Over the last few years Apple, with its successful iPod, iPhone and iPad products, has become a leader in consumer product innovation and marketing. In particular, through the use of effective pricing strategies they have been quite successful at holding their competitors at bay.
As Apple introduces new products, each one offering improved features and innovations, previous models continue to co-exist, but are sold at lower prices. As a marketing leader, this allows them assure that each product category includes a model for everyone at a corresponding price point, which in some cases approaches 0. In this way they ensure that no pricing umbrella is left open that would then allow other companies to flood the market with lower-priced substitutes.
The following chart from US tech enthusiast Ryan Jones nicely demonstrates this practice for both the iPhone and iPod.
Graph by Ryan Jones
It also show that the iPad (first released in April 2010) currently covers the $399-$829 (€409-€814) price points, suggesting that they will soon try to occupy the sub-$399 (€409) market as well.
This could be done in several different ways:
- Selling an older product at a lower price
- Selling a new product with a lower price (i.e. a smaller iPad)
- Offering subsidies via a channel partner (i.e. mobile service provider)
In the end, Apple will probably choose a combination of product pricing strategies to ensure that the iPad continues to dominate the tablet product category.
Tags: iPad, Pricing strategy, Pricing umbrella
October 30, 2012 at 17:15 |
[...] In a recent article we looked at how a leading technology company like Apple can use strategic pricing to stem the competition. [...]