Section 1:

Summary/ Background:
As we know that there has been a tremendous success in Apple Inc. on Smartphone
industry throughout the year. The products from this company represent the highest
technology along with well developed business. Therefore, the purpose of this report is to
study the strategy used by Apple which has lead us to its mobile products to success. The
strategy carried out by Apple can be divided into three main parts: hardware, software and
pricing.
Firstly, the breakthrough in hardware brought the new smart phone very high performance
and some attractive features. For eample, the processor was twice faster than before, and
auto!focused camera system, voice control, and longer!lasting battery were also e"uipped in
the new model.
Secondly, the Apple provided a wide range of applications #$%,%%%&' for both ipod and
iphone products that made the products very competitive to other brands. For more, Apple
made a profit from the third party software provider, and the revenue was as high as (%).
Thirdly, the skimming pricing strategy used by this company was the most important fact to
keep the products to be competitive through many years. A relative higher price was set at
the beginning to cover the cost spent on research and development, and then gradual
lowered price could be offered when the manufacturing cost was reduced through the time.
Business Target Market:
! *verybody from child to adult.
Marketing Mix
Product
i+hone , including i+hone(-S,
i+hone(-, i+hone., i+hone.s,
i+hone$
iTunes , including movies, T/ shows,
audio books, games.
+eripheral products , including
+rinters, Storage devices, digital
videos and cameras
Servers , including 0serve, 0san,
1ac2S 0 Ser, 1oble1e.
Accessories , including 1agic1ouse,
3eyboard, and 4ed 5inema 6isplay.
6eveloper , including 6eveloper
5onnection, 1ac +rogram, i+hone
+rogram.
Price
7ses skimming and premium pricing
strategies.
+rices has been reduced after some
initial product launches
+remium type of computer brand that
does not attempt to compete on price
The Apple i+hone costs begin at 899
Place Apple, Inc :ead"uarters are located at ;
Infinite 4oop, 5upertino, 5alifornia.
The Apple 5onsultants <etwork includes
independent professional service
providers and technology consulting firms
that speciali=e in Apple and third!party
solutions. 5ertified on Apple
technologies, these providers deliver on!
site technology services and support to
home users and businesses of all si=es.
They are located in Asia>+acific, Africa,
the 1iddle *ast *urope and 4atin
America.
Apple has over ?%% retail stores
worldwide including the 7S, 73 and
5anada. Apple recently opened a new
retail store in Shanghai, 5hina.
Promotion Apple, Inc offers special discounts on
refurbished 1acIntosh computers, i+od
<anos, and the @-A i+od Touch. In each
case a ; year warranty is included on the
all products.
Apple, Inc authori=ed Training 5entres
are located throughout the 7.S. each
provides instruction in 1ac systems, 1ac
2S 0, and AppleBs
professional applications. A wide range of
certification eams and courses offer
innovative learning opportunities for IT
and creative professionals, educators,
and service techniciansCdelivered
eclusively by Apple 5ertified Trainers.
The Apple 5onsultants <etwork website
provides a search tool allowing visitors to
locate nearby certified 1ac product
consultants in the 7.S, 5anada, and a
number of international locations.
The online Apple Store offers free
shipping for orders over 8$%.
The online Apple store offers iTunes gift
cards.
Section 2:
SWOT analysis
Strengths Attributes of a company that is helpful to
achieve the obDective.
;: Apple is a very successful company. Sales
of its i+hone had increased its profits. So
iphone gives the company access to a whole
new series of segments that buy into other
parts of the Apple brand. Sales of its
notebooks products are also very strong and
represent a huge contribution to income for
Apple.
?: Arand is all!important. Apple is one of the
most established and healthy IT brands in
the Eorld and has a very loyal set of
enthusiastic customers that advocate the
brand. Such a powerful loyalty means that
Apple not only recruits new customers, it
retains them.
(: Simple, easy!to!use and attractive
designed, strong brand, reliable, high market
share and position, competitive pricing.
Include the well!designed products that the
company puts out, such as the i+hone, i+ad
and 1acintosh computers. Apple has loyal
customers and the strength of its products
allows it to charge more than its competitors.
Weaknesses Attributes of the person or company that is
harmful to achieve the obDective.
;: It is reported that the Apple first iphone
may have a had faulty screen. The company
has commented that a batch of its product
has screens that break under impact, and
the company is replacing all faulty items.
This is in addition to problems with early
i+ods that had faulty batteries, whereby the
company offered customers free battery
cases.
