Product and Product Market
Apple Incorporated is a technology company that makes and distributes hardware and
software. Our most common product is our iPhone Operating System (iOS) which we offer
exclusively for all our Apple devices, smartphones, tablets or computers. Our latest software
is the iOS 10 which is available offers our customers a more dynamic, user-friendly and safe
way to operate their devices.
In this light, the nature of our product defines our market type as an Oligopoly
Market. An oligopoly market is one which has few firms owning large parts of the industry.
Product quality and differentiation are highly important to set ourselves apart from our
competitors. There is high interdependence in oligopoly markets which means that any
changes made by one firm, price or non-price will spark a reaction from the rest of the firms
in the industry. The possible reactions from our competitors are however unknown to us.
Products in oligopoly markets have high cross-elasticity of demand. This means that the
change in the price of complementary and substitute products greatly affect the demand of
ours. It is for these reasons that Apple has invested greatly in product and market research to
set ourselves apart regarding quality goods and services (Westerman, Bonnet 7 McAfee,
Our biggest competitors are Samsung, Google, and Microsoft with the largest
regarding sales being Samsung. Samsung devices operate on the Android Operating system.
The company holds a huge chunk of the smartphone market which is also Apple Inc.’s main
way of distributing its iOS software. This cutting edge competition has seen Apple rise to the
occasion of providing more than just reliable smartphones but tablets and computers as well.
This allows more avenues for software distribution that is not limited to smartphones alone
Google focuses more on distribution of the Android operating system other than its
hardware. Apple Inc. focuses on the whole spectrum of quality control for both its software
and hardware. It is for this main reason that as a company, we have stayed ahead of Google.
Microsoft has diversified its products from just computers to smartphones and tablets.
Customer loyalty and a stable operating system have however had Apple stay ahead in the
Apple Inc. has a diverse customer base. We have the younger population that largely
comprises of teenagers. They find it important to keep up with the latest trends. We,
therefore, design our software in a manner that can keep them up-to-date and connected with
their internal and external environment. This means offering a stable platform that allows
them to listen to their music, connect with their friends and look trendy at the same time.
Another customer base we have is college and university students. They need a means
through which they can keep all their academic and sometimes financial resources highly
organized and easy to access. The iOS 10 offers a way to synchronize all their information on
their devices in a manner that they do not need multiple outlets. On top of it they are light in
weight making them easy to carry around.
One major customer for the Apple software is business people. It looks professional,
is easy to use and is highly efficient in communication and finishing tasks. It is also adaptable
to various kinds of businesses where one can customize his or her device to suit their
preferences and nature of their job.
The iOS 10 targets the functional person with an easy to use interface, adaptability,
and access to applications while still maintaining high-quality standards of the software and
its packaging. It is for these reasons that Apple has captured loyalty from its customers
around the globe.
Comparative Advantages and International Trade Opportunities
Comparative advantage is the ability of an individual, a firm or a country to produce
its good or service at a lesser opportunity cost than other entities. Apple’s main comparative
advantage is having its devices designed in California but produced and assembled in China
and other Asian countries. This is because the cost of production in Asian countries is fairly
A low cost of production gives the firm the flexibility of setting its price. It also
allows us to produce more units to meet the international demand for our products. Our
presence in another country also automatically injects us into its market by offering job
opportunities to its locals and our products for sale. Being able to produce our devices at a
lower cost gives us a wider profit margin since the prices of our products are fixed. Apple
stands to gain more by producing is products overseas regarding revenue and unit supply.
Factors Affecting Demand
A higher disposable income increases consumers’ purchasing power. Apple products
are not an exception when the masses experience positive changes to disposable income. This
means the people ae able and willing to spend more money to buy what they want. An
increase in disposable income will inevitably result in an increase in demand for the iOS 10.
For example, massive sales of the iPhone 6 was notably significant in countries that marked
increase in disposable income
Brand Loyalty; Brand loyalty has seen an increase in demand for Apple products
especially with the release of the iPhone 6, 7 and iPad Pro sales. Apple has met its
consumers’ expectations of delivering quality service through its iOS 10, and the release of
the new products warranted high demands as the customers wanted to upgrade (O’Grady,
On top of developing brand loyalty, Apple Inc. has constantly set friendly terms of
trade for its consumer’s with the release of any new product. This is especially seen with our
trade in policies where the release of a new device can be sold to anyone by trading in an
older device and accurately calculating the difference in cost. Most Apple stores around the
globe have friendly terms of purchase where the consumers can purchase their devices in
Factors Affecting Supply
The main factor that has been seen to have affected the supply of Apple is a shortage
from one of its main suppliers, Qualcomm Inc in 2012. Lack of processors that enable the
Apple devices to power its iOS 10 have contributed largely to less product in the market than
was earlier projected in financial reports. Public scrutiny has found that the directors should
have openly stated so. This is seen as a disadvantage for investors and shareholder but for
consumers, the question on whether it was ethical or not is a personal choice.
