Week 3 – Lesson 3: Apple’s success and the role of price strategy
Last ten years, pricing strategy has played a heavy role for Apple Inc. As a product of the last few years, the price strategy of Apple has largely influenced their success, specifically when it comes in conjunction with design, ecosystem fit, and the brand image. As an Apple user, I can attest (iPhone, Apple Watch) that price has had a massive and powerful psychological effect on how I feel about how the brand and the products are viewed and appreciated.
Apple obviously follows a premium pricing strategy. When I bought my newest iPhone and Apple Watch, the cost was steep, I absolutely identified with. The products still cost me money, but that is fine because they combine good quality, apps, reliability, and brand status. In this sense, price acts as a signaling device: It communicates that Apple products are well designed and carefully integrated, and they are positioned well above mass-market rivals.
Apple doesn’t compete highly on price much with its counterparts, such as Samsung or rival Android phone companies. Most opponents depend on frequent discounted prices, quick depreciation, and a wide range of price points. Apple, by contrast, maintains relatively fairly constant prices and spares major discounts on new products. This is protective of the brand and avoids Apple devices as interchangeable commodities.
Another big difference is Apple’s ecosystem marketing strategy. This ecosystem lock-in is, once users are accustomed to their own iOS, watchOS, and macOS programs, tedious and time-consuming to switch to another operating system.
As people grow older and increasingly appreciate simplicity and efficacy, this is more important than small price differences. In this environment, the higher prices are acceptable because they make the interface frictionless, and because they provide continuity across devices. Apple’s pricing also supports status and identity from a brand perspective. Apple items are more than mere tools; they project good taste, professionalism and success. If Apple made its prices down significantly, it would start to look less like its peers.
Conclusion: Apple’s pricing strategy has been a key to its success in recent years for much of the decade. By wielding price as a signal of quality, design, and status — and not competing on price as a driver, Apple has reinforced customer loyalty and kept a clear edge over competitors in the cutthroat business.
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