apple watch report

A.R.T. Research, Inc.

APPLE WATCH 12/6/14 MKT 346 PROF. ACKERMAN ARMANDO PEREZ RAJ SINGH TAYLOR BURGESS

Fall 14

08 Fall

A.R.T. Research, Inc. 2

LETTER OF AUTHORIZATION 3

EXECUTIVE SUMMARY 4

INTRODUCTION 5

PURPOSE 5

CONSUMER’S PERCEPTION OF WEARABLE TECH & THE APPLE WATCH 5

METHOD 6

FUNCTION OF VARIABLES 6 QUANTITATIVE QUESTIONS: 6 QUALITATIVE QUESTIONS: 7 VARIABLES NOT INCLUDED 7 SAMPLE SELECTION 7

SURVEY FORMAT 7

STRENGTHS: SIMPLICITY 8 STRENGTHS: OPEN-‐ENDED QUESTIONS 8 WEAKNESSES: TOO BRIEF 9 IMPROVEMENTS TO BE MADE: GIVE REWARD 9 IMPROVEMENTS TO BE MADE: ONE ON ONE INTERVIEWS 9 IMPROVEMENTS: ONLINE SURVEYING 10

PRE-‐TEST 11

LOCATIONS SURVEYED 12

RESULTS 13

ANALYSIS 13

DEMOGRAPHIC VARIABLES 13 TABLE 1. DEMOGRAPHIC VARIABLES 14 QUANTITATIVE QUESTION: MEANS 14 TABLE 2. QUANTITATIVE QUESTIONS MEANS 16 PAIRED-‐SAMPLES T-‐TEST 16 TABLE 3. PAIRED SAMPLES T TEST 17 BIVARIATE CORRELATIONS 17 TABLE 4. CORRELATIONS BETWEEN NUMBERS OF PRODUCTS & DESIRABILITY 18 TABLE 5. CORRELATIONS BETWEEN PREFERENCE OF COMPANY & DESIRABILITY 19 TABLE 5. CONTINUED 19

CONCLUSION 19

COSTS 20

REFERENCES 21

APPENDIX 22

APPENDIX A: SURVEY 22


Letter of Authorization A.R.T. Research, Inc.

12345 Ventura Blvd

Encino, CA 91323

December 1, 2014

Mr. Tim Cook

Apple Inc.

1 Infinite Loop

Cupertino, CA 95014

Dear Mr. Cook

With your letter of authorization dated November 1, 2014, you authorized A.R.T. to conduct a research report on Apple Inc. With this letter I’m here by transmitting you the report of that report entitled “Apple Watch”.

The methodology used to find the data in this report is described in detail within this report. Furthermore, the method follows your orders described in the contract. We at A.R.T. believe that this report answers all of the questions that you have requested and more. You should be able to use all of the information found in this report to make knowledgeable executive decisions in the future.

We at A.R.T. would like to thank you for the opportunity to be able to do a market analysis report on your behalf. Should you have any question, please don’t hesitate to call us at (818) 987-2907. We are available 24/7 for your convenience.

Regards,

A.R.T. Research, Inc.


Executive Summary The growing trend with wearable technology encourages new competitors to

emerge. This new market shows great promise for the future-oriented individuals. However, it

is important to understand the present before a leader heads in a new direction.

This research will provide you with a deeper understanding about the respondent’s

thoughts about the apple watch when compared to other wearable technology. The structure to

our research would encourage the greatest results for our analysis. We understood that with a

combination of quantitative and qualitative research tools this could better help strengthen our

results.

The data will be elaborated further below with our interpretations of the

results. Surprisingly, we noticed that the more apple products a respondent owned the less they

desired the apple watch. The exact same relationship existed for competitors, the more android

products they owned the less they desired the android wearable tech.

Our results indicated that apple entering the wearable market was a good move. This was

due to the fact that 80% of our respondents showed a strong interest with the apple watch only if

the product was fashionable. As we know the Apple watch has a strong fashion sense.


