Understanding Apple's Pricing Strategies: Lessons to Learn

Making people eager for new Apple products, Steve Jobs’ strategy for Apple had four pillars that included focusing on the high-end products, offering a small number of products, giving priority to products over market share, and also creating a halo effect.

On low-end devices, Apple CEO Tim Cook told Bloomberg Businessweek in a 2013 interview, “We never had an objective to sell a low-cost phone. Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost.”

Despite the high competition, the company’s products have always been designed to be ahead of peers, making its products unique and attractive to consumers.

Maintaining a premium price at the cost of unit volume, Apple also set up an artificial entry barrier to competitors by focusing on customers willing to pay more. Furthermore, through product differentiation, innovative advertising, ensured brand loyalty, and hype around new product launches,  the company has power over prices.

Through its retail and online stores, it sells directly to consumers and small-to-midsize businesses. While, including third-party cellular network carriers, wholesalers, retailers, and value-added resellers, the company also employs a variety of indirect distribution channels.

MAP (minimum advertised price) Retail Strategy

Below a certain minimum price, Apple uses a MAP retail strategy that prohibits retailers or dealers from advertising a manufacturer’s products. Offering a manufacturer to its resellers, MAPs are usually enforced through marketing subsidies.

According to Macworld, Apple is said to maintain its high-priced products’ popularity by only offering retailers such as Walmart or Best Buy a marginal wholesale discount. Therefore, this small percentage in savings isn’t enough of a profit margin for retailers to offer big discounts on Apple’s products.

To keep its distribution channels, this pricing strategy is effective, as it prevents retailers from competing directly with Apple’s own store. Ensuring that one reseller doesn’t have an advantage over another, this pricing strategy is effective, as it prevents retailers from competing directly with Apple’s own stores. While, smartphone prices falling significantly have directly boosted Apple’s sales over the last few years.

Unique Value Proposition

Apple doesn't budge its competitors as they focus on selling their unique value proposition. From the moment you open the box, Apple handsets have been always creating high quality, innovative products that offer an high-end experience. With applications, features, and the overall Apple ecosystem that works seamlessly, Apple has also managed to focus on creating unique customer experiences which other competitors simply cannot replicate at all.

Read More News :

6 electric vehicle firms to invest over Rs 2,500 crore in Telangana

Honeywell introduces next-gen quantum computer with 10 qubits