Marketing

Assignment
ON

Pricing Strategies for

Apple Iphone in India

Submited By : Nishant Kumar

Roll 11158
Section C
SWOT Analysis
Strengths:
- Trusted Brand image earned from IPOD and computers operations
- First mover advantage with touch screen and user interface
- Stylish and fashionable look
- Technological patents of use
- Self funded Operating Systems

Weakness:
- Dependence on third party for distribution
- Apps support and content provided by others
- Not able to appeal corporate audience for business use
- Un replaceable battery
- Technological complaications

Opportunities
- Availbality of 3G network in India
- Launch of new model Iphone 4 to skim and use old model Iphone 3GS to gain market share
- Target Corporate business users

Threats
- New powerful entrants backed by better free source Android OS
- Many similar and substitute products
- Intense Competition

Models of Iphone
 iPhone with 4GB, 8GB and 16GB variants
 Iphone 3G with 8 and 16 GB variants
 Iphone 3GS with 8GB variant
 Iphone 4 with 16 and 32 GB variant

Target Segment:

Professionals, Entrepreneurs , Students, Corporate users

Iphone Life Cycle

Iphone keeps on renovating its product with changing technological environment with release of new
versions/models and phasing out the former models.Since its launch Iphone has launched
4versions/models of Iphone from Sept 2007 till date viz. Iphone 1G, Iphone 3G, Iphone 3GS and Iphone
4 model in 32GB, 16GB, 8GB and 4GB variants

Iphone 1G,Iphone 3G have passed their decline phase with launch of Iphone 3GS and Iphone 4. Iphone
3GS is in Maturity/Decline phase at differ geographical regions. For example, Iphone 3GS is in Maturity
phase in India but it is in decline phase where Iphone 4 has been launched.

While in US, Iphone 4 is in Growth phase as it is a new launch and is replicating old 3GS model

Pricing Strategy Process of Iphone

Pricing Objective :

 Status Quo: Apple is maintaining its status Quo of its brand and technology in its pricing strategy
 Product Quality(RnD): Iphone pricing has been done taking the considerable time and money
invested over years in R&D for the product.
 Market Share: Pricing Strategy of Iphone since its launch in 2007 has been to Skim the market
first. They have been very successful in that by make too much of hype about Iphone in US such
that there were long waiting queues of buyers even though was prices astronomically high. After
skimming, to capture more marketshare they dropped their prices heavily.

Factors affecting Demand:

 Unique Value Effect : Customers are less price sensitive as this product was new innovation and
it has set a benchmark for all other mobile companies. Hence Apple has been able to do great
business even at high rates.
 Shared Cost Effect : Apple has come with a model pricing structure in US where Iphone resells
like AT&T sell phones at subsidized rates on an annual usage plan. Hence cost is shared between
customers and and mobile operator who provides service.

Analyzing Competitors Pricing

Core competitors to Apple Iphone 4 as of October 2010 are Nokia N8, Samsung Galaxy, HTC Desire, HTC
Wildfire, RIM Blackberry Torch 9800 . All of above competitors have tried to scale up their products to
compete with Iphone but still they have not been able to replicate good User interface , Itunes and Apps
support of Iphone. Iphone has come with its own OS- Mac and brower which is the core component for
any Iphone. Other Smart phones which are coming up in market are now using google free source
Android which seems to be better than Mac OS. Nokia is also upgrading its OS with launch of Symbian 3
platform. Android handsets are giving good competitive price to Iphone as it is free source OS
consequently offers all smart phones functionalities at highly cheap rates. Iphone needs to look into this
aspect as even tough their product may be little better than its competitors but competitors are able to
offer all smart phone functionalities with better Android OS much cheaper

Selection of Pricing Method

 Percieved value Pricing : Apple keeps the perceived value of Apple brand in mind while keeping
the price. Pricing of Iphone is also in sync with the quality ,features and services offered to end
users.
 Target Return Pricing : As Apple had spent excess of time, money and resources in R&D in
development of this Product
 Market Skimming: Apple is very intelligently using Market Skimming method to recover
maximum revenues. They launch new models of Iphone in phased manner at different
geographic locations viz countries and keep the prices high initially. When again new model is
released the old model is phased out in countries where old model was launched late while the
new model is skimmed in other countries.
 Differentiated Pricing: Iphone Prices are different in different countries though they may be
produced in same factory. From example in US it is prices low while in countries like India it is
priced really high.

Recommendations to Pricing Strategy:

1. Increase number of Service Providers permitting usage of Iphone on India. As of now Apple has
tie up with only Airtel and Vodafone as its distributors.
2. Increase awareness of Iphone features and advantages over other mobiles. Most of Indian
consumers are non tech savvy and aren’t able to differentiate between high end mobile
features.
3. Apple can also consider Value pricing methodology for promoting its Iphone in Indian market.
Indians are very sensitive to festivals like Diwali and are willing to spend generously this time.By
Value pricing Iphone will make big impact in minds of consumers and will enhance its brand
image.
4. Setting Assembly unit in India will reduce costs to Apple as it will escape excise duty of import.
Considering the magnitude of Indian mobile market and future growth opportunities in India
this seems to be requirement. This will maximize profitability for Apple and also it can pass
dropped down cost to market.
5. Launch new Iphone 4 in India to skim the market and drop price of old model Iphone 3GS. This
will boost market share of iphone big way as most Indian consumers being not that tech savvy
will not feel much of tech difference in old and new model.
6. Introduce third party resellers in India like indiatimes the way we have Amzon in US. As of now
Iphone can only be bought only from Artel and Vodafone Galleries. Selling through Mobile
operators has its own limitations in promotion and availability. Indian consumer likes to buy
mobile through proper stores like mobile store. So they should tie up with them.
7. Introduce Price Sharing model with mobile service Operators (in India) where phones are sold at
subsidized rates with burden of subsidy being taken by mobile operator under fixed term usage
contacts with customers. This will help in bringing Iphone purchasing power of common public.
This model is beneficial for both Apple and mobile operator viz Airtel and Vodafone who are its
current distributors in Inida.
8. Iphone can take the step of Vertical integration forward i.e Apple should consider involving itself
directly in distribution network through opening its own sales store. Anyhow Iphone’s had been
very selective about its distributors and the distribution can be managed by apple itself. This will
help as it will bring down costs and also enhance Apple brand image in consumers
mind.Opening Apple Stores will also give boost to Apple’s notebook and desktop business in
India.
9. Increased Promotion and advertisements directed at masses not just high end tech savvy people
will help.