Apple's success leaves little room for improvement. However, there are few areas where improvements can be made. Pricing strategy is one of them. There are two common tactics that Apple is reticent to make use of. One is discounts -- aside from Black Friday most of Apple's core products are seldom discounted. One example is the MacBook Air. When launched, it was a best in class machine with a best in class price. Premium pricing is logical when the company has a monopoly, which was the case for the second iteration of the MacBook Air for around a year. Now, however, new competitors are entering the market including Toshiba, Asus, Samsung and Sony. It is recommended therefore that Apple makes more use of competitive pricing, including discounts.
The argument can be made that Apple offers a highly-differentiated product at a premium price point, and in many cases this is true. But when competition enters the market, the company's degree of differentiation is reduced. This should have a downward effect on the firm's pricing power. The market is in a state of monopolistic competition, which means that firms do not necessarily need to adapt to each other's pricing moves if their products are sufficiently differentiated. Apple does have proprietary design and software that delivers some differentiation. However, the new pricing strategy of offering more frequent discounts on their products is derived from the concept of penetration pricing.
With some products, Apple's market share is still very low, and this is the case for computers. Thus, Apple still needs to win over customers who would otherwise buy a competing computer. While this was easy regardless of the price when a product like the Air is superior to all other competitors, when the competition catches us, consumers must weigh the utility of the different products. Price is a significant factor in utility, but if price is matched with the closest competitors then Apple must take that into consideration and should lower its prices -- even if sporadically -- in order to compete better and build out market share.
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