Analysis and Evaluation of the Attractiveness of the Uk Market

The Apple TV: Analysis and evaluation of the attractiveness of the current UK market Executive Summary This report provides an analysis and evaluation of the three levels of the marketing environment for Apple TV and studies the attractiveness of the current UK market. It will consider the future success or not of the apple TV in the UK and from this analysis recommend the modifications and improvement apple should do.

Most of the information in the report is based on market reports such as Keynote, Websites, Newspapers and finally the “Marketing an Introduction" (8th Edition) textbook (Gary Armstrong, Philip Kotler, Michael Harker, Ross Brenan; 2007) and the lecture slides provided by Michael Harker. The principal theories which were significant in the redaction of this report were the SWOT analysis and the PEST analysis. Results of data analyzed show that: • Apple has a strong brand image and international popularity and makes large investment in research and development. The television industry is radically changing with the appearance of a new type of television service, the internet television. •Apple TV has numerous and strong competitors. •Because of the strong position of its suppliers Apple suffers from the pricing pressure. •The Apple TV's price is too expensive. •The number of formats supported by the Apple TV is too limited. In conclusion we can recommend Apple to lower the price and increase the number of formats supported by the Apple TV. Apple should fabricate itself some of the Apple TV's components to be out of the pressure provided by its suppliers.

Apple should also differentiate itself by increasing the number of Application downloadable for the apple TV and creating a special Touch screen working with the Apple TV. The reliability of this report is partially limited because it is concentrated on the study of the micro and macro environment. It is essentially based on secondary resources and some information provided by non official and official website can be not impartial or not up to date. Furthermore Apple refuses to give too much information about the Apple TV and its finance. CONTENTS: Presentation page (p1) I)Executive Summary (p2) II)Contents (p3) II) Introduction (p4)

III) Analysis and Interpretations (p4) 1) Micro-Environment (p4) A- The company (p4) B-The suppliers (p5) C-Marketing intermediaries (p5) D- Competitors (p5/6) D-Consumers (p6) 2) Internal Environment (p6) A-Employees (p6/7) B-Finance (p7) 3) Macro-Environment (p7) A-Political and economic (p7) B-Social (p7/8) C-Technologic (p8) D-Environmental (p8) E-Legal (p9) IV) Conclusion (p9) V) Recommendations (p10) VI) Bibliography (p10/11/12/13) VII) Appendix (p13) Introduction Created in 1976 by Steve Jobs, Apple Company is an American informatics multinational corporation which is headquartered in Cupertino, Silicon Valley.

Best known for its skills in computers, Apple has diversified in recent years by venturing into the music industry and the mobile phone. Always attracted by new opportunities, Apple touches today with its Apple TV a market that it has never explored: the television. But is this new technology a good business idea and does this product have a chance to succeed in a country such as the UK? To answer this question and to give some advice and recommendation about the Apple TV this report will study its three environment level in the UK market.

Every section provides an abstract rate which gives an approximate idea of the Attractiveness of the current UK market. Analysis & Interpretation I)The microenvironment First, this report will analyze the microenvironment which consists of "the actors close to the company that affect its ability to serve the customer”. (Gary Armstrong, Philip Kotler, Michael Harker and Ross Brenan; 2007, p) The company •These recent years Apple has managed to establish itself well in the world market. The company did not stop growing during the last 10 years and became more and more efficient and competitive. Moreover, because of its exponential growth, opportunities are opening up to the organization such as the massive reinvestment in research and development. (Wikinvest, 2010) •Apple uses an effective advertising strategy and has a website easy to use, attractive, and informative. •Apple has an international popularity and a strong brand name which continue to increase the company in the world market. Rating: 8. 5/10 Suppliers •Apple requires each of its suppliers to meet the highest standards for all goods and services. Apple business environment is competitive and fast-paced.

That is why their suppliers must understand this dynamic and be agile and flexible in responding to changing business conditions. (Apple,2010) •The most expensive components of the Apple TV are the processor A4 Apple designed and manufactured by Samsung (16. 55 dollar), the 8 GB flash memory products by Toshiba (14 dollar) and the chip supports from Broadcom Communications Wi-Fi and Bluetooth (about 7. 65 dollars). This doesn’t take into account the costs of research and development, product transport, logistics costs and even the marketing budget. cnet new, 2010) •With a net production cost of 64 dollars and a sale price of $ 99 U. S. , Apple's margin is not very important. We can also underline that Apple suppliers have a very strong position which can make Apple suffer of the pricing pressure. (macnn, 2010) Rating: 5/10 Marketing Intermediaries: •Apple Retail Stores: At the end of June of this year Apple had 293 retail stores open for business and during September Apple opened 24 new stores all around the world. In the UK there are 29 Apples stores. Besides during the month of June, store revenue increased 73% to $2. 78 billion and produced average store sales of $9 million. (postsateventide, 2010) •Others: Apple has also a large number of other retailers such as FNAC. •Apple has a large number of retailer which are efficient and provides the company an important revenue. Rating: 6/10 Competitor: •For this product, the search engine Google also launches into battle with its "Google TV", designed by Japan's Sony and the U. S. Logitech. (BBC,2010) •Furthermore, in the United Kingdom the party may not be easy because of the success of TV offerings on the Internet, included in subscriptions providing triple play (broadband, TV, phone connection).

ISPs Internet multiply the number of available channels and services: catch-up TV, VaD ... All at a competitive price yet (between 30 and 40 euros per month for the triple play). (oezratty, 2010) Companies such as SKY are well implanted in the market and don't stop growing and developing. (market report) •In addition Apple will have to deal with other products that already make the same type of services, such as game consoles lounge (Sony's PlayStation 3 and Xbox 360 from Microsoft). (macgeneration, 2010) • In the U. S. there are also cases very similar to the Apple TV, that start-up Vudu and Roku California, where boxing Box, D-Link. If they are a success they may extend to the rest of the world including the UK. (popsci, 2008) Rating: 3/10 Consumer: •Apple is marketing to people who have a few characteristics. Most of the time Middle/Upper income folks ages 12-35 who are willing to pay a bit more for a better user experience. Its consumers are people who enjoy technology and in this case especially people who like to conserve a lot of digital photos or video. The prime target seems to be an iTunes user who is already used to the Apple concept. But because of the Hi-Def nature of the Apple TV, only a small percentage of this target audience will really buy one. Rating: 3/10 II)The interne environment : Employees: Apple employees are trained to have very strong technical knowledge and to be very efficient in order to deliver a high standard of consumer service. Despite this, these recent years have seen the appearance of numerous scandals especially about its China factories' employees.

Indeed stories about employees' suicide (BBC, 2010), employees' poisoning (Macobservers, 2010) and the presence of children of fifteen years old as employees (telegraph, 2010) has greatly tarnished the company's image. That is why Apple has seriously reviewed the maintenance of its factories in China to avoid further scandals (note a contract signed by the employees in whom they undertake not to commit suicide). Finance: •As Steve Jobs says, the analysis of their quarterly revenue makes us understand why “Apple is now a $50 billion company”: The Company posted revenue of $15. 68 billion and a net quarterly profit of $3. 8 billion. (Apple, 2010) •Apple has moved more than 250,000 units since the device went on sale. (MacWorld,2010) Rating: 5/10 III) The macro environment: This analyze will finally end with a study of he macro environment which consists of "the larger societal forces that affect the micro environment. " (Gary Armstrong, Philip Kotler, Michael Harker and Ross Brenan; 2007, p) Political and economic •Analyzing the political aspect of its company we can see that Apple is a stable organization which is located in 31 countries. When it comes to the economy the company tries to adjust to the economic situation of their market. Today they have to face the crisis of 2009 which created unemployment and inflation, and has impoverished most of the population. •Unemployment in the UK now stands at 2. 45 million, following a fall of 9,000 in the three months to October but the inflation rate rose to 3. 2%. The UK is still very affected by the crisis. (BBC, 2010) Rating: 3/10 Social To study the sociocultural aspect of the macro environment Apple, many factors have to be taken into account •The population of the UK is ageing. Over the past 25 years, the median age increased from 35 years in 1984 to 39 years in 2009.

