Market Conditions and Competitive Analysis

ECO/365
September 16, 2013

Market Conditions and Competitive Analysis
AT&T began business back in the 19th century when AT&T became the parent company of Bell System. At the time Bell System held a monopoly in telephone service and was considered to be the best in the world. In 1984 Bell broke into eight different organizations and until 1986 AT&T was part of an integrated telecommunication service. Today AT&T is a global leader in the telecommunications and continues to grow (AT&T, 2013). One of the best technological ideas that helped AT&T stay competitive in the market was the introduction of the Apple iPad. The iPad offers different features and options for different ages, …show more content…
Brand reliability and customer loyalty are likely the two most important contributors to the iPads success within such a competitive market. Because Apple provides such a competing product, the demand for it is somewhat high making it relatively inelastic. This implies that a large change in price is accompanied by a small change in demand. Thus, Apple has already chosen a pricing strategy that sells products at a higher price. Apple successfully relies on this strategy because their company has established strong brand recognition. The strategy also relies on what M. Tabini (2013) explains as price maintenance which “takes advantage of the popularity of its products and exploits a quirk in the way retailers are allowed to advertise their merchandise” (Par. 1). Traditionally, products from other retailers are sent through distributors, and stores are able to set their own sale prices. Apple, however; only gives retailers a small amount of room to adjust their price. The wholesale price, in fact, is a confidential number that is not released under contractual agreement (Par. 5). Thus, retailers cannot offer sales or discounts on Apple products. Consumers are unable to bargain shop for Apple products, keeping the product on demand and the price at a maintenance level. This concept ties into the relationship between the amount of labor and capital employed and the law