Econs WebQuest Presentation

Done by: Serene, Nikki, Xin Rong, Samuel, Wei Long

Project A

a) When did the ipad first originated?

a) The iPad was announced on January 27, 2010 and first arrived in US stores on April 3, 2010.

b) How is the price of the ipad determined?

b) Pricing is the process of determining what a company will receive in exchange for its products.

The needs of the consumer can be converted into demand only if the consumer has the willingness and ability to buy the ipad. Thus pricing is very important in marketing of the ipad.

Determining of pricing of ipad involves asking

questions like

1. How much to charge for an ipad?

market analysis positioning

targeting

2.What are the pricing objectives?

Pricing objectives:-Profit maximization-Maximize quantity

(Profit maximization is the (short run) process by which a firm determines the price and output level that returns the greatest profit.)

(Maximize quantity means to maximize the number of ipads sold in order to decrease long term costs)

3. What is the cost of production of the ipad?

The iPad Costs Only $229 to Produce

4. Have you considered external factors?

• legal constraints • competitor’s actions

5. As there is a relationship between price and quantity

demanded, what is the demand curve of the ipad?

6. What is the chance of getting into a price war?

Price war is a term used in economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reduction.

When another competitor lower its price, the price of the ipad may be lowered to match. If one of them reduces their price again, a new round of reductions starts. The lower prices of ipad wil reduce profit margins and can threaten their survival.

c) Related Associated Products

• Substitutes• Complements

SubstitutesGoods that are substitutes of the

ipad may replace the ipad in use. An increase in the price of ipad, will lead

to an increase in demand of these goods, and a decrease in the price of

the ipad, will lead to a decrease in the demand of these goods.

Substitute 1

ARCHOS 9

The good: Thin design; solid construction; plenty of storage space.

The bad: Terribly slow CPU; no way to easily rotate orientation; frustrating touch controls.

Substitute 2

QUALCOMM Snapdragon

Substitute 3

Laptops

Complement GoodsAn increase in the price of ipad, will

lead to a decrease in demand of these goods, and an increase in the price of the ipad, will lead to a increase in the

demand of these goods.

Complement 1

iPad Keyboard

Complement 2

SD card

Complement 3

wireless headphones

iphone vs ipad

Substitute or Complement?

Ipad screens are larger, more easily touched, and applications have the space to become more complex, introducing a whole different dynamic to usage. On the other end of the spectrum, the iPhone and its smaller screen leaves it well suited to perform other tasks. Sure you can watch video on it, send e-mails on it, and run apps on it just like the iPad.

However, Could you imagine holding an iPad to your ear to make a phone call though? Or trying to tuck an iPad into your pants pocket?

Despite the overlap in certain functional areas, the iPad and

iPhone are really more complementary devices than

substitution devices .

End of Project A

Project B

Customer Point of View

Price of Substitutes

• Recent developments in the state of technology

• Lead to rise of substitutes for the iPad. • Such as rapid rise in Android tablets.

- eg. Samsung Galaxy Tab, Blackberry Playbook, Acer Smartphone

Price Comparison: • Apple iPad: $499 (cheapest version)

• Samsung Galaxy Tab: $890

• Blackberry Playbook: $399

• Acer Android Smartphone: $397 – $435

• Android Tablets: $299 to $699

How consumers react to prices of subs

• Price of substitute is lower than that of the iPad, Quantity demanded of the good will rise, while that

of the iPad will fall. Consumers will cast lower dollar votes for the iPad, Prices of iPad fall

• Price of substitute is higher than that of the iPad Quantity demanded of that good will fall, while that

of the iPad will rise. Consumers will cast higher dollar votes for the iPad, Prices of iPad rise

Income of consumers

• Recent tsunami in Japan• Country needs to borrow money• With the world just recovering from the

recent recession, this might mean that there might be a relapse.

• The world is floating on borrowings that might never be repaid.

• A recession may soon be arriving and thus consumer’s real income would be lower.

Consumer’s reaction and what we should do

• Less willing to spend on luxury goods• The iPad, and sales of the iPad will dip.

Therefore, I would suggest lowering the price of the iPad

• Delay the release of the iPad2 as it would not sell well

Producer Point of View

Price of the Product

• Recent developments will have a direct and indirect impact on marketing and pricing decisions of the iPad.

• Maximizing profits would be the priority

• With the rise of substitutes and complements, in the three months to 31 December 2010,

the shipment of iPad decreased from 95% to 75%

while Android devices increased from 2.3% to a stunning 22%.

• Price of iPad is set too high, the quantity demanded for it and applications

decreases. Those unwilling / unable to pay for it would be

rationed out of the market. Some consumers would choose to switch to

cheaper substitutes. E.g. Android powered tablet by Acer at US$299.

How producers react to prices of subs

• However, the high price will motivate producers to produce more to reap more profit.

• Cause a surplus in the market, exerting a downward pressure on the price of iPad.

• Expected rise of iPad 2 will result in fall in demand for iPad, and a rise in the demand for iPad 2.

• Therefore, as a producer, I would lessen my supply of iPad so as to save and transfer my resources to producing iPad 2.

Producers’ reaction and what we should do

Changes in Number of Sellers

• Due to recent developments,• More companies like Samsung are able

to produce goods similar to iPad • Sales of iPad will inevitably be affected

• To increase the sales of iPad, both pricing and non-pricing strategies can be used.

• Lower the price of the iPad Consumers will be more willing and able to

buy the iPad. • Advertisements Promote that iPad is better than the similar

goods in the market and is worth it’s value.

Producers’ reaction and what we should do

The End