How Apple’s iPhone 6 Prices Can Help Its Asian Suppliers Harvard Case Solution & Analysis

Background

Apple Inc. is considered as a computer manufacturer aiming at the different imaginative idea that can move generation towards technological advancement. The Apple functions mainly in the personal computer industry. Apple designs, produces and sells a fine line of personal computers such as mobile phones, software, portable digital media devices, and related accessories. It also operates internationally through a combination of direct sales, wholesalers, online stores and retail stores, and resellers. It offers product like Mac Book Pro and Mac Book, Mac OS X, iPod and iTunes Media Store, iPhone, iPad, software market, App store.

The Apple iPhonesare well-established brand in the smart phone industry in today’s US market. Apple was able to gain the pioneer advantage and maintain market dominance. It is a revolutionary product transformed the technology industry and has given a new direction to technological industry. It shows the model of the mature development and yet a mobile phone with all possible technological advancement.

As the other technological products modernizes overtime according to the expectation of customers or beyond their expectations. Similarly, the Apple’s modernized its product line with the passage of time. The first generation iPhonereleased in the United States of America on June 29, 2007 come after second generation iPhone i.e.I Phone 3G launched in July 2008. The third generation iPhone 3GS launched in June 2009 chased by the launch of the iPhone 4 on June 24, 2010.On 27 March2014, Apple launched its 5s and 5c iPhones. Recently on the date of 19 September2014, Apple launched its new iphone version i.e. iPhone 6 and iPhone 6 Plus.

Expansion internationally was faster than domestic expansion, but thanks to tough competition between industries, brands like Samsung, the world’s biggest producer of smart phones. At present iPhones are being sold in more than 88 countries, although Apple can easilycontrol the manufacturing and supply processes for all iPhones shipped worldwide. Apple retail stores are only available in 35 countries around the world.Inother countries the Apple product is being sold by the third parties. For instance, Singapore is one of the countries which do not have an Apple retail Store.

Problem Statement

IPhone is losing its market share because of additional featured android mobile phones. Taking advantage by Samsung, transformed their product into android version and grabbing its market share. Samsung has now biggest market share in a smartphone industry and Apple desires to get its market share back.

Analysis

Former Pricing Strategies for iphone

Apple is a company which has superiority in giving quality product, however it offers the prices, which are almost out of reach of customers. Apple does niche marketing, its target market ranges from upper-middle class to upper class. It’s offerhigh-end products, with extraordinary designs, and customized service to its customers which they sell at premium prices. Moreover, the primary objective is to sell a great product backed with great experience. Apple can charge premium price as long as they are enjoying competitive advantage.

Price skimming vs Price penetration:

Apple always used the price skimming strategy for its product. Apple created a perception that the iPhone is worthy for $599,iPhonesinitial pricing strategy started with a high price to cover upthe whole marketing and development costs. But suddenly the iPhone companyhas adapted the price penetration strategy at the time of the release of my phone 5.They offered iPhone 5 at $399. They had decided to continue with this strategy. As Samsung is now is the leading Smartphone brand and offering product at low prices than Apple  so in order to snatch some market share from Samsung, it became important for iPhone to lower down its product price. People were accepting that as iPhone 6 is coming with new advancements mainly its big screen feature and easy to operate so price will also be higher. But Apple surprised people by offering the product in same price that are alike iPhone 5.

As always the Apple showed upby offering a new and improved iPhone model,iPhone 6 and iPhone 6 plus which provides faster processing, a better camera, and with the bigger screen of an Apple Smartphone till date. Prices start at $199foriPhone 6 in the U.S.and iPhone 6 plus at $ 299 for customers. It is one of the parts of their excellent and outstanding marketing strategy which gives a feeling to customers of getting a great deal in low prices. Apple also depends on bundle pricing i.e. the moment consumers purchases its product a chain of revenue starts throughiPhone by selling songs, apps, software and monthly data service.

Supply Chain Strategies

The proper alliance of the supply chain and the business strategy is necessary to ensure a high level business performance. Apple new ever big screen smart phone with the versatile Watch and wireless Apple Pay system attracting more and more technology lover and Apple fans.But the world's most superior company is encountering with issues in Asia.................

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