Why does the iPhone sell so well even the price very expensive?

 

 

According to the Counterpoint research about the top 10 bestselling Smartphone in the world, it showed that Apple’s iPhone 5S and 5C were in the first and second place. It is generally known that the Apple’s iPhone is expensive in price. However, why iPhone still very popular in the world? What is the balance point between buyer and seller?

 

In economics, “equilibrium price” means the price where the quantity supplied of products and services equals to the quantity demanded of products and services. Due to the interaction of supply and demand, market prices gradually tend to the equilibrium price. So price is determined through the interaction of demand and supply. The equilibrium price is the supply and demand in the market competition naturally formed in the process, the price with external intervention is not the equilibrium price.

 

We all know that when the supply being greater than the demand, the market price will subsequently decrease. As a result, quantity supplied decreases and quantity demanded increases. However, the supply being lesser than the demand cause the market price to rise. Then the quantity supplied will increase, whereas the quantity demanded decreases. The interaction of demand and supply will occur market equilibrium where the supply curve crosses the demand curve. Market equilibrium comes out an equilibrium price which is acceptable to both producer and consumer. The market is only at this price level in order to achieve equilibrium.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In Figure 1, we use the horizontal axis represents the quantity q, the vertical axis represents the price p, D represents demand curve, S represents the supply curve. The intersection point of demand and supply curve is called the equilibrium point. This point represents a price p and a quantity q. Only at this point, consumers are willing and able to buy; besides, suppliers are willing and able to sell. p represents price equilibrium as opposed to q represents quantity equilibrium.

 

When the market price is higher than the equilibrium price, the quantity supplied will exceed the quantity demanded for goods. This situation results in surpluses. For example, when there is a surplus happens in the fruit market, fruit vendor will find those fruits are fully filled in the freezer. They want to sell out all the fruits, but no one buys it. Fruit vendor’s reaction is to reduce the price, until the market becomes equilibrium. In other words, when the fruit market occurs shortages which quantity demanded of fruit is being greater than the quantity supplied of fruit. Due to lots of consumers, but less fruits, the vendor will increase their product’s price until the market is equilibrium.

 

Apple’s iPhone is having a good control on the balance of demand and prices in marketing. Apple’s marketing strategy is called hunger marketing. They reduce deliberately the production to make an illusion of the supply cannot meet the demand. Thus the high-priced of iPhone can be maintained for getting more profit in the market. For instance, before iPhone 4S was released, Apple first revealed a little news and in the meantime, they avoided discussing the product. Therefore, it created a large number of hot spots. After that, the global conference was held and iPhone 4S was subsequently released in seven elected countries as opposed to other countries took no action. While iPhone 4S entered in Hong Kong market, it was already one month after the global conference.

 

First, is the online reservation, the limited number of reservations on Apple’s official website were booked within one hour after had opened to public. Other consumers were feeling anxious and waiting for the product released in the store. When the products were listed in the shop, consumers would line up overnight to buy the iPhone, especially Apple’s fans. It might also be noted, if iPhone takes too much time while using the marketing strategy which is hunger marketing, it will cause the consumers feel disappointed and lose patience. However, iPhone did a very great job in marketing, consumers are tempted into using iPhone. That is the reason why does the iPhone sell so well even the price very expensive.