?: *arly in ?%%$ Apple announced that it was
to end its long!standing relationship with IA1
as a chip supplier and that it was about to
switch to Intel. Some industry specialists
commented that the swap could confuse
AppleFs consumers.
(: 4imited product range, +ractically very
less gaming capabilities.
Opportunities *ternal conditions that is helpful to achieve
the obDective.
;: Success of Apple i+hone is a viable
stepping stone for Apple to attract new users
who previously had not owned an Apple
computer.
?: Apple has the opportunity to develop its
iTunes and music player technology into a
mobile phone format.
(: *port to new markets, strong online
presence, entering new markets, growth of
the industry of operations.
Threats *ternal conditions which could do damage
to the obDective.
;: -lobal economic situation is likely to
reduce demand for higher!priced consumer
items. Since Apple offers no lower!end
alternatives, consumers will switch to other
manufactures in the face of falling incomes.
?: There is also a high product substitution
effect in the innovative and fast moving IT
consumables market. So i+hone and internet
rule today. TomorrowFs technology might be
completely different.
(: Increase in taation, competitorFs actions,
new competitors entering the market.
Section 3:
Question 1: What ricing decision did !le "ace "or its range o" i#hones$
For pricing decision of i+hones, we can see that itBs depending on model and storage
capability
iPhone5 (Latest Model) iPhone 4s iPhone4
;G-A A$ !!"##
(?-A A$ $!!"##
G.-A A$ !!!"##
;G-A A$ %!"## @-A A$ 44!"##
Question 2: What "actors did !le ha%e to consider &e"ore it could imlement
these ricing decision$
There are two main factors that
;. model: the latest model will be more epensive than the previous one because of
new processor and more memory for eample i+hone . use A. chip, i+hone .s use
A$ chip and i+hone$ use AG chip and with this new processor, itBs make the new
i+hone opened applications and web pages up to twice as fast as the previous model
i+hone.
?. Features: the latest model have more features than the previous one such as i+hone
$ can take still photos while recording video and has face detection. Although, this
features donFt have in i+hone. and i+hone .s. And the addition feature for i+hone $
that outstanding which is video calling via Facetime thought (- and has a better front
camera.
Question 3: What are the alternati%e ricing strategies "or i#hones$
2ne of the ways Apple drives up demand for the i+hone is through a calculated pricing
strategy which it uses throughout its product lines, according to a September ?%;%
Aloomberg AusinessEeek article. As an eample, i+hone.s came with a price tag of 8.99
or 8$99, depending on the storage capacity. This established an Hartificially high reference
priceI for the i+hone which made later versions, such as the 8..9 i+hone ., seem like a
bargain by comparison, according to the article. In addition, Apple has at times priced the
i+od touch , a media player device very similar to the i+hone but without calling capabilities
, higher than the i+hone, another tactic to make the i+hone appear to be a good deal.
Question ': What ricing decision (ould you recommend !le$ Why$
I would recommend Skimming pricing. The practice of Jprice skimmingB involves charging a
relatively high price for a short time where a new, innovative, or much!improved product is
launched onto a market. The obDective with skimming is to HskimI off customers who are
willing to pay more to have the product soonerK prices are lowered later when demand from
the Hearly adoptersI falls.
The main obDective of Apple employing a price!skimming strategy is, therefore, to benefit
from high short!term profits #due to the newness of the product' and from effective market
segmentation.
There are several advantages of price skimming for Apple:
Ehere a highly innovative product is launched, research and development costs are
likely to be high, as are the costs of introducing the product to the market via
promotion, advertising etc. In such cases, the practice of price!skimming allows for
some return on the set!up costs
Ay charging high prices initially, a company can build a high!"uality image for its
product. 5harging initial high prices allows the firm the luury of reducing them when
the threat of competition arrives. Ay contrast, a lower initial price would be difficult to
increase without risking the loss of sales volume
Skimming can be an effective strategy in segmenting the market. A firm can divide
the market into a number of segments and reduce the price at different stages in
each, thus ac"uiring maimum profit from each segment
Ehere a product is distributed via dealers, the practice of price!skimming is very
popular, since high prices for the supplier are translated into high mark!ups for the
dealer
For JconspicuousB or Jprestige goodsB, the practice of price skimming can be
particularly successful, since the buyer tends to be more JprestigeB conscious than
price conscious. Similarly, where the "uality differences between competing brands
is perceived to be large, or for offerings where such differences are not easily Dudged,
the skimming strategy can work well.