Introduction By 2018, it is estimated that wearable tech market will be worth some 12.6 billion U.S.

dollars (Wearable Device Market Value). Our goal in conducting this research project is to

decide whether or not it was a critical decision for our client, Apple, to have entered the wearable

tech market segment. Additionally, will brand loyalty be a factor in determining the projected

sales for the Apple Watch? The Halo Effect, which was named by psychologist Edward

Thorndike, explains “cognitive bias in which an observer's overall impression of a person,

company, brand, or product influences the observer's feelings and thoughts about that entity's

character or properties” (Cognitive Bias). Many competitors including Motorola and Samsung

have already entered into the wearable market segment, thus establishing the framework

(product, price, positioning) for other companies to follow. Not only have large companies such

as Samsung have entered the smart watch market, there are also smaller companies funded

through the online website Kickstarter to start their own smart watch projects. Many questions

arise that need to be answered before entering into a new market segment. Consumers should

ask themselves if it is a necessity, since many consumers already have a smartphone that

accomplishes all of the functions of a smart watch. Our findings would help determine a more

solid conclusion if this was a strategic move from Apple.

Purpose

Consumer’s Perception of Wearable Tech & The Apple Watch This study will answer the following question, “Does the number of Apple products

owned influence the desirability of the Apple watch?” Additionally, this study will gauge

whether or not consumers are interested in wearable technology. Furthermore, this will allow


our client, Apple, to have a greater understanding of how consumers view Apple as an entity

based on the respondent’s feedback.

Method

Function of Variables Two demographic variables to be used in this study were age and gender. A respondent’s

age directly influences his or her own knowledge of technology. A younger person is more

likely to be more knowledgeable about technology as opposed to an older person. Additionally,

the respondents were asked six quantitative questions and two qualitative questions that would

help stratify the research.

Quantitative Questions: • Respondent’s preference between Apple and a competitor:

o To prove the existence of a relationship between brand loyalty and future

purchases of other products over competitors.

• Number of Apple and Android products owned:

o This can indicate an individual’s technological knowledge. This question can

also show the relationship between the amount of products a respondent has and

the loyalty the respondent has towards a specific technological brand.

• How often a respondent would wear wearable tech and rating of most desired:

o This question indicates how often a respondent would actually wear wearable

tech, which will allow us to project whether or not consumers will actually wear

the product. Additionally, the respondents will rate a set of wearable tech items

between 1 and 5, 1 being most desired.


Qualitative Questions: • Open-ended question: Do you think wearable tech can be fashionable?

o This question leads them to the next question to construct a more thought

provoking response.

• Open-ended question: What do you think of the Apple Watch? Would you wear it?

o From this response we can learn what are the consumer’s perceptions on

Apple. This answer gives an indication whether they will find it suited to their

interests.

Variables Not Included Income, Social Class status, Family size, and Race/Ethnicity were variables not

considered in the sampling methods utilized. These were variables too personal to ask on a

survey. Many respondents can give false information, thus making the survey responses non-

conclusive.

Sample Selection A convenience sample will be used for this research. This convenience sampling was

chosen above others as it was anticipated that a large majority would be knowledgeable of

wearable tech. A.R.T. Research, Inc. has collected surveys from students at California State

University Northridge as well as random individuals that are associated with A.R.T. Research,

Inc. In total 98 individuals were surveyed.

Survey Format The structure of the actual survey is one of the most important aspects of the entire

research as it gives the researcher the result that was sought. The numbers of qualitative and

quantitative questions combined were limited to one page. This was to keep the survey


simple. A respondent simply does not have the time to answer any more than 10 questions. The

ideal time it should take to fill out the survey was 4-5 minutes. Understanding that our sample

demographic mainly consisted of college students they would tend to be busy. The quantitative

and qualitative questions were asked in an easy format that prevented confusion with the

respondent. A risk that needed to be considered was if it became too long, the respondents just

would not care too much about the quality of their responses. This can result in inconclusive

results that will have no benefit for the researchers.

