COMPANY BACKGROUND Apple Inc.

Is an American corporation which designs and manufactures computer hardware, software and other consumer electronics. Apple was established on the 1st April 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. The company is best known for the Macintosh personal computer line, iTunes media application and the iPod personal music player. It wasnt until the release of the iPod portable digital audio player that Apple gained its fame. In January 2007, Apple Computer Incorporated was changed to Apple Inc. The phenomenal success of the iPod set the stage for future products, including the best selling mobile device in history, the Apple iPhone, the MacBook line of portable computers, and the Apple iPad which was released in 2010. Since then, Apple has released a wide variety of products which are unique due to their touch, look and features. As a result, their success is mainly derived from creating a unique identity for their products.

APPLE PRODUCTS Technology/mobile digital devices iPad iPhone iPod iPod Nano iPod Touch iPods Shuffle iMac MacBook MacBook Air Power Mac Software iTunes (application program) Mac OS (operating system software) Safari (application program) Siri (voice recognition software) Apple is known for their unique and innovative designs, a majority of their products are upgrades from previous models, such as their iPhones, iPads and recently, their iPod Touchs.

ONLINE STORE Apart from its 375 retails stores worldwide (which was recorded in August 2012), there are 126 Apple Online Stores in countries around the world. A majority of Apple products are sold through its online stores. Individuals from countries which do not have an online store are usually able to use one of the Online Stores and have them shipped or delivered to them.

MANAGEMENT OF ONLINE STORE

Shipping & Delivery

Apple allows its consumers to pre-select a delivery time that is convenient for them during checkout. This is subject to a fee and the available options are dependent on the delivery address. Standard Delivery. Expected to deliver within 1-5 days after your item is shipped. Free Postal Delivery. Expected to deliver within 1-7 days after your item is shipped. Free Postal Mixed Delivery. Expected to deliver within 1-7 days after your item is shipped. Free Pre-9:00am Delivery. Expected to deliver within 1-5 days after your item is shipped, before 9:00am. A$20.00 (excl. GST) Pre-10:00am Delivery. Expected to deliver within 1-5 days after your item is shipped, before 10:00am. A$15.00 (excl. GST) Pre-Noon Delivery. Expected to deliver within 1-5 days after your item is shipped, before 12:00 noon. Free

Standard delivery wont cost you a thing Apple Store pays for it. You can also have your order delivered faster or at a time that is convenient for you. This is subject to a fee and the available options depend on your delivery address. Once the order has been placed, customers will receive an Order Acknowledgement email, which confirms their order details, which includes the shipping and delivery estimates. Once the item has prepared for shipment, customers will then receive a Shipment Notification email with carrier and tracking information. Payment Methods The Apple Store accepts a variety of payment methods: Credit Cards or Debit Cards Direct Debit (through phone call with an Apple Representative) Cash Deposit Apple Financial Services (The GE CreditLine card is provided for Apple consumers who wish to purchase Apple products with one simple monthly payment. Customers can apply using the online application which takes 10 minutes. An application response is then emailed to you and if you have been approved, your GE CreditLine account number will be automatically sent to Apple. Apple will then contact you within 2 business hours to place your order).

Security Apple places high importance on security and enforces a number of security measures, the security of Apple Store servers is closely monitored to prevent any unauthorised disclosure or use of credit card numbers and to protect the confidentiality of your personal information. Similar to Strawberry Net.com, the Apple store also uses the SSL (Secure Socket Layer) industry standard, the highest level of security available today for web-secured applications. SSL relies on a pair of public and private key technologies and is based on a 40-bit encryption algorithm.

Refunds /Returns & Cancellations

Consumers are eligible to return the item for a refund under Apples Sale and Refund Policy. You can initiate a return online once your item(s) have been shipped and invoiced. Customers just have to go to online Self Service and sign in with their Apple ID and password, view the order details of the order containing the item(s) you would like to return. However, items in your order will be divided into two groups items that are eligible to be returns online and items you cannot return. For each item that you can return online, you will need to select the item, a reason for return, and whether youve opened the box. Once youve submitted your return request, youll receive an email confirmation with your return details. Apples carriers will then contact you within two business days to arrange collection. Once Apple has received the item(s), they will then process the return, issue a refund, and send you a return receipt confirmation email. Your refund will be issued after Apple receives the goods at the Apple return centre. The way you refund is processed depends on the original payment method. Credit card refunds will be sent to the card-issuing bank within five-business day of the receipt of the return package. For cheque/money order/ direct deposit payments, Apple will require the customers bank details, and after ten days the refund will be sent to the customers account.

