In an interesting departure from previous years, Apple is using a combination of cash and gift card discounts worldwide to attract shoppers to its on-line and retail stores on Black Friday. The gift card option focuses on creating more value for the same price, rather than giving shoppers a cash discount they could spend for other expenses. But beyond the practical differences, the discount change seems to signal a change in philosophy that directly affects Apple’s revenue stream. [I am an Apple stockholder.]
The cash-off discount is standard in the retail industry, and is based on the attraction of obtaining a product at a cheaper price. That attraction doesn’t exist for a gift card discount, since shoppers will eventually spend the same amount of money. Instead, a gift card discount offers buyers marginally more products for the same price. The discount technique stresses value rather than savings.
Starting at midnight today, the Australia, Canada and U.S. stores began offering gift cards worth from $25 to $150 (US) for the purchase of select accessories and certain configurations of iPads, iPods and Macs. For reasons likely related to commerce or business regulations, the UK and Europe stores are still offering cash off for Black Friday purchases.
The gift card discounts include up to $150 for an iPad Air, $50 for an iPod touch, $150 for a Mac desktop or laptop, and $50 for an AirPort Time Capsule 2Gb. Third-party product include the GoPro Hero 3+ ($50 gift card), Beats by Dr. Dre headphones ($50) and the Nike + FuelBand SE ($25). The new iPhone 5s and 5c models, and the iPad mini Retina display model are not discounted for Black Friday.
In previous years, Apple offered simple cash discounts on select products for its only sale day, ranging from about eight percent to 13 percent. By reducing the price of certain products, shoppers could save perhaps $100 on a more expensive product, and then use that money to buy accessories from another retailer, or even pay a part of their ordinary monthly bills.
But by offering a gift card discount, Apple captures the entire standard price of the on-sale product, because shoppers can only “spend” the savings by redeeming the card with Apple. Most likely, the additional products that shoppers would purchase with the gift card are lower-priced, higher-margin accessories. Essentially discounting these extra purchases doesn’t reduce Apple’s revenue as much as a cash discount would on a major product. The result is a “discount” with a much smaller reduction in revenue than would occur with a straight cash-off discount.
Interestingly, insiders have said that Apple retail store employees received a similar gift card discount as their 2013 holiday present. Store staff can reportedly receive a $50 gift card at the discounted price of $40—a $10 gift. Essentially, each employee participating in the gift program would generate $40 in additional revenue for the company—a gift to Apple more than to the retail employees.
via apple - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFtgP8bBWBP0kEhb17lJ4UIySQl_Q&url=http://www.forbes.com/sites/garydallen/2013/11/29/apple-stresses-value-not-cash-for-black-friday-discounts/
Posts
0 comments:
Post a Comment