Management Economics: Analysis of Apple Inc. and its Products

This report analyses the economic management of Apple Inc. and its policies for effectively utilizing their economic resources. It focuses on various concepts related to economic such as cost analysis, price policies etc. and how they influence the functioning of the organization.

ECONOMICS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Description of company and its products.....................................................................................3
Identifying demand and market equilibrium................................................................................4
Products and services affected by factors which influences price elasticity of demand.............6
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
This report helps in understanding about economic management which is related with
management of economic resources which includes income, finance, expenditure etc. It is
important for every organisation to effectively utilize their economic resources which can help
them in boosting its productivity and it also help in effective utilization of resources. This report
focuses on Apple Inc. and focuses on understanding its policies which helps them in managing
their resources. It also focuses on various concepts related to economic such as cost analysis,
price policies etc. These concepts can influence the organisation functioning and helps in
determining its profit and losses.
MAIN BODY
Description of company and its products
Apple is an American multinational technology company that provides products which
are related to electronics, computer software and online services. Apple is considered as world's
largest company in terms of revenue and is also considered as one of the valuable company in
world. Apple was started by two friends which are Steve Jobs and Steve wozniak on 1st April
1976. In initial years Apple focused on introducing computers with single motherboard and
focused on introducing on advanced version of such computers which helped them in building
their image in market.
Products and Services – Apple in it's initial years was famous for its computers which delivers
effective performance and also focused on providing hardware and software services for
computers. Organisation is operating its business in various sector of technology which includes
computer hardware, software, chipset, financial technology etc. It also focuses on manufacturing
and distributing various devices related to media and organisation has also its expertise in mobile
phones, music players etc. Apple focuses on dealing with various range of products and services
related to technology and ensures that consumer should be satisfied with their offerings. Its
products and services includes iPad, iPhone, iPod, Mac etc. It also focuses on manufacturing
gadgets which can make their daily life easier and satisfy their consumers. Apple focuses on
manufacturing their own products and services instead of outsourcing it and ensures that
consumer should get premium quality products which might be costly but can satisfy consumer
need and preferences. Apple also focuses on providing its content through its own application

such as iTunes, iBooks etc. These day Apple is active in providing products related to
entertainment such as TV, Mac etc. Apple product range makes them one of the effective
company and it also helps them in expanding their business while boosting their profits. Apple
faces fierce competition from organisation such as Samsung, SONY etc. but company focuses on
providing quality products to consumer while enhancing their experience. Introduction of new
products would help them in retaining their existing consumers and also help them in engaging
new consumers with organisation. This helps Apple in boosting their profits and boosting its
productivity.
Selection of product – Product range which is chosen for economic data analysis is iPhone
because this series is very popular among consumers and one of the effective series in industry of
mobile technology. This series first product was first introduced in 2007 and now there is various
better and updated version of this series is available in market. Apple launched their iPhone
series with feature of touch screen, internet connectivity and with other various features iPhone
series first phone was launched into the market. After that company released various other
phones under this series such as iPhone 5, iPhone 6 etc. These phones have reached to new
heights and Apple have build its own consumer base which is expanding every day. This also
helped them in boosting their profits.
Identifying demand and market equilibrium
There are various factors which plays crucial role in understanding about product demand
and helps in analysing that whether its demand will increase or decrease. With help of such
concepts it can be analysed that organisation products might have positive or negative impact
upon profit of organisation. It is very important for every organisation to effectively analyse its
business environment before making any business decision for products such as pricing of
product, preference of consumer etc. It would help organisation in understanding about factors
which are uncertain and preparing an effective plan which can minimize the effect of such
factors. Analysis of such can help organisation in understanding about threats which can be faced
in future and such analysis is mentioned below for Apple:
Price of Substitute products – This can be explained as products which can be used in place of
other products which belongs in same range. There are various products which might affect sales
of iPhone and these products are Samsung Galaxy S series, Google Pixel series, One plus series
etc. These products can be considered as good substitute of iPhone series. One of the major

competitors of Apple is Samsung as its phones are also in huge demand and it also provides
services and feature which satisfies needs of consumer. Apple might be considered better from
Samsung in terms of privacy but in terms of battery backup and price Samsung have upper hand
over Apple.
Pricing for its features – Apple might charge high prices for its products but it focuses on
providing services which are viable according to its price. For example, Apple focuses on
providing fast charging facility to its consumer which helps in satisfying its consumers. With its
every new phone in the market Apple increases its price and it doesn't affect its consumer base
due to service provided by them to its consumers.
Consumer income - It is one of the major factor which should be focused by business entities
while planning to sale their products to the customers. Consumption of a good increases when
consumer income gets enhanced. A slight shift in it may leave negative impact upon sales of
products. Currently, it is increasing due to high level of development all around the world. It
directly leaves impact upon demand and supply of iPhones because if it decreases suddenly then
customers will not be able to buy them as their price is very high. Iphone provides premium
services to consumer and that's why it charges high prices for their products. Because of its
image in market Apple retain its consumers and it's brand image also helps in attracting new
consumers. Consumers who wants premium services does not bother about price and it helps
Apple in creating value products for its consumers.
Consumer taste and preference – It is important for every organization to take consideration
under consumer need and preference because it help organization in developing products which
can satisfy needs of consumer. It would help organization in boosting their profits. These days
consumer preference are changing as various mobile companies have started to provide
innovative feature in its products which helps in attracting consumers. Apple focuses on
providing different feature in its Iphone series such as wireless charging, better battery backup
etc. These innovative features might help Apple in satisfying its consumers. Continuous change
in products would help in satisfying demands of consumers and ensures that these changes won't
affect prices of organization. Apple always focused on making innovations in its products to
retain its consumer base.
Price expectations of consumers – In case of product prices every consumer have their own
budget according to their need. It is very important for organization to understand their target

