The Impact of Environmental Factors on Pricing: IPhone.

Environmental factors which affect pricing includes variables which are out of the managers’ control. Example: –Competition –Legislations or Governmental Rules –Ethics

Competition It is considered by the company before pricing a product or service Such Consideration must be concentrating on: –The number of competitors –The size of competitors –Location of competitors –Historical reaction of competitors to price change

Legislations and Governmental Regulation In some countries (such as U.S.A), specific goods and services are regulated by the government (Mainly Public services) such regulation are always of the primary consideration for managers before pricing decisions Example: in U.S sellers are not permitted to make any agreement with the competitors to fix prices

Ethics In many cases businesses find themselves ethically responsible for providing a fare price to their customers

The case of IPhone Is a combination of mobile phone and Ipod, made by Apple Inc. Competition Impact on Iphone Pricing: –Iphone vs Blackberry –Very high competition which has made the pricing managers reduce the iphone price –Iphone started with very high price in the U.S ($500 to $700), in which has comforted Blackberry providers (Reuters, 2007) –In 2008, Apple Inc had no choice but to drop the price of the iphone in order to destroy the competition (Etherington, 2008; and Diaz 2008).

Legislation It also plays an important role in affecting the price of the iphone. In UK, there is no regulations in which prevents Apple Inc to sell their phone locked to O2 network On the other side, in Belgium the legislations prevents Mobistar from selling any mobile phone locked to its network. This gives customers the freedom to switch to another providers and push managers to reduce their iphone prices to attract customers.

Ethics and Iphone It is also plays a considerable role in pricing Apple was concerned about their image if they provided unfair price for the Iphone. Many studies has reported a huge disapountment amongst many customers because Apple has dropped the Iphone prices very low after a very short time of its release

Conclusion Pricing is not only affected by internal factors, such as profits and sales, but it is also affected by external factors which are out of the managers control, such as competition, legislations and Ethics.

Thanks for your Attention

References Appleinside Forum (2008) iphone 3G plans to start at $55 in Austria, 47$ in Belgium. Retrieved November 12, from: Diaz, S (2008) Apple Could Crush Competitors With a $99 iPhone. Retrieved November 12, from: Etherington, D (2008) Apple Could Drop iPhone to $99, Destroy Competition. Retrieved November 12, from: destroy-competition/ destroy-competition/ Ethics, S (2007) Iphone Ethics. Retrieved November 13, from: Petter J and Donnelly, J (2007) a Preface to Marketing Management. McGraw: Hill College Reuters (2007) Competitors Comforted by iPhone’s High Price. Retrieved November 10, 2008, from: