Apple versus Dell Computer

Apple and Dell are two direct competitors which use price and non-price strategies to compete on the marketplace. The relations between products and prices, relationships between the companies and their consumers are crucial for successful performance and competitive position. Laptop computers represent an inelastic market. When estimating a demand schedule, the market can be stratified, which involves estimating the number of customers who will buy at several levels of price (McDonald and Christopher 2003).

Primarily, the competition is based on price factors. Dell proposes lower prices for laptops (from $750 to $1000) than its competitor Apple. An average price for Apple is $1099 -$1999. Dell appeals to a market segment where price is an important consideration to purchase. In contrast, Apple appeals to customers belonging to a high-income group who value brand name and unique product features. A pricing strategy of Dell is accompanied by extensive promotional activity, particularly in up-market and specialist magazines. In Dell, once a reputation and a market have been established there is a reduction in price to broaden the market, using the original purchasers as important opinion leaders (www.dell.com). Price reductions are also necessary to maintain a market share as competitors arrive on the scene. Traditionally, laptops entered the market at high prices, with considerable price reductions as the market ex­panded and the competition increased.

Dell proposes laptops to wide target audiences with different income and social location. It sets prices from $500 to $3000 while Apple sets prices from $1099 to $3000 and more. The pricing objectives of Dell appeal to wider customer groups and allow them to buy low priced laptop which satisfies their needs and wants. In contrast, many potential buyers cannot afford laptops from Apple because of a high price. Thus for both companies, the pricing policy is therefore a vital strand of strategy (www.apple.com). This strategy is valued by Apple which believes that a concentration on a unit that focuses their efforts is better able to serve their needs of a narrow strategic target more effectively than their competition (McDonald and Christopher 2003).

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Both companies use psychological tactics to promote their products. For instance, Apple sets price of $529 instead of $530 and Apple sets price of $1099 instead of $1100. With psychological pricing, the companies appeal to emotions of consumers. However, the element of the psychological purchase based on an emotional response is expanded as there are many psychological triggers often overlooked including the perceived value of ‘family values’ for instance. Also, high price of Apple laptops helps the company to establish trustworthiness, confidence, and competence for customers. This strategy is supported by the buying process and, as the most important, this positioning strategy helps the customers to have product within their minds. Apple represents a promise about a high quality laptops; it is a sort of quality certification.  Branding is crucial for Dell and Apple because they enable customers to better organize their marketplace experience by helping them seek out and zero in on particular models. Also, Dell proposes a wider product range in contrast to Apple. Personality theory is used by Apple to attract new consumers and heat their interest in new and unusual goods creating a demand for convenience goods, which is generated by their lifestyles. Apple laptops are associated not only with trendy life style but with high income. In contrast, Dell displays ‘price history’ which has a great impact on decision to purchase. It proposes immediate price reductions for all products and installment selling. You may also be interested in Apple quality management strategies

Apple and Dell use different pricing strategies and promotional pricing tactics to attract potential consumers. They establish market price policy which helps to support their brand image and appeal to their customer groups. For both companies, the pricing strategy is part of a deliberate attempt to reach a market segment. Dell bases its pricing on emotional appeal while Apple uses rational approach appealing to logic and speaking to the customers intellect.

References

1.      McDonald M., Christopher M. (2003). Marketing: A complete Guide. Palgrave Macmillan.

2.      www.dell.com

3.      www.apple.com

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