Products or goods that are out in market may be categorized according to their elasticity. The elasticity of consumer products or goods are measured according to the demand as it is related to price adjustments (price elasticity), the demand as it is related to the consumer’s income (income elasticity), the demand equal to the price adjustment (unitary elasticity), and the adjustments in demand as it is related to price adjustments for other products or goods (cross elasticity). (“Elasticity,” 2008) For this particular case, laptops, based on observations from Apple and Dell, are inelastic products. Laptops are inelastic products, because the prices of these products do not change whether demand increases or decreases.
As observed from the company web sites of Apple and Dell, competition is subtly based on price, because of the wide range of products that each company offers. For instance, Apple only offers three models of laptops that are heavily priced. Dell, on the other hand offers several models ranging from $399 up to the price range of Apple laptops. The competition lies on the promise of providing quality laptops. For Apple, they provide limited models for their line of Mac’s, while Dell provides many laptop models with varying prices. There are many models to choose from in the long list of laptops that Dell provide, depending on an individual’s gadget, and the specification that one wants.
Moreover, competition is widely based on the innovativeness of each product. For instance, Apple offers the MacBook Air, which claims to be the thinnest notebook in the world, which sells for almost $1800. Dell, on the other hand offers laptops that are thin and light, with price tags worth $500 to $800. Although people would argue that competition is based on the prices, it is actually rooted on the difference in services and the quality for each product that both companies provide.
Basically, price tags that they put for each product is based on the specifications and the quality of the product. For instance, the lowest priced laptop for Dell makes use of AMD Processors instead of the highly priced and quality made Intel Processor. For laptops with low memory capacity, they sell for the lowest prices, and the ones in the higher price levels are those with higher memory capacity. This pricing strategy goes with Dell. For Apple, I guess the brand name itself suggest the price of their products. Apple MacBooks do not go lower than $1000. Perhaps the strategy in itself is producing quality products that Apple seems to exhibit in all the products that they provide and put on a price tag that conforms with the quality that they provide. All people would agree that if you read the Apple brand on technologies and gadgets, you would know what the price tag would indicate.
Dell promotes the service for all target customers. It caters to A, B and C classes of society because of the wide range of products and services that they offer. There are low priced items for those who live on a budget. There are middle priced items for those who can afford products with the moderate quality of services, and there are high priced items for those who want products with the most luxurious and high-end services. The simplest psychological pricing tactic that I can observe from both companies is that they employ the “one dollar off” for the price tags, such as $399, $499, $1799. People often think these prices are actually low because of the first digits of the price, however, when you round it off; you are actually buying a $400, $500, and $1800 worth of products. It is a simple observation, but it is a pricing strategy all right!
The Apple Company’s strategy on pricing is based on the established image and reputation of Apple products. Engraving or labeling each item with the apple logo gives the company the right to impose high prices. For many people, the quality service that Apple offers is established among the customers; therefore, they are able to stretch their prices to the higher end of the market.
References
“Elasticity.” (2008). Retrieved April 15, 2008, from Worth Publishers. Website:
http://www.worthpublishers.com/html/staticcontent/nonstandard/include/1429206233/1429206233CourseTutorch05.pdf
Apple. (2008). Retrieved April 15, 2008, from Apple Inc. Website: http://www.apple.com/mac/
Dell. (2008). Retrieved April 15, 2008, from Dell. Website:
http://www.dell.com/content/products/category.aspx/notebooks?c=us&cs=04&l=en&s=bsd