Apple, Inc.

iCard

Antonio Toscano, Garret Sutherland, Nicholas Edwards, Joe Callahan, Teresa Xiong

BUS 306

May 4, 2014

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Table of ContentsTable of Figures.................................................................................................................4

Executive Summary...........................................................................................................5

Situation Analysis..............................................................................................................7

Market Summary...............................................................................................................7

Market Analysis.................................................................................................................8

Geographic Segmentation..........................................................................................................8

Demographic Segmentation.......................................................................................................8

Psychographic Segmentation.....................................................................................................8

Market Needs.....................................................................................................................9

Market Trends...................................................................................................................9

Market Growth..................................................................................................................9

SWOT Analysis................................................................................................................10

Strengths....................................................................................................................................10

Weaknesses................................................................................................................................11

Opportunities............................................................................................................................11

Competition......................................................................................................................11

Product Offering..............................................................................................................12

Keys to Success.................................................................................................................13

Critical Issues...................................................................................................................14

Marketing Strategy..........................................................................................................14

Mission..............................................................................................................................15

Marketing Objective........................................................................................................15

Financial Goals.................................................................................................................16

Target Markets................................................................................................................16

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Geographic Segments...............................................................................................................16

Demographic Segments............................................................................................................16

Psychographic Segments..........................................................................................................17

Positioning........................................................................................................................18

Strategies..........................................................................................................................18

Marketing Mix.................................................................................................................19

Pricing...............................................................................................................................19

Distribution......................................................................................................................19

Marketing Communications...........................................................................................20

Marketing Research........................................................................................................20

Financials..........................................................................................................................21

Break-even Analysis........................................................................................................21

Sales Forecast...................................................................................................................22

Expense Forecast.............................................................................................................23

Controls............................................................................................................................24

Implementation................................................................................................................24

Marketing Organizational Chart...................................................................................25

Contingency Planning.....................................................................................................25

References.........................................................................................................................27

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Table of FiguresFigure 1: Smartphone Market........................................................................................15

Figure 2: Poverty Guidelines..........................................................................................17

Figure 3: Break Even Chart...........................................................................................22

Figure 4: Sales Forecasts.................................................................................................23

Figure 5: Expense Forecast.............................................................................................24

Figure 6: Production Efficiency.....................................................................................24

Figure 7: Organization Chart.........................................................................................25

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Executive SummaryThis marketing plan has been created to solve a typical consumer’s issues with a

cluttered wallet and payment efficiency. With most consumers possessing multiple credit

and debit cards within a wallet, payment efficiency can be improved. Fraud and identity

theft of lost or stolen credit and debit cards is a constant concern in the consumer’s mind.

A product that can function as an all-in-one card and increases the prevention of fraud

and identity theft is an innovative way to tackle this issue.

Apple, Inc.’s new iCard will ultimately solve all these problems. The iCard offers

consumers an opportunity to store all active credit, debit, and gift cards conveniently on

one device. With heightened security features such as smartphone pairing capabilities, the

iCard alleviates concerns regarding fraud and identity theft. Additionally, the iCard will

come with a smartphone-compatible application that can be used to track personal

expenses, access credit card reports, and card balances.

This marketing plan is designed to give a solid synopsis of the iCard through a

marketing perspective. Geographic segmentations for the iCard include regions with

significant Gross Domestic Product. Demographic segmentations for the iCard are age,

income, and life cycle. Psychographic and behavioral segmentations are broken down by

perception and view of self directly relating to a technology-centered lifestyle,

innovation, and passion. These will be the markets that the iCard will target in this

marketing plan.

A SWOT analysis of the iCard was performed. Strengths of the iCard include the

minimization of a wallet, solid security features, and the product design. Weaknesses of

the iCard include the inability to recharge the product and long-range Bluetooth

connectivity. Opportunities for the iCard include expanding consumer fraud protection

and partnering with major credit card companies. Threats to the iCard include the Coin

and credit card companies that choose not to partner with the iCard.

From a competitive standpoint, the Coin stands as the iCard’s main competitor.

Upon release of the iCard, the Coin has the potential to be bought out by one of Apple’s

major competitors such as Sony or Microsoft. This would increase competition in the

marketplace.

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Keys to success related to the iCard include partnering with major credit card

companies, getting the iCard into brand-loyal hands, and persuading small-store

merchants to introduce updated payment methods. Reaching these goals would expand

the iCard’s potential as a market leader. In contrast, some critical issues of the iCard are

security misconceptions and consumer skepticism. It is important to convince consumers

that the product is reliable and safe in order to have a successful marketing plan.

