Association for Light and Life

One of the most difficult areas of marketing decision making, pricing strategy, deals with the methods of setting profitable and justifiable prices. It is closely regulated and subject to considerable public scrutiny.
One of the many factors that influence a marketer’s pricing strategy is competition. The computer industry has become all too familiar with price cuts by both current competitors and new market entrants. After years of steady growth, the market has become saturated with low-cost computers, driving down profit margins even farther. Big PC makers such as Dell, Compaq, and IBM are trying to compensate by focusing more on business customers. Meanwhile, start-ups like eMachines and Microworkz are the fastest growing segment of the retail computer market with a 20 percent share. In 1998, just 2 percent of computers could be bought for less than $600; today, well over 20 percent are sold at below that price.