Management Economics: Apple iPad Pro Market Analysis

This report analyzes the market demand, price elasticity, and market equilibrium of Apple iPad Pro in the context of management economics. It provides a description of Apple Inc. and its core products, discusses the demand and market equilibrium of the iPad Pro, and explores factors that affect price elasticity of demand. The report also considers consumer income, taste and preferences, and expectations of price, as well as demographic factors. The conclusion suggests pricing strategies for Apple to boost sales and profitability.

MANAGEMENT
ECONOMIC

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Description of business..............................................................................................................3
Demand and market equilibrium.............................................................................................4
Factors effect price elasticity of demand.................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Management economics refer to those applications of micro and the macro economic
concepts and theories like the supply and demand and the price elasticity & equilibrium of
market to solve the issues in the management level and helps in getting the decision making.
Management economics is important for the companies to understand the market demand and
make the services according to the demand and provide supply. Apple is one of the leading
electronic company working globally and providing the best service in the market with its
software name IOS which is different from all the other competition in the market. This report
will help in understanding the business process of apple with a brief history about the company.
The demand and equilibrium will be evaluated in the report to access the effect on the chosen
product. Further in report the income effects and the substitution of the product will be discussed
to know the market competition(Gvili,2020).
MAIN BODY
Description of business
Apple Inc, formerly known for Apple Computer Inc., it is a multinational corporation
which create the consumer electronics, computers, software, phones, iPad etc. The company
works globally and have a chain of stores known as the Apple Stores. Its core product line
includes the iPhone smartphone, iPad tablet computer and Macintosh computer range. Apple is
founded by Steve Jobs and Steve Wozniak who created the famous apple computer in April 1,
1976 and incorporated the company on 1977 January 1st. For more than 3 decades the Apple
were predominantly the manufacturer of the personal computers like Apple II, Macintosh, power
mac etc.
After the launch of successful iPod music player in 2001 and iTunes in 2003, apple
established itself in the electronics market and become the one of leading in the segment. When
Apple started iPhone followed by the iPod touch and iPad. The company reach the maximum
sales and the profit and as on 30 June’2015, apple become the largest public trade in market
capitalization worldwide(Duan,2017).
Apple is one of the top brands in the electric and smart devices and is leading the market
with its technology name IOS, it is one of the most popular people choices in the UK market as
it provides the best quality product in its collection and variety of products in the premium
budget. There are various of operator in the UK market which give the competition in the
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smartphone categories but none can match the quality the company is providing and the services
company give to its customer. The fact which make apple one of the leading companies is
because thy never compromise in the quality and are a customer oriented in service terms. They
are always focused in providing the best of the service to its customer and never compromise on
anything which can let their customer to its competitor. Apple make product which are built to
easily upgrade on the next generations which is one of the reasoned the company is so known
for. The main segment of premium product is the Latest Apple iPad pro. The further project
will be focused on the product of the Apple iPad pro and elaborate the market equilibrium and
demand and price elasticity accordingly.
Demand and market equilibrium
Price of substitutes
Substitute of product refer to those products which can be utilise or used in the same way
like the other product. It is a goods which can be used in a place of another product. They are
basically the product and service in the product market as those which work as same as similar to
another product and service in the market. The substitute of the product iPad pro is the Samsung
pad, note 20, smart watches etc. The demand of the substitute product increasing and they are
dividing the market in different segments as people can choose the product and services
according to their preferences and interests. Those customers who want to do a lot of working on
the big displays will go for the iPads and Pad of Samsung and other brands but the change in
market trends include the smartwatches which can do the working as similar on few terms and
can be used at any place for a longer period of time and is a keen interest of the consumer these
days. Substitute product affect the company product a lot as the market been divided among the
product according to the customer choices, for that Apple need to understand the market on a
wider term to get the best result in the market and can promote their product and increase the
premium product sale to get the benefits out of the product they are offering to its
customer(Ahmar,2016).
Price of complements
Complements product for the iPad pro are the touch pencil and the keyboard feature
which can help the consumer in operating the iPad pro more easily and can do the working on
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more effective way. The complement product and accessories help in getting the work done in an
effective way and this feature from Apple is loved all over the globe and making the sale
increase than its competitor. It is one of the service Apple is providing to its customer for the
money they spending on the product. Company is all focused in providing all the new
technologies to its customer and the iPad pro touch pen helps the consumer work the pad like a
notebook and can help in making a lot in the 3D and other art s also. Thew pen helps the
designers and the architecture a lot in the design with all the latest software preinstalled in the
product.