The market size for the iCard has the potential to reach 91,217,750 consumers in

the American marketplace alone. With this, a major objective for the marketing plan is to

capitalize on the emerging market for smart cards.

Financial goals include selling approximately 3.5 million units at a price of

$79.99 in 2015 alone. Based on a break-even analysis, sales forecast, and expense

forecast, the iCard is expected to generate nearly $280 million in 2015.

The iCard has been positioned to deliver superior convenience, innovation, and

security to consumers. Additionally, the iCard is going to be marketed as a completely

sustainable product, as it will be manufactured from 100% recyclable materials. The

iCard will be positioned as a more-for-less product.

Strategies related to the marketing mix include pricing the iCard at a competitive

price of $79.99, distributing the iCard exclusively in online and retail markets, and

communicating the value of the product through online and television campaigns.

Research, via a comprehensive survey, shows that the iCard would be a very successful

product and consumers would be interested in purchasing it.

The implementation process aims to get the iCard in the hands of 9 million

consumers by the end of the first month of release. Contingency planning for the iCard

includes preparation for economic downturns and software malfunctions. Solving these

problems efficiently and effectively is crucial to the success of the product.

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Situation AnalysisThe world of consumerism always ends with a payment for goods or services

rendered. In today’s technology-driven marketplace, current payment methods are

becoming pedestrian and are in need of a serious upgrade. Consumers would benefit from

this upgrade coming in the form of minimization, convenience, and security combined

with a dash of technological flair. The introduction of Apple’s newest addition to the

‘iFamily’, the iCard, will revolutionize the way that consumers pay for goods and

services and manage their personal finances. With the market trends leaning towards

minimization in every aspect, why should it stop at the wallet? A bulky, leather and

receipt-ridden mess would be replaced by a smooth, professional all-in-one payment

method. The iCard has the capability to transform all electronic forms of payment in a

consumer’s wallet into one universal user-friendly device. Instead of fussing around

searching for the right payment method at the cash register, the iCard enables the user to

conveniently select the appropriate payment method in seconds. The iCard is new,

different, and innovative and consumers will benefit greatly from the transition to this

product.

Market SummaryThere are many problems associated with current payment methods that are

solved with the iCard; Security, convenience, and organization are the most prevalent

issues. According to Creditcards.com, a credit card statistics leader, in 2012, 26.2 billion

transactions were made with a major credit card (Creditcards.com). That number will

continue to grow over time (Creditcards.com). Apple would be able to capitalize on this

giant market simply because there are no similar products in the market yet. The Coin,

described below in the ‘competitors’ section, is simply a beta-tested idea at this point and

has not been released commercially. On the contrary, the major credit card companies

need some incentive to pair with Apple and essentially give up brand equity from

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circulation. As noted below, the international market will be targeted, primarily users

above 18 years old who maintain an upscale lifestyle.

Market AnalysisGeographic Segmentation         After carefully analyzing data provided by the International Monetary Fund,

Apple Inc. will initially target regions with significant Gross Domestic Product. These

regions include, but are not limited to: North America, Japan, Germany, United

Kingdom, and Australia. These six regions are the largest consumers of current Apple

products. Due to Apple’s influence on global tech markets, the introduction of a new

product is standardly never limited to one specific geographic segment. After further

market research, Apple will proceed to market its new iCard to the globalized

marketplace at the June 2014 Apple Special Event.

Demographic Segmentation      Apple’s iCard will target key demographic segments in the regions presented

above. These demographic variables will include: age, income, and life cycle. The iCard

is for consumers who utilize multiple debit and credit cards. Therefore, the speculative

age range will only include those above the age of 18. Due to its low cost, the iCard will

target those with moderate-income levels. This includes individuals with annual incomes

no lower then $20,000. The iCard would also target individuals who are beginning to

enter the workforce as well as those already managing their personal finances. The

millennial and baby boomer generations are the largest consumers of technology in the

marketplace. Apple would profit the most by targeting these specific generations.    

Psychographic Segmentation         Social class and lifestyle are speculated to be the largest psychographic segments

Apple has targeted in the past. The iCard is considered a peripheral product of the iPhone

so a similar psychographic segment will be targeted when marketing the iCard. The

targeted demographic would perceive themselves as middle to upper-middle class and

maintain an upscale lifestyle. Additionally, Apple would utilize its existing

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psychographic segments that primarily focus around a technology-centered lifestyle,

innovation, and passion.

