This document summarizes research into consumers' willingness to pay premiums for reduced waiting times to receive the iPhone 6 across different price points and regions. It was found that: 1) Premiums for immediate delivery did not correlate as strongly with longer wait times, since immediate buyers viewed it as a "hot" purchase. 2) Premiums decreased with increased price points but correlated most strongly for immediate delivery. 3) Contrary to expectations, consumers did not anchor to their expected prices and linearly adjust premiums based on given prices. Overall, the research found differences in purchasing behavior between consumers viewing a product as "hot" versus strategic buyers.

1. Why an iPhone?
Advanced Marketing research - MKGM31203
APOORV KHANDELWAL FULVIO GIANETTI SENTHIL KRISHNA

2. Literature Review
 Su Xuanming, Optimal Pricing with Speculators and
Strategic Consumers, Management Science, 2010

3. Hypotheses
 When waiting time for the product increases, the
premium that the consumers are willing to pay to get
the product immediately, proportionately increases.
 Across different waiting times, the premiums will be
correlated with the price of the phone.

4. Respondent Demographics
 Respondents from
 European Union
 USA
 Others
 Collected responses from iPhone users
 Created distinct datasets for users who viewed it as
 Hot product
 Functional product
 Used these to draw interesting comparisons
 Classified respondents who had made an upgrade and were willing
to buy the new iPhone 6 as ‘hot product’ buyers to draw comparisons

5. Questionnaire Design
 Simple, short - 7 questions
 Customized according to the area of domicile
 Gathered information on
 Expected iPhone 6 price
 Premium they are willing to pay to reduce their waiting time to get the
iPhone 6 for:
3 different times of delivery at 2 price points
 Used sliders to get accurate, realistic data

6. Survey Statistics
 Sample size: 50
13
20
10
7
0 5 10 15 20 25
iPhone 3S
iPhone 4
iPhone 4S
iPhone 5
iPhone Ownership among respondents
76%
24%
Yes No
Upgraded from one
iPhone to another
iPhone
78%
14%
8%
Yes
No
Don't Know
Will you buy an iPhone 6
•76 % of the respondents are between age 18 -
25
•50% - Students;
•40% - Working Professionals

7. Expectations
Our expectations were:
I. Strong correlation between premiums for all 3
waiting periods at each price point
II. Strong correlation between premiums for waiting
periods across both the price points; Strongest for
immediate purchase
III. Linear regression behavior with the premiums as
dependent variables and the initial price assigned as
independent variable


8. Expectation I
 Expected:
 Strong correlation between premiums for all 3 waiting
periods at each price point
 The premium people are willing to pay increases as the
waiting time decreases

9. Expectation I (..results)
120
100
80
60
40
20
0
Overnight 1 month 2 month
Premium (in Euros)
Waiting Time
Price point 679 euros
Average
Price point 779 euros
Correlation between premiums
people are willing to pay
Price Points
679 euros 779 euros
Between 2
delivery
times
Overnight and 1 month 0.77 0.78
1 month and 2 month 0.87 0.87
Overnight and 2 month 0.47 0.49

10. Expectation I (…explained)
 Actual:
 We see a strong correlation between 1 month and 2
months followed by immediate and 1 month.
 Reasons:
 Customers who bought it immediately viewed it as a hot
purchase and hence could not be compared with those
getting it later.
 Strong correlation between 1 and 2 months as it
captured cognitive strategic buying behavior

11. Expectation II
 Expected:
 Strong correlation between premiums for waiting periods
across both the price points; Strongest for immediate
purchase
 The premiums people are willing to pay decreases as the
retail price point increases

12. Expectation II (..results)
Correlation between premium people are willing to pay between 2 retail
price points (679 euros and 779 euros)
Waiting times
Overnight 0.896586
1 month 0.790308
2 months 0.630297
120
100
80
60
40
20
0
Overnight 1 month 2 month
Premium (in Euros)
Waiting times
Price point 679 euros
Price point 779 euros

13. Expectation II (…explained)
 Actual:
 We see a strong correlation for premiums for immediate
purchases across the price points
 Decrease in premiums payable as the price increases
 Reasons:
 Because immediate purchasers were willing to pay a
premium, which fell drastically as the waiting period
increases
 This was contradictory to what we expected. Because of
customers biasing themselves at a new price point and
hence reducing premium payable

14. Expectation III
 Expected:
 Linear regression behavior with the premiums as
dependent variables and the initial price assigned as
independent variable
 The higher the difference between the expected price
and the price points shown is, higher is the amount of
premium they are willing to pay

15. Expectation III (..results)
Regression Statistics
Multiple R 0.736529
R Square 0.542476
Adjusted R Square 0.52553
Standard Error 42.73086
200
180
160
140
120
100
80
60
40
20
0
Overnight 1 month 2 month
Premium (in Euros)
Waiting Periods with different expected prices
650 - 700
701 - 750
751 - 800
801 - 850
851 - 900

16. Expectation III (…explained)
 Actual:
 Linear Regression: No such behaviour exhibited
 Reasons:
 Customers did not anchor themselves to the prices
they quoted and shifted to the price informed. Hence
very low correlation

17. Other Observations
 Premiums people are willing to pay are much less in the
US than in Europe
 Prices of the iPhone are lesser in the US
 The expected price by students is less than that by
working professionals
 Difference in spending power
100
90
80
70
60
50
40
30
20
10
0
Overnight 1 month 2 month
Mean Premium (in EUR)
EU Responses
US Responses
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Student Working Professional
650 - 700
701 - 750
751 - 800
801 - 850
851 - 900
Mean
730 euros
Mean
760 euros
Expected
Price

18. Summary
 People who treat a product as a ‘hot product’ show
substantial difference in behavior from ‘strategic
buyers’
 Premiums for immediate delivery are not correlated with 1
month and 2 months waiting times and are substantially
higher
 Prices they assign to a new iPhone are also higher
 Anchors have a strong influence on the premiums
consumers are willing to pay

19.  Thank you !