Demand and Supply of Iphone in Australia

Discuss about the Demand and Supply of Iphone in Australia.

Introduction

The concept of supply and demand is one of the basic instruments in business economics. The study of demand and supply analysis can ensure the fundamental knowledge of the products, marketers, suppliers and purchasers. The demand for a product or service has signified the quantity to be required by the purchasers in a definite marketplace. In economics, the actual quantity ordered by the purchasers can clarify the how much of that very products, market customers have been wanted to purchase at a given price (Henderson, 2008). On the other flip, the supply of a product or service signifies that availability of the product or service in the marketplace. Understandably, both the supply and demand of a product or service can dictate the pricing of a product (Sengupta, 2016). Meanwhile, prices of the commodity have been merely a reflection of supply and demand chain. Providing the evidence, the identified article paper has been analysed to create a discussion of the supply and demand status of Apple iPhone in the domestic market of Australia. Being one of the innovative based manufacturing devices, Apple iPhone’s pricing has not been controlled by the demand of the product (Pencheon, 2008). The innovativeness and rarity of the technology applied in an Apple iPhone have significantly contributed to the demand structure in the Australian market.   

Demand and Supply analysis of Apple iPhone

In contemporary business scenario, there are significant factors other than product pricing must have been taken into consideration in Australia’s iPhone industry to assess the demand and supply status. The product uniqueness, innovative technological input, increased demand from the loyal customers, income status of Australian social public and brand identity in the market have been significantly contribute to the demand and supply chain of Apple iPhone in Australian territory (Bochet et al., 2012). Modern electronic devices such as Apple iPhone have not found any replacement in the Australian market. Hence, being a luxury electronic device, the demand of Apple iPhone has not been controlled by high pricing (Whitney, 2016). Significantly, a demand curve of Apple iPhone has been analysed herein to clear out the concept of demand, supply and pricing.

Income Demand Curve

Figure: Income Demand Curve

Source: (Bochet et al., 2012)

Being a luxury product, Apple iPhone has got significant edge over other normal goods available in the product. The income demand graph shown in the above figure can deliver addition knowledge on the relation between rise in demand and rise in income level of target demographics (Zhang and Zhao, 2009). As shown in the graph, due to the rise in income status, the demand of luxury products has been improved in a given market. The demand curve Q has been shifted to Q2 due to the same. As a result of such events in economics, as the income level of the social people in Australia will be increased, demand of luxury items such as Apple iPhone can automatically see an upside jump.

Substitution effect

Figure: Substitution effect

Source: (Colander, 2013)

Another major factor that impacts the demand of iPhone in the Australian market is the rising price of the Samsung mobiles (Price, 2013). A diagram has been presented above that shows increase in demand of iPhone from D to D1 due to the rise in price of the Samsung Galaxy series that are capable of substituting the iPhone product.

According to the article, another primary factor that has lead to rise in the quantity demanded of the iPhones is the uniqueness of the product and innovative technology of Apple. It is important to note that the new innovative technology such as retina scan, thumb reader and new IOS platform attract the customers that increase the quantity demanded of the iPhone products in the Australian market  (Price, 2013). A graph has been presented below for better understanding.

 Effect of innovative technology and uniqueness of the product

Figure: Effect of innovative technology and uniqueness of the product

Source: (Colander, 2013)

It can be seen from the above diagram that the quantity demanded of iPhone increases with the rise in price of the product due to its innovative technology and uniqueness of the product. It can be seen that the quantity demanded has increased from Q1 to Q2 with the rise in price from P1 to P2 due to the shift in the demand curve from D1 to D2, whereas the supply remains constant at S.

Currently, it has been observed that the Apple INC has reduced the supply of iPhone in the Australian market. It has been done to increase the quantity demanded of the products and increase the price level (Eatwell et al., 2007). Currently, the company has been charging a high price for the product due to a high level of demand in the Australian market. A diagram has been presented below for better understanding.

Supply and Demand of Apple iPhone in Australia

Figure: Supply and Demand of Apple iPhone in Australia

Source: (Zhang and Zhao, 2009)

It can be seen from the above diagram that the quantity demanded of iPhone increases from D to D1, whereas the company reduces the supply of the product from S to S1. Hence, a rise in the price can be seen from Pe to Pe1. Hence, it can be seen from the critical analysis of demand and supply of iPhone that price is not the prime factor that controls the demand of the product in the Australian market (Eatwell et al., 2007). There are several other factors that must be considered and utilised to control the price mechanism of the market.

Conclusion

The analysis of the supply and demand curves of Apple iPhone has produced the correct market position of the two Apple manufactured devices such as Apple iPhone 6 and iPhone SE in the Australian iPhone market. Primarily, the uniqueness, product rarity, brand identity and technological features of Apple iPhone have increased the sales creating demand in the market. Additionally, latest innovative features in Apple iPhone 6 such as fingerprint sensors and creative technological versions to influence the buying behaviours of the target demographics in Australia. As a result of the overall consequences, being highly overpriced in the market, the demand of the Apple iPhone 6 has increased dramatically forcing the manufacturing company to produce more devices to balance the demand supply chain.

References

Bochet, O., İlkılıç, R., Moulin, H. and Sethuraman, J. (2012). Balancing supply and demand under bilateral constraints. Theoretical Economics, 7(3), pp.395-423.

Colander, D. (2013). Economics. Homewood, IL: Irwin.

Eatwell, J., Milgate, M., Newman, P. and Palgrave, R. (2007). The New Palgrave. London: Macmillan.

Henderson, H. (2008). Supply and demand. [Chicago]: University of Chicago Press.

Pencheon, D. (2008). Managing demand: Matching demand and supply fairly and efficiently. BMJ, 316(7145), pp.1665-1667.

Price, M. (2013). Excessive Supply, Uncertain Demand. Science.

Sengupta, R. (2016). Apple iPhone SE: Overwhelming demand exceeds supply. [online] International Business Times AU. Available at: http://www.ibtimes.com.au/apple-iphone-se-overwhelming-demand-exceeds-supply-1513923 [Accessed Aug. 2016].

Whitney, L. (2016). iPhone SE demand outstripping supply, says Apple. [online] CNET. Available at: http://www.cnet.com/au/news/iphone-se-demand-outstripping-supply-says-apple/ [Accessed Aug. 2016].

Zhang, X. and Zhao, Y. (2009). The Impact of External Demand Information on Parallel Supply Chains with Interacting Demand. Production and Operations Management, 19(4), pp.463-479.

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