Apple Inc: Analyzing Penetration Pricing for Customer Attraction

This report examines the impact of penetration pricing strategy on customer attraction for Apple Inc. The study begins with an introduction outlining the research aim, objectives, and questions, focusing on how lower initial prices can attract a larger customer base. A literature review explores the concept of penetration pricing, its advantages, and its significance for companies like Apple. The research methodology involves a deductive approach, quantitative research using questionnaires to gather data, and frequency distribution analysis for data interpretation. The analysis aims to determine the relationship between penetration pricing and customer attraction, with the conclusion and recommendations summarizing the findings and suggesting strategies for Apple to enhance its customer base through this pricing approach. The report emphasizes the importance of penetration pricing in increasing customer interest, building brand loyalty, and gaining a competitive edge in the market, particularly for a high-end brand like Apple.

SELECTION OF PENETRATION OF
PRICING STRATEGY IN A
BUSINESS OFF APPLE INC
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Abstract
The main purpose of this dissertation is to determine the major impact of penetration pricing
strategy in attracting customers towards new product or services of Apple Inc. There are
different activities used for completing current dissertation in systematic manner. Introduction
was first activity that was done by developing aim and objectives. Literature review is another
activity that was completed by using secondary sources i.e. articles, books, magazines etc. These
sources helped investigator in gathering of secondary information and attainment of research
aim. Research methodology is one of the main activities that were done by using different types
of methodologies including deductive approach, quantitative research choice, questionnaire etc.
These are main methodologies that helped researcher in collecting of appropriate information
about the topic. Quantitative data was analysed via frequency distribution analysis. At last
conclusion and recommendation was done by explaining entire information in systematic manner
that result in attainment of all objectives in successful manner.
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Contents
Abstract............................................................................................................................................2
Chapter 1: Introduction....................................................................................................................4
Overview of the title....................................................................................................................4
Background of an organisation....................................................................................................4
Research aim................................................................................................................................4
Research objectives.....................................................................................................................5
Research questions.......................................................................................................................5
Rationale of the research.............................................................................................................5
Significance of the research.........................................................................................................5
Chapter 2: Literature review............................................................................................................6
Chapter 3: Research Methodology..................................................................................................9
Chapter 4: Data analysis and interpretation...................................................................................15
Chapter 5: Conclusion and Recommendations..............................................................................23
Conclusion.................................................................................................................................23
Recommendations......................................................................................................................23
REFERENCES..............................................................................................................................25
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Chapter 1: Introduction
Overview of the title
Penetration pricing strategy refers to the marketing strategy applied by an organisation,
with aim of attracting larger base of customers towards new services or products offering a lower
price or cost during its initial offerings. This is essential for an organisation because it will help
an innovative service or products penetrate the market as well as attract customers away from
competitors. There are different advantages of using penetration pricing strategy for an
organisation. These are: increased customer interest, reduced competition, more brand loyalty,
increased sales and many more (Roma, Panniello and Nigro, 2019). All these are main
advantages of penetration pricing strategy that will be beneficial for an organisation in
attainment of competitive advantages in successful and within minimum time period. Along with
this, penetration pricing strategy is a type of pricing strategy which is applied to speedily gain
market share through setting an originally low price to induce customers to buy. Such kind of
pricing strategy is mainly applied by new entrants into a market. There is different rationale
behind selection of penetration pricing i.e. capture market share, develop brand loyalty, switch
customers from competitors, drive competitors out of market, create significant demand etc.
There are different advantages of penetration pricing for an organisation including high adoption
and diffusion, marketplace dominance, economic of scale, increased goodwill, high inventory
turnover and many more. These are major advantages of penetration pricing that will help a
business organisation in attraction of maximum customers within less time period.
