Question

Identify a product that you think you have paid either too little for or too much for. Identify the pricing strategy you think the company is trying to implement (based on the assigned readings), and then evaluate the effectiveness of the strategy. Use at least two sources to justify your answer. (cannot be an electronic)

Answer 1

*Answer:

The product, which I am considering for this assignment, is Apple’s iPhone. I feel, the product is priced quite a bit high.

The pricing strategy used by Apple is the skimming pricing strategy. Skimming pricing strategy revolves around pricing the product quite high initially, while launching it in the market and then lowering the price over time. The initial high price caters to the loyal customers of the brand who are ready to pay anything to get the product. The high price also caters to the potential consumers who want to possess that product and get an entry in the reputed customer base of the brand. After catering to the needs of those customers, the company skims down the price to cater to the needs of the price-sensitive segment.

The effectiveness of this pricing strategy can be gauged from the following points:

• Makes a quality perception in the minds of the consumer and makes the product brand as a premium one
• Skimming strategy can effectively recover the product development costs
• The high price keeps the product ahead of the competitors

Apple has rightfully understood the approach to be followed to make the consumers, an addict fan of its products. Its marketing and products department has done appropriate research in understanding the marketing mix for Apple’s products. The launch of new products is done by creating an aura for the same, thus consumers keep waiting in anticipation for the launch. Apple products have also become synonymous of status symbol and feel proud of possessing it. This perception has been totally based on the years of good quality and innovative products offered by the company.

Apple Corp. business strategy is focused on achieving product differentiation in its designs and process functionality. Apple’s business model is quite volatile and varies with the outlook of the business leaders. Steve Jobs gave a definite direction to the business run of Apple. Jobs focused the company’s strategy to make the products beautiful and stylish. Tim Cook is focusing on optimizing the supply chain of Apple Inc. so as to maintain its market hold.

To gain competitive edge over Apple, Samsung needs to study the competitive landscape of Apple, its strengths, weaknesses as well as the business strategy adopted by the company.

https://www.linkedin.com/pulse/pricing-strategy-apple-inc-poonam-rathi

https://www.billboard.com/articles/business/7964782/iphone-x-apple-pricing-strategy-analysis

https://www.investopedia.com/terms/p/priceskimming.asp

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