Apple (relatively) recently introduced different “versions” of the iPhone and iP

Question

Apple (relatively) recently introduced different “versions” of the iPhone and iPad—in particular, currently Apple sells four versions of the iPad (iPad Air, iPad with Retina display, iPad mini with Retina display, and the iPad mini-- http://www.apple.com/ipad/compare/). Note that the “top of the line” iPad and iPad mini are available with hard drives that range from 16GB to 128GB, and with the A7 chip. The other versions of the iPad and iPad mini are only available with a 16GB hard drive and feature slower chips (A6X and A5), but at a lower price than the top of the line models. Briefly explain why continuing to sell the older models when the newer generation’s models are introduced is an example of price discrimination. How does this help Apple reach a larger market? Why are the lower tier models are currently only available with the 16GB hard drive, when previously (when they were the top of the line models) they were available with larger hard drives? When the iPad mini was first introduced, industry experts estimated that for every 4 million iPad minis that were sold, sales of the full-sized iPad would decrease by 1 million units. Assuming that is the case, explain why introducing the iPad mini was a good idea, even with some level of cannibalization.

Explanation / Answer

A very important concept in introduction of a product or service in market is how the company wants to capture the market and how it segments its customers.

Apple is a premium brand and company understands as well as utilizes it by pricing its products higher than it competitors. However, only a few are able to purchase top line of product and thus is limited to high class or working class with higher salaries.

However, still there is a very large segment of customer who go for cheaper products such as Samsung, LG, Sony for fulfilling their desires of having a Ipad.

            To counter this strategy, the company uses a strategy to offer lower priced products with fewer features in comparison to top line of products. This enables the company to capture the market in developing nations and masses that are not able to afford the high line of products.

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