Marketing Plan
Bus 103 Sec 026
Marketing Plan
Stage 3
Executive Summary
The Apple plans to launch its smart TV in the market of US and China with the capability to provide Internet connectivity and access to online iStore and other media library. With the presence of number of TV manufacturing in the respective market, there is need to propose effective marketing plan for the iTV Apple. This marketing proposal has evaluated the current situation and market description that shows that US is the largest seller of TV, therefore, launching iTV in the US market will enable the company to penetrate into entertainment industry. The significant competition that iTV is likely to face is with the presence of LCD, CRT, Plasma and DLP screen.
The marketing objective of the iTV Apple is to gain the maximum market share and differentiate the iTV Apple from other brand in the market. For this purpose, geographic segmentation is proposed as China and US, because these both countries are one of the largest markets of TV brand. Additional to geographic segmentation, demographic segmentation for iTV is proposed based on the income, as iTV will be expensive than other TV brands.
The marketing mix strategy for iTV Apple indicates that it should promote its brand by differentiating its products from others. The recommended price for this product is £223 while it is placed at stores of Apple and other commissioned retailers. As far as promotional strategy for this product is concerned, four mediums will be used including online, cinema, social media and public relationship.
Business Plan Market Marketing Analysis
Introduction To evaluate and analyse a "professionally made" marketing plan requires the evaluator, to very critically and closely point out the strengths of the plan, yet also point out parts of the plan that are irrelevant or are in need of improvement (weaknesses). Of course, as this is a professionally written marketing plan, the positive aspects of the plan will vastly out-number the negative ...
Table of Content
Executive Summary 2
Current Marketing Summary 4
Current Situation 4
Market Description 5
Segmentation and Target Review 6
Target Market 7
Positioning 7
Product Review 8
Competitive Review 8
Distribution Review 10
SWOT Analysis 11
Strengths 11
Weaknesses 11
Opportunity 12
Threats 12
Objectives and Issues 13
Marketing Strategy 13
Marketing Mix Analysis 14
Product 14
Price 15
Place 15
Promotion 15
Action Programs 16
Budget and Controls 17
Reference 18
Current Marketing Summary
Current Situation
Apple has decided to enter into TV market by announcing to launch a creatively designed and technologically advanced LCD TV (Apple Announces iTV, Offers Film Downloads).
This Apple TV will have faster dual-core processor and strong video playback, which is declared as next generation TV with Siri software. Considering the information given from the company, it is assessed that the company aims to possess the upper end of the market by offering state of the art technology in the production of television (Now There is Always Something Good on TV).
Additionally, Apple has been found spending $ 200 million only on the research and development of the television technology and the commercial design of the television (Schwalb).
It is evaluated that upon deciding to launch the iTV, the Apple will have to bear the expenses of $ 2 billion that would be only for tying up with the distributors, suppliers, and other retailers.
At present, there are more than 300 TV manufacturers in global market of consumer electronics products (Rodiek).
The consumer electronic market and especially TV is anticipated to grow higher with the estimated growth rate 4%. This market share is expected to grow further, as recently, 30 million televisions are sold in the USA and Apple by entering into TV manufacturing industry can gain approximately 2.5% of the total market share with the launch of iTV. It is also assessed that if iTV is launched and it gains the market share, it will be able to increase the market share by 0.5% in a year and 3% in second year. Furthermore, if Apple successfully reaches to it target market, it can easily gain 5% of the total market share in the sixth year after the launching (Analyst sees Apple ‘iTV’ taking 5% of HDTV market, earning $17B in revenue).
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Market Description
With the increase in the number of TV viewers, the manufacturer and producer of TV remain consistent in gaining market share by developing and launching new technologies in the TV products (Ogg).
Moreover, with regard to market share of TV industry, TV has been found as the most significant and fundamental product in the consumer electronics market. The substantial development has been observed in the form of availability of LCD, CRT, Plasma and DLP screen, which shows the changing trends and taste of consumers (Takata and Umeda).
However, the journey of the TV manufacturing industry that began with the TV sets is slowed down with the inception of tube and flat panel TVs. Further improvement and development observed in TV manufacturing market is the incorporation of the strategic technologies such as internet programming (Jose).
