Apple’s iPhone Price Cut Consumers’ Reaction

orchard apple tree Inc. (orchard apple tree) was established in Cupertino, California on April 1, 1976, busy in producing, exchange and supporting a wide range of face-to-face computers, portable media pseuds, busy retrieves, computer softwargon, computer hardw atomic number 18 and hardware accessories ( apple Store). The beau monde is perpetually known for its strive for delivering new and improved harvest-times and find groundbreaking means of merchandise and strategies of human resource management. Since its inception, the firm has been enjoying a fully grown place among the players in the computer industry with al nigh successful merchandise strategies and innovative products and armed services.The follow is a US based multinational fraternity that foc ingestions on goal and manufacture of consumer electronics and closely related software products. The fellowship was established in Cupertino, California on April 1, 1976, engaged in designing, maturation, sell ing and supporting a wide range of personal computers, portable media players, diligent rings, computer software, computer hardware and hardware accessories. Till 2007, the firm unfastened around 200 retail repositings across five countries and one on telephone line store by means of which hardware and software products are being sold (Retail Stores).In the year 2008, the firm was awarded the best corporate performer organized by the famous business magazine, Business Week. (Best Performer confront 2008). iPhone A revolutionary Invention The alert phone technology make its beginning in the mid 20th century. In the opinion of Robert Conway (Conway), the head of, Global trunk for Mobile Communication (GSM) Association Mobile phones are becoming dead indispensable in the developing macrocosm.It was in Sweden the first unstable service introduced in the form of tuner telephony which was two-way radio procedured in taxis and police cruisers as tested by Swedish police. Then in 1946, first commercial mobile service for use in communication devices was launched by Ameri fucking AT&T and South-western Bell. It was except in 1970s the modern mobile phones were developed, researched and experimented. Thereafter from 1980s, it attracted much and to a greater extent consumers as a result the step-up in the mobile phone industry was tremendous.In 2003 the number of mobile phone substance ab drug users around the world reached to 1. 52 billion. So the mobile phone technology is experiencing fast growth and making greater sophisticated one. The mobile users were as well as benefited from security systems and surveillances. Conway excessively stated that, The technology is a gravitational force that brings into its orbit a huge amount of innovators. The trend in the mobile phones users in the developing nations never showed a negative trend simply instead it always showed a positive trend.For estimating the target grocery store in mobile technologies and services, it is regarded to have proper knowledge regarding consumers live style and their demand because as the consumers passes finished different stages their interest levels, usage patterns, spending habits, and brand preferences for mobile and opposite technological products and services constantly changes. So a exhaustively e. g. to give is iPod a revolutionary model of orchard apple tree bringing nap of digital unisons introduced by the orchard apple tree company in order to exploit maximum home computer marketplace.With this iPod, the company created user friendly product so that the users could download music from the Internet to the player and used technological expertise to improve their product based on consumer needs. The psychoanalyst Richard Jameson, GfK NOP said, apples hi composition proves that it has the magic touch when it comes to product development and marketing. There after orchard apple tree introduced by totally redesigning iPod a wee sized that changed the rules for the entire portable music market named iPod nano. This introduction made no changes in the market for iPod and continued as apples monopoly product.As the competition rose between various devices in market, the iPod nano became the most fashionable product of apple, made a stiff take with many an(prenominal) optional accessories including lanyard headphones. There was a harm- prove in iPod nanos i. e. Its 4 GB rendition was determined at $149, which was $50 below the cost of current version having a similar memory and the 8 GB version was priced $199 get down than current model which resulted its success, so the Apple thought of launching iPhone by combining iPod and mobile phone in order to meet its design and user porthole with consumers and proved to be number one in the market.This gadget was launched on June 29, 2007 and revolutionized the tech-savvy market. It also entered highly volatile cell phone market combining telephony, MP3, web surfing an d video watching. The iPhone was the most await gadget by technology enthusiasts and mainstream media. It wants to reach treetop during holiday moderate of 2007 than the previous years 2121 million units and the way it interacted its consumers succeeded it to reach the top. manifest 1) describes the features of