Essay: Price Sensitivity of Dell Products

Sample Essay

Price Elasticity of Dell products can be judged from the fact that in 2005, a decrease in the price of the product range was not welcomed by an increase in sales (Enderle, 2005). In fact, the excess of substitutes caused consumption of Dell products to go down and almost created a share losing environment for Dell.

Speed of growth

In the last decade, Dell has continued to show steady growth trends and over the last few years, the growth rate of Dell has been observed to accelerate. So much so that at times Dell has come to standings where experts have speculated that it will manage to attain its targets earlier than anticipated. In 2004, Dell opened a second factory in Europe as it sped past competition and wrapped up the year with a share of 18.2% in worldwide PC sales. No doubt this came as a very sharp contrast to the 17.2% share in worldwide PC sales recorded in 2003 (CNN, 2004). In 2006, Dell reported an increase in profits by 1.5 times with a 65% increase in the return on total capital. Dell has outperformed the market a number of times such as earlier in 2005 and much more recently in 2008 (Zehr, 2005). In 2005, worldwide sales grew by as much as 22 percent. In 2008 a 21.3 percent growth was recorded (Dell Inc., 2008).

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