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Marketing Creative Introduction

How Apple uses different pricing strategy!

Bill Li

on 24 October 2012

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Transcript of Marketing Creative Introduction

Psychological Factors of Pricing Odd Pricing Everyday Low Pricing The Price Is Right! Price Quality Relationship Internal Reference Price External Reference Price External Reference Price External Reference Price is a higher price which the consumer can compare with the sell price to evaluate the purchase
e.g. Trenchcoat original $99.99 on sale for $39.99
Apple uses external reference price to sell the new iPhone 5 with a three year contract ($199) vs. the unlocked iPhone 5 ($699) Overall sacrifice consumers make
money, energy, time
Table of Contents:
Internal Reference Price
External Reference Price
Odd Pricing
Price Quality Relationship
Everyday Low Pricing VS High/Low Pricing Instances where odd pricing may not be applied Odd Pricing Odd Pricing Apple example Odd Pricing Setting a price at an odd number rather than rounding it off Odd Pricing Price quality relationship: Apple's most popular pricing strategy
When the first iPod was released, it had one capacity option: 5 GB
When the second generation iPods were released, it came in two different sizing options: 10 GB and 20 GB Although the first generation iPod was lower in price, the second generation iPods allowed for more music and features.
Consumers gradually became aware that as price increased in the Apple products, as did the quality and features. Everyday Low Pricing: companies set their retail prices below the regular non-sale price but above the deep discount sale price their competitors may offer
(e.g., Wal-Mart) High/Low Pricing: temporarily reducing regular non-sale prices to encourage purchases
(e.g., Danier) $ Regular Non-Sale Price $ Deep Discount Sale Price $ EDLP Guess the actual retail price without going over! Guess the actual retail price without going over! This relationship is not limited to Apple

As consumers, we expect that as price of a product increases, a higher standard of quality is met As Future Managers... Important to understand reasons behind Apple's success
Think from consumer's perspective
Use of pricing strategies
Create values to the firm and the firm's products or services Back in 2010? 7-inch iPad What is a decoy?

How does it relate to price? Price Decoy Price Decoy Definition

Media Internal Reference Price
Full transcript