Marketing the iPad

Background Information  First tablet computer developed by Apple Inc  Announced on 27 Jan 2010  Released on 23 July 2010 (Singapore)  Watch movies  eBook reader  Surf the web.

In order to find out how the price of the iPad is determined, first, we have to understand: 1. Demand, and the factors affecting demand of a product. 2. Supply, and factors affecting supply of a product

H OW IS THE PRICE OF THE I P AD DETERMINED ? Demand : refers to the quantities of a product that consumers are willing and able to buy at various prices per period of time, ceteris paribus. Supply : refers to the quantities of a product that suppliers are willing and able to sell at various prices per period of time, ceteris paribus.

Factors affecting price of iPad through demand (consumers’ POV) Income  The iPad is classified as a normal good / luxury.  With an increase in the income of consumers, purchasing power of money income (or real income) of consumers increase.  Normal goods and luxuries are income elastic, an increase in the income of consumers lead to an increase in the quantity demanded of such goods.  Consumers able and willing to pay more to obtain the iPad, and cast higher dollar votes to do so.  This in turn signals producers to increase production and price of the iPad can be increased.

Factors affecting price of iPad through demand (consumers’ POV) Taste and preferences Convenient, light, portable Many functionalities, ability to run a huge variety of applications Fashionable E.g. Nanyang Girls High School, bought 150 iPad for students and teachers to make learning more convenient. As the iPad offers a wide range of applications and functionalities, more consumers are willing and able to buy it. These consumers cast higher dollar votes in the hope of obtaining an iPad. This will cause an increase in demand for iPad, signalling producers to produce more of the good and thus leading to an increase in price.

The nVidia Tegra Qualcomm Mirasol Mac Tablet

F ACTORS AFFECTING PRICE OF I P AD THROUGH DEMAND ( CONSUMERS ’ POV) Price of substitute (Galaxy Tab) Consumers may wait for Galaxy Tab as it is a close substitute. Price of Galaxy Tab < Apple iPad Increase in the Qty DD of the Galaxy Tab. Demand of iPad will decrease. Downward pressure on price of iPad. Lowering price of iPad. -Apple iPad, Released on 23 July S$1027 -Samsung Galaxy Tab, Released on 13 November S$998

 Expectation of future prices ◦ Expecting a fall in price of iPad due to release of Galaxy Tab ◦ Increase price of iPad to earn greater profit before decreasing it when Galaxy Tab is released -Released on 23 July S$1027 -Released on 13 November S$998

Factors affecting price of iPad through supply (producers’ POV) State of Technology 9.7-inch IPS panel ~ US$100, 16GB of memory + aluminium case ~ US$25, Apple A4 chip ~ US$15, e.t.c. COP~ US$270 Revenue> COP to get profit New technology can be used to produce the good more efficiently, and more output will be produced with the same amount of input. If factors of production remain constant, there will be a lower unit cost of production and a higher profit per unit output, leading to greater profits.  Government policy Government service tax 7% Imposing a high tax reduces the Qty supplied as it costs more to market the product

Done by: Lim Yi Ren Lim Yi Da Joshua Tan Eugene Goh

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