Market Needs The average American has 3.5 cards in use at any given time (Foster, 2011). The

consumer market is in desperate need of the convenience of having one card that will

hold multiple forms of payment, provide security, and manage easily from a mobile

device. Consumers are looking for ways to minimize the contents of their wallets, make

life as simple as possible, and protect their information. The most important aspect to

consumers regarding the protection of personal information includes deterring fraud,

theft, and hackers. A survey was conducted asking prospective consumers about their

individual interest in the iCard. The response was ‘very likely.’

Market TrendsWith the recent security breaches of some large corporations, the demand of

personal information security regarding debit and credit holders is inevitable. The

consumers want better protection and security combined with ultimate convenience.

Consumers are paying with their debit and credit cards more frequently than other forms

of payment. Trends are showing a push for the innovative technology of smart cards

simply related to wallet size. These variables will undoubtedly influence consumers to

seek the growing market trend of smart cards. The Apple iCard will surely be among the

first to enter this market. By recognizing the Apple brand, consumers will know that they

are receiving the latest trend in technology to enhance their lives. The iCard will only

expand Apple’s customers’ wants and offer them solutions to individual concerns.

Market GrowthAccording to the Pew Research Institute, 89% of U.S. adults own a cellphone

and of those, 56% are smart phones (Pew, 2014). This market has potential to grow due

to the increase penetration of mobile devices and the increase of credit cards to make

purchases. The telecommunication sector is the biggest application market for smart

cards, accounting for more than 68% of the global smart card shipments in 2009 (Market

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and Market, 2013) . The growth for the market may come in the way of mobile providers

making the capabilities to smart cards readily available for all consumers through their

products. The global smart card industry was valued at $4.5 billion in 2011, but is

expected to reach $7.9 billion by 2018 (SBWire, 2014). The market is increasing at a

steady climb.

As the market is still in the introduction phase of the product life cycle, the

iCard has a promising potential for growth. This could be a substantial market for

Apple’s iCard. Through the brand equity of Apple Inc., the iCard will introduce the

mobile user to the smart card technology that will connect their daily activities of

spending with the convenience of a simple, secure, and compact payment system. Apple

Inc. stands behind its products to provide innovation and accessibility to its consumers.

The technology of smart cards is still developing. Consumers have many ways to pay but

fusing the mobile device and smart card allows for accessibility and development for

stronger security protection.

SWOT AnalysisStrengths

The iCard has the ability to de-clutter consumers’ wallets by reducing the

number of cards the user has to carry into one, multi-functional card. Any credit card,

debit card, or gift card, can be loaded onto the iCard and used the same way without the

hassle of actually having each individual payment card present. Purchases are not the

only way the user can use the iCard. The iCard will be able to access the consumer’s

bank accounts via ATM machines and smart phone applications.

The “it” factor that the iCard carries with it is a major selling point. Consumers

enjoy putting personal touches on their current cards. However, the iCard takes this to a

new level with its sleek and simplistic design. Consumers are going to love walking

around and purchasing products and services with their iCard, similar to their pride in

their new iPhones. Apple possesses a reputable brand that promises quality and cutting-

edge technology above all else, which is a strength in itself when identifying strengths of

the iCard.

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WeaknessesCurrently, the iCard does not have recharge capability, so once the battery dies it

is essentially rendered useless. The estimated battery life is approximately two years

depending solely on frequency of use. The user will be notified of battery status on the

face of the iCard. All information will be completely transferrable to a new iCard upon

battery death. When the battery dies, the iCard will need to be replaced by the user.

Additionally, if the user’s smart phone battery dies, the iCard is also going to be

inactive. Once the iCard loses Bluetooth connectivity with the linked smart phone, it will

lock up for security reasons and the user will not be able to use it until the phone has

battery power once again.

OpportunitiesThere would be no reason to have an iCard if it did not possess the capability to

imitate the cards of large credit card companies such as Visa and American Express. If

these companies decided not to partner with Apple’s iCard, Apple would have a hard

time marketing it. Obtaining the permission from the four major credit card companies

should be a primary objective before releasing the product to the market.

From a competitive standpoint, the goal of the iCard is to absorb all the major

credit card carriers into the product. However, obtaining each of these carriers’

permission could prove to be the most daunting task above all others. If a credit card

carrier does not want to be a part of the new iCard culture the company would be at a

disadvantage. Apple consumers want to exclusively use each product, not its substitute.

This phenomenon creates an atmosphere where consumers that use an iCard would be

more likely to sign up with a major credit carrier on the grounds that the iCard is

compatible with that card. In essence, a major step would be to convince two of the four

major credit card companies to sync with the iCard. With a fear of losing market share,

the other two would likely join the iCard.

