Question 1: What was Apple’s primary pricing objective when it introduced the iPhone? What was its primary objective in cutting the product’s price just two months after introduction? From the beginning, Apple took advantage of its product’s special features in the markets and set a pricing strategy as price skimming with two main purposes. Firstly, they want their product to be determined to have an outstanding position in their customers’ needs as well as being proved to be a breakthrough development among the markets.
To illustrate further, an iPhone’s owner is considered to have high symbol status in the modern world; therefore, if the price of the product does not equally match the expected quality of it, the customer will not be satisfy with their attempt to buy the products. Another reason for Apple to rise up the iPhone’s price is that because they want to gain back the production and development costs for creating iPhones.
On the other hand, this strategy does not allow the company to maintain that high price for a long time since they would possible face the fact of losing markets in the future. Question 2: How much weight does Apple appear to have given to its evaluation of competitive pricing? If Apple chose to gain market share right from the beginning of introduction the new iPhone, they would have chosen the Penetration Price strategy. In this case, Apple does not give much weight to its valuation of competitive pricing.
By using its available reputation and outstanding position, Iphone was more likely introduced to the market with the soaring price in other to generate their profitable sales for the upcoming advancements in the future without worries about expanding their market on the whole. Question 3: Do you agree with Apple’s decision to switch away from price skimming after the iPhone’s introduction? Defend your answer. I do not advocate Apple for its way of abandoning the price skimming strategy after the introduction of iPhone for many reasons.
Innitially, it is totally acknowledged that there is no way you can keep the high price of the new product for such a longer period of time since it would possibly take away your market share no matter how innovative the cachet of your products is because sooner or later, there would be another potential rival appear to compete with your products in the market. However, the problem here must be the price set from the beginning and how the price should be controlled after the high peak. The fact that iPhone price suddenly went down to the unexpected price from (599$ to only 399$) did unsatisfy a large umber of customers, whom tried to purchase for the very first items. Therefore, it would easily affect the customer loyalty of the products, especially the way Steve Jobs tried to fix the problem, which was the offering of $100 coupon while buying Apple’s products for those who purchase the iPhone earlier. As a result, Apple has come up with a new strategy by introducing new version of iPhone 4GS, which really effectively fix the early problems by adopting more reasonable price right from the beginning but more high-quality products.