APPLES PRICING STRATEGY Most marketing analysts have agreed that Apples pricing strategy, apart from its passion for design, is what drives sales and profits. Bundling Bundling is a marketing strategy where the seller combines two or more products and/or services and sells these as a single unit for a slightly reduced price. For buyers, buying bundled products may result in increased savings. And for a seller, it usually results in higher sales and in higher profits. Apple is a master at bundling; only Apple doesnt combine two or more products and sell these at a reduced price. It sells the product (hardware) at an attractive price, knowing that the customer will later pay for the software that will play on the hardware. So what customers might not realise is that they will have to pay extra to buy software or accessories in order to make use of their new purchase. This strategy is also evident when that particular device requires iTunes to operate, for example, the iPhone requires all its application to be bought and downloaded from iTunes. So what the customer does not realise is that they are actually paying more in order to use the product. Reference Pricing Fletcher & Crawford (2011) define reference pricing as the price that an international buyer pays for a product or sees being demanded for a product becomes the reference price against which other products are likely to be evaluated. Apple benefits from reference pricing by launching a slew of products at various price points. So, a buyer wouldnt mind paying more for versions that usually wont have most of the cutting edge features. Apple has used this method with its own products as well. When launching its first iPhone into the US market, Apple introduced the product at a high reference price of US$599, and then immediately

began decreasing the price. Now at a rate of US$199, the product does seem like a bargain. Apple uses its first-iteration pricing as a reference to make its latest product seem more affordable. Differentiation This is the most helpful strategy to Apple as it allows Apple to price its products at a premium and motivates customers to compare the companys products with other Apple products instead of its competitors. All of Apples products are unique due to their touch, look and features. Due to this, many individuals buy the product due to Apples success in creating a unique identity for its products. ISSUES WHICH INFLUENCE THE INTERNATIONAL PRODUCT PRICING STRATEGY Firm factors: including cost policies, marketing activities and range of products offered Customer factors: perceptions of the product, affordability and what value the offering represents Environmental factors: the situation in the foreign economy, inflation, currency stability and government regulations. Distribution channel factors: the costs and margins in the channel, the need to control what happens to the offering in the international market and the potential for grey market activities. Competitor factors: how the firms offering compares to that of competitors, and their pricing strategies. However, the most important factors in Apples case are the firm factors, the environmental factors and the distribution factors as they are the most important ones when determining the price for each market. APPLES INTERNATIONAL MARKET PRICES The prices of the Apple products vary in different countries. As stated before, the pricing of these products are also determined by economical factors. The underlying economic model in each country has an impact on how Apple prices its products. Firm Factors As stated by Fletcher & Crawford the nature of the product or industry influences the degree of the price discretion available to the firm. All of Apples hardware products are manufactured by outsourcing partners primarily located in Asia. For Apples physical products, there are added manufacturing costs because Apples products are manufactured in different parts of the world, particularly in the Asia-Pacific region. As such, when distributing amongst countries, they have to consider these costs, especially when different currencies are used. Furthermore, a number of its components are obtained from single or limited sources, which subjects the Company to significant suppler and pricing risk. Factors which are also considered when determining the prices also include the shipping costs and delivery costs when purchasing the product from online because Apple does not charge an individual when a certain limit has been spent on the site. Environmental Factors Environmental factors are one of the main factors which help Apple determine the price of their products in each market. As stated, the underlying economic model in each country has an impact on how Apple prices its products.

Apples pricing significantly depends on worldwide economic condition. Uncertainty about global economic conditions poses a risk because it affects the demand for the Companys products. It looks at the situation in the foreign economy and determines if the price is affordable to its consumers if there are changes in rates. Currency stability is also an issue which affects the price of the product. Apple focuses on the price in the other currency, and how relatively expensive the item is compared to other products in the same category. Government regulations related to mobile communications and media devices also affect the setting of prices for Apple. This increase in the costs of doing business, and any such costs, which may raise in the future as a result of changes in these laws and regulations can affect the price of Apple products due to their affect on Apples financial condition or operating results. Customer Factors As stated before, Apple looks at the foreign economy and determines if the price is affordable to its consumers. Apple looks at the differences in the cost-of-living in each country and determines a price they deem affordable and comfortable for consumers in that market. For example, in Australia, the 16GB iPod Touch 4th Generation starts off at AUS$219, where as in the U.S. its US$199. These prices are due to the differences in currency rates as well as the cost-of-living differences, with the cost-of-living in Australia being higher than that of the U.S. Apple believes that the price of the iPod Touch in Australia is acceptable in this market because Australians can afford it, whereas, the U.S. price is more affordable for Americans because their spending is more limited and suites their cost-of-living. Competitor Factors Apple determines its product price by also looking at the prices of its competitors before deciding a final price. While the product may be different, its features might be similar to its competitors, and as such, it looks at the competitors pricing strategies and focus on products similar to their own as well as their cost base. For example, in Japan, Apples media player products are relatively cheaper due to Apple being a U.S. brand and new to the market against competitors such as Sony, which was developed in Japan.

When Apple determines the price of its products in each market, it must consider these factors before pricing its product. Without considering these factors, consumers from overseas markets might deem the product as too expensive, to cheap or the value of the product not being much.