It is projected to continue to increase over the next 25 years rising to 42 by 2034. (statistics. gov,2010) •The culture aspect of the Apple TV environment is favorable to the success of this product because the today’s society wants always to have new technology that is more and more efficient and developed and most people will not be afraid to purchase a new technology. •Easy to use, their product seems perfectly adapted to this segment of the population which, while appreciating the new technology, is especially looking for product easy to use providing a simple and fun interface.

Rating: 5/10 Technological •To improve the technology aspect of the macro environment, the company makes use of various technological innovations that help in increasing productivity and improving the quality of their products. •Indeed, the television industry is radically changing with the development of a new type of television service, the internet television. Users are now being delivered directly to TV sets in broadband-enabled households around the globe and are now offered with free-to-view television via their online ideo players, giving them more choice about how and when they watch (researchandmarkets, 2010). •After the failure of the product’s first edition presented in September 2006, Steve Jobs announced a second-generation version of the Apple TV in September 2010 which seemed to have many advantages compared to its predecessor. About a quarter of the size and one-third of the price of the original Apple TV, the new Apple TV dispenses with the PC/Mac link altogether, to provide a direct connection to the Web and a video download service is included. With its new product, Apple makes new improvements in online video. It puts at the disposal of users thousands and thousands of online video programs accessible via the iTunes store. The Apple TV is easy to use and prevents users from buffering, downloading, stuttering, or subscribing. (LOUDERBACK, 2008) •Moreover, unequal access to broadband means that viewing TV via Internet with a good level of image quality is only accessible part of the population. (Oezratty, 2010) Rating: 3/10 Environmental Because Apple knows that the ecological aspect of its production is very important to improve its image to its clients, the company uses Greenpeace as a way to recycle its polluting components (Greenpeace, 2007). Rating: 5/10 Legal And finally to switch with the law component of the macro environment Apple makes sure they comply with what the law states in the country and they respect the regulated standards of the country. In the UK Apple has to follow the EU anti-competitive laws: •Both UK and EU competition law prohibit agreements, arrangements and concerted business practices which prevent, restrict or distort competition. They prohibit businesses with significant market shares unfairly exploiting their strong market positions. (out-law, 2010) Rating: 6/10 Conclusion Apple has an international popularity, a strong brand name and has considerably increased its fund in research and development. Thanks to this, most of their products have been a real success (IPod, IPhone …) But as Steve Jobs says the apple TV is still a hobby for the company which would like to succeed one day in the television industry, and today this product is still too weak to succeed in this market. First, the price (119? is too expensive at a time when the market has switched to the online rental. Then, most of the users will prefer to access directly to their music, films and photo with their computer using the Shortcuts to which they are used. Furthermore the Apple TV does nothing more than the box of an operator even if it is simpler with an interface that is clear and entertaining. Its possibilities are even less at some levels, since the formats supported are those dubbed by Apple: H. 624, MPEG-4, M-JPEG, AIFF, MP3, AAC, JPEG, GIF and TIFF (to mention only the main).

