During its inception, Apple Inc. was formed to focus on supplying computers. However, with time the company evolved to include other products and services. It is worth noting that the company has been at the center of the most revolutionary technology development of the past 4 decades. Currently the company operates as an international company that designs and manufactures consumer electronics and related software products. The company’s consumer electronics include Personal Computers, iPads, iPods and iPhone smartphones. They trade their products and services in physical retail stores spread across the globe as well as its online store where consumers can access and purchase software and hardware in the online platform. It also runs the iTunes store which provides its consumers with movies, music and games for their digital devices.
Most economists articulate that the law of demand and supply is simple and that increase in demand usually results in increase in price if supply is constant. This is a law that Apple has defied in various different ways. Apple’s products usually have high demand. The company maintains high prices for its products and even though it strives to increase the supply of the products, the supply continues to fall short of the demand for the products. This has significantly worked for the benefit of the company, especially in the smartphone market where its iPhone continues to compete favorably. It is estimated that once it launches new brands or new models of its smartphones, Apple usually records demand increase of about 7.2% each month for about 4 months. The 7.2% increase translates to an average of demand for about 5 million units of quantity demanded. Many economists and theorists explain that this is mainly because the company engages in extensive marketing and promotion initiatives before it actually launches new products in the market, then after it launches the products, it usually emphasizes on how the product meets the needs of the consumers, to influence continued growth in the demand for the products.
To guarantee that the demand for its existing products remains high, Apple commonly engages in price cut strategies. For instance, after the launch of its iPhone 5 in 2012, the company imposed price cuts of about $200 per unit. This strategy ended up ensuring that demand for the product continues to go up as well as its sales. Due to increasing demand for its products, Apple constantly improves its supply capabilities. It is however worth noting that the demand for its products over the recent few years has been considerably fluctuating. This is mainly due to competition from other smartphone manufacturers such as Samsung. As a result, the company uses market forces to set its prices as shown in Image 1 below. Currently, the company’s supply levels successfully serve its goals and objectives with regards to the supply being lower than the demand with the aim of ensuring that the company maintains high levels of prices for its products.
One of the ways through which Apple has been able to ensure that the demand for its products continuously increases is through diversifying its product portfolio, and continuously launching new models of its brands. This usually creates anticipation among the consumers, keeping them exited and looking forward to their annual launch. The market now understand that it is Apple’s culture to constantly improve its products by launching new products as well as improved versions of already existing products. This creates demand for the products. In efforts of achieving growth the company continues to increase the number of units it produces and sales. However, to achieve equilibrium, it ensures that the supply does not exceed the demand, as shown in Image 2 below.
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