Atlas’ Lemon Analysis of iPad market...
First Generation iPad
Launched on 3rd April rd post-PC blockbuster by Apple Inc. Sold almost 15 million iPad in 9 months Generated sales revenue of USD$9.5 billion (April - December 2010) Fastest-selling consumer product in history
How is the price of iPad determined?
By the interaction between the demand and supply forces
Demand The quantities of a product that consumers are willing and able to buy at various prices per period of time, ceteris paribus
Supply The quantities of a product that suppliers are willing and able to sell at various prices per period of time, ceteris paribus
Related/ Associated Products
Substitutes Alternative products to iPad Competitors for market shares Price of substitutes affect iPad’s demand Closer the goods, the greater the change in demand for iPad
Complements Used jointly to satisfy some particular wants and needs Fall in price of complements will lead to the increase in demand for iPad Closer the goods are as complements, the greater the change in demand
Recent Developments Foxconn increased wages Development of substitutes Natural disasters Improvement in economy Features
iPad 2
Launched in USA on 11 March 2011 Thinner Lighter Cameras Faster Processor Available in WHITE!
Producer’s Point of View
Cost of production Gotten feedback from first generation iPad Advertising Producer’s Point of View
Cost of production Gotten feedback from first generation iPad Advertising Producer’s Point of View
Foxconn Increased wages 2 times in less than a week 30% first Then, 66% performance based pay rise
Natural disaster 8.9 earthquake - 11 March 2011 Delay in launch of iPad 2 Apple’s Japan Factory 5 key components said to be made by Japan’s Apple Factory Shortages
State of Technology Improved since the first-generation iPad Thinner, Lighter More features Quality of product Taste & Preferences of consumers Demand for iPad increases
Cost of production Gotten feedback from first generation iPad Advertising Producer’s Point of View
New features Installed to the iPad 2 Cameras Linking of Apple’s products FaceTime - Video Call
Cost of production Gotten feedback from first generation iPad Advertising Producer’s Point of View
Advertising Reviewers, Reporters “Free” advertisement for Apple Simple, neat, elegant High quality product
Customer Relations Department
Consumer’s Point of View
Income Price Distribution Taste & Preferences
Consumer’s Point of View Income Price Distribution Taste & Preferences
Income Non-price factor -- Affects demand Economy recovering from economic downturn Income increases More disposable income Assuming iPad to be a normal good Demand for iPad will increase
Consumer’s Point of View Income Price Distribution Taste & Preferences
Price USD$499 for iPad 2 entry level First generation iPad dropped USD$100 Appearances of new substitutes iPad’s demand decreases Price is supposed to decrease as well to achieve equilibrium price for iPad
Consumer’s Point of View Income Price Distribution Taste & Preferences
Distribution Distribute (sell) their products Different target groups Apple’s 3 channels of distribution: Apple Online Store Apple Stores Resellers - eg. epiCentre
“One of the things that enabled us to roll out this technology so fast was our Apple Retail Stores... educate customers... without these Stores, I don’t think we would have been as successful either” - Steve Jobs, Apple KeyNote 2nd March 2011
Consumer’s Point of View Income Price Distribution Taste & Preferences
Product
Brand Safety & Security Features Peace of Mind Accessories and services
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