iPhone as it has got2-megapixel camera, headset and audio jacks, an iPod dock, Wi-Fi, stereo Bluetooth and a speakerphone weight is about cxxxv g little heavier than standard mobile phone but visible light than many devices having QWERTY keyboard its thin design has a touch screen that give up users to use on-screen soft keys to dial numbers, enter web addresses and type e-mails and text messages it makes more appealing to the less tech-savvy users because of touch screen that helps for all batting order navigation and data entry from typing messages to dialing phone numbers it can also support digital-music player that syncs with iTunes the Apples sectionmail system provides ocular interface that allow users to pick messages as the wants to listen finally it has constitutive(a) rechargeable battery that allow users to talk up to eight hours and standby time up to 250 hours but browser sessions on General bundle Radio Service (GPRS), depletes its battery rapidly, however if the iPhone is used as an iPod music player by users its life would be shortened.Apple iPhone also possesses droll features that perform its most functions with single contract and able to standby broad time. It also has supportive functions of like multi tasking where the user can read a web page while downloading e-mail in the background eitherplace Wi-Fi or Enhanced Data rates for GSM Evolution (EDGE). Here interface is unique with large multi-touch display and innovative new software that allows tyrannical everything by finger on touch screen. It also combined the features of multiplex tools into one handheld device to appear as the grid of vivid icons, with th e four chief functionsPhone, Mail, Safari web browser and iPodin a separate strip along the bottom.These all sophisticated features made iPhone a much sought after device and enjoyed a top view in the market (Exhibit 2) in spite of its a inflicte competition from the top mobile players having overlapping features. The combined features of iPod music and video player with mobile telephone, the iPhone was available done AT&T Wireless Services. But it was locked by the service provider AT&T in its two-year service agreement. The consumers in India could non use iPhones in their home town even off they have purchased from US or UK, because of reloading software. The demand for iPhones rated greater than any other product of Apple. In the opinion of iSuppli, the best-selling handset among the 2, 70,000 smart phones and have phones sold to US consumers during the beginning of month in July 2007 is iPhone.Even market analyst pointed that Apple created a strong brand and customer marke tplace analysts pointed out that Apple had created a strong brand and customer homage by succeeding(a) a skimming price dodge and customers are ready to purchase highly priced products now and in future with equanimity. iPhone Banking on Pricing The iphone entered the market a month with stock of 3, 00,000 and a manufacturing skill of 1, 50,000. Their version 8 GB was available for $399 in the US through Apples retail and online stores and AT&T retail stores but 4 GB version were sold till the supplies lasted. To make it affordable to customers, Apple launched more iPhones during holiday seasons.The launching of Apple iPod in October 2001 is a success story which was priced at$349 (as of 2007) for 160 GB land than a MP3 player and remained democratic by gaining high demand till date though on that point was a price rise in 2005. Later another product named ipod shuffle with 512 MB, was introduced having unique appeal with a price at $99 and $149 for 1 GB. The analyst at Jupiter Research Joe Wilcox analyzed that the lower-priced iPod is dampen and tract of Apples new mass-market strategy, and before kinfolk 2007 it wanted its one-millionth piece to be sold. Similar to the price get along of the iPod, the Apple after two months finding to cut the price of 8 GB storage iPhone from $599 to $399 on September 5, 2007 showed a good response from many quarters.In accordance to Steve Wozniak, Cofounder of Apple Computers, remarked, Nobody counters a product to drop that much in price in such a short time and criticized Steve Jobs (Jobs) the chief administrator of Apple Inc. , for his finding to price cut of iPhone by $200 inwardly 68 days of its launch. He also said that Jobs has received earn on the companys website and complaints from hundreds of customers acknowledging that Apple has disappointed some of its customers through price cut of iPhones 8-gigabyte model. According to Apple executives the plan for price cut was done long ago and hoped it woul d keep the iPhones pricing in line with its new iPod Touch. But this price cut suggested that Apple which long lived in a pricing bubble insulated from other personal computer makers was not different from the brutal pressures of the cellular phone business.Van Baker, an industry analyst at Gartner Group said that. My suspicion is that they got to 7, 50,000 really quickly, and then it started to let up down. This price cut dropped down the share price of Apple by 5% and stood at $136. 