Company Case 10
Apple Pay: Taking Mobile Payments Mainstream
Synopsis
After years of predictions that mobile payments would replace cash and credit cards,
there are finally signs that it might actually be happening. And Apple is leading the way
with Apple Pay. And yet while Apple Pay is quickly gobbling up market share, Apple is
far from being the first to market. This case highlights how Apple jumped into the market
and vaulted right over the competition. Taking advantage of its vast network of loyalists
and strong distribution relationships, Apple designed a product with security measures
that have allowed skeptical U.S. customers to trust digital payments.
Teaching Objectives
The teaching objectives for this case are to:
1. Understand the different roles played in the value chain.
2. Comprehend that the value chain can function as a unit.
3. Learn the different channel management procedures and how a company must
have an active plan for managing its channel partners.
4. Identify the different benefits that can be received from channel partners.
Discussion Questions
1. As completely as possible, sketch the value delivery network for Apple Pay.
This requires a response that identifies suppliers, distributors, and ultimately
consumers of this product in question. Responses should be as complete as
2. With respect to Apple Pay, is Apple a producer, a consumer, or an intermediary?
Explain.
Remember, this is with respect to Apple Pay. In this case, Apple is a producer of
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Part 1: Defining Marketing and the Marketing Process
3. Identify all the reasons why Apple’s partnerships are essential to the success of
Apple Pay.
It is not clear as to whether or not Apple needs the permission of banks and credit
card issuers to integrate the use of their products into its services. Apple does not
However, the critical partnership that is formed in this process is between Apple
and retailers. Because this is a new technology that has yet to reach mass
acceptance, the attractiveness to consumers rests in just how usable it is. In other
4. With respect to marketing channels, what are some threats to Apple Pay’s future?
Consumer acceptance. The biggest threat is still consumer acceptance. While
Apple and others have taken strong measures to make the process secure (in many
Competition. While Apple is clearly the market leader and may be widening the
Retailer acceptance. The only reason retailers have to jump on board is the risk
Disintermediation. It is always possible that the banks and credit card companies
Teaching Suggestions
Every student has a cellphone—one that is likely a smartphone. Take a brief informal
survey as to how many students are using mobile payments of some kind. Then, ask
which brands they are using. Finally, ask what percentage of their retail transactions they
estimate they are making via a mobile payments service. Keep track of these on the
board. As mobile payments increase in popularity, there will still be many (possibly a
majority) of students who have not yet adopted this method of payment. Ask the users to
give the reasons why they use mobile payments. Then, ask the non-users to give the
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Chapter 1: Marketing: Creating and Capturing Customer Value
reasons why they don’t. As the reasons for non-use unfold, allow the users to provide
counterpoint.
This case was developed for use with Chapter 10. This case also works as a good
example for the branding chapter (Chapter 7), the new product chapter (Chapter 8), and
the direct and online marketing chapter (Chapter 14).
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