Apple Pricing Strategy Essay

9001 Words Dec 6th, 2012 37 Pages
CASE STUDY: APPLE
Chapter 7: Pricing

Contents

A. Understanding Pricing 4
1. Internal and External Considerations Affecting Price Decisions 5
1.1. Internal factors 5
1.2. External Factors 9
2. Setting The Price 10
B. Introduction to Apple 13
1. Product 14
2. Promotion 15
3. Place 16
4. Price 17
C. IPHONE 19
1. Introduction to iPhone 19
1.1 Main Features 19
1.2 Market share 20
2. Pricing Strategy of Apple’s IPhone 21
2.1 High Reference Pricing 21
2.2 Penetration pricing 22
2.3 Skimming Pricing 22
2.3 Psychological Strategy 23
2.4 Combination of pricing strategies with carriers 23
3. Result and Evaluation 24
1. Sales and Revenues 24
2. Target market 25
D. IPAD 26
1. Basic
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1.1. Internal factors
Overall marketing strategy, objectives, and Mix Organizational considerations
a) Customer Value- Based Pricing: uses buyers’ perceptions of value, not the seller’s cost, as the key to pricing. It means that the marketers cannot design a product and marketing program and then set the price. There are two types of value-based pricing: good-value pricing and value added pricing. Good-value pricing is the offering the right combination of quality and good service at a fair price. Value-added pricing is attaching value-added features and services to differentiate a company’s offers and charging higher prices.
b) Cost-based pricing: Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.
c) Competition- based Pricing is setting prices based on competitors’ strategies, prices, costs, and market offerings.
d) New-product pricing strategies: usually change as the product passes through its life cycle. The introductory stage is especially challenging. Companies bringing out a new product face the challenge of setting prices for the first time. They can choose between two broad strategies: market- skimming pricing and market-penetration pricing.
e) Product Mix Pricing Strategies: the strategy for setting a product’s price often has to be changed when the product is…

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