Background of an organisation
Apple Inc. is a chosen organisation for this project. This is an American multinational
technology company that is specialising in selling of Smartphones and tablet. Company was
founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne and headquartered in
Cupertino, California. The product of Apple is available at hire cost that only attracts high
income class people. There is requirement for company to also attract middle class people by
using penetration pricing strategy. By using this pricing strategy, Apple Inc. can easily attract
larger number of customers. This pricing strategy helps them in selling of their products at
minimum cost. For this apple can introduce new features in smartphones and tables at minimum
rate. This turn to impact in increasing of their sales and customer base within minimum time
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period. Main purpose of Apple Inc. is to increase customer base that is only possible by using
penetration pricing strategy.
Research aim
“To identify the impact of penetration pricing strategy in attracting customers towards
new product or services. A study on Apple Inc.”
Research objectives
 To develop basic understanding regarding the penetration of pricing strategies in context
of an organisation.
 To determine the significance of penetration pricing strategy for Apple Inc.
 To examine the relationship between penetration pricing strategy and customer attraction.
Research questions
 What is penetration of pricing strategy in an organisation?
 What is the significance of penetration pricing strategy for a company?
 What is the relationship between penetration pricing strategy and customer attraction?
Rationale of the research
Main rationale behind selecting this topic is to identifying the issues of lack of customer
base within an organisation. This is a main reason behind doing this investigation and for this
penetration pricing strategy will be used because it will support an organisation by incurring
customer base. High customer turnover is not good for the growth and success of an organisation
because it reduces brand value in marketplace (Chan, Fung and Ng, 2018). This research is
related to Apple Inc because this will help them in identifying the significance of using
penetration pricing strategy. By identifying this, Apple Inc can easily attract larger customer base
that turn to impact on their sales and profitability in positive manner.
Significance of the research
Current research is significant for an individual, organisation and many other stakeholders.
For individual, this dissertation help researcher by enhancing their different types of research
skills such as literature review, time management, communication, data collection and so on.
With the help of all these skills, researcher can easily complete each activity of dissertation in
systematic and successful manner. For organisation and other stakeholders, present investigation
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helps them by improving their knowledge about penetration of pricing strategy along with its
effectiveness in attraction of larger customer base.
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Chapter 2: Literature review
Literature review refers to the systematic process used for collecting secondary information
from articles, books, magazines and many other sources applicable to the topic. Main aim of
literature review within dissertation is to recognise the research gap. In current dissertation main
gap of literature is the impact of penetration pricing strategy in attracting customers towards new
product or services. In previous studies, there were lots of information available regarding the
use of penetration pricing strategy in an organisation, but there were lack of information
regarding the effectiveness of penetration pricing strategy in attraction of larger number of
customers towards the brand. This is a main gap and for fulfilling this, research questions will be
used that will also help in attaining of each objective successfully (Ahmed, 2020). Research
questions of the current dissertation will be explained as below:
What is penetration of pricing strategy in an organisation?
According to the Grace Baldwin (2020), penetration pricing strategy is used to gain the
market share through setting low cost initially to be enticing the consumers to buy. It is mainly
used through new entrants to enter into the new market. It is when firm forego margins for sake
of the drawing users to products and services. Aim of penetration pricing strategy is to introduce
the customers to product at minimum risk, collect interest in product and develop the brand
loyalty. The different objectives related to the market penetration strategy are introducing
customers to product, create market share, and undermine the established market leaders and
others. These objectives can be attaining by providing the products at minimum cost. Through
using this strategy, company is trying to gain the foothold in the more competitive market. Apple
Inc. penetrates market through providing products with high quality than competitors. Through
pricing below what the existing customers expect to pay, firm can enhance the product
awareness and attract the consumers faster. In regards to this, instead of having to be compete
with the brands solely on value service and product provides, penetration strategy assists the firm
to acquire the new consumers by cost alone. Other than this, competitive nature of the products
and also sheer choices, many consumers have make this complex to gain the footing in new
marketing without acquisition strategy. The product adoption and rapid customer acquisition are
main advantage of the penetration strategy marketing. It can help in attain the market dominance
and also eliminate all but serious competitors. When executed in successful manner, sales
volume could offset income lose due to the promotional costs.
