iPhone Rebates and Credits
9.07.2007
Thinksecret.com banners the Apple decision to give its iPhone early adapters a $100 credit after dropping the iPhone price $200 just two months from its release.
I've always thought that the price drop is premature, and could have waited at least a month even if they want to push for Christmas. In an earlier post, I figured Apple would definitely have in mind the possible negative backlash on the opinion. As it turns out, a $100 credit is on the pipeline.
The goodwill is planned to effect Apple stock price, more than basic revenues from physical goods. Apple is technically not giving away any money - even if it appears to be so! The credit is going back to the Itunes store (which effectively means Apple still gets your money back in revenues while increasing sales in other products)
From the accounting books point of view, they will merely transfer actual $$$ from iPhone revenue to Itunes store revenue when you buy using the credit, no revenue loss, save perhaps for a percentage computed for unrealized iTunes sales. Which of course can be a negligible cost-of-sales.
If the customer doesn't want to use the non-cash convertible credit to purchase Apple, it can always be sold on ebay for say, 80% the face value. Apple still gets the money back when redeemed! Instant hype over what seems to be a freebie.
Now that my friends is brilliant!
Labels: Apple, Price, Strategy
posted by Jdavies @ 9/07/2007,
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On Planned Price Drops
9.06.2007
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.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.
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?
Labels: Apple, Positioning, Price
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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