Why Does Apple Always Come Up with Three Versions of the iPhone?

When it comes to releasing new iPhones, Apple's strategy of producing three distinct versions has become an industry standard. But why do they opt for this approach? We will delve into the strategic reasons behind this practice and explore the marketing technique known as the decoy effect.

Market Segmentation

Apple employs a multi-tiered approach to cater to diverse customer segments with varying budgets and preferences. By offering an entry-level iPhone SE, a mid-range iPhone model, and a premium Pro versions, Apple can address a broad range of customers. This strategy ensures that the brand remains relevant across the market spectrum from budget-conscious buyers to tech enthusiasts.

Feature Differentiation

Each iPhone version comes with its unique set of features, allowing consumers to make informed choices based on their needs. The Pro versions typically boast advanced camera systems, superior display technologies, and enhanced performance capabilities. This differentiation not only attracts tech-savvy users but also encourages upgrades among existing customers who want to stay at the cutting edge of technology.

Increased Sales Opportunities

By providing a wide range of options, Apple creates more opportunities for sales. Customers who might have been hesitant to invest in the top-tier model are more likely to opt for mid-range or entry-level alternatives. This expands the potential customer base and drives overall sales, contributing to Apple's robust market position.

Competitive Strategy

The smartphone market is highly competitive, with numerous brands offering similar products. Apple’s strategy of offering multiple versions allows them to compete more effectively by providing options that cater to different consumer needs and price points. This approach helps Apple maintain a competitive edge in the market.

Innovation Showcase

The Pro models often serve as a platform to showcase Apple's latest technological advancements. By highlighting the most cutting-edge features in these models, Apple can generate buzz and maintain its reputation as an innovator in the tech industry.

Understanding the Decoy Effect through an Ice-Cream Example

To further illustrate Apple's strategy, let's consider an analogy with ice-cream. Imagine you're an ice-cream lover and you're presented with three options:

One Scoop Ice Cream: 13 Rs Two Scoop Ice Cream: 19 Rs Three Scoop Ice Cream: 19.5 Rs

The small price difference between the two-scoop and three-scoop options can attract your attention. This is a perfect example of the decoy effect, a marketing strategy where a third option is introduced to influence consumer choices by making the preferred option seem more valuable.

Show a decoy option to customers, and they are more likely to choose the more expensive option. Without the decoy, you might opt for the one-scoop ice cream (13 Rs). However, the presence of a three-scoop option at a just slightly higher price (19.5 Rs) can make you consider the two-scoop option (19 Rs) more attractive, thus driving you to choose the more expensive version.

The Decoy Effect in iPhone Pricing

Apple applies the same principle in their iPhone pricing strategy. The difference in pricing between the iPhone, iPhone Pro, and iPhone Pro Max is subtly designed to make the Pro models more appealing. For example:

iPhone: 699 iPhone Pro: 999 iPhone Pro Max: 1099

The slight difference in price between the iPhone Pro and Pro Max can make the Pro Max seem like a more attractive option. This decoy pricing strategy encourages consumers to select the more expensive model, even if their needs could be met by the mid-range option.

Conclusion

Apple's strategy of releasing three distinct iPhone versions and their use of the decoy effect in pricing are essential components of their marketing and sales strategy. By catering to diverse market segments, showcasing innovative features, and carefully crafting their pricing, Apple ensures their strong market presence and continually adapts to evolving consumer demands.