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					Project B

Q. Discuss how recent developments will affect your marketing and pricing decision of
the iPad. 4 main factors (2 from consumer’s point of view, 2 from producer’s point of
view). Use economic tools to support your analysis.

The recent earthquake in Japan and the emergence of related products have affected the
marketing and pricing decision of the iPad.

Producers :

1) The impact of Japan’s earthquake and tsunami has resulted in production and distribution
   delays of critical components for many electronic devices. Logistical disruptions and
   supply shortages have arised especially from its suppliers in Japan: NAND flash from
   Toshiba Corp., the system battery from Apple Japan Inc., etc.

    Changes resulting from natural disasters such as the Japanese earthquake has resulted in
    decreased supply of components as production process is disrupted. Less is supplied at
    each prevailing price level. This shortage of iPad components results in producers having
    to pay more for the limited supply. There will be an increase in the unit cost of production
    as components are not easily substituted, hence, resulting in lower profit per unit.
    Producers will therefore, increase the selling price of iPads to of maximise profits.

2) In Singapore, the Samsung Galaxy Tab is a close substitute to the iPad, as both possess
   almost similar functions, hence the cross elasticity of demand for iPads with respect to the
   price of the Samsung Galaxy Tab will be of a high positive value. Thus, the pricing of
   iPads would most likely be very responsive to that of the Samsung Galaxy Tab. The
   pricing decision of the iPad will thus be affected by that of the Samsung Galaxy Tab.

Consumers :

1) The Galaxy Tab is known to possess better features as compared to the iPad. For example,
   the Galaxy Tab has a better operating system as well as Adobe Flash, of which iPad does
   not provide. Singtel’s MioTV is used as an advertising platform as part of its marketing
   strategy. In response to that, Apple could have lowered its prices of the iPad to compete
   with Samsung. The fact that Apple is an internationally renowned brand allows it to bank
   on its worldwide reputation for publicity, via e.g. iTunes, a widely used music player all
   around the world.
2) As the economy in Singapore grew by approximately 14.5%, the real income of
   Singaporeans have increased and hence, there is an increase in consumers'purchasing
   power. This allows an increased expenditure on luxury goods e.g iPads. This increased
   demand for iPads signals to Apple to increase its price and hence, production. Hence,
   consumers who are unwilling/unable to cast higher dollar votes will be rationed out of the
   market.
3) Consumers' tastes affect the marketing and pricing strategy of the iPads. Apple is better
   able to cater to the tastes of consumers due to its popularity. For example, although
   Samsung Galaxy Tab is slimmer and lighter than the iPad, the myriad of applications
   available for Apple products far outweighs Android’s applications. However, this may
   change as there will be emergence of new rival products in the tablet market, such as the
   hp touch pad and the Samsung Galaxy 10in Tab.
Bibliography, Credits :

http://news.cnet.com/8301-31021_3-10450333-260.html

http://www.bloomberg.com/news/2011-01-31/android-tablets-gain-on-ipad-in-fourth-quarter-
researcher-says.html

http://www.bloomberg.com/news/2010-11-18/rim-s-rival-to-ipad-wins-fans-as-corporate-
customers-seek-secure-tablets.html

http://news.bbc.co.uk/2/hi/8603599.stm

ECONS NOTES




Report Done By :

Desmond Ong, Gladys Chang, Voo Ning Chade, Nicole Ng, Zai Kamsani

11S417

				
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posted:6/25/2011
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