This is a study of the iPad market where producers study how recent
changes in the market can affect the revenue of firm.
The iPad was first announced on January 27, 2010, by Steve Jobs at
an Apple press conference in San Francisco.
The price of iPad is determined by the cost of production and the
quantity demand by consumers through the price they are willing
and able to pay.
There are many related products of iPad in the market such as
Samsung Galaxy Tab, HP touchpad, Motorola Xoom, BlackBerry
Playbook, and tablets by Acer Inc. They are tablet computers that
have similar functions as iPad and some are even sold at lower prices
such as the Samsung Galaxy Tab.
 Substitutes are products that are similar in functions and satisfy the same
wants and needs and are in competitive demand.
 Substitutes of IPad 2 e.g. Motorola Xoom, Blackberry Playbook and
Samsung Galaxy Tab.
 Marketing decisions for the iPad by consumers will be affected because
they now have a range of tablet computers with lower prices to choose
from.
Price of
Samsung
galaxy tab
S1
Price of iPad
S1
E1
S2
E2
P1
P1
E2
P2
P2
E1
D1
D1
D2
Q1




Q2
Quantity of
Samsung
galaxy tab
Q2
Q1
Quantity
of iPad
Price of substitute decrease (P1 to P2)
Quantity Demanded of Substitute Increases (Q1 to Q2)
Demand for Ipad 2 decreases (Q1 to Q2)
In order to combat the situation the producer can carry out
non-price competition such as giving out freebies like speakers,
earpiece and cover to attract more consumers to buy them.
 Income Increases, results in an increase in disposable income
 Higher disposable income results in higher purchasing power
 A higher purchasing power will allow more consumers to better afford
Ipad 2
 This overall increases the demand for Ipad 2
As demand increase, the
demand curve shifts to the
right, this cause the
equilibrium price to
increase from P1 toP2 and
equilibrium quantity to
increase from Q1 to Q2.
Price of
iPad
S1
E2
P2
P1
D2
D1
Q1
Q2
Quantity
of iPad
E1
 Government increases the levy on hiring of foreign workers
according to the Budget 2011 announced this year.
 Increased cost of labour leads to increased cost of production
 Increased cost of production reduces the profit per unit
 Supply of Ipad 2 decreases causing a leftward shift of the curve
 As supply curve shifts to the left, the equilibrium price increase
from P1 to P2 and equilibrium quantity to decrease from Q1 to
Q2.
Price of
iPad
S2
S1
E2
P2
E1
P1
D1
Q2
Q1
Quantity
of iPad
In order to increase the
equilibrium quantity
and make it more
attractive to
consumers, Apple can
do more advertising in
order to get more
consumers to buy iPad.
Technology has improved over the years due to investment in research
and development
Increases productivity of Ipad 2, increasing effeciency
Greater production of Ipad 2 with the same amount of resources used
Higher Profit per unit of output
Producers will increase production to further increase profits
Supply increases causing a rightward shift of the supply curve
Diagram:
Price of
iPad
E1
E2
S1
S2
P1
P2
D1
Quantity
of iPad
Q1
Q2
As supply curve shifts to the right, equilibrium price decreases
from P1 to P2 and equilibrium quantity increases from Q1 to Q2.
Recent development will affect marketing and pricing decisions of iPad.
With increase price of substitutes such as samsung galaxy tablet, the
demand for iPad will be affected negatively. However with marketing
strategies this problem can be solved. On the other hand, the increase
income of consumers will help increase the demand for iPad hence it
will affect the demand positively. Inversely, increasing cost of production
may cause decrease in supply of iPad however will the advertisement to
inform consumers about the functions of iPad, it can be returned to
normal. The increase state of technology will help increase productivity
and eventually lead to increase supply.