Price elasticity of demand is defined as the responsiveness of the quantity demanded of a good or service to a change in its price. In relative elastic, modest price changes can cause very large changes in quantity purchased. In relative inelastic, substantial price changes cause only small changes in the amount purchased. In general marketing, producers consider lowering their product price to compete with other products. Have you ever wonder why Apple products are expensive, but the demands are still high?
In analyzing price elasticity of demand in Apple products, there are three factors to be considered: the availability of substitutes, the amount of income available to spend on the phone, and time.
A. The availability of substitutes
Apple has a unique operating system and a revolutionary stylish-looking in the century. No other products can be Apple's substitutes. Therefore, Apple can keep its uniqueness in the market.
B. Amount of income available to spend on the phone
Apple producers frequently change their product prices based on the supply and demand curve. When the product first comes out, the price is very high because it attracts costumers as the first group to experience the refined new products. For those who cannot purchase the apple products in a short time, they can wait to buy until the price goes down. Producers calculate the demand curve and test out how much they should lower the price to get many sells.
C.Time
To keep consumers in the long term, Apple producers learned to keep their customers feel "fresh" toward the products. By providing the refined products and care services, producers make people believe that Apple is worth to purchase. As a result, apple become a fashion, quality taste, and shopping behavior among customers.
Furthermore, Apple Supply is never enough.
Future Concern
However, in a recent study, researchers found that Android products could be a potential future substitute for apple products, showing the future possibility of declined demand in apple. When a brand of loyalty changes, consumers might shift their needs to purchase Android.
Resources:
https://thegadgetlover.com/apple-products-and-price-inelasticity-why-are-they-virtually-immune-to-price-changes/
https://www.economicshelp.org/blog/132985/business/are-android-and-iphone-close-substitutes/
https://www.ukessays.com/essays/economics/price-elasticity-of-demand-of-the-iphone-economics-essay.php
It is interesting to examine a brand that has made their product relatively inelastic and look at the services and perks they must supply to create an irrational loyalty within their consumer base. For companies like the ones we saw in the marketing documentary, such as Song Airline, this can be a big failed investment.
ReplyDeleteThis is an interesting post about how some products can be extremely above the equilibrium price for other phones, yet have a demand so high. Apple has been able to market themselves as the best brand when in some products, it may not be worth it. This relates to my post about Starbucks, where brands are able to interconnect an experience with a product. I wonder how long it will be until the demand declines as it seems as though Apple has been able to market their products for over a century to different generations.
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