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Product Development and Pricing Strategies

Paper Type: Free Essay Subject: Marketing
Wordcount: 991 words Published: 1st Jan 2015

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Product Development and Pricing Strategies

Businesses must remain competitive at all times and ensure they have a sustained growth and development. Through product development a business has competitive advantage over the others given that customers will tend to purchase better developed products (Baker, 1992). In addition the company’s customers must be attracted and retained through providing better products. This means that customers derive their satisfaction from the products and this trigger the need for the product and thus purchase more of it (Baker, 1992). This paper tackles product development and pricing strategies in Apple Company.

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Technology has become very competitive today with very many companies investing in it. Apple’s hardware products include iPhone, iPod, and the ipad whereas software products include Mac OSX operating system. These products have been selected by the customers due to them being user friendly and are preferred by many. The Apple Inc has become revolutionary with its products from the time when it was incepted in 1976 (Linzmayer, 1999). It dealt with personal computers during its first years and has diversified to other products such as iphones and software. These products have also been upgraded to suit the markets as appropriate. The pc was the upgrade to a laptop then to a notebook computer to suit the customers’ needs.

The company has also continued to discontinue products while others have been superseded by improved versions. Products such as Apple I, to Apple III plus that has been overtaken by time, events, and customers needs. Other iPod models such as the iPod mini have been replaced by the iPod nano. All these moves are in line to ensure product development in the company is achieved so as to remain at a competitive advantage (Linzmayer, 1999).

The company also upgrades technology from 3G to 4G to ensure the products are likeable and are in line with other companies that apple competes with. Apple Inc has divided the markets into categories which are workable; they include homes, education, large businesses, small businesses, and government (Linzmayer, 1999). All this can be categorized under three major customer segments; where products are developed for each market niche to specialize more on customers needs and increase market share.

Apple Inc has worked effectively to out smart its competitors such as Dell Computer Corporation, Compaq Computer Corporation, International Business Machines Corporation (IBM), Sun Microsystems Inc, and Microsoft Corporation. Through its principle subsidiaries such as Apple Computer, Inc. Limited (Ireland), Apple Japan, LLC, Apple Computer U.K. Limited (U.K.), Apple Computer Limited (Ireland), FileMaker Inc., Apple Computer B.V. (Netherlands), Apple Computer International (Ireland) and A C Real Properties Inc the company has ensured that the developed products reach the customers efficiently without delay (Taylor, et al, 2008).

Price as charge on a product indicates the value the customers are ready to give up so as to gain and benefit from the product (Kay, 1993). Price is very important especially in a market that has perfect competition in view of the fact that they can attract or repel customers. The price is set in such a way that it is above the production costs and must attain some profits. In case any company makes any flaws in pricing this can cause customer loss, reduced profits, and most important market share. Apple Inc has developed pricing strategies that protect all the above.

Apple applies value based pricing for its products. This involves setting prices based on the customer’s discernment of the value instead of focusing on the competitors’ prices. This is a more value added pricing with quality and specific features being accounted for in every product. In the market the products from Apple costs higher than brands from other companies due to the improved unique features (Taylor, et al, 2008). For instance the iPhone has special features such as touch screen, multi functionality on applications in the Apple stores. The iPhone therefore functions as a mobile phone, a gps, an mp3 player, and a hand-held gaming system among other functions. Another example is the Macbook Pro which is sold higher in price than those from all other competitors’ including HP, IBM, and Dell (Taylor, et al, 2008).

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Apple has also applied new product pricing strategy in the marketing of the iPad. The market penetrating pricing and other product line pricing plans have been used to introduce the iPad in the market and remain profitable. This involves setting the price low so as to increase the demand and market share. The company recorded higher sales of the iPad than the once from Amazon kindle, Netbooks and Sony e-readers (Taylor, et al, 2008).

Apple Inc also applies product mix pricing strategy where each product is sold with its different specifications (Kay, 1993). This is because different users have different needs for the products; for the iPods others may prefer those with higher memory thus pay more. Apple Inc also use of optional product pricing strategy where a customer may opt to buy the products along with other accessory products from the company (Kay, 1993). This applies to products in Apple stores such as the iTunes store for mp3 downloads. Product bundle pricing is also applied where different products are assembled together to form a bundle and sold at a reduced price. This normally occurs during offers to the customers.

Price adjustment strategies such as psychological pricing are also applied; the price of the product is used to portray something about the products (Kay, 1993). The higher prices in Apple Inc makes the customers have a feeling of; high-quality, exclusivity, coolness factor, and uniqueness when they purchase them.


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