Iphone Marketing Case Review

iPhone Case

1.) Some of the factors that caused Apple to release the iPhone with such a high initial price were that it was a new product on the cutting edge of technology, and the product was targeted towards Apple’s diehard followers who would purchase the new product without hesitation. By lowering the price, Apple showed that they wanted to target a larger group than just their traditional buyers, they now wanted to lure in anyone who wanted a high tech cellphone. Bringing the price down closer to what other phones were priced at made the iPhone more affordable and competitive with other phones. Before they were priced so high that they weren’t directly competing with them.

I would have followed a similar strategy; they were able to capitalize on the faithfulness of their consumers as well as the initial excitement surrounding the product without sacrificing profit. I probably would not have made the change in price so drastic, perhaps starting a little lower; this would have sold more phones initially without upsetting original buyers as much after the drop.

2.) I think that the original pricing strategy was profit maximization. Apple set the price as high as it could in order to make as much money as possible. I think they shifted to more of a market share approach with the lowering cost. Selling as many iPhones as possible became a larger focus than profit per phone.

3.) The elasticity of demand for the iPhone was high. Quantity demanded changed greatly along with the price. When carriers subsidized phones with two-year contracts, this made it possible to sell the iPhone cheaper than it normally would be. The tiered subsidizing pricing model made all phones seem similar, grouping them into three broad categories. By selling numerous phones for $199, it made it so that a company could lose a little more on a top phone (iPhone), while catching back up on a lesser phone. This kept the system balanced, making it possible to sell the iPhone...