Premium Essay

Price Skimming, Apple Inc

In: Business and Management

Submitted By phenzy
Words 695
Pages 3
Price Skimming is defined as a strategy in which the price of a product is set relatively high at the introductory stage and gradually lowered over time (Cateora et. al. 2009).. The objective of this strategy is to make people who strongly desire the product pay a premium price when the product is first released into the market. When the demand of the first layer of customers is saturated, the price is reduced in order to appeal to the next layer of customers that are increasingly price sensitive. Hence, the name of this strategy is derived from skimming successive customer segments referred to as “cream” layers.

According to Kumar (2007), Firms can capitalise on the international demand for their products when they are the only seller of a new or innovative product, or when the brand has exceptional features, symbolic appeal and use price skimming to maximise profit, till competition forces the firm to price their products lower. It is usually oriented towards a market that is willing to pay high premium prices for the special offering. Skimming strategies are usually employed with premium brands and works in favour of the branding as well, as the initial high prices can possibly build a high-quality image or position their product as one that is premium and luxury tiered. Especially in the technological sector where large amounts of money has been invested into the research and development of a innovative product, skimming allows the high set-up cost to be offset within a short amount of time.

Apple Inc is one such brand within the technological sector that employs a price skimming strategy for profit maximization in the international market. Apple has positioned and branded themselves as a mid ranged premium lifestyle product that has won the masses and captured a large market share globally. Apple products appeal largely to the mass consumer market as

Similar Documents

Premium Essay

Skimming

...pricing strategies 2 1.2 Introduction to Apple Incorporation 3 2. Skimming Price Strategy 3 2.1 What is Skimming Price Strategy? 3 2.2 When to use Skimming Price Strategy? 4 2.3 Benefits of Skimming Price Strategy? 5 3. Apple’s iPhone Strategy 6 3.1 Market Segment 7 3.2 Product Life Cycle and Elasticity of Demand 7 3.3 Brand Loyalty 9 3.4 Sales and revenues 9 4. Conclusion 11 5. References 11 1. Introduction 2.1 Introduction to pricing strategies Pricing strategy is the pursuit of identifying the optimum price for a product. This strategy is combined with the other marketing principles known as the four P's (product, place, price, and promotion) to position its brand in the market. Pricing strategy is perhaps the most critical components of the marketing mix as it is the only P’s which focused on generating revenue and ultimately profit for the company. The remaining 3p’s are the variable cost for the organization because it costs to design and produce a product; it costs to distribute a product and costs to promote it. Companies may use a variety of pricing strategies, depending on their own unique marketing goals and objectives. Some of the pricing strategies are Penetration Pricing Strategy and Skimming Pricing Strategy. A Penetration Pricing Strategy is designed to capture market share by entering the market with a low price relative to the competition to attract buyers. On the other hand, Skimming Pricing Strategy is aimed to gain high...

Words: 2420 - Pages: 10

Premium Essay

Unit 4 Project

...Application of Theories Company Researched: Apple Inc. Theory: The issue being addressed that gave rise to employing these theories The article that was published in CBS news claims that Apple has distinct culture. Apple Inc. is rapidly moving towards employee empowerment. Steve Jobs taught his company to think differently than everyone else. Apple Inc encourages their employees to stand out. Unlike other companies, Apple knows that having few high quality products and marketing them effectively, is better than having many low quality products. Apple is taking the approach of industrial design, hardware design, and high quality operating systems (Tobak, 2011). Because of Apples beliefs, the company asks each of its employees to make a difference personally within the company. Innovation is the key to creating a successful company. Employees with Apple Inc must innovate in technology as well as marketing. Apple Inc understands that by empowering the employees to think outside the box, it creates a stronger foundation for the company to grow on. Because Apple Inc has empowered their employees to make such a difference, Apple has been able to successfully come up with new innovative products on a consistent basis. Some of the products include but are not limited to the iPod, iPhone, iPad, and many more. Apple has also been very successful in their marketing strategies, unlike many of their competitors. Today Apple is one of the world’s leaders in Electronics...

