Q1: Provide an argument for why a more variable pricing policy might increase the sales revenue from Apple’s Music Store (compared to the flat pricing policy).
Apple used the concept of variable pricing upon their entry into the world of digital music, in their efforts to identify the structure of pricing and to implement pricing strategies which would promote downloadable data. Variable pricing affects the different cost of a merchandise based on the preferences of the manufacturers. While this varies from flat pricing model, where just one fixed price is utilized for those items that are alike. Take the content of purchasing songs, all cost one price and all movies will cost another. Apple captured the music industry with its entry of variable pricing through the iTunes music store. Nevertheless, this pricing tool (variable) was not welcome with open arms by music executives in the industry, but Apple demonstrated its pricing influence in delivering a product and winning over executives as a result of this pricing strategy and that its policy was here to stay.
Q2: Why do you think Apple moved from one to three price points in 2009? What types of songs do you think Apple tends to sell at the lower prices?
A business is in the market to make money and they are always looking for ways to increase their profit margin. Therefore, if you consider that Apple entry this market in 2003 that now six years later they would be thinking of ways to make more money. So, if you lower the prices of music sold online, you get more people to buy that music, but music sold through other means would take a hit. However, to counter that you would offer the music you sell through other services either cheaper or just a low as that you are sel...
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...t they do, what to earn profit from this sector of their business. However, I think this is the sole objective of the major record companies because that was the objective before and why would it not be now. The problem is that now the artist can market their own music and this takes away from their revenues.
Q6: Do you think that Apple’s ability to control the pricing of downloaded music is likely to change in the future? Explain.
At this point and time, I do not see anyone that can force Apple to do otherwise. Yes, Amazon, Google, Pandora and other media service have come about, but in my opinion Apple has total control of the market at this time. Apple dominated the market for downloaded music. Maybe in time their market power will decline, but at this time I do not see it. The competition has to offer better or more than what is currently being offered.
The major point is that apple music is available anytime and anywhere, which proves it is the superior
The music industry has changed in more ways than we could imagine. At first we started with artists just selling singles, then it transformed over to people buying albums, and then on iTunes started to sell songs for just cents. In the year 2005, Pandora was launched on the Internet and later they created a mobile app. Most of the artist’s music can be found on YouTube. Free downloads have affected this industry as well.
An “analyst” was quoted in the case (in 2002) as saying that “people will pay for music on the Internet, eventually.” This person was skeptical of the willingness of consumers to pay for
We the consumer would rather pay less for any product that is needed or want. Ultimately we are the reason for high prices as well as low prices. Prices of products do not always stay the same and more popular products have higher prices than less popular products. These fluctuations, high prices and low prices are from the idea of supply and demand. Supply and demand defines the effect that the availability of a particular product and the desire or demand for that product has on price. Generally, if there is a low supply and a high demand, the price will be high (Investopedia). To understand the idea of supply and demand, the understanding of supply and the understanding of demand must be defined. The Law of Supply states that at higher prices, producers are willing to offer more products for sale than at lower prices, also that the supply increases as prices increase and decreases as prices decrease (Curriculum Link). The Law of Demand states people will buy more of a product at a lower price than at a higher price, if nothing changes, at a lower price, more people can afford to buy more goods and more of an item more frequently, than they can at a higher price and that at lower prices, people tend to buy some goods as a substitute for others more expensive (Curriculum Link). In todays economics these ideas are seen frequently in everyday life. The laws of supply and demand are seen in many ways in the company Apple Inc. Each year Apple Inc unveils a long awaited mobile operating system and IPhone. We can also see many aspects of the law of supply and demand in Nike Inc’s Jordan Brand. Jordan Brand has released a number of...
As we learned from Chapter 12, price must be carefully determined and match with firm’s product, distribution, and communication strategies. (Hutt & Speh, 2012, p. 300) Therefore, there should be a strong market perspective in pricing. In order to build an effective pricing policy, marketers should focus on the value a customer places on a product or service. One of the most effective ways to do so is differentiating through value creation.
