HP faced an assault when Dell entered the printer business of 50 billion dollars. HP’s participation in this market was a dominant 60% in 2003 and earned 70% of its operating profit from the sale of printers. If Dell is successful in this area, it would represent a severe blow for HP. When selling printers, a company ensures future revenues from the sale of high margin ink cartridges, comparable with selling rakes and razors. Dell began by associating with Lexmark International Inc., but then he began to market six of his own models in 2003. By the end of 2004, HP’s market share had fallen to a little over 45% and Dell had approximately 15%. According to Michael Dell: “Our goal last year was selling five million printers and we achieved it. That suggests that in five or ten years, this is going to be a very important business for us in terms of income and utilities. ” He also indicated that the printed ones
Dell color laser ras were a price of half than HP. At that time, HP sold its inkjet printers for around $ 90 each, compared to the 70s of Dell. Again, Dell will sell your printers directly, via your website and catalogs. He has also determined how to simplify the process of acquiring spare cartridges. When a Dell printer begins to exhaust your ink, alert the user, you just have to click to sort a new one, which is sent directly to you. Dell Inc. Now enter the market of electronic products for the consumer with flat screen TVs, product category that Rollins catalog as a “technology in transition with a new source of utilities”. Each successful income comes closer to Dell to its $ 60 billion revenue goal in 2006. In fact, Dell decided that it was too conservative when establishing that goal, and at a recent date it raised it to 80 billion, an impressive figure for a Company known for its low prices. In fact as ambitious as Dell.
Questions 1. a) What pricing does Dell Inc. pursue? b) What type of long-term impact will the
Dell price lithic about the computer industry? 2. How are Dell prices influenced by other elements in your marketing mix? 3. When entering new markets, what kind of price allocation strategy does Dell use?
Challenges of pricing in marketing management Prepared by: Dr. Raúl Mejía Séñol Consultant and Professor of Graduate Accounting and Administration Faculty, UNAM, Mexico and Universidad La Salle A.