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What is the significance of penetration pricing strategy for a company?
Matt Ellsworth (2019) stated that Penetration pricing is when the produce is cost less than
competition to drive the sales at initial release period. It is pricing strategy that used through the
different brands for product that has the more competition. Minimum cost helps to penetrate
market through getting attention of large number of customer than high cost. The rationale
behind using the penetration pricing strategy is that this is an easiest way to differentiate the new
entrants from the existing market players. Apple Inc is a multinational brand that produces their
products at higher cost. This mainly eliminated middleman than the result in the cost saving. It
assists Apple Inc to sell their products for the high profit margin than the national brands.
Significance of the pricing strategy for Apple Inc mention below:
Increased Customer Interest- The penetration pricing works for the Apple Inc because
the shoppers will be more interested in the minimum cost option providing the quick enhance in
the sales as well as word of mouth right at start. This can take the customers away from
competition (Arbatani and et. al., 2019).
More brand loyalty- This kind of pricing strategy has significance of improving the
brand loyalty around product launch. Minimum cost brings in the new consumers and goods that
mainly provides the better quality and value will keep around once cost enhances.
Economic advantages- In long run, use of the penetration pricing permits to generate the
high volume of the sales that mostly compensate for minimum cost. As firm grows, this should
expand distribution channels with objective to make improvement in the customer service,
optimizing sales and enhance influence area of brand (Ramanathan and Sonia, 2018).
Customer acquisition and loyalty- Entering market with the cost are less than
competition will attract attention of the potential consumers. The penetration strategy helps form
to attain the more sales to make the business more profitable. This pricing strategy is helpful in
providing the effective products to consumers and also make them loyal.
What is the relationship between penetration pricing strategy and customer attraction?
WARD (2019) is a writer that said that penetration pricing strategy is a strategy that helps
an organisation in attracting of larger customer base towards the product or brand. The firm
providing the new offering by using the penetration pricing to the garner high market share of
consumers. There is a direct relation among the penetration pricing and the customer attraction.
The penetration pricing is the competitive marketing strategy that aims to enhance the sales
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through attracting large number of customers to the new goods at the initial minimum cost. It is
mainly designed to be entice the discriminating consumer searching for reduced costs. This
consists initial prices services or items less than competition in context to attract the more
customers. Other than this, lower cost assists new service or product penetrates market and also
attracts the consumers away from the rivals. If the company sell enough of product or service at
minimum cost, then they may take the benefit about economies of scale and maintain profitable
margin through negotiating the minimum wholesale costs with suppliers.
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Chapter 3: Research Methodology
Research methodology introduces the process of gathering and evaluating information about
the specific area of study. Main aim of methodology with dissertation is to gather accurate data
about the topic. Primary and secondary methods of data collecting will be used within a research.
For collecting primary information, questionnaire will be applied because it helps in collecting of
quantitative and reliable data within minimum time. For secondary data, there are different
sources that will be applied for literature review. These are books, articles, journals, publication
research and many other relevant to the topic (Ching Wing, 2018). 40 managers of Apple Inc
will be selected for fulfilling the questionnaire. These respondents will be selected randomly
through probability sampling. Frequency distribution analysis will be applied for analysing the
primary and quantitative data collected from questionnaire and for 40 managers. Along with this,
there are different types of methodologies that will be described as below:
Research approach: There are two main approaches of analysing data i.e. inductive and
deductive approach. According to the current dissertation, deductive approach is useful and
valuable for investigator as it assists in evaluating of numerical or quantitative information
within minimum period of time and in systematic manner, that turn to impact in
accomplishment of all objectives.
Research strategy: There are different strategies of the investigation are known as case study,
survey, experiment, action research etc. These are main strategies but in accordance to the
present investigation, survey is a valuable and essential strategy. Main purpose behind
selection of survey is it help researcher to gather quantitative information from larger base
of respondents and within minimum time (Nair and Kshatriya, 2019).
