How Apple Plays the Pricing Game: Using Price Decoys and Different Pricing Strategies

1. Introduction

In the article "How Apple Plays the Pricing Game" Ben Kunz discusses how Apple uses price decoys and different pricing strategies to sell their products. Kunz begins by discussing how people process information and how businesses use this to their advantage when setting prices. He then applies these concepts to Apple and their pricing strategy for the iPod and iPad. Kunz concludes by discussing how other businesses can learn from Apple and use similar pricing strategies.

2. Concepts overview

2.1. Price decoys

Kunz defines a price decoy as "an item that is intentionally overpriced to make another item look like a bargain" (Kunz, 2011). He gives the example of how Apple sells the iPod Nano for $149 and the iPod Touch for $199. The iPod Nano is not a very popular product, but it is used as a price decoy to make the iPod Touch look like a better deal. In reality, the iPod Touch is only slightly more expensive than the Nano, but because of the price decoy it appears to be a much better deal.

2. 2. Pricing

Pricing is the process of setting prices for products or services. There are many factors that businesses must consider when setting prices, such as production costs, competition, and customer demand. Businesses must also decide whether to charge a fixed price or allow prices to fluctuate based on market conditions.

2. 3. Apple

Apple is an American multinational corporation that designs, develops, and sells consumer electronics, computer software, and online services. The company was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. Apple is best known for its iPhone, iPad, and Mac computers.

2. 4. iPod

The iPod is a line of portable media players designed and marketed by Apple Inc. The first iPod was released on October 23, 2001, and the most recent model was released on July 15, 2015. The iPod line includes the Classic, Nano, Shuffle, and Touch models.

2.5 iPad nThe iPad is a line of tablet computers designed, developed and marketed by Apple Inc., which run the iOS mobile operating systemnThe first iPad was released on April 3, 2010; the most recent iPad models are the iPad Air 2, released on October 22, 2014niPad Air 2niPad mini 3, released on October 16, 2014niPad mini 4, released on September 9, 2015

3. Analysis

3.1. Introduction

In the article "How Apple Plays the Pricing Game" Ben Kunz discusses how Apple uses price decoys and different pricing strategies to sell their products. Kunz begins by discussing how people process information and how businesses use this to their advantage when setting prices. He then applies these concepts to Apple and their pricing strategy for the iPod and iPad. Kunz concludes by discussing how other businesses can learn from Apple and use similar pricing strategies.

3. 2. Body

Kunz defines a price decoy as "an item that is intentionally overpriced to make another item look like a bargain" (Kunz, 2011). He gives the example of how Apple sells the iPod Nano for $149 and the iPod Touch for $199. The iPod Nano is not a very popular product, but it is used as a price decoy to make the iPod Touch look like a better deal. In reality, the iPod Touch is only slightly more expensive than the Nano, but because of the price decoy it appears to be a much better deal.

Kunz also discusses how Apple uses different pricing strategies for the iPod and iPad. For the iPod, Apple uses a fixed price strategy. This means that the price of the iPod does not change, no matter what the market conditions are. However, for the iPad, Apple uses a variable pricing strategy. This means that the price of the iPad can fluctuate based on market conditions. Kunz explains that this is because the iPad is a new product and Apple is still trying to figure out what the optimal price point is. By using a variable pricing strategy, Apple is able to experiment with different prices and see how customers respond.

Kunz concludes by discussing how other businesses can learn from Apple and use similar pricing strategies. He recommends that businesses use price decoys and experiment with different pricing strategies in order to find the optimal price point for their products.

3.3 Conclusion nIn conclusion, Ben Kunz provides an interesting overview of how businesses can use pricing strategies to their advantage. He discusses how businesses can use price decoys and different pricing strategies to sell their products. Kunz then applies these concepts to Apple and their pricing strategy for the iPod and iPad. Kunz concludes by discussing how other businesses can learn from Apple and use similar pricing strategies

FAQ

Apple's pricing strategy is generally more expensive than its competitors.

Apple considers a variety of factors when setting prices for its products, including the cost of production, marketing expenses, and competitor prices.

Apple's pricing strategy has changed over time as the company has introduced new product categories and adjusted to changes in the competitive landscape.

Apple's pricing strategy has had a positive impact on the company's sales and profits, helping to fuel its growth into one of the world's most valuable companies.