Case: Keeping Prices as Low as Dell Essay Example

bettered by their rivals. Dell must plan ahead and anticipate such a reaction from their competitors and the industry as a whole.

How are Dell’s prices influenced by the other elements in its marketing mix?

At Dell, the marketing mix elements that influence the price of Dell’s products are: distribution and promotion. In terms of distribution, Dell was the first company to bypass market intermediaries and sell directly to the consumer. This decision greatly influenced the costs, and therefore the prices of Dell’s products. Dell has also adopted the concept of supply chain management, where keeping the level of inventory at small levels also saves costs.

Furthermore, building and maintaining relationships with their suppliers was a positive move in order to support their supply chain functions. In terms of promotion, Dell saved costs by promoting their products through their websites, and using the internet to save money which resulted in reduced pricing for their products.

When entering new markets, what type of pricing strategy does Dell Inc. employ?  When entering a new market, Dell uses “Penetration pricing” which aims at selling as many products as possible at the lowest possible price.

This is the right choice for Dell for the following reasons. Demand is highly elastic, which means that customers are sensitive to price changes and the number of buyers significantly increases when prices drop. Also, lower prices can lead to mass purchases which can effectively restore profits very quickly. Lastly, this is Dell’s core competency. This means that the ability that Dell has to keep its products low ensures that it has a competitive advantage over its rivals and can compete effectively in almost every market in which

it chooses to operate in.