1

iShades
Business Plan 2016
Agenda 2

Question 1: Complete the Demand Forecast by Region for iShades for Q2 FY16 considering by region, mix, prior year sell through
and growth potential

• Demand Forecasting by region for iShades for Q2 FY2016

• Sales Summary and Historical Data
• Observations and Assumptions by region
• Sales vs Forecast Trend and Analysis
• Forecasting Logic
• New Market China - Sales Summary and Forecasting

Question 2: Create a proposal for the launch with the objective of maximising sell thru and achieving best-in-class Customer
Satisfaction and Experience.

• iShades launch for China in Q2 FY2016

• Launch Proposal
• Market research and Competitor analysis for China
• Drive Customer Experience
• Maximising Sell thru
• Manage Supply Chain
• Contingency Plan

References for Assumptions

iShades 2015 Summary 3

Total Sales by Region Total Sales by Region -weekwise

14000

10500

ANZ
31.4%
7000

JAPAN
48.2%
3500

0
SA Q2 ST Dec 28 Q2 ST Jan 11 Q2 ST Jan 25 Q2 ST Feb 8 Q2 ST Feb 22 Q2 ST Mar 8 Q2 ST Mar 22
20.4%
JAPAN ANZ SA
Japan Region - 9 stores ANZ Region - 22 stores South Asia Region - 4 Stores

By region, Japan is the biggest
contributor at 48% in 2015
YoY sales peak during
christmas and big drop in
early January due to new
product release by 170%
Fairly even trading shape
across the weeks in 2015
YoY sales peak during
christmas and big drop in
early January due to new
product release by 125%
Fairly even trading shape
across the weeks in 2015
Steady growth, christmas
less of an impact compared
to other regions, peaks in
CNY due to new product
release by 150%
iShades 2016 Summary 4

Total Sales by Region Total Sales by Colour Splits in 2016

1

24% 28%
37%
0.75
ANZ 16% 10%
31.9%
9% 11%
0.5
JAPAN
16%
48.3% 21%
63%
0.25
35%
30%
SA
19.8%
0
JAPAN SA ANZ
Silver Pink Red Green Blue

Japan continues to be biggest

Contribution of Silver is highest with a total of 65% in all regions
contributor at 48% in 2016
and Contribution of Red is Low at 20% in Japan and ANZ
Sales Summary and Historical Data 5

Apple Quarterly Revenue by Product Segment

Even though the sales for iPod and Mac have been depleting,
Apple’s year on year CAGR has been increasing by 30 % for the past 10 years
iPhone is making up for more than the lost sales**

**Data from Business Insider and Statista

 Sales Summary and Historical Data 6

Apple Quarterly Revenue by Product Segment

iPhone iPad Mac ipod Services
80

5 6
3 4
7 7
60
(Revenue in Billions)

9 7
5
4 2
3 52
51 6 5 5
3 6
4 3 3
4 2 5
40 4 11 5 6 7
7 2 6 2 40
3 2 4
2 2 5 4 2 7 5 4
4 2 8
9 5 7 9 2 32 6 32
2 5 31
2 6 5 5
8 6 26 6
6 24 23 6 24
20 22
20 20
7 17 18

11

0
11

11

12

12

13

13

13

13

14

14

14

14

15

15

15

15
3Q

4Q

2Q

3Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q
iPhone YoY growth has been steady with an average of 8-10% in the over 5 years** compared to iPod where the sales have been low but steady.

**Data from Business Insider and EuroMonitor

Sales vs Forecast Trend and Analysis Forecasting Logic 7

• WoW (week on week growth) for all ishades colours is consistent by region. Assumptions based on external data:
• During the new product release there is a very high spike in sales in all regions • For new product release the trend is of 10% higher growth than the previous year.
• Apple’s YoY CAGR has been increasing by 30 % for the past 10 years • Overall Sales for iPhone having been going up and making up for the loss of iPod
and Mac

2016 Actual 2016 Forecast

18000 • e.g. Japan For Q2 ST JN 31 week my forecast is as below

13500
Actual Forecast
9000
JAPAN

4500
Description Q2 ST Jan 24 Q2 ST JN 31
0
10000
Silver 1,593 4,460
7500
Pink 1,102 3,085
SA

5000
2500 Red 445 1,247
0
Green 819 2,292
10000 Blue 1,258 3,523
7500
ANZ

5000
TOTAL FCST 5,217 14,607
2500
0 Q2 ST JN 31 = 180% of Q2 ST Jan 24
Q2 ST Dec 28 Q2 ST Jan 11 Q2 ST Jan 25 Q2 ST Feb 8 Q2 ST Feb 22 Q2 ST Mar 8 Q2 ST Mar 22
Q2 ST JN 31 = 2.8 * Q2 ST Jan 24
2015 Sales 2016 Forecast New Product Release 14,607 = 2.8 * 5,217
 New Market China - Sales Summary 8

