Dell Marketing Case Study

TASK 1

a) Optional Product Pricing

In this pricing strategy, company’s usually offer to sell optional or accessory products along with the main product. However, they would have to carefully decide on which items to include in the base price and which to offer as options.

In Dell, they offered different price ranges according to their optional products. The optional products that they are offering along laptops are processors, hard drives, and RAM. They differ the prices of these products according to the processors and therefore, the better the processors, the higher the price. The Intel Core i3-3227U processor is priced at RM1399, the Intel Core i5-3337U is priced at RM1899 and Intel Core i7-3537U is priced RM2549. The reason why Dell used this pricing strategy is to offer customers the necessities that they need in order to use the personal computer but as a package deal and a lower price.

The pros of using this pricing strategy is that customers would purchase all the necessary items that is needed from Dell and not from different IT store since Dell is offering it as a package and at a cheaper price.

The cons of using this strategy is that Dell would have to lower their prices for the optional products which will not cost them a lost but they will not gain a profit either.

b) Psychological Pricing

Pricing that considers the psychology of prices, not simply the economics. Many consumers judge the quality of the product based on its price and therefore there are a few consumers that are willing to pay a hefty amount of money for something that is worth much lesser just because it indicates something better.

Air Asia is well known for using this pricing strategy to attract customer to use their budget airline services. They use the aspect of reference prices which allows the customers to refer the offered prices to other airline prices and compare between the options. For example, they have a certain booking (now till 17th March) and daily flights from (1 May till 20 September 2013) which customers have to oblige to in order to get these cheap air tickets. Air Asia uses this technique because they will get a lot of bookings during this period of time and its easier for them to manage their flights where they are able to save more time, money and energy.

The pros of using this pricing strategy is that Air Asia is able to be more efficient with their bookings as customers have to book their ticket much earlier in order to get the discount.

The cons however is that, the booking period is so much earlier than the travel period, so customers might face unanticipated factors or change mind that does not allow them to travel on.