The two examples of brands where manufacturing costs are well below the selling price are Apple Company, which manufactures the iPhone, and Monster drinks, an American company manufacturing energy drinks Burn and Relentless. However, on the classification of innovation-driven technology, quality, and unmatched sophisticated characteristics, these two brands have brought a new market since they were launched. The paper explains how the Apple and Monster companies successfully charge high prices despite maintaining low costs and customer information plays in the pricing strategy.
Apple Company has enjoyed greater and longer spells of creating demand for the brands it produces. Since its grand launching in 2007, the company ensures that it releases a modern version of the iPhone every two years. The short lifecycle attracts more customers to use their products; hence, Apple successfully charges higher prices and the low or minimum costs of productions (Bajpai, 2021). In China, the company also has a lower compliance production line, an effective business ecosystem, and much lower taxes and duties that enable it to charge higher prices while maintaining low manufacturing costs.
Most companies, including Apple, tend to apply significant pressure on the suppliers to lower costs. However, they are still selling to their consumers at the highest price possible. An illustration of this is that Apple sold close to 150 million iPhones in the latest fiscal year, an increase of 19.5% from the previous year where they sold 125 million iPhones (Costello, 2021). Very few smartphones or electronic devices can match those figures. This gives Apple substantial leverage in negotiations for the components and with carriers mainly because its strategy is to upsurge market demand for its products through variation that makes the product more attractive and unique.
Monster drinks is another brand that has enjoyed long spells of success while charging high prices despite the low manufacturing costs. It is the second-highest share after Red bull, with 35% in the energy drink market (Bajpai, 2021). The demand for Monster drinks has increased, and it has 39 different drinks under the Monster brand in the Northern Part of America. The company has been successful in charging higher prices with the aid of the promotional pricing strategy. The strategy primarily aims to display the quality and experience linked with the monster drinks, attracting more customers. The retailers such as convenience stores and grocery stores also play a crucial role in offering promotions on behalf of monster energy drinks (Frohlich & Hess, 2014). The products from Monster have created a niche in the market sector that is primarily targeted to those individuals who want to live an extreme lifestyle and endorse the party lifestyle.
In addition, customer information also plays a crucial role in determining the appropriate pricing strategy, and several elements have to be considered and evaluated (Bajpai, 2021). Monster has deployed customer-driven pricing by setting up prices according to their client’s perception of the value of the brands they produce. Customer-driven pricing works in a manner that optimizes prices; therefore, it is the role of the companies to undertake a detailed and comprehensive understanding of what and how the customer values a product or a service. On the other hand, Apple Company uses marketing through consumer behavior, which is why it has become successful as it plays a huge role in its marketing strategy. Once a client purchases an Apple product or downloads it from iTunes, the company uses this information to gain significant insight into what the consumers want more or what drives their purchase behaviors.
In conclusion, the companies or organizations need to implement an appropriate pricing strategy that charges higher prices but uses lower manufacturing costs. For example, Apple uses a unique value proposition, a marketing strategy that enables it to gain a competitive market compared to its competitors. On the other hand, the Monster brands use the promotional pricing strategy that focuses on youth themes and strategies such as sporting events and lifestyle, making it the most current trend in the energy drinks sector.
References
Bajpai, P. (2021). Why China is “The world’s factory”: The 5 reasons why China is the world’s biggest manufacturer. Investopedia. Web.
Costello, S. (2021). Where is the iPhone made? It takes a village to build an iPhone. Lifewire. Web.
Frohlich, T. C., & Hess, A. E.M. (2014). America’s most profitable products: Insightful analysis and commentary for U.S. and global equity investors. Wallst. Web.