What's Eating Jdavies?

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On Planned Price Drops

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Apple drops the price of it's iPhone 8GB from $599 to $399, a few hours after announcing the launched of the new iPod Touch.

The usual breaking news from Apple just makes one think about marketing principles. Is it too early for a drop? What were they thinking?


My two cents on planned price drops:
1. Consider base's negative opinion on a price drop.
Is it negligible and will have no adverse revenue impact?
Apple had this factored in for sure.

The brand is too strong to get a backlash.
I would hope they don't overdo the price-slashing -
it might erode the premium positioning.

2. Is the goal primarily to speed up market share
and stay ahead of competition? Seems to me
the rationale of Apple at this point.

3. Is it being done to maximize average revenue along product lines?
That is, is the new volume from the new $399 8GB being used to compensate for low sales in the 4GB model?

4. Is it to early for a price drop?
I would have waited until October for the Holiday Season.

5. No rebates for the one who bought the iPhone just 2 weeks back.

6. Is the price drop and marketing share being used to cement positioning of the brand?
I think there should be a law to protect consumers about that. But regardless, the volumes should make it happen. An interesting point is whether Apple is spreading itself too thinly by launching multiple devices? My bet - it doesn't matter at the moment because they have prime mover advantage and they are the clear market leader.

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posted by Jdavies @ 9/06/2007,

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The Author

J.Davies

Jdavies lives in Quezon City, Philippines and has been blogging since 2002. A brand manager in a leading technology company and a freelance new media/web strategy consultant, he has refocused his blogging from personal, political & sociological observations, to marketing-related efforts and Internet trends that are relevant to his career and branding advocacies.


About This Blog

This blog is a depot of thoughts and observations on marketing trends which remain personally relevant to the Author as far as his marketing career is concerned. Having evolved from the personal blog of Jdavies, much of the earlier work contained herein are laced with personal speculation, political views, and similar advocacies. These posts are being kept for posterity's sake and for no other reason. No effort is being made to claim that the author will not contradict himself from his previous positions or that such advocacies are absolute.

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