Recent Developments and How They Affect Marketing and Pricing Decisions By: Dini, Julene, Lengjen, Yoojin, Bryan

1. Effect of Rival Goods on Demand of iPads 2. Effect of Pricing on Quantity of iPads Demanded 3. Effect of Cost of Production on Supply of iPads 4. Effect of Pricing on Quantity of iPads Supplied

 New rival goods include Blackberry Playbook, Samsung Galaxy Tab and LG Android Tablet Blackberry PlaybookSamsung Galaxy Tab

 Consumers may turn to these similar goods as substitutes to the iPad  This is especially so if these similar goods have similar prices or even lower prices

 A change in the consumers’ choice of good would affect the demand for iPads  Thus, it is important to market the iPad in a way that it is significantly better than rivals

 Higher price = Lower Quantity Demanded  This is due to consumers being rationed out of the market

 Consumers choose cheaper rival products with functions similar to the iPad  One example would be Acer’s new Android- powered tablet

 Therefore, to increase the quantity of iPads demanded, the price of the iPad must be lowered.

 With increased cost of production, supply of iPads decrease  With an increased cost of production, the iPad becomes less profitable  Suppliers, trying to maximise profits, would choose to supply less iPads

 Cost of production includes cost of commodities such as metals or plastics  The iPad requires these commodities for production and manufacturing  As these rise in price, the cost of producing and manufacturing the iPads grows as well

 Cost of production also includes wages for workers  Wages of workers have been increasing  In China, wages of skilled workers are seen to grow at rates of up to 10% annually  As the supplier has to pay more to workers who manufacture the iPad, the cost of production thereby increases

 In conclusion, in order to increase the supply of iPads in the market, we have to find cheaper alternatives to alleviate rising costs of production  Price of iPads can also be increased to increase the profits of suppliers and thus making them more willing to supply more

 Suppliers aim to maximise profits  Profits = Total Revenue – Total Expenses

 By increasing the price of iPads, suppliers gain more profit  Suppliers would be more willing to sell, thus increasing supply

 Suppliers would also choose to supply iPads instead of other rival goods  For example, suppliers would choose to sell the more expensive iPad over cheaper netbooks

 Therefore, in order to increase supply of iPads in the market, price of iPads has to be increased

 The iPad holds a large amount of the tablet PC market share  In 2010, the iPad enjoyed up to 90% market share

 However, with competitors such as the rival Android platform of tablets, Apple may suffer  At the end of 2010, the iPad’s share of the market dropped to 75%

 In 2011, with the introduction of the iPad 2, demand for the iPad skyrocketed again  Rumours estimate the sales to be as much as 1 million on the opening weekend

 The iPad has competitors but is in high demand  This is because the iPad has set itself apart from the typical tablet PC  Even so, the iPad’s demand remains price elastic

 In order to increase sales, the iPad has to continue to be the most innovative tablet PC in the market  This would, in turn, increase supply of the iPad as the price function increases the price of iPads as demand increases