Apple products too expensive? Not anymore!


The ‘Apple’ brand stands for luxury, reliability and style. When you buy an Apple product, you experience a certain feeling of class and style. You can expect the product to be of high quality. Therefore, many people would like to own an Apple product.

However, there is also a downside related to this brand. You pay a lot of money, if you want to own a MacBook. For instance, you pay €1329 for the cheapest MacBook. In comparison, you can also buy a computer with the same functions for half the price. Most people find a MacBook too expensive. This means that Apple loses out on sales, due to the fact that people cannot afford to buy a computer of their brand. (http://www.nu.nl/tech/3748427/apple-komt-jaar-met-goedkope-imac-en-dure-iwatch.html).

Luckily, Apple has found a solution to the abovementioned problem. Early next year, Apple will launch a new MacBook, which is specifically developed for people who would like to earn a MacBook, but do not have a lot of money to spend. The motive behind this idea is to be able to sell the MacBook to more people (http://www.nu.nl/tech/3748427/apple-komt-jaar-met-goedkope-imac-en-dure-iwatch.html).

What Apple is going to do, is make use of the concept of ‘versioning’. If a company applies the concept of versioning, it offers the same product in different versions to the public. For the company, this is a positive phenomenon because they will be able to offer the same product for different prices based on diverse levels of quality (bron article).

At the moment, Apple already applies versioning to their Ipads. A customer can choose to either buy a small Ipad (the Ipad mini) or a regular Ipad. The smaller Ipad is more affordable for customers who have less money to spend (http://store.apple.com/nl/ipad).

From January on, Apple will also apply the concept of versioning to the MacBook. So, for everyone who would like to own a MacBook, visit Apple’s website regularly!

macbook

Resources

Articles

Shapiro, C., and Varian, H. 1998. Pricing Information.pdf. In Information Rules: A Strategic Guide to the Network Economy. Cambridge, MA: Harvard Business School Press

Websites

http://www.nu.nl/tech/3748427/apple-komt-jaar-met-goedkope-imac-en-dure-iwatch.html

http://store.apple.com/nl/ipad

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3 responses to “Apple products too expensive? Not anymore!”

  1. 419542s says :

    Well, I think Apple’s pricing strategy is an interesting topic. As a market innovation leader and market share giant, the price of Apple product used to be truly expensive than homogeneous products. Fortunately, as the blog says, Apple now is taking “Versioning” strategy to offer the same product in different versions at a lower price to attract new less-affordable customers. Apart from this, personally, I think they also take “Product Differentiation” strategy, which the real case can be iPhone 5S/5C and probably iPad Mini/Air. For the tablet industry, Apple is cutting prices on some of its older tablets in an effort to combat the rising tide of cheap tablets running on Google’s Android operating system, which have gained market share in recent years primarily due to lower price. However, I’m still doubtful whether such cheaper products with weaker functions will harm Apple’s company image. In a report presented by Rubicon consulting in 2008, it is shown that Apple’s loyal customers are evidently high-technology-sophisticated. The reason why those people prefer Apple is that Apple represents technology. Versioning strategy makes the company less innovative-oriented but more market-oriented. Though it has been shown that the sales of Apple keeps on growing these years, the public also critic it for less revolutionary progress on technology innovation. In all, the balance between market and technology should always be a key point for companies like Apple.

  2. xanderguo says :

    Interesting post. However I would like to add the following. First of all, I think you meant to refer to the iMac, rather than Apple’s Macbook devices, which was indeed priced at €1329.

    Also, with the release of the iMac Retina 5K display as announced during the media event last week Oct. 16 (which the source in your post supposedly refers to, http://www.nu.nl/tech/3748427/apple-komt-jaar-met-goedkope-imac-en-dure-iwatch.html), I think we can argue that Apple has not launched an affordable iMac.. seeing that the model is prices at €2629,-. Luckily, however, at the same time they dropped prices from its cheapest, oldest iMac model with €200,-, which kinda makes it more affordable I guess..

    With the release of the iPhone 5c, the company made its first step in launching an affordable model of its high-end smartphone devices. The iPhone 5c is generally considered to be a commercial flop (http://www.ibtimes.com/record-iphone-sales-6-reasons-apple-sold-10-million-how-it-could-have-done-better-1692906; http://bgr.com/2014/02/18/iphone-5c-sales-flop/). The use of plastic material made the device look very unattractive to customers and its marginal price difference with the iPhone 5S convinced the majority of the traditional Apple users to go for latter model.

    However, sales data have indicated that almost 50% of the users that purchased the iPhone 5c were switching from an Android phone (http://www.networkworld.com/article/2175216/smartphones/update–the-great–iphone-5c-is-a-failure–freakout.html). In comparison, 80% of the 5s purchases came from people who had already previously owned an iPhone. By issuing a somewhat more affordable model, Apple attempted to increase sales in emerging markets and target new users.

    While this strategy turned out to be successful, I wonder wether Apple would reach the same effect when applied to its Macbook or iMac devices. While Apple could have presented a more affordable model of the iMac last week, there must be a reason why the company did not do so. Maybe they will do so in the future, but I doubt it.

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  3. navanderhorst says :

    I find this a highly interesting article, as Apples strategic positioning contradicts much of the theory presented to us in the Information Strategy lectures.
    For many years, they have been market leader on the market for tablets with the Ipad without differentiating their product. Although the Ipad was at its introduction most definitely a radical innovation, the Ipad was also designed to appeal to a large share of the potential market, e.g. appealing to the masses instead of serving niches. Nowadays, they have lost a lot of market share, mostly to Android operated tablets, but also to tablets serving niches such as the Amazon Kindle, for people who value a great e-book reading experience. It is true that with the Ipad Mini they provide more options to potential tablet buyers, but don’t you believe this was a bit overdue?

    The only reason I can think of is that Apple wanted to maintain its high prices, to signal high quality and exclusivity to buyers. At the same time, they maintained their high profit margins.
    And Apple seems to hold on to that strategy, as the new Ipad 2 will be 100 euros more expensive than the previous one.

    The market has changed though, the supply of diversified models has exploded. Dozens of new tablets have been introduced in the last year, several at prices under 100 euros, such as the Xoro Pad 722 of 64 euros. The most budget priced Samsung tablet, the Galaxy Tab 3 7.0, is available at 99 euros, whereas the cheapest Ipad, the Ipad mini 1, costs 239 euros.

    Many niches have been identified and served by new entrants, such as Tesco with its Hudle, and producers of other consumer electronics, such as Lenovo, entered the market and consequently the niche markets get served, though not by Apple.

    All in all, I do not support your view that Apples’ products are not that expensive anymore. They do not seem to want to serve the lowest end of the tablet market with their tablet pricing.

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