Research choice: This is a process of collecting data from effective research choice. There
are two choices of research including qualitative and quantitative. These are main choices but
according to the current topic or dissertation, quantitative research choice is more valuable for
investigator. Main purpose regarding selection of quantitative type of research choice is it
facilitate in collection of numerical information without consuming additional time as well
as cost. Qualitative is another research choice that is not essential for doing present dissertation
because it takes maximum time and not helps in gathering numerical information.
Time horizon: Time is significant for researcher because without this, they cannot complete
entire dissertation within given time period. This section has two main approaches of time
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horizon are known as cross-sectional and longitudinal. Both are known as main approaches but
in accordance to the current dissertation, cross-sectional approach is valuable for investigator.
Main purpose behind choosing of cross-sectional time approach is it based on actual
situation and facilitate in completion of full dissertation within allotted time period (Nair,
2019). Longitudinal is another approach that is not useful for doing present investigation because
it takes longer time in completion of full dissertation.
Data collection: It is the process of collecting data regarding the topic. There are two
sources of data collection which are called primary and secondary. Both are essential and
effective in gathering of accurate data about the topic. Both methods are used within a
dissertation for accomplishing each objective in successful manner. In order to gather primary
information about the penetration pricing strategy and its effectiveness in attraction of larger
customer base, questionnaire is used because it assist in collecting of reliable and valid data. For
gathering secondary information, there are different sources such as articles, books, magazines
etc. All these sources were used for literature review that facilitate in attraction of each objective
successfully. Therefore, within an investigation, both methods of data collection are valuable for
researcher.
Sampling: This is the essential proves of selecting appropriate sample from total population.
This part of methodology is divided into two parts i.e. probability and non-probability. Both
techniques of sample selection are essential but in accordance to the current dissertation,
probability sampling is most valuable and essential for investigator because it assist them
to select larger base of sample in less time period (Chen and et. al., 2019). On the other hand,
non-probability is another type of sampling that is not essential within a dissertation because it
takes maximum time and not facilitate in selection of larger base of respondents. By using
probability sampling 40 managers of Apple Inc will be selected on random basis.
Research instruments: This is an important section of methodology because it has
various numbers of research instruments i.e. interview, observation, focus group, questionnaire
modelling etc. All these are main instruments of the research that will help in gathering of
information regarding any topic. In order to collect information about the impact of penetration
pricing strategy in attraction of larger customer base, questionnaire will be used. One of the main
reason regarding selection of questionnaire is it facilitate researcher by providing accurate and
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valid information within minimum period of time (Nadanyiova, Gajanova and Moravcikova,
2018). Questionnaire of the current dissertation will be shown as below in tabular form:
Q1 Are you aware about the pricing penetration strategy that can be implemented by Apple Inc.?
a) Yes
b) No
Q2 What are the benefits for Apple Inc. of implementing penetration of pricing strategy for a
business?
a) Reduce competition
b) Increased customer interest
c) Brand loyalty
d) All of the above
Q3 What are the major challenges associated with penetration of pricing strategy?
a) Potential price wars
b) Reduce brand goodwill
c) Inappropriate benefits for long-term
Q4 Does penetration of pricing strategy assist in gaining long term profits for a firm?
a) Yes
b) No
Q5 When can the penetration pricing strategy be implemented?
a) When product demand is highly price elastic
b) Product is suitable for a mass market
c) When the product will face stiff competition just after introduction
Q 6 Why is penetration pricing strategy important?
a) Helps in lowering the competition
b) Assists in achieving high sales
c) Initial start to making a product more profitable
Q7 According to you, what is the major significance of penetration pricing strategy for Apple
Inc.?
a) Higher customer base
b) Helps in attainment of competitive advantages
c) Increased sales and profitability
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