Transcript Background Information of iPads

Economics Project
Done by: Eddie Poh
Jay Lim Wei Heng
Sandeep Singh
Shaun Ng Yan Jie
Chu Wee Sheng
Background Information of iPads
The iPad was announced on January 27,2010
and released in the USA on April 4,2010. It
is then on sale in parts of Europe, Canada
and Australia by the end of April.
How is the price of iPad decided?
The iPad is priced between $499 and $829, depending
on the different models. This price is set due to the
interaction between both the buyers and the sellers.
Market research is conducted to find out both how
much people is willing to pay for the iPad and also to
see how much Apple is willing to sell the iPad .Also
,as all firms seek to earn profits ,the price which the
iPad is sold at should be more than the price to
manufacture it.($259.60)
Products related to iPads
One related product would be the iBooks application
announced in conjunction with the iPad. iBooks is an e-book
application by Apple Inc .Users of this app are able to read
electronic versions of books on the iPad, with more books
available for purchase on the iBookstore. Also, there are
additional features such as changing the font and text size of
the book. Another iPad accessories would be the iPad case
which can be used to stand the iPad in various positions.
Substitutes (Consumer’s point of view)
Substitutes are products that buyers perceive as having some
characteristics and utilities in common. Examples of substitutes are
Samsung Galaxy Tab, and Motorola Xoom, which satisfy the same wants
and needs the iPad does and even have better features and specifications.
Since the prices of these Android tablets are lower than that of the iPad,
consumers may choose to buy them over the iPad to maximize
satisfaction. As a result, the demand for iPad will therefore decline (the
rate of decline depends on how close the 2 goods are as substitutes),
causing an inward shift in the demand curve for iPad and resulting the
equilibrium price for iPad to drop.
Compliments (Consumer’s point of view)
Complementary goods are goods which are consumed at the same
time; as a result, the demand for one will increase if the price of the
other falls. One example of complementary goods for iPad is
“Apps” (known as applications). The increase in the price of iPad
“Apps” such as iBook and Pandora will lead to less quantity
demanded and hence a decline in the demand for iPad since they
need to be used jointly. Furthermore, the prices for these apps are
cheaper on other Apple devices such as the iPhone. This causes an
inward shift in the demand curve for iPad which results the
equilibrium price to decline. The rate of decline in demand for iPad
will depend on how close are the two complementary goods. Thus,
consumers will seek to purchase the iPad at a lower price.
iPad market in China (producer’s point of view)
The iPad has already entered the Chinese market. Apple
plans to have 25 new stores in China by the end of 2011,
making the iPad available for purchase in China. As a
result, the supply of iPad will increase, shifting the supply
curve to the right. This would mean a decrease in quantity
demanded. However, analysts predicted strong demand
for the iPad in China as a result of China's growing
luxury goods consumption. Thus, there would be an
increase in both supply and demand for the iPad. The
increase in demand leads to a higher price, while the
increase in supply
leads to a lower price. The effect on equilibrium price
depends on which curve shifts more.
Unforeseen circumstances like natural disasters
(producer’s point of view)
Unforeseen circumstances may also affect the marketing and
pricing decisions. Take the earthquake in Japan, for instance.
Certain parts for the iPad are manufactured in Japan. Due to the
earthquake, production has ceased. Furthermore, it is difficult for
Apple to secure a supply of these parts from an external, nonJapanese source. As such, since not enough iPad parts are
produced, the number of iPads that can be produced will also
decrease. Thus, the supply of iPads will decrease in the short run,
shifting the supply curve leftwards. As a result of this, Apple will
increase the price of iPad as consumers attempt to outbid one
another in order to get the iPad.
Acknowledgements
http://www.wikipedia.org
http://en.mimi.hu/marketingweb/substitute_products.html
http://mashable.com/2010/01/27/9-upcoming-tabletalternatives-to-the-apple-ipad/
http://www.economicsdictionary.com/definition/complementary-goods.html
http://news.bbc.co.uk/2/hi/8590300.stm
http://www.eweek.com/c/a/Mobile-and-Wireless/10Essential-Apps-Every-iPad-Owner-Should-Have-310714/
http://blogs.abcnews.com/theworldnewser/2010/09/cheersin-china-at-ipads-launch.html
http://www.bloomberg.com/news/2011-01-31/androidtablets-gain-on-ipad-in-fourth-quarter-researcher-says.html
http://www.bbc.co.uk/news/business-12782566
Thank You!!!!!!