The market analysis of TV market demonstrates that specification by manufacturing organization has been increasing in the popularity because the invention of satellite and cable connections has provided the TV manufacturers with the opportunity to maintain the demand of TV for household use (Tarr).
Similarly, global TV manufacturing industry has been recognized to be greatly affected by the rapid changes in the technology, which has made dynamic modification in the designing and development of the TV brands. The announcement made by Apple to launch iTV has been considered changing and reshaping the global TV manufacturing industry. Additionally, Acer Inc., that is one of the competitors of Apple in Mac and Laptop products, has also launched LED and LCD TVs named as AT Series, which has posed significant competition for Apple in terms of capturing maximum market share.
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Segmentation and Target Review
For the initial marketing of the iTV brand of Apple, there is need to consider the segmentation or target review available for the brand that could help in implementing the marketing campaign for the new product. In order to determine the segmentations or target review for the iTV, first different segmentations will be reviewed for their appropriateness and then will be suggested the most appropriate for the brand. The customer segmentation for iTV can be chosen from demographic, psychographic, geographic and behavioralistic (Boone and Kurtz).
Through this marketing proposal plan, the Apple will target customers in three segmentations including demographic, psychographic, and geographic.
Geographic Segmentation
It is expected that iTV of Apple with unique configuration and state of art features will be the most desired brand of Apple (Marketing).
Therefore, geographically, the potential customers will be targeted in United States and China. It is because USA is estimated as the largest market for TV brands, as more than 30 million televisions are sold only in USA, while China can also offer large market for iTV (Rodiek).
Further, urban customers will be targeted in both countries USA and China, because in both countries, urban customers prefer to have digital lifestyle.
Demographic Segmentation
Demographically, the primary customer in US and China will be based on income, as iTV will be expensive than other TVs. Therefore, primary customer will be middle-upper income professional, who are in need of having screen device that supports customized system to show movies, TV shows, music and photos, and sports (Tomsen and Faith).
Psychographic Segmentation
Through this segmentation, customers will be targeted for iTV, who prefer to have digital lifestyle with all-in-one device. It is identified that customer with digital lifestyle want to have device connectivity with internet. For such customers iTV will provide wireless TV operations with internet connectivity, where number of online features can be enjoyed (Tomsen and Faith).
target market
Since the objectives of this marketing plan for Apple is to gain maximum market share by increasing the sale of iTV in TV manufacturing industry and differentiate the iTV from other TV brands, therefore, for iTV of Apple, the target market will be divided into two: one primary and another secondary. The primary target market of iTV will be customers of TV in China and US, residing in urban areas from middle-upper income professional. Secondary target customer will be those customers in China and US who wants to have digital life style (Apple Announces iTV, Offers Film Downloads).
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Positioning
Through product differentiation, the iTV of Apple will be positioned as multipurpose, convenient, and value-added device mainly for personal use. Therefore, the marketing strategy of iTV will be focusing on carrying iTV as home appliance with internet connectivity, availability of Apple’s iTunes store on the iTV and facility of rental TV shows. This is not it here, because iTV with internet connectivity will improve the versatility of the brand, where users will be able to access internet, YouTube, photos and songs (Crow).
Product Review
The iTV of Apple is the digital media receiver device with ability to play digital content developing from iTunes stores, YouTube, Netflix and Flickr (Now There is Always Something Good on TV).
Two generations of this product are already launched in the market and this is the third generation of Apple TV. This brand offers its users to use HDTV to view photos, play music and other videos, which are developed form internet sources. Unlike other TV set, iTV is considered as versatile and multipurpose devices that can be connected with the internet. Thus, its internet connected streaming video and movie options are taken into account as strong move that will revolutionize the television screening (Crow).
Moreover, iTV also supports number of formats for videos, audio and pictures such as JPEG, GIF, MP3, AAC and WAV. The iCloud within the iTV offers browsing and watching purchased TV shows and listening music. The photo stream provides the facility of updating photos automatically. Moreover, the iTV features the A4 chip, which enables it to play without having unmoving screens and with fast-forward options. Significant feature of iTV is its less energy consumption and small size, which makes it easy to carry in hand. The differentiation of this brand lies in the fact that it is an interactive TV with the potential to provide the viewers and users not merely receiving the TV shows but also actively having interaction through making request for specific programs such as sharing information with other people and shopping through TV sets (Wyss and Vong).
