How does Apple do it? Case Study on Premium Pricing
In the previous post we discussed how you can charge premium price without losing sales and still have customers love your products. No one does this as well as Apple, the most valuable company in the world by market value. Apple never competes on equal playing field with their competitors. They write their own rules and come up with innovative products that no one has dreamed off year after year. Their slogan explains how they have been able do this – Think Different! As a result Apple has been able to charge premium price for all its products and enjoy remarkable sales growth and margin for a long time. What is their secret sauce? In this post we attempt to decipher their strategy by understanding how they apply the rules of premium pricing we described in the earlier post. Differentiation – You can recognize Apple computer in the
middle of hundred others from a mile away. With their distinctive aluminum casing and signature logo Apple computers are in class of their own. There is no apple-to-apple comparison between them and those from competitors. When all other computer makers are fighting for sales with low price Apple holds its ground and commands premium. And still when you ask any college bound kid what computer he wants without a doubt the answer will be Apple. No wonder Apple enjoys double-digit margin on their products when other PC makers are happy to achieve even 5%. Quality – All Apple products are known for their workmanship and quality. They last for a long time, although most people do not want to hold onto them for too long because they are always itching to get their hands on the next interesting thing. When you do run into problems with Apple products their customer service takes care of them quickly. Anyone who has visited their “Genius Bar” in Apple Store understands this. Must-have Products – Show me someone who doesn’t desire Apple products and I will show...
Please join StudyMode to read the full document