Strengths: Simplicity The survey format included a simple question that only took up one line of text, followed

by a selection of answers that respondents were allowed to choose from. At the very top of the

survey it has a simple title that gave the respondent an idea of what the survey was about. In the

background there was a light watermark of the apple watch that allowed many respondents to

view the product for the first time. This format included Likert scales, which many people are

familiar with. Their familiarity with these research instruments prevents confusions that would

allow them to stress on a survey that can bias results.

Strengths: Open-‐Ended Questions These questions allow the respondent to give us the feedback we need to gather that will

allow us to understand their perceptions of the respondents in their own words. The survey was

structured in a way that began with some basic info about the wearable tech. Then towards the

end there were the two open-ended questions we asked. The previous questions were building

them to the last questions. Through this way they were able to construct more thought provoking

responses as opposed to asking them in the beginning. Likert scales were not going to be enough

to give us their concerns or attitudes.


Weaknesses: Too Brief The biggest issue that occurs when the survey is very simple is that the simplicity of the

survey does not go into too much detail. There exists plenty of information that can be learned

from consumer’s perceptions about wearable technology in general. From our questions we did

not manage to get an in depth understanding about all of the topics in consumer’s behavioral

patterns.

Improvements To Be Made: Give Reward The open-ended questions that were asked did not give much information. Many of the

respondents gave very brief one-sentence answers to the questions. This can show that the

respondents were in a hurry or did not have a desire to complete the survey the best they

could. It became apparent that many of these respondents were only completing them out of

goodwill. Furthermore, this was due to the fact that there was not much for the survey takers to

gain. A reward after completing the survey would have encouraged the survey takers to give a

more thorough response of their perceptions on wearable tech.

Improvements To Be Made: One on One interviews Another improvement that could be made was to conduct one-on-one interviews. In this

case the in-depth interview could have given a more meaningful understanding about consumer’s

perceptions on wearable tech. These open ended questions could have answered questions that

gave us a deeper insight as to how much would wearable tech should be priced at, what would

get them to consider purchasing “smart-gear”, is there a preference between brands, what

functions should be included, how will it benefit the users, how can it improve lives, and what

will this tell us about the future? Other questions that could have been asked were at what price

is the threshold to purchase one of these devices, and how would you want it to look? These are

all important questions that could arise from an open discussion with a respondent. This


discussion should last for as long as they have answers to contribute, meaning that it shouldn’t be

timed. From this in depth discussion, there would be a great expectation of a large reward for the

respondent, e.g. a gift card.

Improvements: Online Surveying Online surveys are considered to be superior research tool when compared to traditional

methods of surveying. There are undoubtedly many advantages for the researcher and the

respondents when surveys are conducted online. Some of these advantages include: fast

distribution, more selective, time saving, low cost, flexibility, higher accuracy, and quick

analysis. With the use of online surveys, the interviewer has the ability to quickly distribute as

many surveys to as many participants quickly and efficiently. Distributing online surveys not

only saves time, but also cuts costs since there is no need to print out individual surveys and go

to different locations to sample individuals. Online surveys can also be designed with flexibility

so they are tailored to fit your goals and research. Even very complex surveys can be

programmed seamlessly, while cutting down the possibility of errors from respondents. Online

surveys also turn out to be more accurate and honest because participants feel safer in an

anonymous environment and are more likely to open up with longer and more truthful responses.

Another advantage is not having the interviewer around because respondents are willing to share

more personal information since their responses are not directly disclosed to the interviewer.

Most of the time the responses are instant or usually come back within 3 to 5 days. The results

can also be automated and transfers into specialized statistical software, such as SPSS, when a

more detailed analysis is needed.


Pre-‐Test The plan was to set out hoping our initial survey would provide the best possible results

from respondents. Due to some of the flaws in the pretest a few discoveries were uncovered in

the survey, we ended up with results that we did not anticipate. After making sense of the results

we agreed the questionnaire should be restructured into a simpler and more efficient design.