Commercial firms use Price Elasticity to manage pricing and production decisions, especially in industries where the growth in sales and revenues are the primary measure of a firm’s success. Knowledge of the Price Elasticity for a product or service enables managers to determine the pricing strategy required to get the sales results desired. For example, a firm with a product with a relatively high elasticity would know that a large sales increase can be created with a small price decrease. Conversely, a firm with an inelastic product knows that changes in pricing would have minimal effect on sales.
Marketing strategies are based on the 4 P’s or Product, Price, Promotion and Place or Distribution Channel. This section will briefly look into the Product and Pricing strategy of Apple and will illustrate various factors how it has been capable of sustaining competitive advantages in times of extreme competition.
-Competitors: Competitors will regulate what, when, how and why strategies will be adopted. The introduction of new products will greatly influence Apple Ipod.
The problem which our company found with Sony’s music entertainment division was their lack of focus on digital distribution. That is, most consumers do not know the artists or content which Sony Music Entertainment has to offer. Also, if consumers were aware of the content which Sony has made available, most consumers would download it illegally rather than pay for it because they feel that the price is too high. The trend of digitally available content is an essential adaptation for an industry giant such as Sony due to the fast paced “on-demand” society in which we currently live. If Sony could find a way to make its consumers more available of their content and provide it as a reasonable price, the Entertainment conglomerate could prove beneficial by generating large amounts of revenue. This information was determined by first researching the background of the company as a whole and then gathering data via consumer interviews.
...his since they make money for licensing the music for the streaming services. Labels are embracing the streaming services since this allows another way for making revenue in a not so strong music economy.
Back in the late 90s, music fans both young and old would line up for their favorite artist’s album drop and completely sell out shelves of CDs. The music industry was on top and bringing in revenue figures as large as 14.6 Billion in the United States alone in 1999. But with the advent of online music sharing and purchasing, the music industry went on a downward spiral. Pirating and illegal file sharing was made easier than purchasing CDs and paid content resulting in a Cat-and-Mouse game between the record labels and pirating sites. In 2006 U.S. revenues reached 11.5 billion and declined further to as low as 7 billion in 2010.
Pricing is an important aspect of every business. Chief Financial Officer’s (CFO) use pricing to create financial projections, establish a break-even point, and calculate profit and loss margins (Power Point, 2005). It is the only element in the marketing mix that produces revenue. Price is also one of the most flexible elements of the marketing mix as it can be changed very quickly. This is usually done to beat competitor prices in an attempt to fix the product’s market value position very low (Anderson & Bailey, 1998). After all, high prices make it difficult to become the market share leader. The leading US retailer, Wal-Mart, is an expert at low product pricing as evident in 2004 with $250 billion dollars in sales to their 138 million weekly shoppers. However, they are also responsible for reducing prices so low that it drives specialty stores out of business. This is the effect Wal-mart has had on many toy stores and has almost closed the doors of the famous toy store Toys “R” Us Inc.
The numbers actually indicate that the music industry as a whole is not suffering any losses, but evidence does show that “sales of music in record stores rose 12 percent in the first quarter of this year, sales at outlets close to universities – where Napster has been popular – fell by 4 percent” (Parkes,
Suppose that you decide on setting up a store for selling a branded mobile phone. This involves making a good investment and asking the mobile company to give you the best price for 10 mobile phones. Suppose that the price of the branded mobile phone set by the manufacturer is $400 and you ought 100 mobile phones from the manufacturer at $200 each. This might sound as a great deal but in reality it is not. Here, it is important for you to consider that you will not be the only supplier for this branded mobile phone in your area. You will have good competition as there are others who are also into selling the same mobile phone in the same area. Your competitors might have bought the same phone from the same manufacturer at a lower price than you. Since you need to compete with the other suppliers, you drop the price of the phone at $270 but you did not take the shipping costs into consideration. This way your profit margin gets killed. This is not the case when you deal with digital media
The industry basically works by selling and buying; however, if the sales decrease there is a huge impact in the economic growth of the firms. There are many factors, which can affect the growth of the firm. The factors that affect the firm do not have a great impact in their growth; nevertheless, a factor that has recently surged is the music piracy, and it has become a negative externality. A negative externality “occurs when a product or decision costs the society more than its private cost” . Music piracy makes the music market loose billions of dollars in the US and even though it doesn’t impact the economy on a big much it has a small impact such as the increase of unemployment per year.