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Competitive Review
In terms of competition, iTV of Apple is expected to face strong competition, as there is number of competitive players in the TV manufacturing industry. Amongst all, significant competition that iTV of Apple is likely to face will be Western Digital Media Center, Roku, Boxee and Google TV, Acer, Sony and Samsung (Tarr).
These TV manufacturers are global TV suppliers with market share equal to 3% while in order to gain the market share in these two countries, iTV will have to maintain the differentiation not only in innovation but also in price, as it will be difficult for iTV to compete in the industry in the context of low price (Ogg).
Additionally, the competitive review of TV manufacturing industry shows that competitiveness in the industry is divided according to technological development incorporated in the brand and price of the products (Tomsen and Faith).
In this respect, it is assessed that competitively, competitors in TV industry are intended to focus on the supply of CRT and LCD TVs, as they are more preferred by the consumers in US and China. Moreover, DLP TV also competes in the market of HDTV as oppose to LCD and Plasma TV, however, it is relatively a new technology (Rodiek).
It has further been indicated that TV manufacturing industry faces increasing price competition among rivalries, as TV is manufactured in great amount while their expected sale rate in low in the respective markets (Wyss and Vong).
In this regard, it is observed that there are four major and biggest manufacturers of LCD TVs and Plasma that are Philips, Samsung, Panasonic and Funai, which can put threat for the iTV in terms of gaining the market share especially in the first quarter. It is because these giant players have been gaining 12%, 12.2%, 10% and 9.7% shares in US, while in total, the LCD and Plasma TV market possess 49% market share, which shows the intensity of the competition between these two manufacturers of TV industry (Rodiek).
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Furthermore, CR TVs in contrast to LCD TVs possesses 43% market share in US, whereas the profitability of the industry attracts new rival to enter into TV manufacturing market. Considering such competitiveness in the TV manufacturing industry in US and China, it is assessed that the entry of iTV into the TV manufacturing industry will be a challenge for these rivals due to technological advancement utilized in the production of iTV. However, the biggest threat for the iTV of Apple is expected LCD TVs, as LCD has increased its retooling requirement in February 2012 to meet the production needs in 2012 (Paracha).
Distribution Review
Sale distribution of the iTV of Apple will rely on different e-retailing sources, as in past; Apple has been utilizing e-retail spots for the distribution of its brands such as Amazon, Google and eBay, while offline retailers have been Wal-Mart and other supermarket stores (Goldman).
Considering the significance of the e retailing as distribution source for iTV Apple, Amazon, Google and other online stores can be utilized as distribution source with the commission of 10% of the price on the per unit sold. In this way, retailers will be bound to pursue the Apple’s fixed pricing strategy rather than offering discounts (Cruickshank).
Another significant distribution source can be Apple retail stores itself, which is available around the country in China and US, where consumers will be able to place their order through online and offline medium (Russell).
However, in order to distribute through its retail stores, Apple will have to invest up front for escalating and adapting the stores. Moreover, as an initial breakthrough, Apple will have to hire sales persons for the distribution at Apple stores, for which it will need to pay a commission of 5% of the price sold per unit. Besides, it is evaluated that the principle distribution growth of the iTV will depend on the cable system in both US and China. The reason of this dependency is that iTV will need the support of fast rollout provided by cable network whereas users of iTV will not be able to access digital TV services and the internet without the cable network system. However, the intense access of cable TV in China will support the enhanced distribution of iTV due to high demand for iTV among the population of China (Young and Aitken).
SWOT Analysis
This section of the paper evaluates strengths, weaknesses, opportunity and threats of the Apple for its brand iTV using the strategic planning tool SWOT.
Strengths
The significant strength of company Apple in relation to iTV is based on the strong international presence of the company and its brand (Crow).
It has been observed that Apple with the strong brand has proved itself as unique and innovative in satisfying the needs of electronic consumer in the industry. The company has possessed outstanding record of successful products, which have gained considerable attention of consumers and achieved maximum market share. Additionally, in China and US, the company has built a strong customer base, which can help it launching iTV in the respective market and gaining the market share (Nicholson, Elad and Stolarz).
