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Apple’s Focus- Market Share? Profit? or Price? | Iterative Path

For a while I have been writing in depth, with supporting data, on Apple’s pricing excellence and price leadership. Apple has been seeing growth deceleration and sales decline in its unit sales. This week there was a piece in Fortune on Apple’s approach to business when it faces drop in volume.  That article correctly points out Apple never chased market share and was more than willing to let others fight for the low end of the market.

“Apple is not concerned with keeping profits. It’s concerned with prices. Within the price is perception. Apple chooses deliberately to ‘own’ a price point and will never move from it. For 30 years the ASP of a Mac hardly changed. Same with iPod and same for iPhone.”

If you are a regular reader of this blog or a practicing product manager you will quickly recognize the error in this view. Price is not a goal, it is not something you optimize for. it is not something your product deserves. It is not an invariant that must be adhered to. Price is a lever you have under control to maximize your share of value created. You do not fix a price point to maintain perception rather you ensure the price point is aligned with the segment you choose to target and its needs.

Religiously fixing a price point is an assured way to destroy value for customers and investors. In fact Apple has let the ASP fluctuate by changing the product mix. While Deidu states Mac’s ASP has not changed, if you look at the complete product family including MacBook Air the ASP did change due to a mix of products at different price points.

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Apple’s Focus- Market Share? Profit? or Price? | Iterative Path.

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