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Pricing Strategies - Dell

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Pricing Strategies - Dell

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  • May 23, 2008
  • 2108 Words
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1. Introduction

Pricing strategies usually change as the product passes through its life cycle, because there is constrains on the company’s freedom to price a product at different stage. The purpose of this report is to determine and elaborate the elements in pricing strategies of Dell’s notebook.

2. Key Objectives
Price is the amount of money changed for a product or service, or the sum of the values consumers exchange for the benefits of having or using the product or service (Kotler et al., 2003, p.332). Historically, prices were determined through bargaining or negotiations between buyers and sellers. Different prices were set based on the buyer needs and bargaining skill. The establishment of one price for every customer is relatively new phenomenon that came about with the rise of retailers but price still remains a major factor in affecting consumer buying decisions. In addition, it is the most flexible of those components. The ability of price to affect consumer decision and its flexibility makes pricing strategies important in meeting Dell’s objectives in a competitive environment. The main objective of Dell is to produce the low price and profitable notebook for the customer. For Dell Company, all the prices that they sell are posed to the internet and they usually based on the e-commerce market. The main reason for successful pricing strategy is having a reasonably accurate idea of supply and demand. Too high a price and demand fall as less buyers purchase the product. Too low a price can increase volume of sales but reduce margins profit. So, Dell has aimed for the e-commerce which is the multiple markets operates at different times of day and may interact or affect each others. Dell Company had set different types of price based on the home user, small business user and medium or large business user. The pricing structure changes as the products move through their life cycle. The company also always...