
8%
4%
16%
100%
Year-OverYear Growth
−55%
51%
75%
26%
25%
−1%
−32%
Notes: *Unit shipments are in millions; the comparison refers to the second quarters (2Q) of 2016 and 2015.
Source: Created by the author based on Joe Rossignol, “Apple Watch Remains Nearly Three Times as Popular as Samsung
Smartwatches,” MacRumors, July 21, 2016, accessed October 19, 2016, www.macrumors.com/2016/07/21/apple-watch-vssamsung-gear-idc-q2-2016.
EXHIBIT 2: ADOPTION FORECAST FOR SMARTWATCH OS
Smartwatch OS
watchOS
Android Wear
RTOS
Tizen
Android
Linux
Pebble OS
Total
2016 Units*
14.0
6.1
1.4
3.2
1.0
0.6
2.0
28.3
2016 Share
49.4%
21.4%
5.0%
11.3%
3.6%
2.3%
7.0%
100.0%
2020 Units*
31.0
28.8
8.3
5.4
4.3
2.3
2.2
82.5
2020 Share
37.6%
35.0%
10.1%
6.6%
5.2%
2.8%
2.7%
100.0%
2016–2020 CAGR
22%
48%
56%
14%
44%
37%
3%
31%
Notes: *Units are in millions; CAGR = compound annual growth rate; OS = operating system.
Source: Created by the author based on Joe Rossignol, “Apple Watch Remains Nearly Three Times as Popular as Samsung
Smartwatches,” MacRumors, July 21, 2016, accessed October 19, 2016, www.macrumors.com/2016/07/21/apple-watch-vssamsung-gear-idc-q2-2016.
This document is authorized for use only by BHARGAVA YALAMANCHILI 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 B. YALAMANCHILI, 2018.
Page 6
9B18A005
EXHIBIT 3: APPLE WATCH VERSIONS
Category
Low Priced
(Sport)
Mid-Priced
(Stainless
Steel)
High Priced
Band
White
Blue
Green
Pink
Black
White Sport
Black Sport
Classic Buckle
Milanese Loop
Black Leath …
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