THE IPA

D PRICING AND

MARKETING DECISIONS

E C O N O M I CS P

R O J EC T

PROJEC

T A

WHEN DID THE IPAD FIRST ORIGINATED? Apple INC. started the iPad on the 23 of April, 2008. The construction of the iPad is a very complex process, taking almost two years to finish the product before it was announced into the market on January 27, 2010.

HOW IS THE PRICE OF THE IPAD DETERMINED?The price of the iPad is determined by demand and supply forces. The decision of the producers determines the supply of the iPad while the decisions of buyers determine the demand. It is the interaction of demand and supply that determines the market prices of goods and services.

HOW IS THE PRICE OF THE IPAD DETERMINED? 

Price

Quantity

Pe

Qe

Market equilibrium occurs at a price where the quantity demanded is equal to the quantity supplied. If there is an increase in demand, the price of the iPad will increase. On the other hand, if there is a decrease in demand, the price of the iPad will decrease.

E

DD

SS

WHAT ARE SOME OF THE RELATED/ ASSOCIATED PRODUCTS FOR THE IPAD?

Related/Associated Products

Complements Substitutes

COMPLEMENTS

iPad apps

iPad sleeves

SUBSTITUTES

VS

PROJEC

T B

CONSUMER’S POV: PRICE OF SUBSTITUTESRecent development: Introduction of 3 new

tablets byAcer.  

“Acer Inc., the Taiwanese laptop maker, debuted its first tablet computers today, becoming the latest company to challenge Apple Inc. and its market-leading iPad… the tablets would likely be in the previously stated range of $299 to $699.”

DECISIONS

Consumers would prefer to get the Acer tablets as they are lower in cost as compared to iPads. Apple Inc.’s iPad- fall in qty dd

Acer’s Tablets- rise in qty dd

Consumers would go for the brand that would be cheaper.Apple Inc.’s iPad- from

$499 Acer’s Tablets- from $299

Introduction of the 3 new Acer tabletsApple Inc.'s iPad Acer’s Tablets

GRAPHS

$ of iPads

$ of Acer tablets

Quantity of iPads Quantity of Acer tablets

D1 D4

D2 D3

CONSUMER’S POV: TASTERecent development: Speculations of iPad

2. 

“There will be two new cameras, one at the front and one rear facing plus a USB port and an improved display screen… Those rumours turned out to be correct. That device has gone on the dominate the tablet PC market.”

DECISIONS

The demand for the iPad will decrease.

The consumers would chose not to purchase the iPad.There will be a better version of it being produced and sold in the market later on.

Make the product more desirable.More of it would be demanded at same price.

Added gadgets to make the upcoming iPad 2 a newer and improved version of the iPad.

GRAPHS

$ of iPads

Quantity of iPads

D1

D2

PRODUCER’S POV: CHEAPER SUBSTITUTESRecent development: Cheaper devices

(Android, Acertablets) in competition with iPad. 

“A wider range of cheaper devices with Google features like YouTube and Google Maps will probably erode the iPad’s market dominance…”

DECISIONS

The producer will produce lesser supply of iPads, to minimise loss.

The demand curve of iPad shifts towards the left.This results in the pricing of iPad to decline as there is a surplus.

This increase in supply leads to a fall in price of Android Tablet.Increase in quantity demand of Android

Tablet. Fall in demand of iPads.

Android tablets have a lower cost of production.The supply curve for the Android Tablet will shift towards the right.

Android tablets and iPad are in competitive demand. Satisfy the same wants or needs

GRAPHS

$ of iPads

Quantity of iPads

D1D2

$ of Acer tablets

Quantity of Acer Tablets

D1

S1S1

S2

PRODUCER’S POV: INCREASE IN PRICE OF COMPLEMENTSRecent Development: Increasing price for iPad

apps

“Mr Pusenjak is the creator of an iPhone game called Doodle Jump. His two-man developer shop has sold 3.5m units at 99 cents (67p) and will price it at $1.99 (£1.35) on the iPad.

“Likewise another game called Animatch, where users have to match the heads of cute animals, will be pitched at $1.99 instead of 99 cents…

“Since launching 14 months ago, it has sold 2.4m units at 99 cents (67p) each. Mr Castelnuovo will bring the game to the iPad for the higher price of $2.99 (£2).”

DECISIONS

The price of iPad will increase.Decrease in supply of iPad by producer.

Leading to producers producing lesser iPad.This will result in decrease demand for iPad.

iPad are complements with iPad apps.

There will be a decrease in quantity demand for iPad apps.

When there is an increase in the price of iPad apps

GRAPHS

$ of iPadapps

Quantity of iPad apps

D1D2

$ of iPads

Quantity of iPads

D1

S1S1

S2

BIBLIOGRAPHYBloomberg. (2010). Acer seeks piece of iPad market with introduction of three tablets devices. Retrieved March 17, 2011, from http://www.bloomberg.com/news/2010-11-18/rim-s-rival-to-ipad-wins-fans-as-corporate-customers-seek-secure-tablets.htmlBBC. (2010). Apple ‘iPad 2’ rumors grow online. Retrieved March 17, 2011, from http://www.bbc.co.uk/newsbeat/11863568Bloomberg. (2011). Android tablets gain on Apple iPad in Fourth Quarter. Retrieved March 17, 2011, from http://www.bloomberg.com/news/2011-01-31/android-tablets-gain-on-ipad-in-fourth-quarter-researcher-says.htmlBBC. (2010). iPad apps to cost more says developers ahead of launch. Retrieved March 17, 2011, from http://news.bbc.co.uk/2/hi/8590300.stm

FIN1 1 S 1 1 1 . A M A N D A Y O N G . A M A N D A O N G . D A R R E N

L E O N G . R O N D A K U N G . T A N I A C H E O N G .