Another substantial strength of Apple is strong research and development in the field of technology, as Apple has remained as pioneer of unique technology enhancement such as iPhone and iPad.
Weaknesses
Significant weakness that Apple is likely to face in relation to iTV is the cost of the production, shipment, and price of the brand. Apple observes exploiting the excess capacity in the production of the iTV, and if it expands its production facility to produce more iTV, it will have to increase the price of the product, while this cost does not include the cost of shipment, suppliers, distributors and retailers (Hill and Jones).
In addition, Apple has been facing strong criticism related to high cost of its brands in China, where the cost of brand in electronic consumer market is lower due to intense price competition among the industry players. Thus, high cost of production and price of brand cause weak market position (O’Grady)for the Apple iTV, because the electronic consumer market of China and US has more demand of comparatively low price brand.
Opportunity
The considerable opportunity available for the iTV Apple is the exploitation and incorporation of advance technology in the products and exploring new market segments (Ireland, Hitt and Hoskisson).
It is estimated that the improvement in the technology enables the Apple to launch new and efficient product in the market that helps the market segments in reducing the total cost of the production. Another significant opportunity for iTV Apple is that this product is supposed to be so versatile in fulfilling number of demands of electronic consumer market (Apple Announces iTV, Offers Film Downloads).
The use of technology and differentiation of features in iTV has the ability to generate market share where consumers prefer to have a TV device along with internet facility.
Threats
The significant threat for the iTV Apple is the number of strong players in the TV manufacturing industry, as it is already recognized that Apple with its TV product will have to face intense competition (Cruickshank).
Such intense competition in China and US can lead the organization to have low market share. Another threat that Apple is likely to face in the context of iTV is the price war in the TV manufacturing industry and high price of Apple brands. It has been estimated that the brand of Apple more focuses on the creation of innovative products while advancement in the technology has outdated the production facilities within the organization due to which Apple to sustain its market position has to spend on the production facility of iTV, which in turn increases the price of the product.
Objectives and Issues
For its new brand iTV, the Apple should use new brand identity and change in the marketing tactics considering the unique brand features of its products. For this purpose, Apple needs to focus on the differentiation of its brand iTV and develop its marketing objective that fulfills its financial goals. Therefore, primary marketing objectives for iTV Apple will be as follows:
* To penetrate and promote the new iTV brand in the market of US and China
* To achieve the 5% of the market share in the consumer electronic market by increasing the sale of the product
* To create differentiation for iTV brand by generating new identity of the product
The objectives identified above indicate that launching new iTV brand in the market will require the company to penetrate and promote its product in the consumer electronic market through utilizing different media such as internet. Additionally, this marketing objective seeks the achievement of 5% market share by the means of increasing the sale of the product in the respective market. In this regard, the significant objective of this marketing objective for iTV Apple is to create the differentiation for the Apple brand for competitive advantage for the product by personalizing the product and making it more attractive than competitors’ products.
Marketing Strategy
In order to explain the marketing strategy for iTV Apple, this section of the paper conducts analysis of internal factors are evaluated for achieving the marketing objectives of the company.
Marketing Mix Analysis
This marketing mix analysis for iTV Apple aims to identify the attributes of the product in terms of marketing, price of the product, promotion tools and medium to be used and place where marketing of the iTV can be carried out.
Product
The iTV Apple offers brand of smart television, which is especially produced to satisfy the electronic consumer market needs in terms of accessing satellite channels and internet. The specialty of iTV Apple is that it enables its users to experience high level of technology for watching movies, favorite TV shows, music while getting online shows and music from the iStore (Apple Announces iTV, Offers Film Downloads).
Different features of this product such as iCloud and iSight may be used throughout the marketing campaign to attract the customers who are more interested to experience new and advanced technology. Additionally, this Apple iTV gives the access to iTunes and the media library of Apple through the TV device, which is the unique combination of TV and computer (Analyst sees Apple ‘iTV’ taking 5% of HDTV market, earning $17B in revenue).
