1. THE IPAD PRICING AND MARKETING DECISIONS ECONOMICS PROJECT

2. PROJECT A

3. WHEN DID THE IPAD FIRST ORIGINATED? Apple INC. started the iPad on the 23 of April, 2008. The construction of the iPad is a very complex process, taking almost two years to finish the product before it was announced into the market on January 27, 2010.

4. HOW IS THE PRICE OF THE IPAD DETERMINED? The price of the iPad is determined by demand and supply forces. The decision of the producers determines the supply of the iPad while the decisions of buyers determine the demand. It is the interaction of demand and supply that determines the market prices of goods and services.

5. HOW IS THE PRICE OF THE IPAD DETERMINED? Price Quantity PePe QeQe Market equilibrium occurs at a price where the quantity demanded is equal to the quantity supplied. If there is an increase in demand, the price of the iPad will increase. On the other hand, if there is a decrease in demand, the price of the iPad will decrease. E DD SS

6. WHAT ARE SOME OF THE RELATED/ ASSOCIATED PRODUCTS FOR THE IPAD? Related/Associated Products ComplementsSubstitutes

7. COMPLEMENTS iPad apps iPad sleeves

8. SUBSTITUTES VS

9. PROJECT B

10. CONSUMER’S POV: PRICE OF SUBSTITUTES Recent development: Introduction of 3 new tablets by Acer. “Acer Inc., the Taiwanese laptop maker, debuted its first tablet computers today, becoming the latest company to challenge Apple Inc. and its market- leading iPad… the tablets would likely be in the previously stated range of $299 to $699.”

11. DECISIONS Consumers would prefer to get the Acer tablets as they are lower in cost as compared to iPads. Apple Inc.’s iPad- fall in qty ddAcer’s Tablets- rise in qty dd Consumers would go for the brand that would be cheaper. Apple Inc.’s iPad- from $499Acer’s Tablets- from $299 Introduction of the 3 new Acer tablets Apple Inc.'s iPadAcer’s Tablets

12. GRAPHS $ of iPads $ of Acer tablets Quantity of iPadsQuantity of Acer tablets D1D1 D4D4 D2D2 D3D3

13. CONSUMER’S POV: TASTE Recent development: Speculations of iPad 2. “There will be two new cameras, one at the front and one rear facing plus a USB port and an improved display screen… Those rumours turned out to be correct. That device has gone on the dominate the tablet PC market.”

14. DECISIONS The demand for the iPad will decrease. The consumers would chose not to purchase the iPad. There will be a better version of it being produced and sold in the market later on. Make the product more desirable. More of it would be demanded at same price. Added gadgets to make the upcoming iPad 2 a newer and improved version of the iPad.

15. GRAPHS $ of iPads Quantity of iPads D1D1 D2D2

16. PRODUCER’S POV: CHEAPER SUBSTITUTES Recent development: Cheaper devices (Android, Acer tablets) in competition with iPad. “A wider range of cheaper devices with Google features like YouTube and Google Maps will probably erode the iPad’s market dominance…”

17. DECISIONS The producer will produce lesser supply of iPads, to minimise loss. The demand curve of iPad shifts towards the left. This results in the pricing of iPad to decline as there is a surplus. This increase in supply leads to a fall in price of Android Tablet. Increase in quantity demand of Android Tablet. Fall in demand of iPads. Android tablets have a lower cost of production. The supply curve for the Android Tablet will shift towards the right. Android tablets and iPad are in competitive demand. Satisfy the same wants or needs

18. GRAPHS $ of iPads Quantity of iPads D1D1 D2D2 $ of Acer tablets Quantity of Acer Tablets D1D1 S1S1 S1S1 S2S2

19. PRODUCER’S POV: INCREASE IN PRICE OF COMPLEMENTS Recent Development: Increasing price for iPad apps “Mr Pusenjak is the creator of an iPhone game called Doodle Jump. His two-man developer shop has sold 3.5m units at 99 cents (67p) and will price it at $1.99 (£1.35) on the iPad. “Likewise another game called Animatch, where users have to match the heads of cute animals, will be pitched at $1.99 instead of 99 cents… “Since launching 14 months ago, it has sold 2.4m units at 99 cents (67p) each. Mr Castelnuovo will bring the game to the iPad for the higher price of $2.99 (£2).”

20. DECISIONS The price of iPad will increase. Decrease in supply of iPad by producer. Leading to producers producing lesser iPad. This will result in decrease demand for iPad. iPad are complements with iPad apps. There will be a decrease in quantity demand for iPad apps. When there is an increase in the price of iPad apps

21. GRAPHS $ of iPad apps Quantity of iPad apps D1D1 D2D2 $ of iPads Quantity of iPads D1D1 S1S1 S1S1 S2S2

22. BIBLIOGRAPHY Bloomberg. (2010). Acer seeks piece of iPad market with introduction of three tablets devices. Retrieved March 17, 2011, from http://www.bloomberg.com/news/2010-11-18/rim-s-rival-to-ipad-wins- fans-as-corporate-customers-seek-secure-tablets.html BBC. (2010). Apple ‘iPad 2’ rumors grow online. Retrieved March 17, 2011, from http://www.bbc.co.uk/newsbeat/11863568 Bloomberg. (2011). Android tablets gain on Apple iPad in Fourth Quarter. Retrieved March 17, 2011, from http://www.bloomberg.com/news/2011-01-31/android-tablets-gain-on- ipad-in-fourth-quarter-researcher-says.html BBC. (2010). iPad apps to cost more says developers ahead of launch. Retrieved March 17, 2011, from http://news.bbc.co.uk/2/hi/8590300.stm

23. FIN 11S111. AMANDA YONG. AMANDA ONG. DARREN LEONG. RONDA KUNG. TANIA CHEONG.