Group3’s Travel

1. Group3’s Travel Jolene Sherting QihangJustin Daniel

2. Project A

3. Origin of iPad • The iPad was announced on January 27, 2010, by Steve Jobs at an Apple press conference at the Yerba Buena Center for the Arts in San Francisco.

4. Price determination of iPad • It is estimated that each iPad 16 GB Wi-Fi version costs US$259.60 to manufacture, a total that excludes research, development, licensing, royalty and patent costs. We can split the cost of producing an iPad across two basic parallels: the first are the costs incurred, which remain the same, irrespective of which model of the iPad you use; and the second which consists of those features which are responsible for the differing costs for different models of the iPad. The first is the core component cost which contains expenses under the heads of touch screen display cost, mechanical and electromechanical component cost, battery cost, memory cost and several other component costs. The total bill for these materials, all of which are part of the iPad, irrespective of the model bought is USD 182.25. For every variant of an iPad, there is some differential component which adds to the iPad cost. The price of the NAND flash for the 16 GB is USD 29.50, for the 32 GB variant is USB 59 and for the 64 GB is USD 118, irrespective of whether the gadget is 3G enabled or not. The 3G enabled iPads, by the way, have an extra cost of USD 24.5 for the wireless version and USD 2.60 for the GPS. The iPad cost also includes the cost of contents in the box which amount to USD 7.50, irrespective of the model. The manufacturing costs of all non 3G units of the iPad are USD 10, while those of 3G are USD 11.20.

5. After adding miscellaneous

6. Hence the expenses under the heads of touch screen display cost, mechanical and electromechanical component cost, battery cost, memory cost and several other component costs are related to the iPad as whatever the price the components of the iPad is, it will affect the price of iPad.

7. Project B

8. When iPad was first released on 3rd April 2010, the price ranged up to $1000. At that time it is considered as a luxury good. • However, recent developments have caused new electronic gadgets to surface, such as the ‘Samsung Galaxy Tab’ and ‘Blackberry Playbook’. These inventions are possible substitutes for the iPad. With these developments, the price of substitutes is a non price-factor that would affect the demand and supply of iPad.

9. Consumer’s Point: Demand or effective demand refers to the quantities of a product that consumers are willing and able to buy at various prices per period of time, ceteris paribus. It represents the intention to consume. The law of demand states that the higher the price of a good, the lower the quantity demanded, ceteris paribus. Non-Price factor: • Firstly, the invention of new electronic gadgets, such as ‘Samsung Galaxy Tab’ and ‘Blackberry Playbook’ are substitutes to iPad. Hence, there is a change in demand, causing the entire demand curve to shift left due to a decrease in demand for iPads as there are other forms of substitutes. Consumers would compare the iPads and other substitutes to choose which one to buy. • Secondly, the two Integrated Resorts (IRs) in Singapore have boosted the economy, creating more jobs for more people and people’s salary increased due to a better economy. Thus, people will have more disposable income and lead to a higher purchasing power. Hence, iPads will become more affordable for more people and people are more willing and able to buy it. Therefore, it will lead to an increase in the demand of iPads and the entire demand curve for iPads will shift to the right.

10. Producer’s Point: • The iPad can work as a replacement to a laptop, as well as a handphone. It has major applications, including those requiring the audio visual medium like books, music, games and movies among others. Therefore, it is a craze among the youth and people who understand IT equipments. The producers can devise a marketing strategy which requires the partnership with specific companies. Since iPad is a craze among the youth, an appropriate example will be ASKnLearn, which is a premier Pan-Asian provider of Education solution and services. They can work together to provide internet-based e-learning solutions, content and services to over 180 institutions from different countries. With the addition of this specific target audience and the benefit it brings to them, I believe that there will be a significant increase in demand for the iPad. • The producer will decide on their pricing decisions for the iPad based on, the advancement in technology and the expectations of future prices. Living in this current society, technology will only keep advancing as time passes. This advancement in technology will aid in the production process of the iPad, resulting in an increase in supply as more can be produced with the given base of factor inputs. As the cost of production decreases with time, it will lead to a fall in the price of an iPad too. Also, the producers will expect the price of iPad to fall in the future period, as there will definitely be an increase in the number of substitutes. This explains the high price of the iPad when it was first launched. Therefore as time passes, the producers will slowly lower the price of the iPad due to better developments.

11. Credits: • World Wide Web • Google • Yahoo! • Wikipedia