Prices for different products vary between different organizations or companies which produce them. Therefore, I have chosen computer manufacturing companies for this analysis. Different prices are offered to the same computer brands with same specifications. The three chosen companies include HP, Acer and Dell. These are top computer producing companies in the world. It should be mentioned that computers with the same specifications from the three companies have different trading prices in the market. A computer from one company may be cheaper compared to the other one. These differences are caused by a number of factors mentioned below.
Geographical pricing factors usually play a significant role when a company decides on the kind of prices it will offer on its product across local and international markets. These considerations may be determined by factors such as shipping cost that varies between different locations and different companies (Holger, 2010).
Different production cost may differ between the companies. Production cost is the overall cost incurred by a company in the process of producing a product. The companies have to set the price which will enable them to make profit and stay in the market; this in turn leads to the differences in the price of the same product. For example, Dell production cost differs from that of Acer and HP.
Allowances and discounts offered by these three companies to customers who purchase this product vary as well. However, this is a key competition tactic employed by many companies in the market in order to win a big market share or have a competitive market advantage. In most cases this can influence the decision of a customer.
When companies are fully established in the industry or in the market, they win a high percentage of customer loyalty. In case of HP company, it is ranked the best computer company in the world. HP will take this competitive advantage over other companies such as Dell and Acer. Therefore, computer with same specifications produced by Dell and Acer has a higher price; nevertheless, customers will buy it because they trust this company’s product.
The three companies may produce a computer brand targeting different users of the product. For example, HP may decide to come up with a computer product targeting companies as the market of the product. Dell may produce computer brand with the same specifications as HP, but its target market may be students. Thus, the price set by these two computer brands will be different on the basis of the purchasing power of the target markets.
The given computer companies sell their products all over the world. Trade agreements, import taxes, and tariffs and exchange will have an influence on the price of a product, because all these factors vary from country to country.
Customers determine the brand of a product they wish to buy according to the quality of a product. Moreover, the level in the market established by the company will also influence the price. The customers do not doubt the quality of computer brands from HP compared to those of Dell or Acer. Therefore, the demand for HP computers is high giving HP a large market share over others. Thus, if the demand of a product is high, the supplier will sell a product on a high price. Due to the loyalty enhanced by the company with its customers they will buy its products.