Words: 814 - Pages: 4

Premium Essay

Pricing Iphones and Similar Devices

...Pricing Policies – Pricing iPhones and Similar Devices AApple Inc. (Macintosh), established on January 3, 1977, plans, fabricates and markets versatile correspondence and media gadgets, PCs, and convenient computerized music players, and offers an assortment of related programming, administrations, peripherals, organizing arrangements, and outsider advanced substance and applications. The Company's items and administrations incorporate iPhone, iPad, Mac, iPod, Apple TV, an arrangement of shopper and expert programming applications, the iOS and OS X working frameworks, iCloud, and a mixture of extra, administration and bolster offerings. In March 2013, the Company gained a Silicon Valley startup, WiFiSlam, which makes mapping applications for PDAs. Compelling July 19, 2013, Apple Inc obtained Locationary Inc. Powerful July 20, 2013, Apple Inc obtained Hopstop.com Inc. Powerful August 28, 2013, Apple Inc obtained AlgoTrim AB, a Malmo-based designer of prepackaged programming. In November 2013, Apple Inc purchased PrimeSense Ltd. Viable December 2, 2013, Apple Inc gained Topsy Labs Inc. In February 2014, Apple Inc gained Burstly Inc. Viable April 3, 2014, Apple Inc gained Novauris Technologies Ltd. Compelling August 1, 2014, Apple obtained Beats Electronics LLC (Beats). DIFERENTIATION: Apple endeavors to build business interest for its items through separation, which involves making its items special and alluring to shoppers. The organization's items have dependably been intended...

Words: 1320 - Pages: 6

Premium Essay

Marketing Mix Paper

...interchangeable with the phrase “marketing mix”). Culliton’s analogy was a perfect way to describe the components a marketing plan. The ingredients of a marketing mix can be thought as the ingredients of a cake; all of the ingredients are necessary for the cake to be tasty, However, if too much or too less of some ingredient(s) is/are included, then the cake will be ruined. One can tweak the formula for the cake specifically to enhance the taste of the cake in certain aspects (sweetness, flavor, frosting, etc.). This same concept can be applied directly into marketing; the same actions that one can take and the results in the cake scenario directly correlate to the results of the marketing plan. The four P’s of the marketing mix are price, place, product, and promotion. Each component has its importance, and it is utterly important that all of the components are given equal and abundant importance. The customer is the most important part of the marketing strategy but it isn’t included in the marketing mix because all of the components are geared towards the target that is the person. The product component of the marketing mix focuses on tangible and intangible goods and services respectively that are produced by a company. The product component of the marketing mix incorporates the actual product or service, the customer service over it such as warranty, repairs, the usefulness and use of the product, the...

Words: 1621 - Pages: 7

Premium Essay

Marketing Mix

...MKT/421 University of Phoenix Marketing Mix Marketing mix is when the right product is put in the right place, at the right time, and at the right price. When an organization or company creates a product that attracts individuals and put it on sale or offer it to individuals it should may be place at a price in which it matches the value of the product and is worth what the consumers or individuals get out of it. The 4 Ps of marketing and the marketing mix are sometimes used as synonyms for one another because they are close to being the same thing. The 4 Ps of marketing mix are product, place, price, and promotion. Each component of the marketing mix has some type of importance and are given an equal abundance of importance. In the marketing mix the customer is the most important piece of the marketing strategy however it is not included because all the components are aimed toward the target. A company that I think would represent for a good marketing mix is Apple. They are about pleasing their customers and making sure that they are aware of the products that they have to offer. Prices are adjusted to make sure that things are affordable and sometimes to bring in new customers. Surveys are completed at times to see what it is that the customer wants and what satisfies the customer. The customers have a say so in the product and the company value their opinion. The product- The product is...