This new market is highly competitive and Apple is not sufficiently differentiated to its competitors. Finally, the Apple's suppliers have a too important influence on the company. Final rate: 4/10 Recommendations Following the Marketing environment analysis and the conclusion some advices can be recommended to Apple. •Lower the price. •For broadband, Apple may just wait or target its bid on these target audiences that may already be well connected. •Apple may also overshadow all other competitors on the market by creating an application “Store TV” as the Iphone. Increase the number of format supported by the Apple TV including the divX. •Apple should fabricate for itself some of the Apple TV's component such as the GB flash memory. •Increase the number of Application downloadable for the apple TV including the Iphone's application • Created a special Touch screen working with the Apple TV which could provide the user a manual photo or video retouching system. •Avoiding scandals such as the China's ones and being stricter about its foreign supplier conventions. References Book: Marketing an Introduction" (8th Edition) textbook (Gary Armstrong, Philip Kotler, Michael Harker, Ross Brenan; 2007) Websites: -(wikinvest, 2010) Research and Development excerpt taken from the AAPL 10-K filed Jan 25, 2010. http://www. wikinvest. com/stock/Apple_(AAPL)/Research_Development -(Apple,2010) Apple and procurement, 2010 http://www. apple. com/procurement/ -(postsateventide, 2010) Apple and law of large numbers, Robert Paul Leitao, July 31, 2010 http://www. postsateventide. com/2010/07/apple-and-law-of-large-numbers. tml - (oezratty, 2010) Apple peut-il reussir dans la TV? 25 august 2010 http://www. oezratty. net/wordpress/2010/apple-peut-il-reussir-dans-la-tv/ - (macgeneration, 2010) L’Apple TV, console masque, Jean-Baptiste Giraud, October 2010 http://friendfeed. com/uberapple/47cd4a0d/lapple-tv-console-masquee-macgeneration -(Apple, 2010) Apple Reports First Quarter Results http://www. apple. com/pr/library/2010/01/25results. html -(statistics. gov,2010) Fastest increase in the ‘oldest old’, Office for National Statistics; General Register Office for Scotland http://www. statistics. ov. uk/cci/nugget. asp? id=949 -(researchandmarkets, 2010) Internet Television: 2010 to 2014 - Analyzing How the Internet will Change Television http://researchandmarkets. net/reportinfo. asp? report_id=1343728&t=d&cat_id= - (Greenpeace, 2007) Tasty news from Apple! http://www. greenpeace. org/international/en/news/features/tasty-apple-news-020507/ -(Out-law, 2010) Competition law – the basics, based on UK law, updated in April 2010. http://www. out-law. com/page-5811 Newspaper: -(BBC,2010) Google and Apple heat up battle for TV screens By Maggie Shiels http://www. bc. co. uk/news/technology-11521742 -(BBC, 2010) Apple boss defends conditions at iPhone factory http://www. bbc. co. uk/news/10212604 -(BBC, 2010) UK inflation rate in surprise October increase http://www. bbc. co. uk/news/business-11764588 -(cnet new, 2010) New Apple TV may cost less than $64 to build, October 5, 2010 http://www. macnn. com/articles/10/10/05/could. prove. more. profitable/. -(Telegraph, 2010) Apple admits using child labour, Malcolm Moore, 27 Feb 2010 http://www. telegraph. co. k/technology/apple/7330986/Apple-admits-using-child-labour. html -(MacWorld,2010) Apple sales top $20 billion in fiscal fourth quarter, Oct 18, 2010, Philip Michaels http://www. macworld. com/article/154967/2010/10/4q_earnings. html -(Macobservers, 2010) China Factory Workers Claim Poisoning from Apple Products October, 2010, Jeff Gamet http://www. macobserver. com/tmo/article/china_factory_workers_claim_poisoning_from_apple_products/ -(popsci, 2008) BATTLE OF THE INTERNET VIDEO BOXES: NETFLIX VS. APPLE TV VS. VUDU, Sean Captain, 2008 http://www. popsci. om/gear-gadgets/article/2008-06/battle-internet-video-boxes-netflix-vs-apple-tv-vs-vudu -(macnn, 2010) New Apple TV may cost less than $64 to build, October 5, 2010 http://www. macnn. com/articles/10/10/05/could. prove. more. profitable/. Reports: -(LOUDERBACK, 2008) JIM LOUDERBACK, Apple TV's Extreme Makeover, PC Magazine 27 no7 58 Je 2008 http://www. keynote. co. uk/market-intelligence/view/product/1276/digital-tv/chapter/1/executive_summary -(market report) Digital TV Market Report, 2003 http://www. keynote. co. uk/market-intelligence/reports/category/new-media Graphs: -Appendix1: The microenvironment