{"id":1373,"date":"2019-04-26T10:38:37","date_gmt":"2019-04-26T10:38:37","guid":{"rendered":"https:\/\/assignmenttask.com\/answers\/?p=1373"},"modified":"2020-01-16T20:21:39","modified_gmt":"2020-01-16T20:21:39","slug":"apple-pay-marketing-case-study-analysis-questions-answers","status":"publish","type":"post","link":"https:\/\/assignmenttask.com\/answers\/apple-pay-marketing-case-study-analysis-questions-answers\/","title":{"rendered":"Apple Pay: Marketing Case Study Analysis Questions & Answers"},"content":{"rendered":"

Apple Pay: Marketing Case Study Analysis on Apple Pay <\/strong><\/h2>\n

On September 9, 2014, in front of a packed audience in Cupertino, CA, Tim Cook, the chief executive officer of Apple, announced the much anticipated launch of Apple Pay, \u201cOur vision is to replace this [wallet] and we are going to start with payments.\u201d1 He continued, \u201cPayments are a huge business. Every day between credit and debit, we spend $12 billion in the U.S., and this business is comprised of over 200 million transactions a day.\u201d2 Cook then invited Eddy Cue, Apple\u2019s senior vice president of Internet Software and Services, to the stage to explain how Apple Pay would transform the mobile payments industry.<\/p>\n

\u201cOver $1 billion a day is spent on online purchasing,\u201d said Cue. \u201cThat\u2019s five million daily transactions just in the U.S. alone, and the process is really cumbersome. You\u2019ve got these long forms to fill out for each and every app that you shop in.\u201d He went on to explain how Apple Pay would allow consumers to complete the check-out process within apps with a single touch, and without the need to repeatedly enter their credit card information, billing address, or shipping address.<\/p>\n

On October 20, 2014, U.S. consumers could start using Apple Pay in stores with their iPhone 6 or iPhone 6 Plus (and, later, Apple Watch) and within apps using iPhone 6, iPhone 6 Plus, iPad Air 2 and iPad mini 3. All three major payment networks (American Express, MasterCard and Visa) and 220,000 retail outlets in the U.S. accepted Apple Pay at its launch\u2014and more than 500 banks signed-on to bring Apple Pay to their customers. Within a month, Whole Foods reported more than 150,000 Apple Pay transactions and McDonalds processed half of its mobile transactions via Apple Pay.3 By March 2015, Apple Pay was accepted in 700,000 retail locations including Coca-Cola vending machines. \u201cWe are the fastest adopted mobile payment service by a long shot,\u201d noted Jennifer Bailey, vice president of Apple Pay.<\/p>\n

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However, Cue and Bailey were aware that the landscape of mobile wallets and payment services was littered with failures. In 2011, Google introduced Google Wallet and invested hundreds of millions of dollars with limited success. Softcard, originally known as Isis, was formed as a joint venture between Verizon, AT&T and T-Mobile, but it struggled to gain traction and was sold to Google in March 2015. And while Apple Pay\u2019s acceptance in 700,000 retail locations within six months was<\/p>\n

impressive, it accounted for less than 10% of the 7 to 9 million retail establishments in the U.S.4 Reflecting on these challenges, Bailey wondered, \u201cWhat should Apple do to continue the early momentum for the adoption and use of Apple Pay?\u201d<\/p>\n

U.S. Payments Landscape<\/strong><\/h2>\n

In 2015, annual U.S. retail spending was projected to reach $4.7 trillion and to grow at 4% per year through 2019.5 Payments were not simply a large business; they were also an important touchpoint for consumers. \u201cPayments are an integral part of everyone\u2019s lives,\u201d said Bailey. \u201cIn the U.S., adults make over 400 payments per year. In some Asian countries, it\u2019s 700 and growing.\u201d<\/p>\n

In the U.S., consumers used cash for 25% of their monthly payments by value,6 while credit and debit cards comprised 46% of payments by value (see Exhibit 1<\/strong>).7 Although cash was less convenient for consumers to obtain and use than credit or debit cards, it was more widely accepted. Merchants saw credit cards as a double-edged sword: credit cards carried transaction fees but also had larger than average transaction sizes.8<\/p>\n

The origins of modern credit cards could be traced to the private label store cards issued by Sears, one of the oldest department stores in the U.S., in the early part of the 20th century. The cards allowed shoppers to buy items on credit, but only at Sears stores. In 1950, Diner\u2019s Club created a credit card that could be used at participating restaurants in New York City. Eight years later, American Express launched a card for travel and entertainment expenses.9 In 1966, MasterCard and Visa launched the first \u201copen\u201d credit payment systems through a consortium of banks, which allowed consumers to use credit at a variety of participating retail outlets.10 By 2015, private label cards like Sears; closed system cards such as American Express and Discover; and open system cards existed side-by-side. Open system cards processed over four times the transaction value of the closed system and private label cards (see Exhibit 2 <\/strong>for U.S. market sizes).<\/p>\n

Mobile Payments<\/strong><\/h2>\n

Although e-commerce and mobile commerce (m-commerce) made up only 6.5% and 1.1% of all U.S. retail transactions in 2014, they were expected to grow much faster than the total market (see Exhibit<\/strong><\/p>\n