Words: 1380 - Pages: 6

Premium Essay

Apples Marketing Policy

...EXECUTIVE SUMMARY In this report, there will be an in-depth analysis of the International marketing strategies that Apple Inc. currently does in order to promote their products. The key strategies will be discussed and explained further in more clarity. There will an investigation into any problems that Apple may face currently as well as potentially. Finally, there will be recommendations in terms of their marketing strategies will be given. Firstly, there will be an introduction into the company with clear background information. This will provide an insight into the formation of Apple Inc. and the mastermind behind Apple’s successful marketing strategies. Information on the key products that Apple produces and sells will also be given. The report will also look at the marketing mix of Apple, also known as the four P’s: • Product • Price • Place (distribution) • Promotion The 4p’s will be discussed in detail and there will be specific analysis on each of the core elements in the marketing mix. Therefore, the importance of having quality products will be explained. Also, the reasons why price plays a pivotal role in terms of Apple’s international marketing will be specified. Apple’s distribution policies will be examined and explained; as well as the promotion strategies that are used by Apple to enhance its global appeal. The report will also provide a SWOT analysis; this is a strategic method that will be used in order to evaluate Apple’s strengths...

Words: 3798 - Pages: 16

Premium Essay

Apple Economics

...Apple Inc University of Redlands Abstract Apple Inc (previously known as Apple Computers Inc) is a market leader and an iconic American company. They provide an interesting example of micro-economics as they operate in a competitive industry – high tech consumer electronics, but they have differentiated themselves so well, they operate almost like a monopoly. This paper will explore the uniqueness of Apple that makes them an economical oddity. Company Overview Apple Inc. (originally Apple Computers Inc.) was formed in 1977 and is a $500 billion company, employing 75,000 people worldwide. It sells consumer electronic products, software and digital content. Its primary product lines are the Macintosh, iPod, iPhone and the iPad. It is, by far, the largest company in the world in terms of market capitalization and is more than twice the size of Wal-Mart. This sheer size makes Apple an important to our component financial composition. Many people own shares of Apple without even realizing it, as most pension funds and stock mutual funds have a significant amount of Apple stock. It’s also an important company in terms of technology that touches our lives. Niche and Following Apple products have a fiercely loyal following. Many of its customers wouldn't even consider a competing product. There have been a series of bugs and technical oversights in its products and software. Who could forget the famous antenna snafu? Despite these issues, Apple's customer base...

Words: 1270 - Pages: 6

Premium Essay

Unit 3 P

...troduction For the purpose of this presentation, I have chosen to use Apple Inc and Tesco PLC as case studies. During this presentation, I will explain what marketing is as well as how it can affect Apple and Tesco so that I can work towards the P1 of Unit 3 in Business Studies which is called 'Marketing'. Pricing Strategies Firms think very carefully about the price to charge for their products. There are a number of factors to take into account when reaching a pricing decision: Customers - Competitors - Costs. There are times when businesses are willing to set the price of a product below unit cost. They use this loss leader strategy to gain sales and market share. An example of the 'loss leader' strategy is the 'Bugatti Veyron' supercar. The car is made by the VW group and uses 1000 BHP to reach speeds of up to 253 mph. The car sells for around £1 million. The technology used in the car is so advanced that the VW group spend approxiamately £7.5 million on building just one car netting them an estimated loss of £6.25 million on each car they sell. Pricing New Products A business can choose between two pricing tactics when launching a new product: - Penetration pricing means setting a relatively low price to boost sales. It is often used when a new product is launched, or if the firm’s main objective is growth. - Price skimming means setting a relatively high price to boost profits. It is often used by well-known businesses launching new...

Words: 1885 - Pages: 8

Premium Essay

A Research Proposal on the Impact of Marketing in Consumer Behavior in Apple Mobile Phone in Uk.

