Apple Pricing Strategy

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CASE STUDY: APPLE
Chapter 7: Pricing

Contents

A.Understanding Pricing4
1.Internal and External Considerations Affecting Price Decisions5
1.1.Internal factors5
1.2.External Factors9
2.Setting The Price10
B.Introduction to Apple13
1.Product14
2.Promotion15
3.Place16
4.Price17
C.IPHONE19
1.Introduction to iPhone19
1.1Main Features19
1.2Market share20
2.Pricing Strategy of Apple’s IPhone21
2.1High Reference Pricing21
2.2Penetration pricing22
2.3Skimming Pricing22
2.3Psychological Strategy23
2.4Combination of pricing strategies with carriers23
3.Result and Evaluation24
1.Sales and Revenues24
2.Target market25
D.IPAD26
1.Basic features of Ipad:26
2.Pricing strategy27
3. Impact of the pricing strategy on Ipad30
E.MACBOOK33
1.Technological specs33
2.Pricing strategies35
2.1.Skimming pricing35
2.2.Value-based pricing35
2.3.Psychological pricing36
2.4. Product Mix Pricing Strategy36
3.Impact of the pricing strategy for Mac Book37
F.REFERENCE39

A. Understanding Pricing
Price is the amount of money charged for a product or a service. More broadly, price is the sum of all the values that customers give up to gain the benefits of having or using a product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent cost. Price is also one of the most flexible marketing mix elements because prices are perhaps the easiest element of the marketing program to adjust; product features, channel, and even communications take more time. Pricing decisions are clearly complex and difficult, and many marketers neglect their pricing strategies. Holistic marketers must take into account many factors in making pricing decisions- the company, the customers, the competition, and the marketing environment. Pricing decisions must be consistent with the firm’s marketing strategy and its target markets and brand positioning. In order to decide price we need tools to facilitate the setting of initial prices and adjusting prices over time and markets.

How Companies Price
Companies do their pricing in a variety of ways. In small companies, the boss often sets prices, in large companies, division and product line managers do or companies can establish a pricing department to set or assist others in setting appropriate prices. For any organization, effectively designing and implementing pricing strategies requires a thorough understanding of consumer pricing psychology and a systematic approach to setting, adapting, and changing prices.

Consumer Psychology and Pricing
Understanding how consumers arrive at their perceptions of prices is an important marketing priority. Here we consider three key topics- reference prices, price- quality inferences, and price endings. Global Perspective

Setting the right price for a product can be the key to success or failure. Even when the international marketer produces the right product, promotes it correctly, and initiates the proper channel of distribution, the effort fails if the product is not properly priced. A product’s price must reflect the quality and value the consumer perceives in the product. Of all the tasks facing the international marketer, determining what price to charge is one of the most difficult. It is further complicated when the company sells its product to customers in different country markets. Whether exporting or managing overseas operations, the manager’s responsibility is to set and control the actual price of goods in different markets in which different sets of variables are found: different tariffs, cost, attitudes, competition, currency fluctuations, and methods of price quotation.

1. Internal and External Considerations Affecting Price Decisions The internal considerations include strategies related to customer value perceptions, costs, and competitor...
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