Apple Quarterly Revenue by Region

China Japan Rest of Asia Pacific
30

5.2
4.2
22.5
5.5
(Revenue in Billions)

3.5
3 2.7
3.6 4
16.8 3.93
15 2.6 16.1 2.9
4 3.2
4.9 7
4 13.2
12.52
4.4 3.1 2 2.2 1.9
2.5 2.1 9.3 3.5
7.5 2 3.3 8.8 2.6
2.4 8.2
2 6.8 2.5 7
5.4 5.4 5.7 5.9 5.8
4.6

0
12

12

12

13

13

13

13

14

14

14

14

15

15

15

15
2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q
Assumptions based on external data for China:

• Overall market penetration and growth in China is steady by 8-10%

• Sunglasses have a high market share in Eyewear category for up to RMB 72K million.
• Total forecasted units to be sold is around 673K million for 2016
**Data from Business Insider and EuroMonitor
Forecasting for China 9

Q4 2015 Sales 2015 Sales APAC

Period Q4 2015 Q3 2015 Q2 2015 Q1 2015

Greater China 12,518 13,230 16,823 16,144

Rest of APAC 6,633 5,824 7,667 10,675

% Difference 189% 227% 219% 151%

China is out growing rest of the APAC by more than

150%+ every quarter

2016 Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst

Q2 ST JN Q2 ST Feb Q2 ST Feb Q2 ST Feb Q2 ST Feb Q2 ST Mar Q2 ST Mar Q2 ST Mar
iShades Total
31 7 14 21 28 6 13 20
• Take opening week (highest sales week in APAC) and increase by 250%
Silver 8,398 9,237 7,852 7,459 7,086 6,732 6,395 6,076 59,235
12,317 13,548 11,516 10,940 10,393 9,873 9,380 8,911 86,878
based on historical data, sales trends and market research
Pink

Red 16,795 18,475 15,704 14,918 14,172 13,464 12,791 12,151 118,470 • Top up 10% the following week due to historical data plus CNY
Green 6,158 6,774 5,758 5,470 5,197 4,937 4,690 4,455 43,439 • Sharp Reduction of 15% the following week based on historical data
Blue 12,317 13,548 11,516 10,940 10,393 9,873 9,380 8,911 86,878 • Subsequent reduction of 5% week on week
TOTAL
55,984 61,583 52,345 49,728 47,242 44,879 42,635 40,504 394,900
FCST
 10

iShades launch for China - Q2 FY2016

Launch Proposal 11
Key Launch Plan Activities

Complete Order Stock, Manage

Forecasting for Manage, Allocate Contingency
China based on and Replenish Plans and Ensure
Sales Trends and Stores and stock is available
Historical Data Distribution at the right time
Outlets and right place

Complete Market Understand Drive supply

and Competitor Customer and chain to increase
Analysis Prep the Internal proximity to the
and External customers and
Teams for Best in meet the high
Class Customer customer
Experience Demand
Market Research and Competitor Analysis of China 12

Market Population Access Business Environment

• The growth in LTE (Long-Term
Evolution) penetration in China is a
key driver for Apple
• Apple has prioritised sales
development in China, with CEO Tim
Cook announcing China to be second
core.
• Huawei and Xiaomi are preferred
brands in China and Huawei has
been doing the most number of sales
and has a record YoY growth for 2015
unto 37%
• Huawei plans to launch similar
product to ishades in April 2016
• China's population is almost 1.4
billion increasing 110 million since
2000. The median age is 37.5 year.
• In 2015, consumer expenditure per
capita amounted to RMB18,714 (US
$3,005). In real terms, the indicator
will grow by 7.3% in 2016 .
• Chinese population loves chasing
high-tech products
• The O2O (online-to-offline) e-
commerce model which combines
“offline experience” and “online
trading” is gaining attention in
Sunglasses market
• China is not just the world's
leading manufacturer of sunglasses
but is also the largest potential
consumer.
• China has over 30,000 sunglasses
retailers.
• Launching in CNY has potential to
do rocket sales and Red colour
might sell more as it is auspicious
for Chinese Tradition
• New stores opened from 2014
• According to a joint 2014 survey by
the Ministry of Health and the
Ministry of Education, China has a
myopia occurrence rate of 33%.
Customers are attaching greater
standards to protect their eyes.
• Sales for imported sunglasses
alone in 2014 were recorded to be
U$ 250 Million .
• Regulations on Eyewear
manufacturing