...A research proposal on The impact of marketing In Consumer Behavior in Apple mobile phone in UK. Course work B Name: SID: WORD COUNT: Name: SID: WORD COUNT: Contents 1.0 Introduction 3 1.1 Research aim and objectives 3 1.2 Research Questions 4 2.0 Literature Review 4 2.1 Marketing Strategy 4 2.2 Marketing Plan 4 2.3 Marketing Mix 5 2.4 Differentiation and Segmentation of market 6 2.5 Generic strategy 6 2.6 Skimming and Penetration 7 2.7 Consumer Behavior 7 2.8 Theoretical Framework 8 3.0 Research Methodology 8 3.1 Framework-Attitude Theory 8 3.2 Research Approach 9 3.3 Data Collection 9 3.4 Sampling Techniques 9 3.5 Accessibility Issues 10 3.6 Ethical Consideration 10 3.7 Data Analysis 10 3.8 Limitations of the Study 11 4.0 Timetables 12 References 13 1.0 Introduction Marketing has a large influence over the consumer buying patterns as marketing motivate people to buy their product so that they can do business. Marketing identify the target market and the potential customer of that target market. It is a key source for customer acquirement as the consumer are whom generate profit for the organization. Apple follow a competitive marketing strategy as they hold a large market share in the world’s mobile phone. Apple become a giant in household technology because of their unique marketing strategy. Apple Inc. follow exclusivity technique in its marketing strategy which make them the giant in mobile phone industry...

Words: 2890 - Pages: 12

Premium Essay

Marketing

...APPLE  ANALYSIS  REPORT                 TESLA  GROUP   Table of Contents PART I: Introduction .............................................................................................................3 PECTS analysis........................................................................................................3-4 Strategy (Step-segmentation, targeting, positioning) analysis) ...............................4-5 Competitor Analysis.................................................................................................5-6 SWOT Analysis........................................................................................................6-8 Product Analysis.......................................................................................................8 Promotion/advertising Analysis................................................................................8-9 Pricing Analysis........................................................................................................9 PART II: Recommendation I: Focus On Product Quality......................................................10-11 Recommendation II: Expand International Trade Market......................................11-12 Recommendation III: Design and Innovation.........................................................12 Work cited...............................................................................................................13...

Words: 3130 - Pages: 13

Premium Essay

Marketing Mix

...Marketing Mix Project THE APPLE IPAD By MeelieB June 16, 2012 INTRODUCTION Technology in its respect has made a huge impact in today’s society. With technological products ranging from computers, kindles, mp3 players and handhelds, at least two of these products can be found in every home in the United States. These products have developed into products of necessity in which serve vital functions for everyday life. Functions such as research on papers such as this, performing business transactions, and providing reading material and entertainment for which people can enjoy are all performed by these technological products thereby cementing their importance in today’s society. With these products come companies that are working hard to outdo the other, creating products that go above and beyond to meet the needs of consumers. Apple, technological giant, has done this by creating a product which has the same function of a computer but is easily handled like a mobile phone. This product created is the iPad, and since its creation it has made its mark within the technological world. Nevertheless, in this project I will analyze the product, iPad, going into detail the marketing mix implemented for the product. I will analyze the product itself, place, promotion and price of the product. PRODUCT SECTION Positioning The iPad is a consumer product that satisfies consumers need for entertainment and mobility. Apple positions iPad as a product that caters to individuals that...

Words: 2040 - Pages: 9

Free Essay

Apple and Google

...Apple V/S Google Apple and Google differ significantly in what they sell (Apple’s innovative products Vs. Google‟s Technological Services) and their revenue generation models (Price discrimination and skimming of Apple vs. Ad based revenue of Google). Hence we are not sure whether we are comparing Apple with apples here! Nevertheless one interesting and meaningful comparison is given by the Market cap of the two technology firms. In May 2010, Apple Inc. reached $222 billion in market cap surpassing Microsoft to become the most valuable technological company in the world. At present the market cap of Apple is even more astonishing at $290* billion in comparison with the $187* billion of Google Inc. and $217* billion of Microsoft Corporation. Yet Google cannot be underestimated with regard to the power it wields on the internet. It saves search queries associated with your Internet Protocol (IP) address for nine months. Thus most of the suggestions Google makes are the ones that you are actually searching for. Similar things could be said about most of the Google ser-vices. Needless to say Google‟s Search algorithm is still one of the best and widely used by all users across the world. But Google has a free to use image because of nature of the open source applications such as Android, Chrome OS, etc. Thus most of its revenues are Ad based and hence does not have the premium pricing ad-vantage of Apple. On the plus side, Google services are extensively used across the globe...

