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Published by:
IBS Center for Management Research (2018)
15 pages
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The case discusses how the iPhone came to be positioned as a premium product. Apple Inc successfully introduced new models of the iPhone and simultaneously moved up the price curve as reflected in the rising average selling prices. Several consumers considered an iPhone to be an extension of their personality and did not seem to mind shelling out money to buy the latest iPhone models. The case also discusses the creation of a successful ecosystem, which benefited the iPhone immensely. The ecosystem was in the form of the iOS, the associated applications, services such as iCloud and Apple Pay, and products such as the iPad and Apple Watch. The ecosystem increased users' dependence on the iPhone. The case goes on to discuss the launch of the iPhone X model at a price point of USD999 and above. It discusses what was unique about the iPhone X model and how the constrained supply may have added to the appeal of the product. The iPhone X was the largest-selling smartphone model in the first calendar quarter of 2018. The case also touches upon the challenges associated with pricing the product at USD999 and above. Some analysts pointed to iPhone's steep price as the reason for the projected softening of demand for the iPhone X. The question was, could Apple sustain its perceived steep pricing strategy for iPhone X?


Managerial economics; Behavioral economics; Veblan goods; Pricing; Price elasticity of demand; Demand forecasting; Substitutability; Anchoring; Manufacturing cost; Premium pricing; iPhone X; Smartphone market; Competition
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