Page 569 - Business Principles and Management

C HAPTER 20 A SSESSMENT

CASE IN POINT

CASE 20-1: Computer Life Cycle
The personal-computer market has become very competitive, and it is
more and more difficult for computer manufacturers to make a profit.
Technology changes rapidly, so if a company has not sold its inventory of
one model when a competitor introduces a newer, faster, more powerful
model, it often has to sell its older model at a loss. Many computer pur-
chasers are not brand-loyal and either look for a lower price or expect
the manufacturer to include related products, such as a monitor, printer,
scanner, or several types of software with the new computer.
Online computer sellers have created considerable competition for
traditional store outlets. Many consumers today do not feel they need
much technical help with computers. Businesses are also buying online
because they can configure computers to meet their needs.
Newer computer products are entering the market. These include
wireless portable computers and personal digital assistants. Even cellular
telephones are gaining computer functionality.
One computer manufacturer began a new marketing program that
offered customers a free computer. The computer was not the manufac-
turer’s latest model, however. The offer also did not include a large
monitor or additional equipment or software. Instead, the manufacturer
required the customer to sign a contract to use the manufacturer’s Inter-
net service for at least three years, at a cost of $24.95 a month. Typically,
consumers could buy the same service for as little as $14.95 a month
from other companies.

THINK CRITICALLY
1. Which stage of the product life cycle do you believe computers are
in, based on the case information? Why?
2. Explain how this stage affects the price of computers.
3. Are computers industrial or consumer products? Explain your
answer.
4. In which consumer product category do you believe consumers
classify computers, based on the case information? Why?
5. How does your product category choice in question #4 fit with
companies’ ability to sell computers on the Internet? Explain your
answer.
6. Describe the target market that you believe might be attracted to the
manufacturer’s offer of a free computer.
7. Explain why a consumer may or may not find the Internet/computer
package an appealing offer.
8. What are the advantages and disadvantages of offering consumers a
computer that is not the company’s latest model?

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