![]() ![]() This means that the company earns 60 to 70 percent in profit for each iPhone sold. The costs associated with manufacturing an iPhone, in addition to the costs related to research and development, marketing, and other operations expenses collectively account for 30 to 40 percent of its retail price. Remember that premium pricing also provides Apple with higher profit margins. More than this, however, the company has actually enjoyed a large consumer base comprising of consumers from middle to upper socioeconomic market segments because of its established brand reputation built from its effective marketing and business strategies. Apple has undoubtedly succeeded in appealing to consumers who would not mind paying a premium for an iPhone. Note that other Apple products are expensive as well.Ĭustomers of premium or luxury products are typically limited to the upper-class socioeconomic market segment. The specific premium pricing strategy for the iPhone reinforces its brand positioning and marketing messages by creating positive perceptions or favorable assumptions that collectively suggest product superiority and exceptional quality. While it is natural to assume that an expensive product would perform poorly in the market when compared against affordable alternatives, premium pricing is integral to the marketing strategy for iPhone. Note that this price is enough to buy two to three mid-range Android smartphones or even two mid-level Windows laptop computers. Several observers have criticized Apple for attaching a high price tag on iPhone. Price: Understanding the Pricing Strategy After all, buying and using different products from different manufacturers create a hodgepodge of diverse and confusing product and consumer experience. iPhone and other Apple products such as the iPad or the Mac line of macOS desktop and laptop computers, and even software products such as the iTunes and Messages complement one another.Ĭomplementary products create a halo effect in which certain consumers prefer buying products from a single manufacturer due to convenience. ![]() Doing so allows the company to simplify the customer experience while also slimming down processes and strategies aimed at supporting and boosting the sales of iPhone.Īpple has also maintained a sizeable but controlled product portfolio that promotes uniform and unique usability and consumer experience. Unlike other manufacturers that flood the market with different varieties of smartphones, Apple has limited iPhone variants into two to three, thus limiting consumer choice. Limiting variety is another aspect of the product strategy for iPhone. Furthermore, this short lifecycle also helps renew consumer interest. This short product lifecycle enables Apple to keep up with the fast-evolving market trends driven by technology, industry drifts, and consumer demands. Since its first introduction in 2007, an updated version of the iPhone appears every one to two years. ![]()
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