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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 purchasers 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 manufacturer’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 Internet 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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