• Huge potential for sales in China due to the high demand for sunglasses and high-tech products.
• No new entrant or competitor threat just yet considering no other brand has a similar offering.
Drive Customer Experience 13

Create a halo effect that makes people desire for new improved iShades

Position the new iShades in the customer’s mind prior to the sale

Increasing Proximity to Customers

Personal Attention to customers; Allowing to make appointment for undivided one-on-one time with
an Apple support

Training, prepping and communicating with Internal Geniuses on how to engage the brand’s customer on ishades.
Ensure effective ‘A P P L E’ customer service.

Managing Contingency Plans

Maximising Sell Thru 14

3rd Party partner sites

Storage trucks
Apple Resellers/Telecom
or Other Partners

Store within a Store

Mobile booths and stalls

at Airports, Train Stations and
Taxi stands
Brand Alliance

24 hrs stores

Click and Collect Diversify Customer

Demand
Manage Supply Chain
Pre-Launch
• Communicate to all stakeholders
about the Launch
• Train and prep the China Store and
FC teams on how to sell/recommend
and handle the new iShades.
• Integrate Geniuses from JAPAC and
other major Apple hubs offline and
Online to cross train and represent
China for the launch.
• Communicate ordering plans to the
Suppliers.
• Liaise with Marketing, Purchasing
and Fulfilment Center teams
• Build extra production capacity in
anticipation of increasing sales
During Launch
• Monitor Sell thru against the plan
for Apple Stores, Resellers and other
diversified outlets.
• Manage the rebalancing of the
stock during and high and low sales
by push, pull and stock transfer
allocation strategies.
• Daily and weekly Calls with
Marketing, Purchasing, Store and FC
teams about Sales, Demand and
challenges, if any.
15
Post Launch
• Monitoring Stock Flow across all
channels
• Recalculate forecast on week to
week basis on actuals.
• Share Long term forecasts with
Suppliers to prepare them for the
future.
• Plan for other seasonal or
promotional events or store
openings etc.
Contingency Plan 16

New Product launch comes with a lot of risks around demand, ambitious forecasts, shortfalls for
distribution etc. With potential impact of such failures the effort includes engaging both internal
and external resources under the guidance of the PMO. If they should occur, to detect them
quickly, minimise their impact and expedite their repair is the best contingency.

• Supplier/Logistics Shortfalls - The challenges we may face are that key supply chain partners and
resellers will be shut during the CNY period. Include measures such as selecting alternative suppliers
and channels of distribution. Building extra production capacity in anticipation of increasing sales
during and after launch.
• Demand-Forecast - Increase Safety Stock, Stock up the back offices (mini warehouses) in stores, keep
tracking sell thru for better stock rebalance. Monitor Stock allocation.
• Near Sourcing - Reduce Lead times by driving proximity to customers and operations.
• Staff Absenteeism - Train cross functional staff, Check on Transfer from other outlets, Keep in View
Contractual Staff and tie-up with other HR agencies for back-up
 17

Thank You
Reference Documents 18

Apples Sales report available from press release on Apple website

EuroMonitor Reports
Verge Financial Reports
Statista Analytical Reports
IDC Reports

Reference Links
http://china-trade-research.hktdc.com/business-news/article/China-Consumer-Market/China-s-Spectacles-Market/ccm/en/1/1X000000/1X002MQG.htm

http://www.idc.com/getdoc.jsp?containerId=prUS40980416

http://www.idc.com/getdoc.jsp?containerId=prUS41037416

https://www.quora.com/How-precisely-did-Tim-Cook-fix-Apples-broken-supply-chain

http://www.researchandmarkets.com/search.asp?query=Global%20and%20Chinese%20Sunglasses%20Industry%20Report&NoSpellCheck=True&IsAWebsiteInitiatedSearch=True

http://www.asymco.com/2014/09/22/iphone-launch-patterns/

http://english.gov.cn/policies/policy_watch/2016/01/05/content_281475266850795.htm

http://www.theverge.com/2015/4/27/8505063/china-is-now-apples-second-biggest-market - sales part 1

http://www.theverge.com/2015/10/27/9622578/china-is-becoming-apples-most-important-market - sales part 2

http://www.datamation.com/mobile-wireless/why-the-c-in-iphone-5c-stands-for-china-2.html - for colour differentiation

http://www.cultofmac.com/252227/what-are-the-most-popular-iphone-5s-5c-colors-space-gray-and-blue/ - SEA colours