Some of the issues we encountered while distributing the surveys were through the feedback the

respondent’s gave us. We ended up only using two demographic variables, age and sex, in the

new survey because the most common questions we got were aimed towards anonymity and

confidentiality; this is due to the fact that most people do not like giving away their personal

information to strangers. As a result, we decided on keeping the questionnaire anonymous and

emphasized on anonymity when we asked individuals to take the survey. We also tried to make

the questionnaire as simple as we could by condensing it down so it would fit on to one page,

instead of two. Since our sample population is composed up of CSUN students, we

acknowledged the fact that other students are just as in a hurry as we are and would least likely

participate in long questionnaires. Furthermore, they are more likely to rush through the

questions and not answer them truthfully; one of the actual answers a respondent left for our

open-ended questions was “ughh”. One mistake we found in the survey was the question: on

average how many Apple products do you own? Later we realized it was lousy question to ask

because you can’t have an average of products owned. The improvements we implemented from

the pre-test provided us with better results that closely reflected our goal; that is to understand

consumer perception of the Apple Watch and other wearable tech.


Locations Surveyed The many locations we singled out were selectively picked to better represent our sample

population of CSUN students. Our objective was to get as many individuals to fill out the survey

without having to spend too much time looking for candidates; we focused on some of the most

popular areas on campus. These areas included, but were not restricted to: the library, pub,

cafeteria, student rec-center, and a few places off campus. Our initial survey during the pre-test

was only limited to individuals walking around near our class, which was very time consuming

since everyone was either heading to class or going home. The second time around we decided

to target areas that would be full of students such as the Arbor Grill and Freudian Sip with an

updated questionnaire; usually these areas are crawling with students on their breaks. We

assumed we would get most of our surveys filled here, but we realized a lot of students didn’t

want to participate in our survey while they were trying to enjoy their lunch breaks. Later on we

headed towards the student association center since we didn’t get the number of respondents we

were hoping for; in this area we target individuals near the pub, matador store, cafeteria, and the

gym. We did get a few more people to fill out our surveys in this area, but not enough to

complete our research. The last area we chose to conduct our surveys was at the library, we

initially held off on going there first because we expected students to be busy studying and

would have been too disruptive to ask them. Surprisingly we were able to complete the last set

of surveys in this location by the end of the night. We noticed most of our respondents came

from the first floor because more individuals were willing to take the survey if their friends were

also taking one. Some other areas we distributed the survey was in our classes and to our student

roommates. We distributed 95% our surveys on campus and the remaining 5% to students at

local bars and food joints.


Results

Our results from the research study and analysis of the collected data left us with more

questions then answers. The responses we received for the qualitative questions gave us an idea

of what respondents thought of the apple watch and their attitude towards wearable tech. Our

findings show that the more Apple products the respondent owned, the less desire they had

towards the Apple watch. This is due to the fact that smart-watches already have the same

functionality as our smartphones. This was contrasting to our original assumption because we

assumed that Apple owners would have higher desirability towards a watch made by Apple. Our

findings also indicated that more of the respondents would purchase the Apple watch, even

though it has not been released, than the products that are already being offered by the

competitors. Their attitude towards competitor products showed that they were bias, to some

extent, towards Apple products since many of the respondents said they had never seen or heard

of the Apple watch. We can also add that many of the respondents stated they would consider

using wearable tech if it was fashionable and affordable.

Analysis

Demographic Variables Respondents were asked two demographic questions which prompted them to state

whether they were female/male as well as their age. The mean age of the 98 respondents was 26

years old. Respondents were chosen using convenience sampling but older respondents were

targeted in order to add more value to the research. Additionally, age was factor due to the direct

correlation it has with technology. Though more people of all ages are more versed in

technology it is usually noted that younger individuals are more versed in technology than older

individuals. It was noted that 58% of the respondents were male and 42% were female. One of


the proposed reasons why the distribution concluded more males than females was due to the

fact that the individuals that were requesting participants to answer the surveys were male.

