ASSIGNMENT 1: APPLE INC. MARKETING MIX

Photo Credit: (Apple Inc., 2018).

Image credit: (Gupta, 2016) 

Image credit: (Apple Inc., 2018).

Image credit: (Haynes, 2014).

Image credit: (Richter, 2017). 

Image credit:(Pilllai, 2016)

Image credit: (DeMers, 2014).

How Apple Inc Pricing Structure guides their Marketing Success

Introduction:

Apple Inc is a premium brand that does not attempt to compete with its competitors on pricing. This premium pricing strategy is reflective of Apple's enduring belief that consumers will pay more for products that are so well designed they can't fathom living without them” (Associated press, 2017). Founding CEO Steve Jobs was the instigator of the vision when in 1976 (Topolsky, 2011) he set out to create the first of apples premier products, the Macintosh computer, a premium product marketed at a premium price. (Marketrealist, 2018).

30 years on and Apple inc’s vision has remained unchanged. It’s a pricing strategy in stark contrast to its competitors who have worked to push the price of high tech devices down over the last decade (Associated press, 2017).

Findings and Discussion:

Apple inc use price skimming with all of their products. They don’t typically have sales on their products, instead the product remains at a premium price until a new model of the product is released (Claessens, 2015). i.e when the first iPhone was introduced, its initial price was high for a smartphone and attracted only customers who could afford to pay its high price. After this segment had been skimmed for six months, Apple dropped the price to attract new buyers. Within a year (and a new release), prices were dropped again. “This way, the company skimmed off the maximum amount of revenue from the various segments of the market” (Claessens, M, 2015). Price skimming is in contrast to Apple’s android competitors, who use penetration pricing when marketing their product. Penetration pricing constitutes a low initial price which gradually increases over time (Kirk, 2013). 

Apple inc’s allegiance to its premium brand strategy has remained strong for the past 30 years. This strength is reflected in the company “continuing to push its prices higher, even though improvements it's bringing to its products are often incremental or derivative” (Liedtke & Ortutay, 2017).  For example, the iphone X retails for $999, double the price the original i-phone sold for (Liedtke & Ortutay, 2017). Apple have also started selling their ‘Homepod’ internet-connected speaker at a price of $349, nearly twice the price of its competitor, the Amazon's Echo speaker (Liedtke & Ortutay, 2017). These examples once again highlight apple Inc’s marketing mix price strategy by showing how Apple Inc ‘ignore the standard’ and price their technology higher than any other competing devices on the market. They get away with doing this by firstly, “build[ing] great looking products for an audience that loves them passionately” (Jone, 2017) and “ Secondly, they justify their price with features and benefits that can’t be matched. For example, no other software can match what iTunes brings to the table” (Jones, 2017).

Conclusion:

Apples Inc. ‘s price point is reflective of the fact they are market leaders in technology. “Showing off a new technology with something that everyday people can use and understand is what Apple does best” (Liedtke & Ortutay, 2017).

In this way, Apple Inc have sustained their image as exclusive and have retained their spot in the high end market, “Apple’s popularity in the high-end of the market — where it almost exclusively sits — was enough to capture more than a third of the phone industry’s total revenue.” (Dunn,2017) and this has seen Apple Inc retain its spot among the “among the Top 50 retailers in the world” (Richter, 2017)

References:

Topolsky, J (2011). ‘Steve Jobs, 1955-2011’, The Verge [online]. October 5. Available at: https://www.theverge.com/2011/10/05/steve-jobs-1955-2011-2  [Accessed 8 March 2018] .

Kirk, J (2013). ‘Android’s Penetration Vs. Apple’s Skimming Marketing Strategies’, Techpinions[online], March 21. Available at: https://techpinions.com/androidss-penetration-vs-apples-skimming-marketing-strategies/15255 [ accessed on 8 March 2018].

Liedtke, M & Ortutay, B(2017), ‘iPhone X Puts Exclamation Point on Apple's Pricing Strategy’, Associated Press [online], September 13. Available at:‘ (https://www.billboard.com/articles/business/7964782/iphone-x-apple-pricing-strategy-analysis” [accessed on 8 March 2018].

Marketrealist (2018). Apples premium pricing strategy [online], available at:  https://marketrealist.com/2014/02/apples-premium-pricing-strategy-product-differentiation [accessed 8 March 2018]

Claessens, M . (2015). ‘ New product pricing – price skimming or penetration pricing? ‘, Marketing- Insider [image] , 20 August. Available at: https://marketing-insider.eu/new-product-pricing/ [accessed 8 March 2018]

(Jones, P (2017). ‘Marketing Strategies in Coca-cola and Apple’, Wayland School committee [online]. Available at: [accessed on 11 March 2018]

Dunn, J. (2017). ‘Android and Windows sell way more devices than Apple, but that's not as important as it sounds’, Business Insider [online] . 8 April. Available at: https://www.businessinsider.com/apple-market-share-revenue-ipad-iphone-mac-chart-2017-4#t1Uy5ZV7jmSUmpCm.99 [Accessed 5 March 2018]

Richter, F (2017). ‘Apples retail stores’, The statistica Portal [online], 7 February. Available at https://www.statista.com/chart/7974/apple-retail-stores/). [Accessed 9 March 2018

Apple Inc. (2018) . Homepod [image]. Apple Inc. Available at: www.apple.com

Gupta, V. (2016) Why Apple Products are More Costly in India? [image]. Available at: https://blog.shopnani.com/2016/why-apple-products-are-more-costly-in-india/ [accessed 8 March 2018]

Apple Inc. (2018). Cashless made effortless [image]. Available at: https://www.apple.com/nz/apple-pay [ Accessed 8 March 2018].

Richter, F (2017). Apples retail stores [image]. Available at https://www.statista.com/chart/7974/apple-retail-stores/). [Accessed 9 March 2018] 

Haynes, R. (2014). ‘Apple Macintosh best ever print ads’, solopressblog [image], 24 January, Available at: https://www.solopress.com/blog/business-marketing/apple-macintosh-best-ever-print-ads/ [Accessed on 8 March 2018]

Pillai, S (2016). ‘24 Unbelievable Facts That You Probably Didn’t Know About Apple And Its Innovative Products’, Scoopwhoop [online], 19 February. Available at: https://www.scoopwhoop.com/Unbelievable-Facts-About-Apple-And-Its-Products/#.zv2aima4f [accessed on 15 March 2018]

DeMers, J (2014). ‘Here’s the simple secret to Apples marketing success’, Forbes [image], 8 July . Available at: https://www.forbes.com/sites/jaysondemers/2014/07/08/heres-the-simple-secret-to-apples-marketing-success/#6402ba111e3d ) [accessed on: 15 March 2018].