After reading the case study, Do you agree that brand name has been the reason for Apple to adopt a premium pricing policy or its because of the fact that truly premium products fetch premium prices.

Justify your answer with relevant examples of similar products or brands.

IA APPLE: Premium Priced and Worth It pple is the prototypical premium price. Whether Ask Apple users and they'll tell you that their Apple devices it's an iPhone, iPad, Mac laptop, or Apple Watch, simply work better and are easier to use. And they love Apple's customers pay more for an Apple than for compet- clean, simple designs that ooze style. ing devices a lot more. Apple's iPhone last year Apple's obsession with deepening the user experience sold globally for an average price of $624, compared with shows up in everything the company does. From the begin $185 for the average Android smartphone. Even compared to ning, Apple has been an innovative leader, churning out one Samsung, its closest high-end competitor, the latest iPhone cutting-edge product after another. Making products custom- commands a premium of $100 to $200 more than similar a ers want-usually before consumers themselves even know Samsung Galaxy models. Similarly, a standard MacBook Pro what they want-has resulted in one Apple-led revolution after costs $300 more than a comparable Dell or HP computer. another. Apple has always had a genius for wrapping technol- Yet despite such sky-high prices, Apple's products ogy beautifully around human needs in a way that puts its continue to fly off shelves, as eager customers get in line to customers at the front of the crowd. map up the latest models. For ex- In tum, Apple has built a huge Imple, Apple sold more than 231 Under its premium pricing strategy. corps of avid Apple enthusiasts. million iPhones last year alone. Apple sets its prices above those of For nearly four decades, customers That leaves Apple in an envious have anointed Apple as the un position: It charges the highest even its highest-priced competitors. Yet disputed keeper of all things cool. prices and still captures market Apple's sales remain hot and its profits When you buy an Apple product, leading shares in most of its prod- even hotter. you join a whole community of uct categories. How does Apple fervent fellow believers. Say the word Apple in front of hard-core fans, and they'll go into raptures For Apple, success has never been about prices. Instead, it's about the superiority of the brand. Such enthusiasm and support been about the Apple user experience. Many tech companies creates demand for Apple products beyond the limits of price. hand. By contrast, Apple creates "life-feels-good experiences. Duke products that just occupy space and complete the tasks at Not only ane Apple fans willing to pay more, they believe deep down that the value they receive is well worth the higher price. Pithat off? OB OB OF 310 PART | Design Customer Vats-Diven Strategy and MX One of the best illustrations of Apple's pre- mium pricing power is the Apple Watch Apple was hardly a pioneer in introducing its smart watch. Derens of companies were already selling wearables across a broad range of price points. In the year prior to the launch of the Apple Watch competitors sold 6.8 million smartwatches at a average price of $189. Apple unveiled its own smartwatch in three versions. The last expensive version, the basic Apple Watch Sport, sold for $30% nearly twice the average Industry price. At the other extreme was the premium Apple Watch Edition made of solid 15-karat gold with sapphire crystal glass. Fully loaded, it sold for as much as $17.000. Such high prices did anything but scare away buyers. By one estimate Apple will sell an Apple earns the premium prices charges. Ad Apple fans wong estimated 21 million Apple Watches a year and now the brand as the keeper of all things cool holds a 74 percent share of the greatly expanded them smartwatch market. More broadly. Apple's ability to command higher prices thriving iTunes clone that supplies apps, games, and margins has produced stunningles and profit results content. Xiaomipacks potent technology and in smartphones, for example, Apple captures an impressive into dirt.cheap phones that sell at a fraction of Applies 20 percent share of total global sales. However, it commands For instance, an entry-level iPhone sells in China for en an even more impressive 50 percent share of the premium that's more than a month's wages for the average smartphone segment. Most remarkably thanks to its premium buyer. By contrast, the average Xiaomi smartphone prices, Apple routinely pulls in a lion's share of industry prof-only $149 its. For instance, in one recent quarter, it grabbed a dazzling 92 With its smart design and low, low price is percent of the total smartphone profits made by the world's targeting the technically inclined, geeky, typically you top eight smartphone makers. Similarly, Apple captures nearly sort of customer who can't afford a top-of-the-line Apple 50 percent of the profits in the competitively crowded personal Samsung phone." says one tech blogger. Such comes computer market. make up the fastest-rising tech segment not just in Overall, in just the past four years, Apple's sales have more but also in other emerging markets such as India and Break than doubled to a record $234 billion, placing the company And so far. Apple neither has norintends to have at number five on the list of Fortune 500 companies, ahead of fordable answer for that type of consumer. Low-end me traditional industrial giants such as GM and GE Brand tracker ucts simply don't fit Apple's operating style or premia Interbrand recently rated Apple as the world's most valuable positioning brand. And the company's soaring stock prices have made However, Apple is still thriving in China and otherm Apple one of the world's two most valuable companies, neck ing economies by catering to the also-burgeoning numbers and neck with Google parent Alphabet more-affluent consumers in those markets who want and Even with all this succes, however, Apple's premium afford the luxury and status associated with Apple. Just like pricing strategy does present some risks. For example, in anywhere else, if you can afford it, an Apple devices wil some markets-especially the world's rapidly growing emerg- worth the premium price in China, according to one ing markets --Apple's high prices make it vulnerable to low lyst, 's a price people have been willing to pay, specifically price competitors. Consider China, which accounts for a full because it is expensive." For instance, remember that one-third of all smartphone sales worldwide. In China, Apple tantly priced Apple Watch Edition? It sold out in China in now places third in market share behind fast-growing, low. than an hour priced local competitors such Xiaomi and Huawei Thus, whether here or abroad. Apple's premium precis Chinese market leader Xiaomi has come from nowhere in strategy will likely remain a winner. The dominance of Apple just the past three years to become the world's third-largest is something that is very hard to overcome," says an inte smartphone producer behind only Apple and Samsung It executive. "Apple has to stumble somehow of another produces low-cost smartphones, laptops, and other devices I don't think that's going to happen. The lesson is that are modeled closely after Apple devices. It even has a Truly premium products eam premium prices