Consumer Income
The consumer income is an important part for the company and according to the latest
pandemic of covid-19 the recession takes place and lots of people have lost their jobs and are
facing the crises. To buy such premium iPad its not easy for most of the customer to buy and
give such huge amount of money in a pandemic situation. The recession is hitting the customer
so hard that they are not able to purchase things and it is causing the decrease in the sale of the
company and for that the company is planning new strategies to over come these issues and
trying new ways to find the best for the company product. The company have plans for the
product in the pandemic situations(Teece,2019).
Consumer Taste & preferences
The taste and the preferences in the UK market is all about the latest technologies and
the innovation. UK market people are always to the new technologies and it is helping the
company as the company is providing the latest technologies in their product the iPad pro which
include the stick pen and the keyboards. It is a perfect balance product including the high
quality and the latest technologies. It is one of the most like product in the market as the
company is well know for its quality and technologies and the new trend is all set to achieve the
business goals for the Apple by its latest product of iPad pro. The taste and preferences of the
UK customer rely on the quality product which give a benefit to the Apple.
Consumer expectation of price
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The expectation price of the customer according to the brand name before the product
launch is 850 pounds, Which the company released the price of its 2 variants in the product
according to the screen size by 799pounds and 999pounds variants, which were acceptable from
the customer. The covid-19 situation is hitting the company so hard and affecting the market of
the company. Because of this the company is focusing in decreasing the price and giving the
rewards features with the product including the cashbacks on the particular site and bank
purchase. Apple is taking no risk for its product iPad pro and is keep on trying to match the
market needs and keeping the value of its products by providing the different
schemes(Dempsey,2019).
Demographic
The number of the consumer in the UK market are so high that the company provide the
varieties of choices and product to its customer. The demographic factor of the product iPad pro
is so versatile that the product cover most of the demographic factors of the consumer market as
it is a product with versatile feature to adapt the market easily. As one of the leading brand in the
market helps the Apple in getting the business trust and the trust from its customer which help
the company in its sales and services. The apple iPad pro is a product which can be used by the
people of above 16 years age and can be used by every person as it gives the best qualities with
features like low light to make sure that the eyes doesn’t pain if they watch the screen for longer
period. The price segment of the product is from 799 to 999 pounds in all segments(LaCour,
2019).
Factors effect price elasticity of demand
Price elasticity is a concept of economics which pointed out the fact that in case the price
of the product is increases than it would reduce the demand of such a product. In case the price
of the product is decreases than it will boost the sale of such a product (Campbell, 2018). The
concept furthermore, emphasis that in case the price of product get increases than customers
would go for the substitute products available in market in context to that product customers are
using. In this situation sale of competitors would also increases as customers would look to buy
the same products of other brands and companies offering the competitive price. Various factors
that put an impact over the concept of economics call as price elasticity of demand can be
projected in following points.
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Substitute effect
Concept given in economics denoted as price elasticity of demand involves substitute
effects as the key factor that influences the product demand in case of the price of the product get
increases. In case the price of product get an increase than customers in market would go for the
substitute products (Li and et.al., 2016). Demand of all such products in the market that can
replace the use of I Pad Pro of Apple Company. Other substitute products like phone and other
products will get an instant boost in sales due to the price hike of the I Pad Pro. If the substitute
product is more economical for customers than they would switch on buying such products. In
case the Apple Company increases the price of its I Pad Pro product range than customers would
also look for the other I Pad options available in market. In case such companies offer I Pad in
more economical price than customers would go on buying such products offer by other
competitors.
The concept of price elasticity of demand also get affected the type of product company
offering. I Pad is a luxury category of product and it’s not a basic product or a necessity of
customers. In case of customers buying luxury product this concept does not work aggressively.
Apple Company carry a huge brand image and the product price of company is generally high as
compare to other competitors like Samsung and all other competitors available in market due to
immense brand value of company (Tucker, Laugesen and Grace, 2018). The brand value of
company also denotes that company also contains the immense amount of loyal customers who
would buy the Apple products only even if the company increases the price of its product line. In
case of luxury products customers also look at the quality and services. In case of I Pad
technology company provided like the battery power, storage capacity and many other features
also put an impact over the sale of such product. It can be projected that even if the company
increases the price of its I Pad product range company would still be able to sustain the majority
of customer’s base due to high brand value, product quality and features and its luxury nature of
product. On the basis of the above analysis it can be projected that the luxury products are
inelastic in nature due to various aspects discussed above in relation to such products.