CompetitionWhile the iCard is the first complete idea of its nature, there are many alternative

sources of consumer payment that serve as indirect competition. An emerging idea,

independent of any major technology companies, is a product called the Coin. The Coin

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has many similar features as the iCard but lacks financial backing by any technological

powerhouses. However, Coin is likely to be bought out by one of Apple’s major

competitors (Microsoft, Sony) once Apple releases the iCard. The competitor’s buyout

would be an opportunity to compete with the iCard by offering manufacturing and

marketing advantages that Coin currently does not possess. Therefore, the Coin currently

stands as Apple’s main competitor. According to the Coin official website, a consumer

can pre-order a Coin for $55; the Coin will jump to $105 when released to the public in

the summer of 2014 (Coin, 2014).

In summary, Coin utilizes the “four P’s” of marketing like this:

o Product: All-in-one credit/debit card

o Price: $55 pre-order and $105 retail

o Place: only online sales at this juncture

o Promotion: incentives to pre-order for nearly half-price online. All advertising

occurs online.

Potential additional competitors are the major credit card companies that choose

not to partner with the iCard’s services. These credit card companies would benefit

greatly from joining the iCard’s offering but some may choose not to join. These

companies would essentially pose as competition in the sense that a credit card, at its bare

minimum, is able to function in the relatively same way as the iCard..

Product OfferingThe iCard offers the convenience of having one card to pay for all purchases. It

holds an unlimited amount of credit, debit, and gift cards and is made of 100% recyclable

plastic material. The iCard works like a normal credit card. It will be within the physical

standards set by the international standard ISO/IEC 7810:2003 (Credit, 2014). The iCard

will be 3.370 inches by 2.125 inches and have 0.76 millimeters of thickness with rounded

corners (Credit, 2014). Users can select which payment method their needs by using the

built-in button complete with a touch screen. The small screen on the front of the card

will display the last four numbers of the selected card. This will inform the user of the

card being used to pay for current purchases. Once the payment method is chosen, the

card will be locked in until it is changed it to another type. The various cards can be

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uploaded onto the iCard by opening the iCard application from an iOS or Android

smartphone and snapping a photo of the front and backside of the card. The data will then

be transferred and stored on the iCard.

Additionally, the iCard is built in with Apple’s fingerprint technology for security

reasons. This feature is compatible with both iPhones and Android smart phones. It also

has chip and PIN technology and will shut off if the phone registered to the iCard is more

than 25 feet away. If the iCard is left behind, the smartphone attached to the iCard will

send a text message informing the user the card has been left behind. Each iCard can be

purchased for $79.99 and comes with a two-year warranty for the battery life of the card.

With the purchase of the iCard come the perks of AppleCare. The iCard will be available

in a high gloss white and matte black.

Keys to SuccessIn effort to achieve high brand recognition, large credit card companies encourage

that its card be physically used for purchases. In effect, a partnership with a third party, in

this case Apple would have to provide benefit to these creditors. However if the iCard

gains popularity in the market, the credit card companies would be able to use their

compatibility with the iCard as a selling point against competitors. Once the larger credit

card companies are on board, the iCard will gain much more attention and interest from

consumers who are concerned with the usage of all major carriers.

To garner initial interest from consumers, Apple has to drive consumers’

confidence by getting the product into the brand-loyal consumers hands first. Once the

reviews and word-of-mouth marketing take place, additional consumers will see the

benefits of being a part of the iCard culture.

The majority of merchants have advanced systems that would be compatible with

the iCard’s form but some may not. From general knowledge, some stores may operate

on a cash only basis. A consumer may be deterred from purchasing the iCard if it does

not have universal capabilities, as this is a major selling point for the product. If Apple

could convince merchants that do not carry technology-friendly forms of payment to

upgrade each system, it would benefit both parties tremendously.

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Critical IssuesA small portion of consumers may write-off the iCard as a piece of dangerous

technology that has the potential to create a new way for the user’s personal information

to get into the hands of identity thieves. These consumers, who are skeptical of new

technological advances, tend to adopt to a trend after it has been on the market for some

time. This fear is illogical due to the iCard’s security solutions: There is a fingerprint

unlock on the iCard’s surface and it is equipped with password protection. Both can be

used exclusively or as a two-stage security option.

To date, the iCard prototype has been testing for over one year. Employees, their

friends, and family have all reported fault-free use for this entire period of time. Apple

also offers a two-year warranty on the iCard and Apple Care services similar to the

“iProduct” line. If the user experiences a problem with the iCard, a simple solution is to

take it to the nearest Apple store for a free assessment.

