Recent Developments and How They Affect Marketing and Pricing Decisions By: Dini, Julene, Lengjen, Yoojin, Bryan.

The iPadRecent Developments and How They

Affect Marketing and Pricing Decisions

By: Dini, Julene, Lengjen, Yoojin, Bryan

1. Effect of Rival Goods on Demand of iPads

2. Effect of Pricing on Quantity of iPads Demanded

3. Effect of Cost of Production on Supply of iPads

4. Effect of Pricing on Quantity of iPads Supplied

Report Outline

Effect of Rival Goods on Demand of iPads

New rival goods include Blackberry Playbook, Samsung Galaxy Tab and LG Android Tablet


Blackberry Playbook Samsung Galaxy Tab

Consumers may turn to these similar goods as substitutes to the iPad

This is especially so if these similar goods have similar prices or even lower prices


A change in the consumers’ choice of good would affect the demand for iPads

Thus, it is important to market the iPad in a way that it is significantly better than rivals


How Pricing Affects Quantity Demanded

Higher price = Lower Quantity Demanded This is due to consumers being rationed out

of the market


Consumers choose cheaper rival products with functions similar to the iPad

One example would be Acer’s new Android-powered tablet


Therefore, to increase the quantity of iPads demanded, the price of the iPad must be lowered.


How Cost of Production Affects Supply

With increased cost of production, supply of iPads decrease

With an increased cost of production, the iPad becomes less profitable

Suppliers, trying to maximise profits, would choose to supply less iPads


Cost of production includes cost of commodities such as metals or plastics

The iPad requires these commodities for production and manufacturing

As these rise in price, the cost of producing and manufacturing the iPads grows as well


Cost of production also includes wages for workers

Wages of workers have been increasing In China, wages of skilled workers are seen

to grow at rates of up to 10% annually As the supplier has to pay more to workers

who manufacture the iPad, the cost of production thereby increases


In conclusion, in order to increase the supply of iPads in the market, we have to find cheaper alternatives to alleviate rising costs of production

Price of iPads can also be increased to increase the profits of suppliers and thus making them more willing to supply more


How Price of iPad Affects Quantity of iPad Supplied

Suppliers aim to maximise profits Profits = Total Revenue – Total Expenses


By increasing the price of iPads, suppliers gain more profit

Suppliers would be more willing to sell, thus increasing supply


Suppliers would also choose to supply iPads instead of other rival goods

For example, suppliers would choose to sell the more expensive iPad over cheaper netbooks


Therefore, in order to increase supply of iPads in the market, price of iPads has to be increased


Conclusion

The iPad holds a large amount of the tablet PC market share

In 2010, the iPad enjoyed up to 90% market share

Conclusion

However, with competitors such as the rival Android platform of tablets, Apple may suffer

At the end of 2010, the iPad’s share of the market dropped to 75%

Conclusion

In 2011, with the introduction of the iPad 2, demand for the iPad skyrocketed again

Rumours estimate the sales to be as much as 1 million on the opening weekend

Conclusion

The iPad has competitors but is in high demand

This is because the iPad has set itself apart from the typical tablet PC

Even so, the iPad’s demand remains price elastic

Conclusion

In order to increase sales, the iPad has to continue to be the most innovative tablet PC in the market

This would, in turn, increase supply of the iPad as the price function increases the price of iPads as demand increases

Conclusion

Recent Developments and How They Affect Marketing and Pricing Decisions By: Dini, Julene, Lengjen, Yoojin, Bryan.

Documents

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market share slide

supply of ipads

quantity of ipads

opening weekend slide