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Apple Pay Case AnalysisAlicen SpaleLouisiana State University ShreveportMKT 701 – Summer 2020
RUNNING HEAD: Apple Pay Case Analysis 1BackgroundSteve Jobs and Steve Wozniak founded Apple Computer, later changed to just Apple, in 1976. Apple offers a wide variety of technology including smartphones, laptops, computers, iPads, iPods, Apple TV’s, Apple Watches as well as services such as Siri, Maps, and Apple Pay (Gupta, Santana & Rodriguez, 2015). When Steve Jobs passed away in 2011, Tim Cook took over as CEO. He had been with the company since 1998 and knew the ins and outs of their mission and where he needed to take Apple (Bloomenthal, 2020). Apple thrives on innovative ideas that solve a consumer’s problem. Their goal is to simplify the user process and create an easier way of living for consumers. They have a user-friendly, uniformed model across all of their products which allows consumers to quickly adapt to updates, new features and products. Because their products operate on the same system and are connected, Apple has created high switching costs that leads to customer loyalty. Apple Pay was designed to eliminate the need to carry your wallet and assist in a quicker paying process for online and in store purchases. In the months leading up to the launch, Apple worked closely with merchants and banks to convince them to invest in utilizing Apple Pay without a guarantee of success (Gupta et al, 2015). At the time of the launch, the three largest payment networks agreed to collaborate with Apple Pay and 220,000 merchants offered it in theirstores. Within six months, it was up to 700,000 merchants. However, that still measured as less than 10% of overall retailers. The service was launched in October 2014 and within 72 hours over one million users had activated Apple Pay (Gupta et al, 2015). Apple Pay was the fastest adopted mobile payment system, however users were not consistently using it. Of those that activated it, only half had reported to have used Apple Pay more than once (Gupta et al, 2015). Inorder for Apple Pay to continue to succeed they will need to increase the number of users as well
RUNNING HEAD: Apple Pay Case Analysis 2as the number of retailers. To do this, they will need to streamline the service as seamlessly as possible and expand geographically. Situation AnalysisStrengthsDesigned to be convenient and easy for consumers, does not need to be downloadedSecure using tokenization Private – shares less data Strong CultureBrand recognitionStrong financial resources with an established/successful companyStrong/innovative leadership – Tim CookContactless PaymentHigh switching costs Weaknesses<10% of retailers offered Apple Pay68% of users reported issues Lack of training for retail employees knowing how to use the terminal