How has Apple's pricing strategy changed?

18/10/2018

Angela de la Vieja

If we know anything about Apple it is that their products are not exactly cheap. The Cupertino brand has turned each of its technological gadgets into cult objects desired by many consumers. Their promise: to make your life more comfortable, connect with what you wish and to free you from having to worry about certain tasks. Since its beginnings, the Apple brand has opted for innovation with prestige, something that has, from a commercial aspect, defined how their pricing and sales strategy evolves.

After decades, the latest keynote from Apple surprised everyone (lovers of the brand and detractors alike) with the most expensive handsets in their history. However, the high price of their latest products has not prevented their smartphones from being the best sellers in the market.

So, how has Apple managed to succeed with such a pricing strategy?

The key is pretty clear: high prices build a luxury brand. After all, who does not want exclusivity? Every luxury firm (fashion, automotive or technological) knows that a high price is an essential factor to instil a desire for something unique in their consumers.

As for its evolution, we could say that it has been linear, upward, and somewhat proportional. Their base rule, for example, differentiate the storage capacity of each of the iPhone’s and apply high, or higher, prices. Up to now it seems that this logic has run its course successfully.

On the other hand, on several occasions, Apple has also played to adapt prices according to physical characteristics of its products, such as colour. Another important point to exclusivity.

However, it seems impossible to think that, just for the desire of a unique or apparently limited item, sales of the giant apple continue to increase with each quarter. What is it then that Apple actually sells?

Apple is a latent success of the user experience. From the expectation generated around each of their presentations, to the packaging of their products. The UX, or user experience, is in terms of digital business a key factor that is now understood beyond mere CTA’s and forms.

The digital user has new demands that Apple has been able to identify and cover for at each moment of the customer journey. In fact, it has positioned itself as its generator in many circumstances.

As for the sales system, we must bear in mind that Apple is both a manufacturer and a retailer. This duplicity allows them to establish the standard prices of their products while negotiating with third parties the sale of devices with a specific margin. A clear example are the cell phone operators. These offer users benefits on the total price of a smartphone if it is purchased by hiring along with one of their tariff models and a commitment to contract for a certain period of time. However, other large technology resellers such as Dixons, Media Markt or Tesco do not have this flexibility, even on occasion preventing Apple products from being promoted during the sale season. Is this just one more step used to control brand image through price?

Overall, Apple's pricing strategy has always recognised the point of maturity of their audience and turned them into a potential customer by always offering them what they expected. For some, their prices are scandalously exorbitant, obscene, one could even say. However, the truth is that, regardless of price, every autumn the crowds line up to be the first to acquire one of Apple’s latest products fresh from the oven.

The low-end models, differentiation, and rise in the average price

If there is one aspect to highlight in the price trend of Apple is the differentiation between their own products. According to the experts, and the experience which supports them, the brand has designed a strategy for the sale of two kinds of products: the high-end and the medium-price.

With this differentiation, Apple gains on two fronts: on one hand, it keeps the image of luxury and exclusivity in operation; and on the other hand, it manages to increase the average price of its products even at the risk of selling fewer expensive units.

On this occasion, the iPhone XR is responsible for the variety in the Apple catalogue. This is the device with which the company has opted to separate top devices from mid-range devices. In this way, it seeks to approach an already receptive audience, while giving those who seek a unique experience something almost inaccessible. Undoubtedly, the vivid image of how to keep everyone happy.

11/11/2022

Consumer behavior: How can behavior tracking be effective for setting the right pricing strategies?

Behavior tracking is becoming massively popular today. As a result, pricing strategies born from studying consumer behavior are a merchant's dream come true. If done right, it can conquer every market for the business quickly. With abundant data available, the strategic makeover of the pricing models is becoming easy for companies.

What is behavioral tracking, and how is the data beneficial in pricing?

For a quick understanding, behavioral tracking refers to gaining in-depth knowledge and insights into consumers through their web data. Their browsing habits, spontaneous decisions, shopping interests, and preferences come under behavioral tracking.

How can enterprises use customer behavior data?

Companies can use customer behavior data as a tool to strengthen their hold on the market. A customer’s preferences, values, and tendencies allow businesses to work in sync with them through the collected data. Apart from this, customer behavior can also aid in:

Tailoring customer needs for customer retention

Personalization is becoming the heart of a company’s growth. No matter in which area an enterprise is functioning, tailoring the services, products, and solutions is becoming increasingly crucial. Uniqueness and personalization attract the crowd like no other.

Increasing the overall value

One of the best ways customer behavior data affects a business is by upgrading the value of customers for the business. The customer’s characteristics allow the company to target the people that match the business prospects well.

Optimizing every type of content

Everything that is up for digital display requires content. You must have seen companies unveiling their products or services through advertisements and making the initial public appearance. Two essential sales strategies – upselling and cross-selling comes through content optimization.

Pricing Strategy

Last but certainly not least is the influence of customer behavior data on the pricing strategy. The pricing strategy essentially constitutes content derived from data analysis. Companies need to have a dynamic approach to the pricing system to attract the right customers.

17/02/2015

Saint Valentine’s Day, always a good opportunity

V-Day is looming, a long-awaited date for all and also a good occasion for the eCommerce. According the study conducted by Prosper Insights and Analytics, it is forecasted the average consumer expense that day will be the highest in last years. Furthermore, 25% of them will buy online, which means an increase of 4% regarding 2014 (The US department of Commerce). This is, therefore, a key date where market competitiveness increase and which could be assumed as a big opportunity for our business or, a big fail if we do not adopt the correct strategies.

How to turn this event into an opportunity? To achieve this goal, we need to adapt our prices to this hostile environment, i.e. we need to develop an appropriate Dynamic Pricing strategy that allows us to adapt our prices to the variations produced in supply and demand and to position us ahead of our competitors. In V-Day, the frequency in changes will be higher, carrying it out each hour or even each minute. It is estimated that 65% of leader retailers have the ability to respond quickly at these variations, such Amazon. For this reason, it acquires great importance the correct use of a software specialised in price motorisation of competitors. Do not miss the time and adapt your business to new adversities.

28/12/2022

Which are the best footwear marketplaces to sell on?

Footwear marketplaces are booming. The last decade has seen the launch of new specialized marketplaces with millions of different users. Among them are Spartoo, Sarenza and Farfetch, portals with international reach. Their main value is that they unite hundreds of footwear brands, as well as offering clothes and accessories. Although each has its own characteristics, they are all vertical marketplaces, i.e., they focus on a specific area, and their sales categories are interrelated. For sellers, these portals provide an opportunity to expand sales channels and drive the globalization of their e-commerce business. We explain how to sell on these footwear marketplaces so that you can assess whether they align with your plans for the future and then start defining a possible pricing strategy.