Furthermore, most of the surveys were requested at night thus causing women to be more

cautious when speaking to strangers. This was noted when one woman informed us that she

“normally would never talk to strangers at night but due to the fact that the surveys were

requested in front of the library which was well lit, it was ok.” A respondent's gender was

important in this study in order to conclude whether or not gender plays a role in a person's

cognitive bias towards a company. In the past men have dominated the tech market. Companies

would usually only target men. Now however, times have changed. Women are becoming an

increasingly large factor in the sales of technology. Products are beginning to be more appealing

to men and women. The following graph shows the distribution of male and female and the

mean age of the respondents:

Table 1. Demographic Variables

Quantitative Question: Means Respondents were asked six quantitative questions in order to provide the data that was

then inputted into SPSS predictive analytics software. This ordinal and nominal analysis was

collected using a Likert Scale. By using a Likert Scale the respondents were able to rate

questions based on frequency and desirability. The frequency questions pertained to how often

the respondent would agree with the question asked. For example: How often would you choose


Apple over a competitor? These questions were then followed by desirability questions. For

example: Please rank the following items from 1-5, 1 being most desired. Following the

computation of these variables means, they were then tested using a t-test in order to show if they

were related or not.

The analysis concluded a host of different means (averages). Based on a scale of 1-4 (1

Very Often, 2 Often, 3 Sometimes, 4 Never) the results showed that the mean for respondents

choosing “Apple over a competitor” was 2.6 and the mean for “Competitor over apple” was 2.3.

This meant that of the respondents that were sampled, more preferred Apple over a competitor

rather than a competitor over apple. The respondents were then asked a desirability question that

made the respondent rank five products (Apple Watch, iPhone 6, Google Glass, Samsung Gear,

Samsung Galaxy S5) from 1-5, 1 being most desired. Though Google Glass was not an Apple or

Samsung product, it was used as a buffer in order to give balance to the results. By placing 2

products per company (Apple & Samsung) and 1 from another random company (Google) we

were able to level the desirability scale in order to have more conclusive results. The lower the

mean (average) the more desired the product was. The iPhone 6 had a mean of 2.41 and the

Samsung Galaxy S5 had a mean of 3.24. This concluded that more respondents desired the

Apple iPhone 6 than the Samsung Galaxy S5. Additionally, the Apple Watch scored a mean of

3.2 and the Samsung Gear scored a mean of 3.8. Based solely on the means, respondents

preferred Apple and their products over Samsung and their products.


Table 2. Quantitative Questions Means

Paired-‐Samples T-‐Test By calculating the means of the quantitative questions we were able to show if

respondents preferred one variable over another. Though we calculated the means, it was

imperative that we conducted a T-Test in order to find out if the variables were actually related

to one another by testing different hypotheses. If our research solely relied on just the means of

the variables then our information would be lacking value. By initiating a T Test, it shows value

in the research. All of the T Tests were conducted between two variables from the same group.

The first test’s variables were between choosing Apple over competitor and competitor

over Apple. The purpose of this test was to see if these two variables were related at all. The

null hypothesis: There is a relationship between choosing Apple over a competitor or competitor

over Apple. The alternative hypothesis: there is no relationship between the two variables in the


population (sample). The results concluded Sig. (2-tailed) .111. Because P>.05, this indicated

that the null hypothesis was accepted. The respondents choosing one of the variables had a

direct response on the mean of the other variable.

Table 3. Paired Samples T Test

Bivariate Correlations Bivariate correlations were used to measure the relationship between two different

variables. This data was calculated in order to show if two variables were related and if so how

strong the relationship was.

The first correlation that was measured was that between the number of Apple products

owned and desirability of the Apple Watch. Our results concluded Sig. (2-tailed) of .000 and a

Pearson Correlation of -.390. This was surprising because a Pearson rating that is negative

means that when one variable goes up the other goes down. This meant that the more Apple

products a respondent owned, the less likely that they desired the Apple Watch. The second

correlation was between the number of competitor products owned and Samsung Gear

desirability. The results were Sig. (2-tailed) .001 and a Pearson Correlation of -.321. This

outcome was closely related to Apples outcome. The more competitor products owned by a

respondent the less they desired Samsung Gear.


