Dell Computer Corp., the world's largest personal-computer maker, is keenly aware of everything its rival PC manaufacturers decide to go. Explain why Dell usually reacts more quickly and more substantially to pricing, product design, and advertising decisions made by Hewlett-Packard and Gateway than when these same types of decisions are made by Apple Computer.

Dell runs on Microsoft Windows, as does HP and Gateway. Apple does not. Think about the cross-price elasticity of demand for Dell with respect to 1) change in prices of HP products and 2) of Apple products. In additon to price, think about the non-price changes by Dell's competitors.

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Dell Computer Corp. reacts more quickly and more substantially to pricing, product design, and advertising decisions made by Hewlett-Packard (HP) and Gateway for several reasons.

1. Market positioning: Dell, HP, and Gateway are all direct competitors in the PC market, targeting similar customer segments. This means that they compete directly for market share and revenue. As a result, any changes in pricing, product design, or advertising strategies by HP or Gateway directly impact Dell's market position.

2. Market share and competition: Dell is the world's largest PC maker, and HP and Gateway are among its main competitors. As market leaders, each company closely monitors its rivals' moves to gain competitive advantages. Dell needs to respond quickly to maintain or grow its market share. This creates a sense of urgency to react swiftly to pricing, product design, and advertising decisions made by HP and Gateway.

3. Comparative advantage: Dell's business model is based on cost efficiency and direct sales, allowing them to offer competitive pricing. HP, on the other hand, focuses on innovation and broader market presence with a wide range of products, including printers, laptops, and accessories. Gateway is known for its consumer-friendly designs and branding. Dell's response to HP and Gateway's decisions reflects their strategy to maintain a comparative advantage in terms of cost, innovation, and product positioning.

4. Different market dynamics with Apple: In contrast to HP and Gateway, Apple Computer operates in a different market segment and has a different market positioning. Apple's primary focus is on a premium and differentiated user experience, design aesthetics, and integration between hardware and software. Apple primarily targets a different customer base and emphasizes brand loyalty and customer experience. Dell may react less quickly and less substantially to Apple's pricing, product design, and advertising decisions because they operate in different market dynamics, catering to different customer needs and preferences.

In summary, Dell's rapid and substantial reactions to pricing, product design, and advertising decisions made by HP and Gateway are driven by their direct competition for market share, the need for competitive advantage, and their similar target customer segments. The different market dynamics with Apple result in a different response strategy from Dell.