iPhone 5C in China - Final_10

8/11/2019 iPhone 5C in China - Final_10

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For years, pundits and analysts have been suggesting that

the only way for Apple to compete against cheap Androidphones, especially in China and throughout Asia, was toproduce a cheap iPhone

Well, Apple finally relented (sort of) when it released thecheapish iPhone 5c to mainly compete in China & FarEastern markets where it is not the market leader (iPhoneranked 7th in China Smartphone market as opposed toleading in US market for example) and considering thelarge market in China.


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Country Profile: China Population: 1,338,612,968 (July 2009 est.) Ranked 1 Major Age Bracket: 15- 64 years (72.1% of total population) Mobile Phone Users: 634 million (2008) Ranked 1 Internet Users: 298 million (2008) Ranked 1 The above facts and figures of China are appealing for any company. A market with

majority as youths is certainly a great prospect for any business. But sadly, for Applethis has not been the case


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Apples pricing strategy for iPhone 5c was clear Market -penetration pricing and thereasons of using this strategy are summarized in

Current (low) market share of Apple in china. Type of Chinese market is highly price-sensitive. Market size (mid-range market of China) the biggest economy of the world.

Determining demand Price elasticity of demand was highly elastic due to

Huge number of substitutes High Buyers awareness of substitutes Perfect Buyers justification of price change


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Analyzing competitors cost, price and offers

The most attractive points are prices and offerings. Selecting the pricing method

Market oriented pricing Perceived-value pricing due to

High Product quality Buyers image of the product performance High Suppliers reputations

Final prince for IPhone 5c is priced at 4,488 yuan (US$733) for the 16GB model,meanwhile as per IHS Teardown Analysis: Estimated cost of iPhone 5c 16 GB is 173$


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Apple officially announced iPhone 5Cprice for unlocked version and madeone thing clear iPhone is not meant foreveryone, at least not for people whodont have deep pockets.

In China, the iPhone 5c costs the buyerabout $733.

According to World Bank, Chinas grossnational income per capita in 2012 was$9,210.

That means an iPhone 5c purchase inChina is equal to one full month of grosspay!!!


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Compared to the iPhone 5s, this chart shows the iPhone 5c has bombed in China


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With such price strategy, Apple has lost the apparent advantage it could

get over arch rival Samsung. Instead, iPhone 5C price strategy is makingpeople more confused in accordance to iPhone 5S available with only$100 difference.

Chinese Bought More iPhone 5s than iPhone 5c


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A recent survey carried out by AlphaWise on 2,000 smartphone users in China shows

that the price sweet spot that balance between expensive and acceptable for theiPhone 5 would be RMB 4,000, which is $649. Thats RMB 1,288 ($209) less than the entry -level iPhone 5 at its official, unlocked

price in China and ($84) less than iPhone 5C.


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Why $649 is still way too high especially in China?

For China and many other semi-emerging markets with a strong group of middle-income consumers, $649 is still not quite budget enough.

If the iPhone 5C were to be priced at $649, thats still double the price of the flagship

Xiaomi phone, the Xiaomi Mi2S, which is RMB 1,699 ($275) for a plastic-cased butfairly well made Android smartphone with a 1.7 GHz quad-core Qualcomm Krait 600processor.

That balance of strong specs with a great price is the main reason that Xiaomi, whichhas only been making phones for three years, is now outselling Apples iPhone inChina.


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Apple must work out to reduce the price of 5c trough bundling promotion in

order to reach the target market.

Conduct more prices experiments before launching new product.

Conduct more Consumer surveys and market analyses.


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iPhone 5C in China - Final_10

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