ECO 561 Week 6 Apple iPhone Business Proposal
Apple iPhone Business Proposal
Apple launched its first phone known as the iPhone in 2008; the phone is designed to target people who wanted and needed to communicate and store information. The phone is design to provide a wireless Internet connection, music, and talk into one. The features of this phone include a 3.5 touch screen without the aid of a keyboard, using more than one finger to control the phone, and shifting the screen to view in different modes. The market for the phone was small in 2008; but today the phone has taken over. In this paper I will present a business proposal for the iPhone addressing how the iPhone can improve designs and features, the market structure and the elasticity of demand for the iPhone.
The Apple smartphone is part of an Oligopoly market; an independent market and has its own behaviors strategies. According to McConnell, Brue, and Flynn (2009), “Oligopoly, in contrast, blends a large amount of monopoly power, a small amount of competition through entry, and considerable rivalry among industry firms” (p. 222). Because Apple’s smartphone industry and competition was small, it needs to take control of the market by differentiating the iPhone from others phone in its category. Apple needs to develop a plan that will help them to target the upper class professionals first, next taking over the college students, and finally making the phone a global product. Once Apple establishes this plan, it is on its way to acquiring success in the industry. Apple directed its attention to the iPhone by making it capable of accessing the Internet, downloading music, videos, and taking pictures. To do this, Apple created a phone with a unique operating system that calls for the phone to be connected to a computer for synchronizing, the phone is used with application from the Apple store, and the hardware is different in that the battery has a long life. According to Kang (2013), “The iPhone’s screen size is smaller than most other smartphones, but it has an extremely high pixel density, giving it one of the sharpest resolutions available” (para. 5). Another feature of the iPhone that makes it different from other smartphones is that it does not have a memory slot like the others do. Because I understand Apple’s market and the type of customers it wants to attract, I can generate ideas that will help the business to succeed.
Elasticity of demand for the iPhone
Smartphones are high in elasticity in regard to price and income, especially the iPhone. The demand for iPhoneis extremely elastic mainly because these days a number of products are present in the market and the companies keep introducing their cell phone regularly.People buy Apple’s product for many reasons; however, the most important reason is that they have a following that will stand in line for hours to get the latest product, and those who do not mind paying the higher price for the phone. However, if Apple wants to reach a certain amount of sales, it should know the elasticity of the iPhone. The questions that need answers would include the price elasticity of demand and what features other than Apple’s own price would affect the demand of the iPhone. To help answer these questions, I will define the price elasticity of demand. According to McConnell, Brue, and Flynn (2009),“The responsiveness (or sensitivity) of consumers to a price change is measured by a product’s price elasticity of demand” (p. 114). What this definition means is that when the price changes, the demand for the product changes too. However, if the demand change is small, the product’s price elasticity of demand can still be calculated by a percentage change. When Apple first released its phone in 2008, the price was set at $599; however, the phone was reduced to $434 by September 2009 and sold a total of