IPOD NANO CASE
1) Which factors influence the pricing of the Nano?
First, there are environmental factors which influence pricing decisions such as currency fluctuations between the dollarand the euro for example, since today the euro is much stronger, but most of all, Apple must face strict government controls and regulations in France: indeed in France the tax for private copycollected by SORECOP makes the iPod Nano’s price increase considerably: for a 4 Go iPod Nano, the tax goes up to 50 Euros! However, the iPod Nano’s price could lower since this tax is going to be diminishedin the upcoming years.
Second of all, Apple’s method for pricing the iPod Nano is a positioning based pricing, and more specifically on a skimming strategy, which implies setting high prices toattract the wealthiest customers. The goal is to obtain maximum benefit in a minimum delay. This is employed by companies in order to reimburse their cost of investment put into the original researchof the product.
This is why Apple’s prices are generally higher than its competitors’ ones, as for example Archos in France, and it is justified by the fact that:
-The price is not the determiningcriteria in the iPod’s choice: the design, its uses, the practicality are more crucial ones.
-Apple wants an upscale image for its products.
-The iPod Nano is innovative by its size, the tactile pad,its design.
Therefore those who can afford to buy a product like the iPod Nano are customers who have high enough incomes and a superior standard of living.
Apple also uses pricediscrimination, which is a pricing strategy that charges customers different prices for the same product or service. For example Apple reduced $200 from the original price of the iPhone just two months after itsrelease. After a flood of complaints by its customers, Apple attempt to rectify complaints by offering $100 store credit to early iPhone customers. In addition to this temporal price discrimination,...
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