It is estimated that this product of Apple will not only be appreciated and demanded by youth but also by those families who enjoy watching TV and want to access massive media library for experiencing entertainment stuff. Based on the above, iTV Apple can be positioned for those who like watching TV, movie and enjoy music, age approximately 18 to 35 and who like sharing social networks through quality content on TV. It is because iTV is not merely a TV but an internet TV with online streaming content and state to art technology that makes it easy for its users to explore the quality content for entertainment. Moreover, along with the product, the company is also offering full year warranty and an optional three-year Apple Care warranty.
Price
The TV manufacturing industry has already been facing price war, where number of TV manufacturers is tended to focus on low price TV set to their target segments (Paracha).
In China and US, where there is already very intense competition in terms of price, it will be very difficult for iTV Apple to gain maximum market share with the price of £350. Therefore, iTV Apple to penetrate itself into entertainment industry requires offering cheaper price, which is possible by allying with cable operators in US and China to provide cheap cable service to access Apple iTV services.
Place
The iTV Apple brand will be available at number of sales spots using distinct channel including distributors of electronic equipments, retailers and e-retailers. Alternatively, iTV products can be purchased from stores of Apple from sale agents (Boone and Kurtz).
Promotion
In order to promote the iTV brand, Apple should consider allocating 20% of its revenue on the marketing budget. In this way, in the first year after launching iTV, Apple will have to allocate around $4.1 million only for the marketing. Apple has great opportunity to use four different medium as source of its iTV promotion including online promotion, promotion through cinema, social media and public relation (Ireland, Hitt and Hoskisson).
The beginning of this marketing campaign should start from major advertising that aims to establish awareness and improve the customer base in China and US. However, in past Apple has been carrying out successful advertising campaign for its other brands, for iTV, it is proposed to focus on the advertising online. The company can target its potential customers through online means where users ranging from 18 to 30 spend a lot of their time on online activity and can easily be targeted. Additional to online media, Apple can also use cinemas to show their ads during movie (Mullin).
Since iTV is mainly about HDTV movies and social networking, therefore, through using cinema advertising, Apple will be able to gain the cinema-based response from consumers. Apple can also carry on its social media marketing specially on Twitter, which can help in reaching to large number of potential consumers. Additional to social media marketing, Apple can use its leadership to promote the iTV brands through improved public relationship by attending conferences and meetings.
Action Programs
S. No. | Marketing Activities | Objectives to be Achieved | Resource Required for implementation | Duration of Activity | Cost of activity |
1 | To promote the iTV brand in China and US using online media | To increase the sale of the product and establish customer based in China and US | Trained personnel is required for marketing the iTV brand on internet especially social media | This marketing activity will continue for 6 months | The cost for this activity will be approximately $2,000-$4,000 per month only in US. Thus, this cost will be double after calculating China. |
2 | To advertise on TV and cinema | To increase the sale of the product and establish customer based in China and US | The service from experience advertising agency to shoot digital advertisement for iTV advertisement | The duration of this TV ad will be 30 seconds and it will broadcasted on channels most watched by family and youngsters | The cost for shooting digital TV ads is $495, while the cost for broadcasting 30 second ads 10 times in whole day will be $10,000, $50,000 in US and China |
3 | To advertise on stores and retailers | To increase the sale of the product and establish customer based in China and US | Sales agents at stores will be required to promote the iTV brands | This will continue till 1 year | The agents will be paid $250 commission on the sale of per unit of the product |
Budget and Controls
Based on the assumption, it is estimated that the wholesale revenue of iTV Apple will be $500 per unit and variable cost of $250 per unit and whereas fixed cost of $50 million (Johnson).
However, considering the costs of the materials and ingredients utilized in the manufacturing of iTV, Apple anticipates the production cost per unit as $400 next year and consumes $ 1 billion on advertising. Thus, there is expected 5% increase in the cost for next year. Introducing total cost on the advertisement of iTV, there will be 12% increase in the total advertising expenses of Apple. The recommended price for iTV Apple is £223, with the gain 45 percent.
In order to implement this marketing proposal, there should be meeting of marketing team with board of Apple to present the information, to make proposal and get permission to continue the marketing strategy. However, before this meeting, marketing team will meet where each individual will present his own proposal and suggestions based on their findings and research. In the first meeting, vote will be casted for suitable one and that will be presented to board of Apple in the meeting.
Reference
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