Yan Gao’s blog post: Risk of Lowering Price in High-end Markets described why luxury brand should satisfy customer’s needs instead of reducing price to gain market. And I agree that even though the cheaper version of iPhone could boost the selling, but it could also damage its reputation as a high-end brand.

Many high-end brands have a rich background and extraordinary history that make up an essential part of the brand identity. Therefore, when customers buy a high-end product, it is not only because of the product performance, but subconsciously they are also influenced by the brand’s rich heritage also. So, it is important for high-end brand to price themselves right. Setting the price too low can potentially harm the brand value. When a product is available and affordable for all customers, it tends to lose its exclusiveness.

Even though Apple tried to distinguish the cheaper iPhone from the regular one by eliminating some features and wrapped with an inexpensive plastic look, the announcement of 5c itself makes Apple’s value in customers’ minds start shaking. Therefore, for Apple to regain what they have lost, they needs to challenge themselves in terms of functionality and creativity.

Picture Source: http://www.businessinsider.com/apples-new-iphone-is-plastic-beautifully-unapologetically-plastic-2013-9