Edited by Sarah Mejia
Since the release of the new iPhones, the 5C and the 5S, in Sept., Apple has decided to decrease the number of iPhone 5Cs per order due its low demand. Retailers have reported that consumers are indifferent to the product, which may prompt the possibility of a price cut. “The fact that the 5C appears to have missed Apple’s expectations may not be all bad, especially if it means consumers are buying more of the 5S, the higher-end iPhone that came out the same time last month and sells for one-hundred dollars more” (Luk, Dou, Sherr). This has proven to be true in more developed markets such as Hong Kong and the US because the price difference is minimal compared to the added features of the 5S. Apple decided to create the 5C because of pressure from their investors to have a product that it can put up against its competitors’ products such as Samsung’s Galaxy Note 3. The investors wanted Apple to be able to compete in China and other fast-growing, emerging markets by having a product that is more affordable. One reason that the 5C has failed to make a large profit is because it is essentially last year’s iPhone 5 with a plastic backing that is available in five different colors. Many people don’t want to upgrade to the 5C because they can get the same features the 5C offers at a much lower price with the previous model of the iPhone, the iPhone 5. That is why much of the attention went to the new iPhone, the 5S, which features a “better camera, new motion-sensor technology and a fingerprint sensor” (Luk, Dou, Sherr). Apple has decided to cut orders of the 5C but still keep some supply in stores “to ensure adequate supply of the 5C so that potential buyers, who were more likely to be switching from competing phones, didn’t have to walk out of a store empty-handed” (Luk, Dou, Sherr). By keeping some 5C’s on hand, Apple can hopefully lure in new customers who have travelled and waited for an iPhone.
Ultimately, Apple is framing this situation in relation to the phones’ attributes. Apple is using semantic framing, which is the characterization of objects, events and people. While Apple could admit the 5C was a failure, they have taken another route and claim that the 5C was a strategy to attract new customers who are interested in a cheaper product (when compared to the 5S since they came out at the same time). As mentioned above, Apple has realized that their product, the iPhone 5C, didn’t succeed as intended, yet it has increased the profits of the iPhone 5S, which in the end creates a greater all around profit for Apple since that phone is more expensive.
Apple created the 5C due to pressure from its investors, which they thought would maximize the value of the firm. However, this backfired because they thought that the 5C would be very profitable when in fact it was a “second best option” when compared to the new 5S. This is an example of how shareholders have an opinion on what the company should do although they do not legally control the corporation.
Apple failed to successfully provide an iPhone at a lower cost as they intended. Although ultimately everything worked out by increasing their overall profits, they cut down the production of the 5C and 5S sales are extremely high. In order to achieve high sales of 5C, Apple should have created a product that was more cost efficient than the iPhone 5 or take the iPhone 5 off the market. Since Apple is a luxury brand, its overall goal to be able to appeal to customers of all income levels was slightly distorted. Apple should have either made a phone that was significantly cheaper than any iPhone out there or waited to incorporate more of the iPhone 5S features, while still having the plastic backing to create some diversity between phones.
As stated earlier, the only difference between an iPhone 5 and an iPhone 5C is the plastic color on the back, which most likely will disappear with a protective case. Apple never said that this color back would be protective for the phone, although it is plastic so a case would still be necessary. The 5C is a failed product and Apple should just cut its losses and move forward by cutting the production of the 5C all together in order to focus its money in more profitable places such as its new iPads and computers.
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Knutson, Ryan, Drew FitzGerald, and Thomas Gryta. “Apple Cuts IPhone 5C Orders as Retailers Report Tepid Demand.” The Wall Street Journal 17 Oct. 2013: B1+. Print.