market and set the prices according to attributes of product. Consumer base of Apple products
are ready to pay price but consumer want products which can satisfy their needs. Sometimes
price of product affect demand of products in market but due to its goodwill in market Apple
have upper hand among its competitors. Apple always focuses on fulfilling the needs of
consumers by their products and ensure that product should meet expectation of consumers.
Demographics – It focuses on people which are buying products of Apple globally. According
to recent studies it has been analysed that Apple have sold over 77 million Iphones in 2018. It
helps in understanding that Apple have large consumer base which makes organization
successful among its competitors. It also helps in understanding that Apple have large consumer
base which is also helpful for Apple in boosting its profits. Demand of Apple products in market
is very high and it also helps in boosting productivity and profitability of organization.
In order to retain its consumer and expand its market it is important for Apple to innovate
its products by understanding needs of consumers. Ignoring demands of consumers can affect
sales of organization which directly makes impact on revenue of organization. Managers of
Apple always focuses on innovating products and providing exceptional customer service which
helps Apple in attracting new consumers. This would help them in boosting its profits and
increasing their market share. Considering needs of consumers help organization in growing its
business and also helps in reaching out to higher number of consumers.
Products and services affected by factors which influences price elasticity of demand
Price elasticity of demand is explained as the process of determining impact of price
fluctuations upon products which are demanded by consumers. In order to avoid any type of
decrease in sales of Apple, they have to ensure that prices of its products shouldn't be increased
suddenly either it might affect demand of Apple products which have direct impact upon its
profits.
It helps in understanding that elastic demand of Iphone is more as it demand fluctuates
when its price is increased. There are numerous substitutes of Iphone which can affect its sales
and attract consumers. Examples of its substitutes are Samsung Galaxy Note 9, Samsung S9,
Google Pixel, One plus 7 pro etc. These products are very close substitute of Iphone and it can
affect sales of Apple and might affect productivity and profitability of organization. In case of
Iphone people might switch to other phone due to low prices and attributes which are not
included in Iphone such as battery backup, low prices etc.

Luxury vs necessity – In case of Iphone it is considered as one of the luxury product in this
segment due to its price. This product is used by high class people but these days middle class
people also focuses on buying such product to raise their standard of living in society. Buying
luxury products also help in displaying high class. It affect Apple sales in positive way and it
also helps in understanding that products is more elastic as fluctuations in product prices affect
sales of Apple.
Percentage of Income – High prices of Iphone shows that good portion of individual income
has been spent on purchase of Iphone. This helps in understanding that in case income of
individuals have been decreased then it might affect sales of Apple as individual don't have
money to buy such expensive phone.
Apple have to be very effective in terms of pricing if they want to expand as well as
retain their market. It can only be possible by using appropriate pricing strategies which can help
them in competing against its competitors. There are various pricing strategies which can be
utilized by organization and these strategies are mentioned below:
Penetration Pricing
This strategy focuses on decreasing the prices of products in order to get upper hand over
competitors and then boost the price of products when demand increases. This strategy is
commonly used to gain market share. This strategy can be utilized by Apple to attract higher
number of consumers and expanding market share.
Economic Pricing
This strategy focuses on selling large volume of products at low prices. Such strategy
helps in attracting higher number of consumers and assists in reaching out to higher number of
consumers. In case of Apple, by using this strategy organization can target lower class people
which would help them in engaging higher number of consumers and also helps in boosting its
profits.
Competitive pricing
This strategy focuses on setting the prices of products according to competition in
market. Use of such strategy help organization in gaining competitor advantage over its
competitors. Apple can use this strategy to retain its existing consumer and engage new
consumer with organization. Such strategy is helpful in expanding the market share.
Premium Pricing

This strategy focuses on setting the high prices of products as organization is providing
quality products to its consumers. This strategy is helpful in setting price of product when
organization launching its product into the market. This strategy is considered as one of the
effective strategy for setting prices of launching new product. Apple is currently using this
strategy as organization is selling product which are different from other organization and have
quality attributes.
Skimming pricing
This strategy focuses on setting the price of product high when there is no competition in
market. It helps organization in generating higher number of profits. Apple can use this strategy
to launch its new product into market and can set its price according to their own will.
From all of the above strategies which are discussed above, Apple should use competitive
pricing as it can help organization in competing against its competitors and also helps in gaining
market share. It can be very beneficial for organization to utilize such strategy as it can help
Apple in boosting its profits.
CONCLUSION
This report concludes about management economics which is explained as process of
understanding about concepts and theories which are associated with economics. Analysing
demand of products is important in economics and it also focuses on taste and preference of
consumers. This report concludes about negative implications which can affect demand of
products and how expectation of clients can be met by taking effective steps.

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