Name: Tenzing Nuru Sherpa

I.D: 6008040074

Quiz from the Pricing Strategy Unit (10 Marks)

1. Why would Apple want to move into the fashion business? (3 Marks)
- Apple has long used fashion rules in the design and marketing of its iconic iPod,
iPhone, and iPad devices, which are sought after not only for their functionality, but
also for their slick aesthetics and symbolic meaning, which distinguish Apple users
from others and signify their association with specific social tribes. Apple is involved
in the design business. Regardless of ambition or complexity, they all have one thing
in common: they are long-term investments that may take years to show a significant
reduction in the bottom lines of these large corporations. Apple's Watch, the
company's first foray into wearable tech — personal accessories with embedded
digital technology — is widely expected to be the next big thing in consumer
electronics, and it's a big driver of these steps. Tim Cook, Apple's Chief Executive
Officer, unveiled the new Apple Watch on Tuesday in Cupertino, after years of
anticipation. As the small group of Vogue editors and other fashion journalists invited
to the event demonstrates, Apple sees the method as much as technology: "It's a
practical thing but incredibly beautiful." Apple CEO Tim Cook says the company
wants to create goods that support people in their everyday lives, such as health
monitoring apps for smartwatches, and solve many more personal technology
problems, while others in Silicon Valley will attempt to develop a prophetic vision of
the future. "We decided to make something really one-of-a-kind. We agree that the
side was the best place to do so." Mr. Cook said, according to the Financial Times.
2. What type of innovation is Apple’s new watch? (3 Marks)

- We can safely identify the Apple Watch as Integrative Innovation because it combines
multiple tasks into one and makes other products that only performed one task
(including fitness trackers like the Jawbone) obsolete. The iPhone did the same with a
wide range of devices, including standalone GPS systems and portable MP3 players.
The Apple Watch features a touch screen as well as a digital crown for accurate
zooming and scrolling without obstructing the view. You may also use the digital
crown as a home button. Apple Watch has the potential to be disruptive as well.
You'll get a different outcome if you move the research market to smartphones and
say that the Apple Watch is a mobile disruptor, but even that is a stretch.

3. What role does innovation play for a company such as Apple and how was the price
planned for this product? (4 Marks)

- Apple is widely regarded as the world's most innovative business. Fantastic new
technologies and creative business models are part of the company's growth plan.
Apple's innovation executives think in terms of channels and pipelines, and they are
aggressive in their pursuit of new ideas. Competitors that chase Apple's new release
fall behind when Apple launches its latest and greatest product a few months later.
Concentrating on areas where they can make a big difference Apple seeks out great
innovators who want to create the best products possible. Apple's contribution to
creativity is based on its culture rather than its processes. Apple's most popular goods
were developed by a small group of people with no hierarchical structure or hierarchy
and no corporate oversight. Yet, as Steve Jobs advised, “it takes a lot of disciplines to
transform very innovative concepts and fledgling innovations into a business that will
continue to innovate for years.” Apple has created a framework that allows it to tap
into its employees' imagination, generate fresh ideas, streamline the design process,
and introduce successful, profitable new products. Innovation promotes the
development of new technologies and a broader variety of products. EXAMPLE: The
iPhone, iPad, Macbook, iMac, and Apple Watch are all examples of Apple
innovation.
TOWS MATRIX S W

- Market leader in a range of products - Products are not priced competitively

and services - Narrow Product range compared to
- High strong brand image rivals
- Financial Strength - Products and services incompatible
- Innovative and highly sophisticated with the other brands
supply chain -
- High profit margins
- Huge loyal customer base

O S–O W–O
- Increase the focus on mobile devices - Release a range of products priced
- Increasing demand for mobile gadgets - Use its financial clout and the strength competitively
and technology of brand image - Create a larger product range
- Product Diversification - Collaborate with other brands
- Make Compatible Products
 T S–T W–T
- Develop a larger range of products - Release a range of competitively
- Increased Competition - Control costs of manufacturing priced products
- Increasing cost of manufacturing - Focus on cultural change - Broaden the product range
Strategy Development
No Strategies Explanation
1 Increase Focus on Mobile To benefit from the growing demand for mobile
device devices, increase the emphasis on their
manufacturing and marketing. Focus on laptop
portability; release versions such as detachables that
are more portable.

2 Use its financial clout and Diversify into new product areas and generate
the strength of brand revenue and revenues by leveraging its financial
image clout and brand value. This will also allow it to
capitalize on its existing customer base and loyalty.

3 Collaborate with other Collaborating with other brands to establish

brands complementary goods and mutually beneficial
partnerships. This will allow you to gain access to
the consumer base of other brands.

4 Release a range of Releasing a range of products priced competitively

products priced ensure that it attracts middle class customers as
competitively well. Expanding the product line, expanding into
new product categories, and serving new consumer
segments ensures Apple to widen its market reach.

5 Focus on cultural change To keep the competitive edge that Steve Jobs
provided, focus on cultural change. This means that
apple needs to focus on the technological changes
 in the market and stay innovative with its products
in order to keep that competitive edge.

6 Develop a larger range of Developing a wider variety of products expands the

products and Control costs company's consumer base and reduce competition.
of manufacturing Control manufacturing costs by concentrating on
supplier partnerships and locating production
facilities in countries with lower labor costs. This
can help the company to widen its profit margins.

Segmentation, Targeting, Positioning

Segmentation:
Apple has divided the market into four segmentations:
Geographic Segmentation: This includes people living in the big cities of developed
countries. Even though the primary market is based in U.S. it has expanded to international
borders as well
Demographic Segmentation: This includes both male and female under the age group of 15-
70 who are students or working professionals.
Psychographic Segmentation: The main criteria in this segmentation is the customers
buying behavior. This could include people having high income and wanting luxury goods
Behavioral Segmentation: This segmentation includes tech lovers, people who love
aesthetic products, trend followers etc.

Targeting:
Apple can divide their market segments into three target markets:
Students: Students from high school to masters degree between the age of 15 – 27 who rely
on their laptop, computer or phone for personal and academic purpose.
Working Professionals: People who rely on their phone, laptop or computer to work
Tech Lovers: People who are trend followers and are tech lovers
Positioning:
The positioning statement of apple is the same for everyone i.e., “to bring the best user
experience to its customers through its innovative hardware, software, products and services”.
Apple has been able to build a lifestyle-brand by making Apple mean “Creative” and
“Superior-class” in the sub-conscious minds’ of consumers.