Pricing Strategy How Well Does Apple Create

Pricing Strategy

How well does Apple create value for its market segments? Explain.

The way that Apple creates value for its market segments is by finding areas that are emerging, as a new way to incorporate technology into daily life. Where, there is an emphasis on implementing the latest technology with: changes in the industry and transpiring demand (to redefine how people are entertained). A good example of this can be seen with the I Pod. What happened was the company wanted to find a way to address changes that were taking place in way people were: listening to and downloading music. The I Pod was the first product to address this change, by offering consumers a way to download and listen to some of their favorite songs. At which point, the product would become the must have item for anyone, who is wanting to: listen to and record music in this new format. This is significant, because it shows how this device would address these changing needs, by incorporating technology and these adjustments together. As a result, the company has been introducing different products to achieve this objective to include: the I Pod, the I Phone and the I Pad. This is important, because this highlights how the company has pushed itself to continue with innovation. ("Pricing Strategy," 2010)

Does the Apple use different price offerings for different market segments? Describe these and evaluate how effective they are.

Yes. The way that Apple uses its strategy is: to offer consumers larger choices about purchasing a particular product through different levels of pricing. For example on the I Pad, the company would provide consumers with a choice about the features that they were looking for at various prices including: $299 and $399. The differences between them, is that the lower priced units would have less applications and not as many extras. This was designed to give consumers more of a choice about what product they would like to buy (based upon the underlying price). At which point, someone who wants the product, but not able to afford the higher priced units could purchase one for less money. Over the course of time, this helps to increase sales and demand about the product, because these different prices were appealing to larger groups of consumers. At the same time, the company would set the lower priced I Pad, in a similar range to competing products such as: the Dell Streak. When you put these different elements together, this is highlighting how Apple wants to offer product that can remain competitive with others on the market. While at the same time, the high prices units can address those individuals, who are concerned about the different applications / technology vs. The price. (Sigal, 2010)

Explain how the Apple communicates both value and price.

Apple communicates values as well as price through a number of different mediums to include: TV, newspaper advertising and online media. At the heart of the basic strategy, is when the company will compare the Apple products with competitors. For example, Apple recently used a series of TV commercials to communicate how their products are more technologically advanced and user friendly. This was accomplished through the I Am a Mac, I am a PC Campaign. What happened was Apple would compare the Mac with the PC, by showing the Mac with a young person signifying speed and the use of the latest technology. While the PC was depicted, by an old man, who is slow and cannot compete against the Mac. This is important, because it is highlighting how Apple would focus on how their products were: more user friendly and had the latest technology in comparison with competitors (through a simple, easy to understand comparison). At which point, the viewer would be able to automatically associate Apple products with superior quality and the latest technology. ("Apple Marketing Strategy," 2010)

When you step back and look at this strategy, it is clear that the company's marketing approach communicated value as well as price (through simple comparisons). This is significant, because the simplistic use of contrasting of the different products would help the public to: automatically associate Apple with superior quality and value.

Give examples of how Apple develops policies for price objections, price increases, economic downturns, or promotions.