Apple’s AirPods are now a representative product of high-quality wireless headphones unlike any other. Its unique design grasped customers’ mind which brought them to a huge success when they released the first generation AirPods on December 13, 2016. On March 20, 2019, Apple released the second-generation AirPods, which feature the H1 chip, longer talk time, and hands-free “Hey Siri” support. There is an optional wireless charging case with an additional price. Aside from that, the upgraded version of AirPods is the same as the original AirPods since there is no improvement to sound quality or design. The price was the same as the first generation, but it does not have any specialty to appeal their product to potential customers. People who were using AirPods did not feel any need to get their new headphones by paying another $159. However, it is still the world’s most popular headphones and how did Apple make this big success?
1. It is a complementary goods of iPhone
Complementary good means a product that is used or consumed jointly with another product. Such a good usually has more value when paired with its complement than when used separately. In other words, the object that is paired with another item; they are usually purchased together rather than separately. AirPods are the most and common accessories that iPhone users can complement with their iPhones because Apple OS supports the great connectivity with Apple products. Impressively, Apple’s market share in the premium smartphone segment is 47%. Apple CEO Tim Cook today announced that its active installed base of devices has hit 1.4 billion, a milestone the company hit at the end of December. This great number of iPhone users is a potential customer for Apple because AirPods are complementary goods for them. As more people buy the iPhone, the more would buy AirPods as well. Furthermore, At its fall 2019 event, Apple announced that the iPhone 11, 11 Pro, and 11 Pro Max was released on September 20th. New design and cheaper price caused an increase in demand for iPhone which increased the demand for AirPods as well.
2. They Discounted AirPods Price in Oct 2019
In the US, Amazon sold the new AirPods with a wireless charging case for $179, which is a discount of 10% off the original retail price. Without the wireless charging case, the cheapest price was $129 from Macy’s eBay. Using an economic concept, we can figure out how this sale made success in selling AirPods. If the selling price of a product is decreased, we can easily find out that the number of units sold will increase. Elastic demand is also referred to as the price elasticity of demand. Price elasticity of demand is a measure used in economics to show the responsiveness, or elasticity, of the quantity, demanded of a good or service to a change in its price when nothing but the price changes. We can use Alternative calculation : Midpoint Method, to discern whether the it is elastic or inelastic or unit elastic. The Midpoint Method formula is : [(Q2–Q1)/(Q2+Q1/2] / [(P2-P1)/(P2+P1/2]
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