As for trustworthiness, the iCard division has been operating under the same

privacy standards that Apple has had in place since the 1980s. Apple holds its clients’

privacy and well-being as its number one priority. In effect, Apple would never do

anything to jeopardize that promise. One of the best features about the iCard’s design is

that the user’s information never reaches the iCloud (an information transferrable

database). The iPhone application allows the user to access his or her iCard through a

key-authenticated and algorithmically encrypted Bluetooth connection that can only be

accessed from the user’s specified smart phone or computer. With all that being said,

there is still a group out there that has identified themselves as “anti-brand” and will have

nothing to do with Apple products. In a sense, this is a lost demographic that is very

difficult to reason with. Luckily, the brand loyal demographic is much larger than the

group that refuses these products, allowing Apple to still capture its target market.

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Marketing Strategy

MissionThe iCard consolidates and reinvents commerce by eliminating the use of

multiple credit cards. The iCard’s goal is to be the industry leader and innovator of smart

cards.

Marketing ObjectiveQuantitative data from both primary and secondary research suggests that an

estimated 65 percent of individuals who own a smart phone would likely purchase a

smart card. Based on these figures it is safe to estimate a potential market size of

91,217,750 consumers in the American marketplace alone (Census Bureau 2013).

According to Pew Research Center's Internet & American Life Poll, data also

shows that smartphones now account for 56% of the U.S cell phone market, 25% of

which are iPhones. Apple Inc.’s market share is up from 19% in 2012 and 10% in 2011

(Pew, 2014). (See Figure 1.)

Figure 1: Smartphone Market

2011 2012 2013

10.0%19.0%

25.0%15.0%

20.0%

28.0%

10.0%

6.0%

4.0%

2.0%

2.0%

1.0%

Cell Phone Platform Choice 2011-2013

WindowsBlackberryAndroidiPhone

Source: Pew Research Center’s Internet and American Life Project

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Based on this market trend and Apple’s influence on the commercial tech

markets, the goal is to capitalize on the emerging demand for smartcards. With the aid of

the company’s current integrated marketing communication strategies, and its superior

brand loyalty, the Apple iCard is expected to be very successful.

Financial GoalsApple, Inc.’s goal is to sell 3,500,000 units in 2015. The company has forecasted

unit sales of 1,000,000 in the first quarter, 800,000 in the second and third quarters, and

900,000 in the final quarter. The Apple iCard will be sold at a unit price of $79.99 and

will generate $279,965,000 in revenues for the 2015 calendar year.

Target MarketsThe Apple iCard intends to target specific markets in geographic segments,

demographic segments, and psychographic segments. Each criterion has divided the

potential smartcard marketplace into smaller targetable markets.

Geographic SegmentsAs it’s stated above in the Market Analysis, the iCard will target specific

Geographic’s, these regions that will include, but are not limited to: North America,

Japan, Germany, United Kingdom, and Australia. These six regions currently have the

largest GDP per capita and contain some of the world’s largest populations. (Find

Source) Along with the largest amount of disposable incomes, consumers within these

regions are some of Apple’s earlier adopters. The release of Apple’s new iCard would be

most successful in these six geographic segments.

Demographic SegmentsApple’s iCard will also target key demographic segments in the regions presented,

these demographic variables will include: age, income, life cycle, and generation.

Because the iCard is for consumers who utilize multiple debit and credit cards, the

speculative age range will only include those above the age of 18. The 91,2172,750

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potential consumers represent 65 percent of the American adult population that own a

smartphone.

Because the iCard is a peripheral product that needs to be tethered to a

smartphone, there is an un-targetable income level. Individuals and families living in

poverty do not have enough disposable income to be considered potential buyers. The

2014 poverty guidelines are presented below. (See Fig 2)

Figure 2: Poverty Guidelines

Persons in family/household Poverty guideline1 $11,6702 15,7303 19,7904 23,8505 27,9106 31,9707 36,0308 40,090

For families/households with more than 8 persons, add $4,060 for each additional person.

Source: http://aspe.hhs.gov/poverty/14poverty.cfm

Much like age, life cycle is also a very broad segment. The iCard will target

individuals who are beginning to enter the workforce as well as those already managing

their personal finances. Because technology plays such a big part in the conveniences of

life, much like the iPhone, the iCard will target all income earning life cycles.

Finally, the millennial and baby boomer generations currently control the majority

of U.S wealth, and by definition, disposable income. The 55+ age group controls more

than three-fourths of America's wealth (ICSC). Apple would profit the most by targeting

these specific generations.

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Psychographic SegmentsApple will utilize its existing psychographic segments: lifestyle, imagination,

innovation, passion, hopes, dreams, and aspirations through technology, in order to

successfully market the iCard.

