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Published byMadeleine Miles Modified over 9 years ago
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jesslyn shuling jiexin wenchao
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Brief introduction of iPad iPad is originated in January 27, 2010 A line of tablet computers designed, developed and marketed by Apple Inc Platform for audio-visual media including movies, music Runs the same operating system as the iPod Touch and iPhone Can run its own applications as well as iPhone applications.
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How Price of iPad is determined? Determined by: Consumers’ demand Cost of production Income of targeted consumers Finally, the price of iPad was determined at 499 US dollars.
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Consumer’s demand An increase in demand would raise the equilibrium price and so, Apple Inc. would choose to increase the price of an iPad to gain more profits. ta E2 P2 Q2 D2 Price of iPad S1 P1 Q1 Quantity of iPad
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Cost of production Increase in Cost of Production (COP) - wages, rent, interest, price of a raw material Holding the price of the good constant, a higher unit cost of production would result in a lower profit per unit. Hence, when COP of iPad increase, the producer of iPad will increase the price of iPad to maintain their profit.
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Income of targeted consumers As iPad is a normal good, income of consumers would be a deciding factor. An increase in income leads to an increase in the demand of normal goods. When demand of iPad increases, the producers would increase the price of iPad to maximize profits.
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Products associated to iPad Complements: iPad casing iPad screen protector Subsitutes: HP Slate Dell Streak
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How these products affect the demand/quantity demanded(Qd) of iPad? Complements: Casing and screen protector. A fall in their price increases Qd of these goods thus an increase in the demand for iPad and vice versa. Substitutes: A fall in price of substitutes will lead to a rise in Qd for those goods but a fall in the demand of iPad and vice versa.
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How recent developments would affect your marketing and pricing decisions for the iPad?
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Producer Factor 1: Trend of tablet PCs IIncreased competition in the tablet PC market NNeed a competitive edge over its rival EE.g: Potential substitutes - HTC Flyer and HP slate EEmergence of substitutes would make the PED for iPad more elastic DDemand for other substitutes likely to be responsive to the change in price of iPad.
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Factor 2: Technology R&D HHigh degree of R&D -> more efficient method of production LLower cost of production of iPad DDecreases selling price of iPad MMore consumers rationed into the market PProfitability of each iPad would still increase TTotal revenue increases
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Consumer Factor 1: Taste and preferences IImprovement in software TThe launch of iPhone gained commercial success for Apple AApple known to deliver products with consistent quality LLoyal patrons due to easily adaptable hardware TThus iPad was highly anticipated and demanded PPED of iPad would be relatively inelastic IIncrease in profits as higher dollar votes are casted
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Factor 2: Consumer income CConsumers’ growing income with improvement in world’s economy PPurchasing power of Singaporean consumers increases TThe iPad and iPad 2 are normal goods (YED > 1) IIncrease in income => more than proportionate change in quantity demanded for iPads. IIncome increases, sales of iPad increase
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Bibliography Marketing Mix. (2002 - 2010). Retrieved March 18, 2011, from NetMBA Business Knowledge center: http://netmba.com/marketing/mix/http://netmba.com/marketing/mix/ iPad - Wikipedia, the free encyclopedia. (Last modified: March 18, 2011). Retrieved March 18, 2011, from Wikipedia: http://en.wikipedia.org/wiki/Ipad http://mashable.com/2010/01/27/9-upcoming-tablet-alternatives-to- the-apple-ipad/ http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_6 45612.html MJC economics notes.
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