Table 4. Correlations Between Numbers of Products & Desirability

The correlations between number of products owned and desirability of products showed

that though they were significant, they were negatively related. We then tested the correlation

between a respondent’s preferability of choosing Apple over a Competitor or Competitor over

Apple with desirability of the products that were listed. The first test was between Apple over a

competitor and the desirability of the Apple Watch. The results concluded a Sig. (2-tailed) .000

and Pearson Correlation of .440. This showed that though they were significant, there was a

weak correlation between choosing Apple over a competitor and the desirability of the Apple

watch. The second test was between choosing a competitor over Apple and the desirability of

the Samsung Gear. The test concluded a Sig. (2- tailed) .000 and Pearson Correlation of .231.

This showed that though there was a relationship between the amounts of competitor products

owned and the desirability of the Samsung Gear, the relationship was not strongly correlated.

Additionally, it correlated less (related less) than Apple over competitor did with Apple Watch.

The third test was between Apple over a competitor and the iPhone 6. The results concluded a

Sig. (2-tailed) .000 and Pearson Correlation of .781. This result showed that there was a

significant and strong correlation between choosing Apple over a competitor and the desirability

of the iPhone 6.


Table 5. Correlations Between Preference of Company & Desirability

Table 5. Continued

Conclusion The analysis concluded a host of different information that will help our client Apple

structure their strategy for entering the wearable tech market. Additionally, other important data

was obtained via the surveys.

The results of the various tests in the analysis concluded that the more Apple products a

respondent owns, the less likely they are to desire the Apple Watch. This is possible due to the

limited marketing exposure these respondents have with the Apple Watch, which doesn’t debut

until 2015, and the whole idea of wearable tech. Respondents noted that their smartphones

already accomplish the task of a smart-watch and they feel it is not necessary to acquire one.

However, the mean score of desirability of the Apple Watch was less than the desirability of

Samsung Gear (the lower the mean the better). This indicated that more people desired the Apple

Watch, even though it has not been sold yet. Considering that the Samsung Gear has been out

for sale for some time now it is an impressive feat for Apple Watch. Additionally, the


respondents as a whole preferred Apple and their products more than Samsung and their

products.

The analysis concluded that fashion plays a significant role in the likeability of a product.

Respondents stated how if the product looked good, that they would wear it. This in addition to

the mean score of the question asking the respondents, “Would you wear it” which was 2.7

(between often and sometimes) showed that if the product looked good or was fashionable,

respondents would generally wear it.

Costs Surveys (paper): $10

Transportation (gas): $20

Consulting Fee: $2000

Total: $2030


References "Cognitive Bias." Princeton University. Princeton, n.d. Web. 02 Dec. 2014.

<https://www.princeton.edu/~achaney/tmve/wiki100k/docs/Cognitive_bias.html>.

"Wearable Device Market Value 2010-2018 | Forecast." Statista. Statista, 2014. Web. 03 Dec.

2014. <http://www.statista.com/statistics/259372/wearable-device-market-value/>.


Appendix

Appendix A: Survey Apple, iWatch, & Wearable Tech

This is an anonymous and confidential survey to analyze individual’s perception of Apple following the release of the iWatch. Please check or fill in the appropriate response.

1. Age: __________

2. Sex: [ ] Male [ ] Female

3. How often do you choose an Apple product over another competitor’s product? [ ] Very often [ ] Often [ ] Sometimes [ ] Never

4. How often do you choose a Samsung, Microsoft, or Sony product over an Apple product? [ ] Very often [ ] Often [ ] Sometimes [ ] Never

5. How many Apple products have you owned? __________________________

6. How many Android products have you owned? __________________________

7. Please rate the following items that you would prefer to have from 1-5. 1 being most desired: [ ] iPhone 6 [ ] iWatch [ ] Samsung Gear [ ] Galaxy S5 [ ] Google Glass

8. How often would you wear wearable tech (iWatch, Samsung Gear, Google Glass)?

[ ] Very often [ ] Often [ ] Sometimes [ ] Never

9. Do you think wearable tech can be fashionable? Please explain.

10. What do you think of the Apple iWatch? Would you wear it?

Thank you for taking the time to complete this survey

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