Published on June 15, 2013 by Lea Steadman and Tracy Okolo
We would like to start off by first saying that we are huge fans of Apple products, between the two of us we own at least one of each Apple product including, iPhone, iPad and MacBook Pro. We had never before thought of the pricing strategies behind these products. However, after researching the topic we realized that we, as well as everyone reading this who owns an Apple product, have fallen victim to Apple’s pricing strategies including, price decoys, high price references, obscure reference prices and most definitely bundled price components.
According to Ben Kunz, of the Bloomberg BusinessWeek, Apple defends it’s pricing using all of the methods mentioned above, however we feel that customers have been most susceptible to their method of bundling price components to hide additional costs. This is because we are avid app store visitors. Since there always seems to be an Apple product nearby customers are always spending money on books, apps, videos and music, and even more now that we have multiple devices. This is not something we had thought about before this research; not only did we pay for meticulously priced items, but we continue to spend money monthly with Apple.
Bloomberg BusinessWeek writer Kunz states that, “The pricing strategy is brilliant. By staging a series of perceived technology innovations and then adding price decoys, reference prices, obscurity and bundling, Apple makes us willing to pay more to do the same stuff we did 30 years ago: read magazines, type messages, watch shows or make phone calls.”
Although we doubt we’ll be able to stop using the app store anytime soon. We now know that Apple planned for me to use it all along. We find that Apple is a great example of using many different pricing strategies to compete in the technology market. They have shown amazing pricing discipline and a real dedication to understanding customer value and willingness-to-pay. The next chapter in Apple’s pricing strategy is to compete against Samsung as they are making strong inroads as a disciplined follower. We cannot wait to see what Apple has in store!
Kunz, B. (2010, September 6). How Apple plays the pricing game – Business – US business – Bloomberg BusinessWeek | NBC News. Breaking News & Top Stories – World News, US & Local | NBC News. Retrieved June 10, 2013, from http://www.nbcnews.com/id/38980367/ns/business-us_business/t/how-apple-plays-pricing-game/#.UbUg_5U9kYE