PositioningThe iCard comes complete with many key attributes that set it apart from its

competitors. Similar to other Apple products currently available on the market, the iCard

will come in a sleek and luxurious design. The iCard offers consumers an easy and

seamless card that stores unlimited credit cards, debit cards, gift cards, and store

membership cards. The iCard delivers security measures through the fingerprint

technology or number entry password that unlocks the card. The iCard can be synced to

Apple iPhones or Android smart phones that possess Bluetooth capability. In the case that

the card is left behind, a text message will be sent to the phone registered to the iCard.

The card is made from 100% recyclable materials that will contribute to decreasing

Apple Inc.’s environmental footprint. The iCard will be offered at a higher end price of

$79.99.

The attributes of the iCard align itself to deliver the more-for-less position.

The card will convey the message of luxury and premier status. The iCard will provide

convenience that allows consumers to easily access their cards in this device. The

fingerprint and password entry features will provide measures that will help deter theft.

Since the iCard is made from 100% recyclable materials, environmentally conscious

consumers will feel good about contributing to reducing waste. Customers of the iCard

are less price sensitive and will not be shocked at the card’s introductory price of $79.99.

This will give consumers the perception of prestige due to Apple’s premium brand image.

In addition, the iCard will be first in the market, which will add to the Apple brand image

of innovation through technology.

StrategiesThe iCard is the most innovative product in personal technological integration for

everyday consumers. The overall idea of iCard is fresh and enticing for that reason alone,

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without mention of the practicality and many other benefits it offers. Because our target

market is already looking to Apple for new product releases, a drastic change in product

communication with our customers is not necessary. We can use many of the same

advertising and PR channels that are used for other Apple products (for example sleek

TV and print ads) as well as the strong word-of-mouth influence that Apple products

possess. The innovative nature of the iCard will likely be the most valuable form of

marketing it has. It is crucial to provide optimal access to the product in Apple’s stores

with “Geniuses” there to answer any and all questions.

Marketing Mix

PricingBased on market research and evaluation of competing forces in the market a

retail price of $79.99 will be charged for the iCard. With a variable cost of $20, Apple

generates a handsome profit margin at this price point. Our direct competitor, the Coin,

currently offers a retail price of $105 but that is assuming that it has no complication with

funding leading up to the product release sometime during summer 2014 (Coin has not

supplied a specific date on the corporate site) (Coin). Because of Apple’s resources as a

large corporation, an optimal manufacturing process is available that allows the physical

card to be produced for $8.50 per unit. $6.50 will go to online/mobile app maintenance

and development, and $50 is reserved for public relations.

Profits of $52 per unit allow for the option to implement promotional strategies

that will give some consumer levels access to the iCard who wouldn’t normally consider

buying it on its own. For example, the iCard will be bundled with the iPhone 5S, 5C, and

new 6, so the purchase of a new iPhone will give consumers the opportunity to include

the iCard in their purchase at a discounted price of $49.99.

DistributionDistribution of the iCard will be done through Apple stores throughout the U.S.

and at Apple.com in the U.S. only. Depending on the success of the release in the U.S.

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market, the iCard may have secondary releases in other countries. As with all other Apple

products, there is no better setting to sell this item than with the expertise an Apple

representative right there to assist with questions and information. There is a possibility

that the iCard could be sold in other environments in the future, but, for now, Apple

needs to have an exclusive hold considering the technical and secure nature of this

product.

Marketing CommunicationsApple recognizes the largely online oriented market that will be interested in this

innovative technology and has decided to reach that market through a largely online

oriented marketing campaign. This will be done through sleek and personal videos of

iCard test users describing their thoughts and experiences with the product. Getting the

iCard’s image and videos with testimonials and descriptions of the features circulating

through social forums can begin to develop a foundation of loyal and interested

consumers. If the video is a success, Apple can move it into televised advertisements.

This online campaign will not start until the June 2014 Apple Special Event

where Apple will be announcing the iPhone 6 and iOS 8 to the world. This event is

viewed around the globe and will create a huge initial information distribution as it does

every year for new Apple products. The iCard videos and details will be on Apple.com

for all to view as well as throughout popular online media sources. The cost of this

marketing campaign will be minimal as far as direct spending on the iCard. We will be

able to use the buzz and anticipation of the iPhone 6 to introduce the iCard and then

answer all questions and meet intrigued consumers with our video campaign. This

strategy will allow us to keep advertising costs low while still reaching millions of

potential buyers.

