The main issue of the contemporary businesses is to introduce the price that satisfies the demand and the supply itself. The balance can be achieved if the price is justified and this is understood by the customers. However, for an average consumer it is tough to assess the price through the prism of its justification. In the present paper, we will draw the attention to the Apple’s production in terms of the grounds for their high prices.
I. Company’s Background
Apple Inc. is world’s technical giant well-known for such the products, as MacBook, iPhone, iPad, iWatch, and, of course, the operational system therefor – IOS. In fact, the design and the comfort when certain Apple gadget is used are the main elements of Apple’s products for which they are highly appreciated. This is taken in conjunction with the simplicity and the quality of these items’ work. The company has competitive advantage on the market being open for changes and creative, when introducing new gadgets. It is reflected in PR and marketing campaigns. Besides that, Apple has no intensions to stop its expansion opening new official stores everywhere in the world. Any company’s gadget is nowadays is associated with the word ‘a must’, as otherwise people cannot imagine their daily activities. Apple Inc comprehensively applied the approach whereby marketers define markets based on market need instead of product or service form (Sorger, p. 31). The company in its approaches towards the market always tries to answer the question ‘Why?’ first. Why do people need IPads? People need them; since they are comfortable and can be taken anywhere they go. Secondly, they define the characteristics thereof.
Regarding the company’s segmentation, it shall be emphasized that Apple Inc is aimed at the style-conscious people (Sorger, p.77). The products per se have strong sense of style with rounded corners, and high quality materials (Sorger, p.77). These products, as it was already highlighted, are associated with innovativeness and simplicity (Sorger, p.204) that, by and large, justify the prices set. Moreover, the company always publishes its position towards the prices they fix for certain products (the argumentation thereof) as well as the reasoning why people shall buy certain products of theirs. It, particularly, took place, when the iPads were introduced that replaced the smaller-screened devices (Sorger, p.282). The products of Apple are sold through different channels: starting from Apple-branded Retail stores and ending up with any licensed stores with the relevant Apple production (Sorger, p.520). Now, we will move to the pricing part of the paper.
II. Pricing scenario.
AT first, it shall be highlighted that the real prices for company’s iterms are safeguarded and cannot be known for the public due to confidentiality agreements (Tabini, 2013). The company approach to the market requires the relevant pricing system. It means that the prices are high, but this is done to signal high style and quality, whereas the customer is provided with all the guarantee and other services. One of the studies (conducted in 2009) concluded that the Apple’s pricing approach regarding MacBook was extremely successful. Even though the price was much higher than the one for PC World, the former were sold several times better, than the latter (Sorger, p.153). This Apple’s policy has benefited the company in all the aspects, particularly having improved its annual indexes (Sorger, p. 153). The properly introduced pricing scheme taken in conjunction with product innovation and branding largely contribute to these successful outcomes of the company.
Moreover, the statistical data demonstrate that, despite the policy of raising the prices for its products, the company’s revenues rise as well. The total of $108,2 billion in 2011 was twice more, than the year before (Sorger, p.199). And this number only grows. Even though the product at issue (MacBook) has its disadvantages, namely few ports and the lack of user-replaceable battery (Sorger, p.299) as well as high price thereof, the consumers drop these arguments and still prefer its design (style) and weight taken together with great technical characteristics.
Recommendations
Apple Inc shall keep properly combining the features of being internally and externally-focused. Notwithstanding the existence of a wide network of Apple stores around the world, it still has strong competitors, such as, for instance, Samsung. In this respect, Apple shall struggle for the establishment of the universal standards of technical and stylistic quality of its production irrespective of the location of final consumer. Having established the budget-oriented policy, the company shall be close to its foundations, namely not to forget that the very essence of its production is the style and quality which shall be paid for properly. If the products become available for anybody, Apple can lose a very important segment of its consumer, i.e. those who can spend days near the overcrowded stores waiting for the new model of certain Apple’s product. Also, Apple shall still provide the justification for the prices set, when the new items are introduced, thus enabling the people understand what they buy and why they need that.
Conclusion
Apple Inc has managed to introduce the prestige pricing scheme, when people pay much money mostly for the style of the gadget they will possess and belonging to the group of the same users. This policy helps the company to (at least, in the social consciousness) justifying its prices.
References
Sorger, S. (2013). Marketing Analytics: Strategic Models and Metrics 1st edn. New York:
Admiral Press
Tabini, M. (2013). How Apple Sets its Prices.
Macworld
Kelly, G. (2016). Apple Leaks Reveal New iPhone Price Changes.
Forbes
