Apple pricing strategy essays

Second is that as a result of this lack of creativity and innovation, and perhaps due to market saturation, iPhone sales have now been largely stagnant for three years, with AAPL reporting a modest decline in iPhone sales in the last quarter. Which leads us to the most closely watched part of yesterday's Apple presentation: And since total revenue is a function of total sales x prices, Apple is now focusing exclusively on the price point, realizing that volumes may have topped out. In other words, a price point for everyone, or so Apple believes with Tim Cook naturally hoping that the bulk of the new iPhones sold will in the highest pricing tier cluster.

Apple pricing strategy essays

However, most companies are known for their marketing strategies used in the marketing mix. The marketing mix is a powerful strategy that contributes to the success of Apple Inc.

The headquarters of the company can be found in Cupertino, California while there are retail stores located 10 different countries. They carry a variety of products such as iPhones, iPods, iMacs, and the list goes on.

However, the most successful products of Apple is in the mobile phone industry. This includes the iPhones. Apple has released eight generations of iPhones since when the 1st generation was released.

Price is explained as the amount consumers are charged Apple pricing strategy essays a product, indicating the value customers perceive the product to have. There are many pricing strategies within the marketing mix which is very important when it comes to selling the product.

They are cost plus pricing, hour based pricing, penetration pricing and skimming. Cost plus pricing is when the price of a particular product is determined by calculating how much it costs to do the job and adding on a given percentage as a return for the job.

Hour based pricing is when the business determines the price for every hour of work they complete, typically seen in small businesses.

Penetration pricing is when a business starts off by offering the product or service for a low cost and when market penetration is achieved, the costs are raised. Last but not least, skimming is when you offer a product for a high price because many customers are interested in it due to the brand of prestige it has.

The pricing mix of Apple iPhones includes costs, competition, mark-ups, discounts and geographical area. The company reduce prices after the initial launch of products, usually using the skimming strategy. The benefits of the skimming strategy is that it allows the company to reach its target market, products are perceived as high-quality products so consumers will be attracted to it and consumers who are status conscious may purchase higher priced goods for prestige which allows the company to get more recognition.

This strategy is very successful with Apple because, generally, the products of Apple are purchased at by high class people who can afford it so no matter how high the price is, it would be sold in large amounts.

However, the disadvantages of the skimming strategy is that it limits its sales which means that it cannot lower costs by building sales volume, if the price of the particular product remains very high for too long, it may delay or entirely prevent acceptance of the product by the general market and early customers of the product may be highly annoyed when the company later drops its price for the product, and as a result, generate bad publicity and cause a very low level of customer loyalty.

Pricing strategies of Apple Essay Example | Topics and Well Written Essays - words

It is usually used to maximize profit in areas where customers are happy to pay more, where there are no substitutes for the product, where there are barriers to entering the market or when the seller cannot save on costs by producing at a high volume.

However, the disadvantages of premium pricing is that the costs required to establish and maintain a premium pricing strategy are massive, and must be maintained for as long as this pricing strategy is followed or the premium brand recognition by consumers will falter, and the company will have difficulty maintaining its price points, there will be a continual stream of competitors challenging the top tier pricing category with lower-priced offerings and since the company using this strategy is restricting itself to low sales volume, it can never generate the cost reductions that a high-volume producer would be able to achieve.

However, the product was the most innovative on the market which gave Apple the freedom and ability to price their phone at whatever cost they chose. Also, since the iPhones are usually aimed towards business people and younger customers, they have a higher chance of the product being bought due to the income of their customers and brand loyalty.

Product The most important area of the marketing mix is the product itself. The marketing mix of Apple is mainly product driven. For example, Apple has released the iPhone 3, 3GS and 4 which are all considered to be of the same product line because they all derived from the same product with similar physical characteristics, customer segments, distribution channels, pricing methods and promotional campaigns.

However, what makes the versions different is the innovations added to the features of the phone to make it up to date and trendy. There are four major distinctions about the Apple iPhone that makes product so important in the marketing mix.

As android and Windows operating systems came later on smart phones, Apple was able to spellbind its customers with its mobile operating system. Secondly, the operating system was not enough to keep customers attracted because it required processing speed as well.

Therefore, the high quality processing speed also contributed the popularity of the product. Thirdly, iPhone does not compare itself with other companies. When promotions are given from Apple, they are independent from competition.

Apple pricing strategy essays

It would be a communication of what Apple has done in its current version of iPhone as compared to its previous versions. Therefore, on the product level, Apple does not enter competition with other smart phones. Finally, iTunes is the major attention grabber for Apple iPhone.

Apple pricing strategy essays

The Apple store has more number of apps than the Google play store which is a compliment for the large developer network which iPhone has.

Although there are many good qualities to the features of the iPhone, it has its cons as well. Furthermore, Apple ensures that the iPhone is at its best. They also ensure that the iPhone is packaged as attractive as possible to mirror other Apple products.

Apple invests a lot of thought, time and money and their products and it is specifically seen in the creation and upgrades of the Apple iPhone.Apple Pricing Strategy . Pricing Strategies: torosgazete.comation Pricing: This pricing strategy is followed by companies with the intention to maximize their market share.

They believe that a higher sales volume will lead to lower unit costs & higher long-run profit. The entrance to the Apple Store on Fifth Avenue, New York City.

Apple Inc.’s marketing mix (4Ps) takes advantage of different product lines, distribution channels, and promotion, while keeping high-end price points for information technology, Internet services, and consumer electronics products.

The Marketing mix of Apple inc discusses the Apple company marketing mix and how the company has delighted its customers over the is known for its smart and elegant promotions.

The major focus of the company is on its product and differentiating the products from those of competitors. Pricing Strategy How well does Apple create value for its market segments?

Explain. The way that Apple creates value for its market segments is by finding areas that are emerging, as a new way to incorporate technology into daily life. Apple’s price cut is an example of a strategy known as “temporal price discrimination” where it charges people different prices depending on the their desire or ability to pay.

Downloading prezi...

Companies such as Apple may practice this strategy for two reasons. Pricing Strategies - Apple Inc. What Is a Pricing Strategy? The decision of setting a price for a product or service Penetration Pricing “the act of setting a low initial price.

Essay: Essay's marketing mix - Essay UK Free Essay Database