Marketing ResearchThe primary research to determine the target market of the iCard consumer came

from developing a survey. The survey included a brief but concise description of the

iCard and its functions. It then followed up by asking if the person would be interested in

a product like the one described, how much he would spend to purchase the item, and if

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he or she would use the product. The survey was sent via email to family, friends,

students, and acquaintances as well as posted on Facebook. The survey was made widely

available. In the case of the secondary research, to find quantitative or qualitative

information the Internet was used majority of the time. In addition, the California State

University, Monterey Bay library databases were also used to find sources and

information that pertain to market trends in credit cards or debit cards projections.

As the iCard will begin in the introduction phase of the product life cycle,

ongoing market research is essential to the growth and maturity stages in meeting

consumers’ needs. The market segmentation variables, which includes demographic,

psychographic, geographic, and behavioral, must be reevaluated continuously. Research

on growing trends in technology, banking, and security protection will all be needed to

ensure the iCard will meet the standards while being a leader in innovation. Furthermore,

research on sustainable product design will ensure that the iCard delivers its initiative of

reducing waste in the environment.

FinancialsThe following sections will detail the iCard’s break-even analysis, sales forecast,

and expense forecast. The iCard is anticipated to break even at 23,390 produced units

sold. First year sales are anticipated to reach $279,965,000 with fixed costs of $1,216,000

and variable costs at $28 per unit. Apple, Inc. can expect $180,749,000 profit in its first

year of iCard production.

Break-even AnalysisAccording to Philip Kotler and Gary Armstrong’s Principles of Marketing

textbook, the break-even volume of production measures the price of the iCard, fixed

costs, and variable costs as follows:

“Break-even volume = fixed cost/(price-variable cost),” (Kotler &

Armstrong, p. 298).

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With this formula in mind, to determine the iCard’s break-even volume, a measurement

of production must be made. The iCard’s retail price of $79.99 combined with variable

costs of $28 per unit and fixed costs of approximately $1,216,000 is computed as follows:

Break-even volume = $1,216,000/($79.99-$28) = 23,390 unitsIn order for the iCard to break even in first year sales, Apple, Inc. must sell 23,390 units

at $79.99. According to the sales forecast, this will occur early in the first quarter.

Figure 3: Break Even Chart

Sales ForecastIn 2013, Coin, the iCard’s competitor, offered pre-orders of its all-in-one

electronic card to the public at a price of $50. This is half price compared to its market

retail price of $100 but there is no guarantee that their product will be ready to distribute

at the estimated July, 2014 deadline. These consumers are really putting their faith in this

type of product. According to Forbes, when Coin allowed consumers to pre-order their

product they hit their goal of 1,000 orders in less than 40 minutes (Robehmed). This

really shows the demand for this type of card in today’s market. With this knowledge and

Apple’s reputation, Apple will be able to surpass the introductory sales seen by Coin. Not

only does the iCard have a reputable brand backing it up but Apple has the ability to

produce this product in mass volume with upgraded technology.  Since the business

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model is more efficient, Apple has the opportunity to release the iCard at a lower price

than Coin at $79.99. This is discounted $20 from Coin’s retail price. With this

information, Apple could gauge its first quarter sales at 400,000 units and our first year’s

sales reaching 1,300,000 units. Second year sales would slow a little at 1,100,000 but

because of the iCard’s two year battery life, Apple would see a huge increase in sales for

the third year at around 2,200,000 products sold.

Figure 4: Sales Forecasts

Sales ForecastYear 1

Quarters Q1 Q2 Q3 Q4 TotalSales Per Unit 1,000,000 800,000 800,000 900,000 3,500,000Revenue $79,990,000.00 $63,992,000.00 $63,992,000.00 $71,991,000.00 $279,965,000.00

Unit Price: $79.99

Sales ForecastYears 2 and 3

Year 2 Sales Per Unit 2,800,000.00Revenue $223,972,000.00Year 3 Sales Per Unit 4,200,000.00Revenue $335,958,000.00

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Expense ForecastTo meet these sales goals we will have to add additional employees and buildings

among many other additional expenses. We would separate these expenses into fixed and

variable costs. Apple would hire a team of 10 new employees to market the iCard and

each would receive a salary of $100,000. Apple would rent a new office for these

employees that would cost them $18,000 dollars a month. Apple is also going to run a

series of television advertisements along with many public relations activities.

Figure 5: Expense Forecast

ControlsIn order to stay on track with the sales goals set, Apple’s marketing team will

analyze sales on a monthly basis. These marketers will constantly compare iCard sales

with the sales of competitors and take advantage of any weaknesses in the competitors’

marketing strategies to steal customers. Apple would also do a study to see if the first

time iCard buyers are returning to buy a second or third iCard after their initial iCard’s

battery dies. This study would help Apple make future sales forecasts.