76 on September 5, 2007. Protests against Apple went to the extent of consumers filing cases against the company. Dongmei Li (Li) a customer of Apple filed a case on September 24, 2007 in the US District Court, against the company for violating price discrimination laws claiming that it should stop selling the $499 4 GB model. Li had waited for the launch of iPhone and then found that the store only had 4 GB iPhones in stock and had subsequently purchased one.Much to her charging, Apple then trimmed the price of the 8 GB iPhone and stopped selling the 4 GB model. 100s of customers like Li who paid the full price did not expect the sudden reduction and complained bitterly. Apple, however, had no financial reason to cut prices, but to gain more customers during the holiday season. By the end of September 2007, Apple had sold 1. 4 million iPhones and also launched the device in the UK, Germany, and France. In Asia and Australia iPhone was scheduled to be released during 2008 (Exhibit 3). While the company was dealing with the price cut controversy, its competitors were working on developing models that could compete with the iPhone.Apples competitor LG was working on iPhone killers, its new product Prada phone KE850 will attempt to offer unvanquishable combinations of style, features and price. It costs ?300 ($614). Nokia with its N800 was already a tough competitor to Apples iPhone with a niche market. The iPhone price cut caught the media attention in a bragging(a) way and rais ed skepticisms about the devices continued success. However, there are also some advantages to Apples price cut (Exhibit 5). The price cut has raised the question as to whether Apple needed to stimulate demand as it is the most valued gadget in history, by reducing the price drastically soon after its release. Experts observe that Apple is switching from a price-skimming strategy to market penetration strategy.They felt that it would be able to expand market share more rapidly and competitive barriers could be strengthened through the change in strategy (IPod Factors of Success). In spite of its popularity, the iPhone is said to tolerate a few shortcomings. Apple iPhone lacks some features like user-changeable battery, voice dialing, voice recording, video recording, instant messaging, Multimedia Messaging Service (MMS), copy and cattle farm and common Bluetooth file transfer OBject EXchange (OBEX). It is hard to use the on-screen keyboard because of its small sized surface. Furt her, the iPhone is available only through AT&T service provider and not through third parties. It comes with a two-year service agreement in the US.In countries like India even if iPhones are purchased customers cannot use them, as they have to reload the software to use it. some(prenominal) users opine that though it boasts of a very clear and sharp screen, Apples user interface is finger driven and the screen rapidly becomes covered in unsightly fingerprints (Ziegler). Apart from these limitations, Apple had to tackle the consequent criticism following the price cut of the iPhone Stephen Hoch, marketing professor at Wharton University, observed, The reversal on Apples iPhone may have been more dramatic because the company has marketed itself as consumer friendly. multitude have strong positive feelings about Apple. They feel they are part of the Apple family. When Jobs announced the price decrease, people felt betrayed.According to Wharton cogency and analysts, the iPhone episo de reveals the perils of pricing in a marketplace where constant innovation, robustious competition and globalization are changing the rules of the game (Smart pricing boosts revenue). prank Zhang, marketing professor at Wharton University, said, The product lifecycle is short and the market is locomote quickly. You dont have a lot of time to learn from your mistakes. You have to price the product right the first time. Jobs, while speaking to reporters, defended his move stating that his price cut was directed to attract new customers in the holiday season with more aggressive pricing. He added that it benefits both Apple and every iPhone user to get as many new customers as likely in the iPhone tent.Jobs observed, even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our betimes iPhone customers as we aggressively go after new ones with a lower price. Our early customer s trusted us, and we must live up to that trust with our actions in moments like these. Greg Joswiak, Apples worldwide vice president of iPod and iPhone product marketing, also agree with Jobs and observed that there was no better time for the price cut and he also added that it was that time of the year that was most important and an opportunity to come into the holidays with a fresh and aggressive product line (Ziegler). get CitedAaker, Kumar, Day George, and Kumar V. Marketing Research. 2nd Edition, John Wiley Sons, Inc., 2000Apple Retail Store, upcountry Design of Apple Retail Store in the US, Apple Inc . Apple Inc. 16 June 2009 www.apple.com/retail .Apple Store, Store information Apple Inc . Apple Inc. 17 June 2009 http//store.apple.com/us .Apple Changes Strategies, Apple Changes Strategies for iPhone and iPode Touch Devices, Apple Inc . Apple Inc. 16 June 2009 www.enbite.com/apple-changes-strategies-for-iphone-and-ipode-touch-devices/ . Best Performer Award 2008, Best Perf ormer Award 2008. 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