This week we will be discussing the “price” component of the marketing mix. Here is one example of why price is a critical piece of the marketing mix.
An article on the Apple Insider blog points out that Apple's share of the mobile phone market is “below 10 percent, even as Apple and its development community rake in profits from an actively engaged user base.” (Market share can be measured several ways: by unit sales or by revenue. It is sometimes looked at as just US, other times on global basis).
Too many analysts focus on the “market share” as the metric that is equated with the success of a product. By this measure Apple has not done well, as its global share has been declining since shortly after the initial iPhone had the consumer market to itself. Samsung has overtaken Apple substantially by the market share measure.
But take a look at this chart. It’s a bit out of date, but the general trend has been maintained. Apple accounts for about 70% of total industry profit. Why is that? That is what we will be talking about when we look at pricing.