Marketing the iPad

Background Information First tablet computer developed by

Apple Inc Announced on 27 Jan 2010 Released on 23 July 2010 (Singapore) Watch movies eBook reader Surf the web.

How is the price of the iPad determined?

In order to find out how the price of the iPad is determined, first, we have to understand:

1. Demand, and the factors affecting demand of a product.

2. Supply, and factors affecting supply of a product

HOW IS THE PRICE OF THE IPAD DETERMINED? Demand: refers to the quantities of a

product that consumers are willing and able to buy at various prices per period of time, ceteris paribus.

Supply: refers to the quantities of a product that suppliers are willing and able to sell at various prices per period of time, ceteris paribus.

Factors affecting DEMAND

Factors affecting price of iPad through demand (consumers’ POV)Income The iPad is classified as a normal good / luxury. With an increase in the income of consumers, purchasing

power of money income (or real income) of consumers increase.

Normal goods and luxuries are income elastic, an increase in the income of consumers lead to an increase in the quantity demanded of such goods.

Consumers able and willing to pay more to obtain the iPad, and cast higher dollar votes to do so.

This in turn signals producers to increase production and price of the iPad can be increased.

Factors affecting price of iPad through demand (consumers’ POV)Taste and preferences

Convenient, light, portable Many functionalities, ability to run a huge variety of

applications Fashionable E.g. Nanyang Girls High School, bought 150 iPad for

students and teachers to make learning more convenient.

As the iPad offers a wide range of applications and functionalities, more consumers are willing and able to buy it. These consumers cast higher dollar votes in the hope of obtaining an iPad. This will cause an increase in demand for iPad, signalling producers to produce more of the good and thus leading to an increase in price.

The nVidia

Tegra

Qualcomm Mirasol

Mac Tablet

Products similar to iPad

FACTORS AFFECTING PRICE OF IPAD THROUGH DEMAND (CONSUMERS’ POV)

Price of substitute (Galaxy Tab) Consumers may wait for Galaxy Tab as it is a close substitute. Price of Galaxy Tab < Apple iPad Increase in the Qty DD of the Galaxy Tab. Demand of iPad will

decrease. Downward pressure on price of iPad. Lowering price of iPad.

-Apple iPad, Released on 23 July 2010-S$1027

-Samsung Galaxy Tab, Released on 13 November 2010-S$998

Factors affecting

SUPPLY

Expectation of future prices◦ Expecting a fall in price of iPad due to release of

Galaxy Tab◦ Increase price of iPad to earn greater profit before

decreasing it when Galaxy Tab is released

Factors affecting price of iPad through supply (producers’ POV)

-Released on 23 July 2010-S$1027

-Released on 13 November 2010-S$998

Factors affecting price of iPad through supply (producers’ POV)

State of Technology9.7-inch IPS panel ~ US$100 , 16GB of memory + aluminium case ~

US$25, Apple A4 chip ~ US$15, e.t.c.COP~ US$270Revenue> COP to get profitNew technology can be used to produce the good more efficiently, and

more output will be produced with the same amount of input. If factors of production remain constant, there will be a lower unit cost

of production and a higher profit per unit output, leading to greater profits.

Government policy• Government service tax 7%• Imposing a high tax reduces the Qty supplied as it costs

more to market the product

Factors affecting price of iPad through supply (producers’ POV)

Done by:Lim Yi RenLim Yi DaJoshua TanEugene Goh

www.nvidia.com www.pocketnow.com http://www.tomshardware.com/

news/apple-ipad-cost-iphone-ipod,9571.html

http://news.oneindia.in/2010/11/12/tech-samsung-galaxy-tab-apple-ipad-price-india.html

http://en.wikipedia.org/wiki/IPad

References