Apple’s iPhone 6Plus costs $300 which is $100 more than the smaller iPhone 6. Reports from analysts show that the production cost of iPhone 6Plus is barely more than the iPhone 6 and this culminates a huge financial win for the iPhone 6Plus handset. HIS analysis shows that the production cost of iPhone 6Plus averages to $200 while the production cost of iPhone 6 is $15 less. (FOX Business). iPhone 6Plus additional features of 0.8 inches screen and casing only costs this much. On contract basis, iPhone 6Plus will cost the consumers more than $ 749 while iPhone 6 will retail at $649. Apples produce high-end profile iPhone with enhanced desirable and quality features and prices them for maximum profitability.
The handsets have high memory configurations, large screens and security features that justify additional pricing strategy. The iPhone 6Plus structures its bottom line profits with a handset with very desirable features with pablet-sized screen. The camera and battery subsystems costly slightly more but both models of iPhone 6 cost more to produce than the iPhone 5’s. After three days of release of iPhone 6 and iPhone 6Plus, the company had sold more than 10 million handsets that set a new performance record.
The choice between the two iPhones generates new markets and expands existing ones that are replicated in the market share. (FOX Business) The strategy allows the customers to choose the price that is right for them and works well for them. The self-selection of the two iPhone options of the contract or off contract based pricing strategy will enable the low earners to purchase the iPhone model of their choice.
The strategies aimed to help apple to preserve the iPhone 6Plus margin. The premium products in the markets encounters waves of competition from new entrants in the market that are always low-priced. Introduction of iPhone 6 and iPhone 6b plus in tandem will combat the pricing pressure from these cheap handsets and serve the loyal customers who are price sensitive. These will position iPhone 6Plus in a better position and be able to charge a premium. (FOX Business) IPhone 6 is a fighter brand that is meant to repel the competitors of the iPhone 6Plus to maintain its margin, competitiveness and market value.
iPhone 6 is a great marketing tool for iPhone 6Plus. The company no longer sell the smaller iPhones at low prices, but IPhone 6 codifies the identity of iPhone 6Plus to constantly remind the consumers about the beauty and expensive iPhone 6Plus. Market segmentation using the iPhone 6 reinforces iPhone 6 plus luxury and premium brand. This strategy works well for the image conscious consumers which very important demographic segment for the Apple customer base.
The new strategy may not work well in the global market. According to statistics, 90 % of all Brazilians have android phones and South America in general. (FOX Business) The pricing strategy of iPhone 6Plus at $749 and iPhone 6 at $ 649 will be competing with large format Androids costing the consumer around $100 and $ 200. In this market, statistics shows that Microsoft windows phones have larger market share than the iOS handsets. Apple supply chain in this country is at infancy stages with only one store in Brazil and needs to invest huge amounts to spur is the growth in Latin America.
Apple strategy does not care about the bottom of the market. The main focus is to dominate the profitable high-end section of the market which has high potential for the market iOS market.
Works Cited
FOX Business, Gabrielle Karol. "Report: iPhone 6 Plus Costs Apple Only $15 More than iPhone 6." Fox Business. FOX News., 24 Sept. 2014. Web. 11 Nov. 2014. <http://www.foxbusiness.com/technology/2014/09/24/report-iphone-6-plus-costs-apple-only-15-more-than-iphone-6/>.
