Iphone 6

INTRODUCTION

With the advent of new alternative phones, such as Samsung, Apple has to consider the  retail selling price of their new product - iPhone 6 cautiously. This case study examines the suitable price for Apple to sell their new model that help them to be the market leader again. In this report, the simple linear functions can be the tool which model and give the evidence of the optimum price. These functions that we used are to evaluate the supply curve and demand curve - and through the point of intersection of these two curves we can estimate the appropriate price of iPhone 6. In conclusion, the calculated price is about £590.91 - but can Apple rely on this price to reach their sales target of 20 million units? How much revenue they can gain? What can they do if they want to accomplish the goal of 20 million units?

A SIMPLE MODEL FOR SUPPLY

In this report, which can be clearly known is that when the selling price goes up, the amount of supply increases. This means a positive relationship between selling price and amount of supply. We let x represent the selling price(£) and y represent the amount of supply(million units). By using the summarized statistics of the report, we assume y=mx+c(m and c are constant.) and then we have two plots(550,10) and(700.20).

The gradient m = =

Then we use the plot(550,10) to calculate c — 10 = × 550 + c  c = –  

Thus, the linear expression for supply can be written as y= x –  

A SIMPLE MODEL FOR DEMAND

Which can also be clearly aware of is that the amount of demand decreases as the selling price goes up. This means a negative relationship between selling price and the amount of demand. We let x represent the selling price(£) and y represent the amount of demand(million units). By using the data from the report, we assume y=mx+c(m and c are constant.) and then we also have two plots(500,20) and(700,4).

The gradient m = = –

Then we use the plot(500,20) to calculate c — 20 = – × 500 + c  c = 60

Thus, the linear expression for demand can be written as y= – x +60

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Figue 1: linear functions to show how the the number of units varies with the selling price. The red line shows supply and the blue line shows demand.

Figure 1 shows this linear demand function plotted over a range of value for x. We can know the maximum amount of demand – 60 million units(when x=0, y=60) which represents the final amount of demand must be less than it. Such demand stream might rely on the impact of new series. On the same graph, we also can see the linear supply function. From this graph, the basic selling price(£400) can be seen easily which represents the final selling price must be higher than it. Such supply stream might partly be attributed to the production cost of iPhone 6. Of course, the linear functions of both supply and demand that we use are very simple, and will not influenced by the cost of transportation and promotion - perhaps unrealistic, as we might assume that the supply and demand model are the linear expressions.