Figure 6: Production Efficiency

Production EfficiencyYears Year 1 Year 2 Year 3Sales 3,500,000 2,800,000 4,200,000Total Revenue $279,965,000 $223,972,000 $335,958,000Fixed Costs $29,216,000 $29,216,000 $29,216,000Variable Costs $70,000,000 $56,000,000 $84,000,000Total Costs $99,216,000 $85,216,000 $113,216,000Profit $180,749,000 $138,756,000 $222,742,000

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Expense ForecastFixed Costs(Per Year)

Employees Salaries $1,000,000Rent $216,000Advertising $28,000,000

Total $29,216,00

0

Expense ForecastVariable Selling Costs

(Per Unit)Public Relations $5.00Product $8.50App $6.50Total $20.00

ImplementationThe implementation of the iCard starts with product testing and advertising. With

our test run of iCards that have been distributed to Apple employees, select columnists

and writers, as well as family and friend of employees, we will create a relatively small

advertising campaign online by filming usage showing wear and tear in everyday life.

This will be available on the Apple website along with a detailed description of the

features immediately following the June 2014 Apple Special Event, announced alongside

the iPhone 6 and iOS 8. The cards will be available in Apple stores across the country as

well as online and packaged with the new iPhone 10 days following the event.

This approach piggybacks the release of the iPhone 6 and will allow more

exposure for the iCard. We aim to have an iCard in the hands of at least a million

consumers domestically after the first quarter. This is achievable considering the fact that

Apple saw nine million iPhone 5 sales after the first three days of availability

(9to5mac.com, September 2013). This will give Apple an added $22 million in revenue

on top of iPhone sales, not to mention purchases of the iCard at the individual price of

$79.99.

Marketing Organizational Chart

Figure 7: Organization Chart

Chief Marketing

Officer

Product Manager

Advertising Manager

Market Research Manager

Sales/Promotion

Manger

Creative Design Manager PR Manager

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Contingency PlanningWith the iCard being the first of its kind, difficulties or risks will arise. Security

issues will be at the forefront of consumers’ minds. Consumers can rest assure that Apple

Inc. will take care of any malfunctions or security issues that may arise during the

product’s life cycle. Consumers will question the integrity of the security protection of

the iCard, but they can be convinced that the fingerprint and PIN code technology are

implemented to deter identity theft. Another way the company will deal with security

issues is to use secure trusted networks.

Global or regional economic factors may adversely affect consumers’ spending

habits. If that may occur, Apple Inc. will cut back the iCard price or have rewards

promotions to combat the issue. Consumer trust and reliability difficulties in the iCard

will be hard to obtain because currently the market has nothing like this product to

compare with. Trust and reliability will come through using the card. With any new

product, there will be competitors looking to imitate the iCard and its technology. Apple

Inc., as a large entity, will trademark its design and software technology for the iCard so

that competitors cannot easily copy.

The worst-case scenarios would be if the product has hardware or software issues

and is not received well by early adopters. If this occurs, the public relations team will

draw up a public apology and inform the media that the issues are being handled with

care to ensure there will not be future incidents. The product engineers will be ready and

able to examine and correct any mishaps from the iCard. Each iCard comes with in-store

support technical service. Customers will be able to bring the iCard under its warranty

with no cost to them. The iCard is backed up by Apple Inc.’s brand and image, but most

importantly, customer satisfaction is our main goal. With the contingency plan, Apple

Inc. will ensure all issues are handled in a timely and appropriate manner.

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http:// www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-

statistics-1276.php

Credit Card Dimensions. (2014, March 13). Dimensions Info Credit Card Dimensions Comments. Retrieved from http://www.dimensionsinfo.com/credit-card-dimensions/

Coin. (2014). Home. Retrieved March 2, 2014 from https://onlycoin.com/

Foster, K., Meijer, E., Schuh, S., & Zabek, M. (2011). The 2009 Survey of Consumer Payment Choice. Federal Reserve Bank of Boston, MA.

MarketsandMarkets: World Smart Card Market Worth US $6.6 Billion By 2015.

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http://www.marketsandmarkets.com/PressReleases/

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Robehmed, N. (2013, November 20). Coin reaches campaign goal, extends pre-order.

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http://www.forbes.com/sites/natalierobehmed/2013/11/20/coin- reaches-

campaign-goal-extends-pre-order/

SBWire. Smart Card Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2012 - 2018. Retrieved March 13, 2014,

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