iTUnes Essay

AbstractSince April 2003, iTunes unison Store has permitted the consumer to purchase melody and digital books over the Internet with success. By 2005 their shares gain significantly as a result of their dire success. Their product became a platform for the digital melody business to explode into the industry it is today. This also make digital practice of medicine affordable to the consumer who may have gone to felonious downloads in the past which in turn check overd that the music industry was getting paid for their product as well. The $0.99 centimes per meter download provided $0.70 cents to be paid to the mark companies and the remainder ($0.29 cents) was orchard apple tree profit. By August 2005, some of the larger volume companies snarl that their product was under expensed and requested that flexible prizes were instituted. However, this was not a shared opinion by only, the fear was that the grocery store might not be stable enough to survive a cost increase when illegal downloading was widespread. A price increase would encourage this type of activity to continue and no one would be making money. Due to its power, orchard apple tree kept the same prices, however by January 2008, Amazon.com entered the market place with a similar product without all of the restrictions that were placed on music in the iTunes Store.Questions1)Provide an argument for why a variable determine policy might increase the gross revenue revenue from orchard apple trees euphony Store (compared to the flat pricing policy). Life is complicated, but apple Computer s iTunes store is handsome simple Download a song and pay $0.99 cents. In 2009, Apple announced that for the initiative sentence would allow beginning implementing variable pricing on the iTunes Music Store. Instead of a absolute $0.99 cent price point, record labels would now have the option to charge $1.29 for more ordinary songs and $0.69 for less popular tracks. It was not too long before almos t every top song on iTunes jumped from $0.99 to $1.29. enchantment most tracks that saw an increase in price suffered a small drop in sales, the $0.30 price difference more than made up for that fact, worked to increase overall revenues. Apples position during the time to increase the price of popular songs was global. Many of Apples products such as the iPod and laptops were sold all over the world. The iTunes Music Store was highly successful, and has alreadyaccomplished large user numbers. The lurch in price did not suggest a complete renovation in the way people downloaded and listened to their music. Also, Digital downloading of music is plainly one of the many markets that Apple has recruited into. Under a new pricing plan songs would cost depending on how desirable they are finded and having Apple such a market power, the new pricing strategy was another(prenominal) successful for the company.2)Discuss other potential pricing policies that might increase the revenue from Music Store sales. With the increase in the demand for online- base music, Apple is likely to increase its prices to gain more from its products. The company cannot however administer high prices on the consumers because the sale of online music is still in a changing stage. Apple could consider other pricing schemes like a bundle pricing where they combine popular and unpopular music or getting the latest popular music across genres. This could expand customer base to distinguishable genres and increase the sales of unpopular songs. The bundling strategy will help in increasing remuneration by extracting additional consumer superabundance. They also could offer an entire group of songs, as a group, for a oneness price. The company could resort to sale of large music files such as MP3s, JPEG and MP4 and other music formats for heterogeneous consumer needs (Brickley, Smith, & Zimmerman, 2009). 3)What are the risks and potential costs of implementing more sophisticated pricing s chemes for the downloaded music? Sophisticated pricing tools are potentially available to provide a contrast to the uniform pricing model that apply to implement iTunes. This sophisticated alternative tools may include song-specific pricing, pure bundling, mixed bundling, two-part tariffs among others that could be use to parent revenue. If firms have market power they can raise their prices without losing all customers to competitors. Firms have as ultimate intention to choose the pricing policy that boosts the value of the firm.Managers are trying all the time to devise a pricing policy that captures as much gain as possible catching costumer surplus as company profit. For managers and companies in general, only incremental prices matter in pricing decisions. As this carapace show, iTunes has certain power on their loyal costumers and confronting the risk of some decreases on sales, iTunes took the risk when they increase theirsongs prices and at the end, the most loyal costume rs remained whit the company. The potential costs were evident when iTunes suffered at the first moments a fall in sales. Was very worrying that people were still able to download disembarrass music from other sites. Nevertheless, iTunes survived, and the company was still betting on iPods sales at the same time. 4)Is Apples pricing design to maximize the revenue it receives from the sales of the downloaded music? Is this the objective of the major record companies? Explain. (Hint review the revenue/product data from Apples 10-K) Apple as all companies is evoke in maximize its revenues, but it not its objective reach it trough the downloaded music pricing strategies which is the objective of the record companies. Apple is a successful company that has a lot of attractive products that convert all the costumers in loyal fans of Apple. The companion is confronted by aggressive competition in all areas of its business the markets for the Companys products and services are highly co mpetitive. The Companys competitors who sell mobile devices and private computers based on other operating systems have aggressively cut prices and lowered their product margins to gain or maintain market share. However, Apple is focused on expanding its market opportunities related to personal computers and mobile colloquy and media devices. The Company believes it offers superior innovation and integration of the entire solution including the hardware (iPhone and iPod), software (iTunes), online services (iCloud), and dispersal of digital content and applications (iTunes Store). The Companys ability to compete successfully depends heavily upon its ability to ensure a continual and timely flow of competitive products, services and technologies to the marketplace.The Company continues to develop new technologies to set up existing products and to expand the range of its product offerings by means of research and development. On the other hand record companies are just intereste d in gaining the greatest among of money from each company that distribute the music on which they have rights, they matter is to collet the most possible from every song downloaded. 5)Do you think that Apples ability to control the pricing of downloaded music is likely to change in the coming(prenominal)? Explain. My personal opinion is that Apple has a huge recognition all around the world. Apple has been able to chance upon its position with prodigious skills in the market. Nowadays, as we all know, Apple has the most loyal costumers inthe world. every single time that Apple launches a new product the most loyal costumers excited peace for nights on the doors of the stores to be the first ones buying the new products that always offer the most cutting-edge advances in technology. I would say that Apples ability to control its prices related to downloaded music would not change too much in the next future. In deed, Apple has increasingly assumed the control of technological de velopment in the industry. The Company is committed to bringing the best user experience to its customers through its mod hardware, software and services. Apple is pioneered providing its customers new products and solutions with superior ease-of-use, seamless integration, and innovative design, every time getting ambient to the wishes of consumers.As part of its strategy, the Company continues to expand its platform for the discovery and delivery of third-party digital content and applications through the iTunes Store allowing customers to discover and download applications and books through either a Mac or Windows-based computer. The Companys strategy also includes expanding its distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience. As a customer of Apple is very difficult to see that for the near future the company may lose its ability to control the prices of their products. When people become a fa n of Apple never more would pay a similar price for another technology more than Apple offers. That is the reality today.