Predictions for Apple

This article is mostly about the inelasticity of Apple products. It's surprising that in rough economic times that people aren't searching for less expensive substitutes from other companies in order to save money. According to the article Apple has adjusted their strategy along with the economy. Rather than allowing another company to take over the cheaper MP3 market Apple has innovated and found ways to provide music players for a decreased cost. Since Apple has created such a brand name for themselves consumers are willing to settle for the inexpensive IPOD shuffle. What Apple has ultimately done is become its own substitute. The shuffle is the substitute for an IPOD, Apple Netbooks are a substitute for the full Notebook etc. The article specifically states that Apple's strategy is to create a large enough umbrella so as to not give any market share to a competitor. It appears that they have done just that.


Kyle said...

That is a very smart move on Apple's part to create substitutes for its own products. We often think that substitutes are created by different companies, but the Shuffle does meet the definition of a substitute as provided by our textbook. These rough economic times have forced many companies to create substitutes to for their own products. I don't believe this is a new idea, but it is great to see how Apple is using it to keep its market share.

Dr. Tufte said...

Apple is an interesting case for ManEc, but I'm not always sure it is a good one.

The reason is that if there is any company that has convinced people that it is worth paying a premium for a product, it's Apple.

This shouldn't be a sustainable business model (and for most firms it isn't). Why is Apple different? This is the question a professor should really be providing the answer for, and I'm sad to say that none of us has figured this one out yet.