Essay Example on Introducing the iPhone SE: Price Skimming for Optimal Prices

i.)

Setting prices for a new product is challenging, especially during the introductory phase. The company will use price skimming to price the new iPhone SE. The new iPhone SE is a unique gadget that outperforms existing smartphones in quality and features. Therefore, there will be an additional price premium for exceptional attributes and quality. In this case, the company will employ a price skimming strategy to set a suitable price for the new product. The price skimming strategy will target the market segment that is willing and can afford the cost of the new iPhone SE.

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The firm expects to sell a few products and maximize revenue from the high prices of the product at the initial stage. In the next step, the price will decline slightly, targeting the next layer of the consumers. Still, the business expects to optimize profit from those who can afford the product. After every six months, there will be a stepwise lowering of the iPhone price to attract new customers who can afford high the cost of the phone. In the end, the iPhone will penetrate the market as price declines gradually. At this point, the company will enjoy less margin per phone, lower production cost from mass production, and optimize revenue from increased customer Base.

ii). Pricing strategies in different channels

A multi-channel pricing strategy requires a firm to understand its distribution channel first before setting the price of products or services. The new iPhone SE will pass through a series of dealers before reaching the final user. The company will be setting the margin for dealers to ensure the final price to customers is relatively stable. The firm will factor in marginal cost incurred to get the phone to consumers. It means that prices will change depending on the geographical location. The price of iPhone SE will be lower at the company's stores because the company will be controlling the final price in these stores. For dealers, the company will ensure price stability by controlling margin earned by dealers, consistency of terms between dealers, and giving no quantity discounts to resellers. The company will require resellers to position iPhone SE as a unique product to other smartphones in their stores. As such, the targeted price by the company will remain instant. Prices will remain relatively stable, whether in-store or online. However, to purchasing online and digital platforms, the company will offer discounts to customers. Online purchasing is critical in lowering or eliminating fixed costs associated with setting and maintaining physical stores.

Distribution Strategies

i). Multiple channels distribution strategy

The company plans to use a multi-channel distribution strategy. The multi-channel approach will combine both direct and indirect selling. The company will be selling the new iPhone SE at its strategically located in-stores in different parts of the world. Direct selling will allow buyers to physically visit stores of their choice to get the phone. Besides, the organization will use its own digital platform for customers to purchase online directly from the company. Buyers will be ordering and paying for the smartphone online. After proving personal details, the company will dispatch the product to the buyer within the agreed time. Also, the company will use indirect selling techniques to reach customers. Indirect selling is the use of dealers to reach the product to consumers in different parts across the globe. Indirect selling network aids in reaching more customers conveniently.

The firm will register and authorize dealers to distribute iPhone SE on behalf of the company. The authorized dealers will consist of telecommunication corporations and individual sellers. All registered dealers and telecommunication firms will be using physical stores and online means to sell the product to enhance convenience. The use of the company website as a distribution channel is fundamental for the firm in reaching the international market and improving customers experience. Authorized dealers of iPhone SE will be those situated in strategic places, such retail stores. The corporation will make arrangements with telecommunication firms to integrate iPhone SE with their products and services and offer as a package to their customers. Overall, the distribution channels will be online and offline intensive to take advantage of each distribution method.

ii). Channels width: Selective

The distribution channel width will be selective. It means that the firm decides to use a few distribution channels to reach the market. The company will crumble distribution avenues to arrive at a small number of channels to us. However, the quantity of iPhone SE distributed through the selected channels will be limitless. The primary reason for the selective approach is to control the selling of the phone. Also, the selective strategy will allow the company to keep track of the regions and price of the phone. The distribution mix of iPhone SE will be company-owned physical stores and websites for direct selling. Indirect selling channels consist of registered consumer stores and telecommunication firms. It means that, in each geographic region, the company will allow a few dealers to sell the smartphone. The selected dealers will not subcontract to others, but they will operate physical stores and run digital selling platforms that they will be personally liable.