This is a study of the iPad market where producers study how recent changes in the market can affect the revenue of firm.
The iPad was first announced on January 27, 2010, by Steve Jobs at an Apple press conference in San Francisco. The price of iPad is determined by the cost of production and the quantity demand by consumers through the price they are willing and able to pay. There are many related products of iPad in the market such as Samsung Galaxy Tab, HP touchpad, Motorola Xoom, BlackBerry Playbook, and tablets by Acer Inc. They are tablet computers that have similar functions as iPad and some are even sold at lower prices such as the Samsung Galaxy Tab.
Substitutes are products that are similar in functions and satisfy the same wants and needs and are in competitive demand. Substitutes of IPad 2 e.g. Motorola Xoom, Blackberry Playbook and Samsung Galaxy Tab. Marketing decisions for the iPad by consumers will be affected because they now have a range of tablet computers with lower prices to choose from.
D1 S2 Q2 Q1 E2 E1 P2 P1 D2 D1 S1 Q2 Q1 P1 P2 Price of iPad E1 E2 S1 Quantity of iPad Quantity of Samsung galaxy tab Price of Samsung galaxy tab Price of substitute decrease (P1 to P2) Quantity Demanded of Substitute Increases (Q1 to Q2) Demand for Ipad 2 decreases (Q1 to Q2) In order to combat the situation the producer can carry out non-price competition such as giving out freebies like speakers, earpiece and cover to attract more consumers to buy them.
Income Increases, results in an increase in disposable income Higher disposable income results in higher purchasing power A higher purchasing power will allow more consumers to better afford Ipad 2 This overall increases the demand for Ipad 2 As demand increase, the demand curve shifts to the right, this cause the equilibrium price to increase from P1 toP2 and equilibrium quantity to increase from Q1 to Q2.
Government increases the levy on hiring of foreign workers according to the Budget 2011 announced this year. Increased cost of labour leads to increased cost of production Increased cost of production reduces the profit per unit Supply of Ipad 2 decreases causing a leftward shift of the curve As supply curve shifts to the left, the equilibrium price increase from P1 to P2 and equilibrium quantity to decrease from Q1 to Q2. Price of iPad E1 E2 Quantity of iPad D1 S2 S1 Q2 Q1 P2 P1 In order to increase the equilibrium quantity and make it more attractive to consumers, Apple can do more advertising in order to get more consumers to buy iPad.
Technology has improved over the years due to investment in research and development Increases productivity of Ipad 2, increasing effeciency Greater production of Ipad 2 with the same amount of resources used Higher Profit per unit of output Producers will increase production to further increase profits Supply increases causing a rightward shift of the supply curve
As supply curve shifts to the right, equilibrium price decreases from P1 to P2 and equilibrium quantity increases from Q1 to Q2. E1 E2 D1 S1 S2 Price of iPad Quantity of iPad Q1Q2 P1 P2 Diagram:
Recent development will affect marketing and pricing decisions of iPad. With increase price of substitutes such as samsung galaxy tablet, the demand for iPad will be affected negatively. However with marketing strategies this problem can be solved. On the other hand, the increase income of consumers will help increase the demand for iPad hence it will affect the demand positively. Inversely, increasing cost of production may cause decrease in supply of iPad however will the advertisement to inform consumers about the functions of iPad, it can be returned to normal. The increase state of technology will help increase productivity and eventually lead to increase supply.