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Market Equilibrating Process Paper - Essay Example

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Recently, its latest iteration, iPhone 5, was released amidst great anticipation from the consumers, great fanfare, great media interest, culminating into record-breaking first-week sales. Already,…
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Market Equilibrating Process Paper
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The Market Equilibrating Process: the iPhone Experience For this particular activity, I chose to talk about Apples iPhone product. Recently, its latest iteration, iPhone 5, was released amidst great anticipation from the consumers, great fanfare, great media interest, culminating into record-breaking first-week sales. Already, reports of product shortage have been posted by several news outlets. These developments depict an extremely successful and profitable product. Other variables such as Apples branding, the Apple ecosystem, innovation in technology and design have exerted their respective roles in the success of the iPhone as well. However, I will argue that this may be the case at present but the product is at risk in the long term for several reasons. This can be reflected in the gradual shift in the supply and demand equilibrium.
Successful branding and Apple innovation have ensured the current demand for iPhone. The product has been the first to usher in the era of "touch" smartphones and this has been displayed by the array of competitors emulating the product even until now. So for a time it has enjoyed leadership and dominance due to the scarcity of such product given the limited options and demand choices for consumers.
Things are changing, however, because of the increasingly competitive market and the increasingly sophisticated requirements of the consumers. The development of the Googles Android operating system has launched the success of many smartphone manufacturers that collectively led to a viable and sophisticated alternative to the iPhones IOS. The Android phone and the iPhone became substitutes: as the price of the other increases, the demand for the other increase (p.50) Recently, a research by the firm IDC placed the market share of Android to about 68 percent whereas Apple claims only 16.9 percent (AP 2012). Of course, Android is fragmented into several phone manufacturers such as Samsung and HTC. But the trend signals an interesting shift in the market, which bring together buyers and sellers (p.46). This year Samsung toppled Apple as worlds leading phone manufacturer. As more and more people are exposed to many choices, they are able to expand the variables that inform the cost-benefit analyses that drive their purchase decisions. In this instance, price and quantity are no longer the sole drivers of the market. The so-called other “determinants of demand” assume equal importance in the pattern of market demand (p.48). Moreover, increased competition aggravates the principle of "diminishing marginal utility", which argues that "for a specific time period, each buyer of a product will derive less satisfaction (or benefits, or utility) from each successive units of the product consumed" (p.47). The supply and demand dynamics, hence, are significantly altered. This is what the concept called “change in demand” in the market equilibrating process is about: the changes in the many determinants of demand, which, in effect, changes demand data (p.48)
The iPhone is within the high-technology industry, which develops in an extremely fast pace. It is sensible, hence, to say that the movement of the supply and demand is not as stable as other industries. The advances in technology also aggravate this. The determinants of demand are more pronounced and market demand is not merely governed by factors such as demand and quantity.
Reference
Associated Press. (2012). Android Market Share Q3 2012: Googles Still Beating Apple, But Will The iPhone 5 Change That?. The Huffington Post. Retrived from: http://www.huffingtonpost.com/2012/09/18/android-market-share-q3-2012_n_1893292.html Read More
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