Question

A. What are Apple INC's fixed and variable costs to the company of producing, marketing, and selling the new good or service, and how do those fit with the company’s short- and long-term objectives? Support your narrative with a table showing calculations and any assumptions.

B. How much is the target market willing and able to pay for Apple's product or service? Use target market analysis and research on competitors’ prices to support your answer.

C. Are targeted consumers willing and able to pay more for the APPLE product or service if it aligns with their preferences for socially responsible and ethical behavior? Justify your response with evidence.

D. In light of your analysis, what pricing strategy and price is most appropriate for this product or service and why? For example, would skimming, penetration, economy, or premium pricing be most appropriate? What should the initial price be?

Answer 1

A. What are Apple INC's fixed and variable costs to the company of producing, marketing, and selling the new good or service, and how do those fit with the company’s short- and long-term objectives? Support your narrative with a table showing calculations and any assumptions.

Apple Inc. is like any other company and has both fixed and variable costs that it puts into while producing a product. Apple has emerged as one of the largest companies to manufacture mobile phones and products that have reshaped the technological industry all together. Apple Inc. looks to sell its products at a premium price while ensuring that it does not compromise on technology as a whole respectively. It has therefore emerged as one of the best smartphone brands across the years.

For the purpose of this case study let us understand the pricing strategy of Apples 1000$ Smartphone respectively.

A chart herewith shows, Apples strategy and pricing in this.

The chart here indicates key elements of Apples Costs. While Plant and Workers contribute to fixed costs, other variables such as Cost of Display, Internals & Marketing costs change as per the demand and the product life cycle respectively.

B. How much is the target market willing and able to pay for Apple's product or service? Use target market analysis and research on competitors’ prices to support your answer.

Apple has built its brand value on placing itself as a premium smartphone maker only. In this sense competitors biggest ones being Samsung primarily sells its products at approximately 30% lesser value than the later.

Apple has built its brand value in the premium segment and while the pricing of Apple smartphone in 2018 is $1000-1500 which is extremely high, the nearest competition is Samsung which is priced at about 700$ respectively. Though the target market of Samsung high end S Series and Note Models is the same, yet it sells relatively cheaply.

C. Are targeted consumers willing and able to pay more for the APPLE product or service if it aligns with their preferences for socially responsible and ethical behavior? Justify your response with evidence.

It is usually a trend among aware customers to take social responsibility and ethical behavior extremely seriously. In this case, Apple has emerged as a giant only because of the higher customer satisfaction that its products have delivered at and the fact that apple keeps its customers at the top.

Also, Apples stock previously took a hit when manufacturing activities in China indicated that norms were flouted. Since then Apple has corrected policies to ensure greater social responsibility and is largely benefited from this. At times it is reasonable to say that people prefer to spend more on certain brands realizing the kind of ethics and policies which they use respectively.

D. In light of your analysis, what pricing strategy and price is most appropriate for this product or service and why? For example, would skimming, penetration, economy, or premium pricing be most appropriate? What should the initial price be?

Apple uses premium pricing for its products and services. It is the most appropriate strategy because the company retails in only specific goods and services and aims at delivering high value products to its consumers for which the consumers do not shy away from paying a premium price respectively.

Please comment in case of any doubts