Apple Pricing Strategy

Designing an appropriate pricing strategy is always a challenging task for most corporations, because price is a determinative factor of operating profits. Meanwhile, price can affect customer perceptions and product development. According to the basic economic theory, pricing policy should reflect the product’s costs and the relationship between supply and demand. In addition to the fundamental framework, price settle mechanism should take into consideration the underlying industry environment. For example, pricing in manufacturing is heavily cost-based with the certainty that the costs are fully covered. And conversely, in some particular sectors, there are downsides when price setting relies solely on the variable costs because of the high fixed cost. Based on this judgment, product providers should carry different pricing mechanism under different market conditions. Accordingly, pricing evolves from a purely academic topic related to the economic theories to a profits-maximising instrument involved with marketing practices. All these issues make the price setting problem more

Price & Offer Structure- A price structure is a segment set at various stages for pricing to

This is a strategy that can apply to products with consumable supplies. This is where the pricing at high prestige levels, otherwise they will not sell; customers equate higher quality with higher prices.

Price is an important factor in the marketing mix not only because it drives revenue and business sustainability, but also because it acts as a signal of value to consumers. Consumers often use price as a way to gauge quality or exclusivity. Moreover, price can also help segment the market, by customer, product-form, location, time-basis, or price sensitivity. By offering products at different price ranges, a wider range of consumers can

Demand-based pricing is any pricing method that uses consumer demand - based on perceived value - as the central element. These include : price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing. Pricing factors are manufacturing cost, market place, competition, market condition, Quality of product.

Pricing is important when marketing a product. The determining factor for the pricing is the material, time to make, amount spent on marketing and promotion of the product. The goal in providing such a product that is moderately

Cost-plus pricing lead to a complicated pricing structures, since distributors and customers negotiated separate product prices from manufacturers, introduced incentives, let prices vary from customer to customer, covered some products by contract and some don’t etc.

Premium pricing, also known as “image pricing” or “prestige pricing,” means pricing a product above normal market value so that customers think a product or service is more valuable than similar offerings. Although the price may dissuade some buyers, premium pricing proponents believe that the higher cost will create a market perception that will ultimately bring in more revenue (Maguire, n.d.)

Third, the price must be high enough to cover costs and make a profit but low enough to attract customers. There are a number of possible pricing strategies. The most commonly used are:

• Captive Product Pricing – In this technique we put a low price on the main or core product, but we keep the prices high on the captive products. In this way it can attract the attention of the customers to buy off the core product at a low prices, but it will help us the “sellers” to make profit of the captive products (which are high in price) which are necessary and essential to use the core product. • Penetration Pricing – This is one of the techniques that companies all around the world use in order to attract customers away from competitors. Our company Rock Jam, can use this as a way of bringing more and more customers to us and to gain publicity, we make sure that the product and service is at a low price compared to other companies so that more people would buy our product and they would get attracted to us and not to our competitors. Prices will be lower since ROCK JAM is still infant.

Today’s highly competitive business world forces companies to create different tactics and relatively rely on multiple pricing strategies to conduct business.

The strategy for setting a product’s price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes its profits on the total product mix. Pricing is difficult because the various products have related demand and costs and face different degrees of competition.

Briefly describe the pricing structure that is used with this product and explain the benefits of this method.

For product mix pricing strategies, iPhone4s use the product line pricing strategies to set its prices for its product. For each product of the company have different range prices. Company usually develops product line rather than single product. In product line pricing, management must decide on the price step by step between the various products in a line. For example, under Apple iPhone line, iPhone 5 has just released with new features and benefits that are compatible with the current technology which is coming to Malaysia therefore, the price of iPhone 4 8GB has relatively decreased from RM1799 to RM1449 and iPhone4s 16GB from RM2199 to RM1799.

There are a number of factors to be taken into consideration when setting a price for a product or service. Some of these factors are internal, meaning that they are influenced by the company’s objectives and their organizational structures. Other factors are external, meaning they are shaped by the company’s competitors, the condition of the market, and consumer demand. While it is important to address all of the factors that weigh on pricing decisions, it is wise to pay special attention to the external factors. The reason for this being, that external factors are usually precarious in nature. Often, external factors are only managed by adjusting to the circumstances precipitated by these factors. This could mean either increasing or decreasing your pricing. The pricing modification can either be a permanent change, or one existing for an established period of time.