Decreased costs of production have seen an increase in the supply of our products.
The cost of production is affected mostly by external factors such as a drop in oil prices and
availability of cheaper labor across the U.S. borders. Cheaper expenses in producing a unit of
a device that carries our iOS have resulted to increase in unit produced.
The most important are the firm’s objectives. The late Steve Jobs’ passion for the firm
to stay ahead as the world’s leading company for innovative and technology provider has
focused the company on making large sales. He set cut-throat procedures on how the firm
would achieve this goal. By cultivating this culture and incorporating it into the organization
as a whole, he saw the Apple brand surface globally.
Factors Affecting Product Price
The price of the product is affected by internal and external factors surrounding an
organization. Apple Inc.’s major internal factors of its pricing are the cost of production of its
products, brand maintenance, and product life cycle. The major external factors are its
consumers and their choices and the world economy.
With its manufacturing base in China, Apple has been able to produce its hardware
devices at a relatively low cost which make it more available for price setting across the
board. Higher costs or production would mean higher pricing of its product. Anyone who
owns a certified Apple device is guaranteed to access the iOS 10 for free. Apple Inc. has also
managed to brand itself to be more appealing to upper scale markets. Low prices of its
products would, therefore, be contrary to its image. iPhones, iPads, and iMacs have seen to
have newer versions coming out every year just before Christmas. The life cycle of the older
models is limited, and as a result, its prices drop significantly with the release of newer
Apple Inc. has invested heavily in meeting consumer demands. Their price sensitivity
and purchasing power of our consumers has not only set the bracket for our product pricing
but has also ensured constant production of new and improved products. Another major
factor contributing to Apple’s product pricing are our competitors. It is acknowledgeable that
they are currently producing highly similar products and offering them at a lower price. We
have made it our purpose to strive for high-end markets and product differentiation that allow
us to set higher prices than our competitors.
Factors Affecting Total Revenue
Total revenue is the total income of a business that is obtained by multiplying the
quantity of goods and services sold by their unit price. Total revenue is affected by, but not
limited to certain conditions.
Price elasticity of demand is the measure of the responsiveness of demand for product
to changes in its price. The price elasticity of demand of iOS and its certified devices is
considered to be inelastic. This means that an increase in the price of the product does not
result to decrease in demand but instead an increase in total revenue. This is a characteristic
of high-end and addictive goods.
The demand curve below demonstrates price inelasticity of demand. An increase in
price does not result in a decrease in demand. Demand remains the same or continues to
Productivity is the unit of measure for a firm’s output with every unit of input. Total
revenue is directly linked to the productivity of a firm as this determines quantities produced.
More quantities are available for sale when we have the modern and efficient technology, a
knowledgeable and skilled task force, high demand for the product and healthy competition.
With these in play, Apple can produce more products for sale, therefore, increasing its total
Total revenue is dependent on various measures of cost. The fixed cost is that which
is incurred on fixed factors of production such as renting of space in a different location. This
does not change with increase or decrease of output. Variable costs are those that change with
levels of output such as an increase in the power supply with an increase in machinery used
to produce more quantities of devices. Opportunity cost is that foregone when another option
is picked. The potential loss should be less than what stands to be gained from the chosen
alternative. The total revenue should be more than the total cost of production otherwise the
firm would operate at a loss.
Marginal cost is the cost of producing an additional product. Marginal revenue is the
revenue earned by an additional unit of a product. Externalities are a benefit or a cost of a
product. Apple’s most commonly faced externality is pollution to the environment. Most
public policies across the globe factor the cost of the effects of pollution into the firm’s cost
of production. This means that it is Apple’s job to clean up where it pollutes and to
compensate anyone who is affected negatively by it. The cost of this externality increases our
marginal cost and reduces our marginal revenue which reduces total revenue.
Suggestions for Profit Maximisation and Increased Presence within the Market
Figure 1 Demand Cureve showing iOS products as inelastic
For-profit maximization, the golden rule applies that a firm should not engage in any
form of production that would be more than the total revenue derived from selling its product.
Whenever the firm decides to produce some output, it should do so at the lowest marginal
cost possible. Where marginal cost and marginal revenue are equal, the firm should
determine if it is profit maximization or minimization (Carabaugh, 2016).
Apple Incorporated has done an exemplary job in making its presence known in the
market. Continued effort in innovation and technological efficiency and excellence is the key
to our continuous staying ahead of our competitors.
Carabaugh, R. (2016). Contemporary economics: An applications approach (8th ed.). New
York, NY: Routledge.
O’Grady, J. D. (2009). Apple Inc. Wesport, London: Greenwood Press.
Weterman, g., Bonnet, D. & McAfee, A. (2014). Leading digital: Turning technology into
business transformation. Boston, MA: Harvard Business Review Press.