Income effect
Income effect denotes that in case the income of people get an increase than it will boost
the demand of luxury products in market. I Pad is a luxury product offers by Apple Company. In
case the income of people will increase than people would look for buying luxury products such
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as I Pad of companies like Apple and other top brands. Income effect in economics is a simple
concept that denotes that in case the income is increases than it will boost the sales of luxury
products available in market. Increased income would allow the customers to spent more to fulfil
the desires they hold. His concept is well justified as it can be witnessed that in countries like
America and other developed nations the demand of Apple products are high as compare to
developing nations where the demand is less (Gligorić and et.al., 2020). The high demand of I
Pad product of Apple Company in developed countries where the per capita income of people is
much more than as compare to the developing nations like India and other denote that fact that if
the income of the people get increases than they would switch to the usage of luxury products
like I Pad of a top brands like Apple. In case the income of people get decreases than they would
spent less and save the purchasing capacity by procuring only the basic products they need. If the
income of people get decreases than customer would buy more the necessity rather than going
for luxury products purchase. This entire analysis project that demand is more elastic.
Pricing policy should employ by company
Apple Company is a big brand that allows company charge higher prices of its product
range I Pad. Company can go for competitive price which will allow company to boost its sales
even in developing countries like India where the per capita income of customers is usually low
as compare to developed countries where the income is high (Kucherenko and Dybvik, 2019).
This pricing policy would support the Apple Company to boost its sales growth and also the
profitability by generating more product demand. The price elasticity of demand concept also
favours this pricing policy. As if the product price is decreases than company would generated
more demand in market.
CONCLUSION
This report have emphasised over different concepts given in economics. Price elasticity
of demand denotes that if the price of the product is increases than it will boost the sales of such
products in market. Various factors put an impact over the sales of company’s products like
substitute product, [rice of compliments, consumer income, consumer taste and preferences,
consumer expectations and demographics. All these factors put an impact over the product sale
in market. In order to generate the high sales potential company needed to cope up with all these
factors that affect demand.
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REFERENCES
Books and Journals
Ahmar, A., 2016. Predicting Movement of Stock of Apple Inc. Using Sutte
Indicator. Proceedings The 3rd AISTSSE Trends in Science and Science
Education.Online
Campbell, A., 2018. Price and income elasticities of electricity demand: Evidence from
Jamaica. Energy Economics. 69. pp.19-32.
Dempsey, P., 2019. The teardown: Apple iPad pro. Engineering & Technology. 14(2). pp.80-81.
Duan and et.al., 2017. Genome re-sequencing reveals the history of apple and supports a two-
stage model for fruit enlargement. Nature Communications. 8(1). pp.1-11.
Gligorić, D. and et.al., 2020. Estimation of Price Elasticity of Demand for Cigarettes in Bosnia
and Herzegovina–Macro Data Analysis. Economic Analysis. 53(1). pp.59-
71.
Gvili, Y., 2020. Security analysis of the covid-19 contact tracing specifications by apple inc. and
google inc. IACR Cryptol. ePrint Arch.. 2020. p.428.
Kucherenko, A. and Dybvik, J. S., 2019. Price elasticity of demand in air passenger transport
markets: A meta-analysis (Master's thesis, Høgskolen i Molde-Vitenskapelig
høgskole i logistikk).
LaCour, J., 2019. iPad Pro Impressions.
Li, X. and et.al., 2016, July. Optimal load interactive strategy based on price elasticity of demand
in smart grids. In 2016 35th Chinese Control Conference (CCC) (pp. 9919-
9923). IEEE.
Teece, D.J., 2019. A capability theory of the firm: an economics and (strategic) management
perspective. New Zealand Economic Papers. 53(1). pp.1-43.
Tucker, M. R., Laugesen, M. and Grace, R. C., 2018. Estimating demand and cross-price
elasticity for Very Low Nicotine Content (VLNC) cigarettes using a
simulated demand task. Nicotine and Tobacco Research. 20(7). pp.843-850.
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