Page 1 of 2The release of a new iPhone often leads to too many will be produced
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Page 1 of 2The release of a new iPhone often leads to too many will be produced creating a lot of unsold stock. The pricing team large crowds queueing before it is available to buy. Suggested topics to investigate The pricing team has conducted a worldwide The price is right: How much should the new iPhone cost? Man Isha Kaur, Keith Newmon and Lee Fawcett, Ncante nkwrat estimated that they would only he able to produce 10 million units if the iPhone 6 was sold at this price, and that the selling price would have to he at least EO0 for enough phones to be produced for Apple to reach its people whether or not they would be willing to buy the iPhone 6 at a range of prices. Using from other iPhone and Apple products, the pricing team made the estimate that 20 million sales of the iPhone & would only be reached if the price was at most E500, and that if the iPhone was sold at VO0,sales would anly reach 4 million. Hence, the pricing department has to calculate an appropriate sales price for the iPhone 6 that would sell the amountof units that can be produced at that price, without high end smartphone market is a very lucrative and competitive sector. Apple have been the market leader for manyyears since its pioneering iPhone was released in 2007, until recent figures suggested that South Korean firm Somsng now have the greatest operating profits, eclipsing Californian-based Apple for the first time. In order to regain their position as the market leader, Apple wll have to choose the retail selling price for their new iPhone& very carefully. For several years, the smartphone market has acciD22/NCC1013 Case Sad Consider the effect of increasing the cost of an iPhone in terms of the number of phones Apple produce, and the number of phones they expect to sell. Then consider the what products. But with many phones being released on Google's Android operating system there is now heavy competition, with other alternative phone operating syatems also looling to expand in popularity such as Micrusoft Windows Phone, Pirefox, Whuntu and Blackberry S 10. Samsung and their flagship Galaxy S series of smartphones have recently knocked Apple off the top spot in the smartphone market Inorder Think of any ways to model these effects in terms of the supply and demand Look again at the last sentence of the case study. Can you help the pricing department find a solution to their dilemma-is it passible to find an optimum price that strikes a balance Can you alsa convey your findings using suitable visual methods? Do you think Apple can hit their sales targets? How mach revenue do you think they could Apple currently creating a new mobile phone model, the iPhone & and wants to reach the sales goal of 20 million units. One of the major The iPhone 5S was released in Septemher 2013, with 'successor, the iPhone 6, due for new product that would he compatible with both Apple and its customers. A team focused on pricing is currently directing some research pricing team thathe higher the price the and calculations to establish the hest price for iPhone 6 sells at, the greater the number of The production department has informed the phones that can be made. Hence, it is ery important to get the price 'right': if the price is too low, not enough phones will he producerdExplanation / Answer
1.According to this case study the effect of number of phones that Apple can sell and number of phones that they will produce is directly related to the price of the phone. As a producer point of view higher price will lead to more production. But how much do they expect to sell also determines the prices as higher demand will definitely surge the price.
if the price decreases then Apple will be able to produce less phones and will not be able to meet the market's demand. So this will create imbalance in the market.
2. This is very much clear from the aspect of demand and supply. Aplle wants to sell more numbers of phone as the prices people pay for that is very high and profitable for Apple.
While if the price increases too much demand will fall down as detected in the survey. And then the production will not be profitable at all.
3. The dilemma of number of phones to be produced is quite challenging because they have already set sales goal which turned out to be superficial according to the survey. So they can't stick to their presumed price of $700. AS AT $700 only 4 millions pjones will be sold whic is not profitable. it will generate income of $2800 only.
While At $550 only 10 millions phones can be produced. The income that is generated by selling these 10 millions phones is $5500 which is greater than $2800. Also if they price the phone at $500 they will be able to sell 20 millions and earn $10000 millions. This is clearly much higher than other profits but they won't be able to cover up the cost of peoduction. So the optimum number of production should be 10 millions and should be sold at $550.
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