recent developments and how they affect marketing and pricing decisions by: dini, julene, lengjen,...
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The iPadRecent Developments and How They
Affect Marketing and Pricing Decisions
By: Dini, Julene, Lengjen, Yoojin, Bryan
1. Effect of Rival Goods on Demand of iPads
2. Effect of Pricing on Quantity of iPads Demanded
3. Effect of Cost of Production on Supply of iPads
4. Effect of Pricing on Quantity of iPads Supplied
Report Outline
New rival goods include Blackberry Playbook, Samsung Galaxy Tab and LG Android Tablet
Effect of Rival Goods on Demand of iPads
Blackberry Playbook Samsung Galaxy Tab
Consumers may turn to these similar goods as substitutes to the iPad
This is especially so if these similar goods have similar prices or even lower prices
Effect of Rival Goods on Demand of iPads
A change in the consumers’ choice of good would affect the demand for iPads
Thus, it is important to market the iPad in a way that it is significantly better than rivals
Effect of Rival Goods on Demand of iPads
Higher price = Lower Quantity Demanded This is due to consumers being rationed out
of the market
How Pricing Affects Quantity Demanded
Consumers choose cheaper rival products with functions similar to the iPad
One example would be Acer’s new Android-powered tablet
How Pricing Affects Quantity Demanded
Therefore, to increase the quantity of iPads demanded, the price of the iPad must be lowered.
How Pricing Affects Quantity Demanded
With increased cost of production, supply of iPads decrease
With an increased cost of production, the iPad becomes less profitable
Suppliers, trying to maximise profits, would choose to supply less iPads
How Cost of Production Affects Supply
Cost of production includes cost of commodities such as metals or plastics
The iPad requires these commodities for production and manufacturing
As these rise in price, the cost of producing and manufacturing the iPads grows as well
How Cost of Production Affects Supply
Cost of production also includes wages for workers
Wages of workers have been increasing In China, wages of skilled workers are seen
to grow at rates of up to 10% annually As the supplier has to pay more to workers
who manufacture the iPad, the cost of production thereby increases
How Cost of Production Affects Supply
In conclusion, in order to increase the supply of iPads in the market, we have to find cheaper alternatives to alleviate rising costs of production
Price of iPads can also be increased to increase the profits of suppliers and thus making them more willing to supply more
How Cost of Production Affects Supply
Suppliers aim to maximise profits Profits = Total Revenue – Total Expenses
How Price of iPad Affects Quantity of iPad Supplied
By increasing the price of iPads, suppliers gain more profit
Suppliers would be more willing to sell, thus increasing supply
How Price of iPad Affects Quantity of iPad Supplied
Suppliers would also choose to supply iPads instead of other rival goods
For example, suppliers would choose to sell the more expensive iPad over cheaper netbooks
How Price of iPad Affects Quantity of iPad Supplied
Therefore, in order to increase supply of iPads in the market, price of iPads has to be increased
How Price of iPad Affects Quantity of iPad Supplied
The iPad holds a large amount of the tablet PC market share
In 2010, the iPad enjoyed up to 90% market share
Conclusion
However, with competitors such as the rival Android platform of tablets, Apple may suffer
At the end of 2010, the iPad’s share of the market dropped to 75%
Conclusion
In 2011, with the introduction of the iPad 2, demand for the iPad skyrocketed again
Rumours estimate the sales to be as much as 1 million on the opening weekend
Conclusion
The iPad has competitors but is in high demand
This is because the iPad has set itself apart from the typical tablet PC
Even so, the iPad’s demand remains price elastic
Conclusion
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