Words: 275 - Pages: 2

Premium Essay

Apple Marketing Mix

...Apple Marketing Mix Apple, Inc originated from the friendship and mutual interests of Steve Wozniak and Steve Jobs. The Two collaborated in the development of the “Apple I in the early 1970s. The Apple I was a step ahead of most computers of the time featuring a use of aTV as a display system and a cassette interface for recording programs. After obtaining financing for the development of Apple II, the Apple Computer Company was formed in 1970.As the growth of home computer use grew, Apple grew with it. In 1980 the company issued its initial public offering of investment stock. Apple next introduced the MacIntosh Computer in 1983 during the Super Bowl. The computers desktop publishing features provided the foundation for future innovations that have become standard for the company. Today Apple, Inc has more than 33,000 employees and revenues exceeding 42 million dollars. Product * Portable Computers – including Mac products such as Mac Book Pro, iMac, MacBook Air, Mac Mini, Xserve * Servers – including Xserve, Xsan, MacOS X Ser, MobleMe. * Accessories – including Magic Mouse, Keyboard, Led Cinema Display. * Wi-Fi Based Stations - including Airport Express, Airport Extreme, Time Capsule. * Developer – including Developer Connection, Mac Program, iPhone Program. * iPod – including iPod Shuffle, iPod Nano, iPod Classic. * iPhone – including iPhone3GS, iPhone4s, iPad, iPad2. * iTunes – including movies, TV shows, audio books, games. * Peripheral products – including...

Words: 980 - Pages: 4

Premium Essay

Apple Marketing Mix

...Apple Marketing Mix Introduction Apple, Inc originated from the friendship and mutual interests of Steve Wozniak and Steve Jobs. The Two collaborated in the development of the “Apple I in the early 1970s. The Apple I was a step ahead of most computers of the time featuring a use of aTV as a display system and a cassette interface for recording programs. Would you like to take a lesson on the marketing mix? After obtaining financing for the development of Apple II, the Apple Computer Company was formed in 1970.As the growth of home computer use grew, Apple grew with it. In 1980 the company issued its initial public offering of investment stock. Apple next introduced the MacIntosh Computer in 1983 during the Super Bowl. The computers desktop publishing features provided the foundation for future innovations that have become standard for the company. Today Apple, Inc has more than 33,000 employees and revenues exceeding 42 million dollars. Product • Portable Computers – including Mac products such as Mac Book Pro, iMac, MacBook Air, Mac Mini, Xserve • Servers – including Xserve, Xsan, MacOS X Ser, MobleMe. • Accessories – including MagicMouse, Keyboard, Led Cinema Display. • Wi-fi Based Stations - including Airport Express, Airport Extreme, Time Capsule. • Developer – including Developer Connection, Mac Program, iPhone Program. • iPod – including iPod Shuffle, iPod Nano, ipod Classic. • iPhone – including iPhone5s,5c,4s, iPad. • iTunes – including movies, TV shows, audio...

Words: 1000 - Pages: 4

Premium Essay

Marketing Mix Paper

...through which goods are sought and purchase. At various point in the life cycle of a product, various marketing strategies become important. In early stages, advertising is essential to create product knowledge, while in later stage when the majority of potential consumers would have already bought the product, owner prices may be necessary to enhance further sales. Place A place is not where a business is located but where customers are. For a retailer like Apple Incorporated an ideal place is the global economy. Here place means the genuine physical position of the customer in a geographic area or along a distribution channel. Place is about product flow ensuring that product is disperse to the customer or consumer no matter the location throughout the marketplace. Price Price is a significant element of the marketing mix. The costs of placing a product on the market represents the base price, for if price fall below the cost, the producer ultimately will incur a loss. Most organizations tend to keep the prices of products within a price range to meet the means of the consumers but at the same time to make a profit. When considering price setting managers must estimate customers and consumers reactions. Planning is essential when making a decision on different targeting a specific market when developing a market plan. Promotion Promotion is apprehensive with telling the target market or other in the channel of distributing about the right...

Words: 1373 - Pages: 6