In Australia, the printer market is extensive as evident by the number of sellers dealing with the product. Approximately, there are about of printer producers in the country. The main sellers include Samsung, HP, Canon, Brother DCP, Epson. Even though there are many companies dealing with printers, some there are some which are well established and therefore attract more customers and others are on the verge of attaining competitive advantage. Sellers such as include Samsung, HP, Canon, Dell, and Epson have already established themselves and therefore enjoy competitive advantage as well as high profitability. Even though the printers share some common characteristics such as functionality, they vary in others. For the case of HP printers, they have 1 GHz 32-bit (x86) or 64-bit (x64) processor and a RAM of 1 GB (32-bit) or 2 GB (64-bit) (Hall, 1997). The printer has a capacity of 150 sheets and the print resolution maintains at 600 x 600 dpi. These specifications have made it easy for printer companies to penetrate and position themselves successfully. Reportedly, the firms which deal with printers make high profitability since there is a readily extensive market in the country. For HP the average revenue in Australia for its sales within the last 4 years is $2.15 billion. The graph below illustrates the cross price elasticity of demand.
Graph 1; A graph illustrating the the cross price elasticity of demand
(Q) 2
Certainly, all printer consumers need ink cartridges. The people doing printing business will always require ink cartridges for them to execute their activities. As such, the price of either of these variables affects the usage of the other. For instance, when the price of the printer inclines, HP printer users will be affected significantly. This is because the printer consumers will spent a high amount of their money purchasing the HP printers since they need them for their work. On the other hand, the budget for purchasing other accessories which fosters the usage of printers such as ink cartridges will be affected. The printer consumers will thus be forced to reduce their ink cartridges consumption (Lemay, 2016). In other words, the demand for ink cartridges will decline profoundly when the printer price is raised. Equally, the supply of printers will also be affected negatively. Particularly, the price hike will lead to a decline in the supply of printers.
(Q) 3
It is notable that most printer companies produce ink cartridges which are compatible for not only their printer brands but can also be used by other printer brands. When the companies start producing ink cartridges which can only be used by their specific brand printers the demand for specific ink cartridge brand will be affected substantially. The reason behind this is that the market base will reduce since users of other printers who have been using ink cartridges from other brands will be forced to stick to their brands (Darby " Pociask, 2007). They will have no option but to divert to their own brands despite the fact that most printer users are loyal to ink cartridges of other brands. This shows that the demand will automatically decline. The assumption that I make is that the brand company for specific ink cartridges will have the monopoly of adjusting the price according to its wish. However, price setting for the ink cartridge should be objective since there is a high chance of printer users to divert completely to other printer brands where the expenditure is favorable.
(Q) 4
Competitive pricing is the price strategy which is used by the HP Company. The company utilizes the price strategy to ensure that it successfully maintain its competitive advantage. HP PPS Australia Pty Ltd analyses the price that its competitors sets for their products and use them as a guide to set the price for its products (Ciotti, 2015). It is an assumption that since the company produces quality products, it has managed to ensure a high consumer return rate. In turn, the quality of HP printers as well as that of the HP Ink cartridges leads to a high consumer surplus.
Conclusion
HP PPS Australia Pty Ltd operates in a market where the forces determining business success are extensive. The company which produces printers, as well as ink cartridges, utilizes competitive pricing strategies to ensure that it maintains its competitiveness. It is notable that in the event that specific printer companies start producing ink cartridges which are specific to their brand printers the demand for ink cartridges will decline.
References
Ciotti, G. (2015). 10 Pricing Strategies That Can Drastically Improve Sales. Entrepreneur. Retrieved 24 May 2018, from https://www.entrepreneur.com/article/250289
Darby, F. L. " Pociask, S.B. (2007). Inkjet Prices, Printing Costs and Consumer Welfare. Retrieved from http://www.theamericanconsumer.org/2007/11/inkjet-prices-printing-costs-andconsumer-welfare/
Hall, R.E. (1997). The Inkjet Aftermarket: An Economic Analysis. Working Paper available on Stanford University website - Retrieved from https://web.stanford.edu/~rehall/Inkjet%20Aftermarket%201997.pdf [Pages 1-8 and possibly 9-17 most relevant?]
Lemay, R. (2016). HP Australia product revenues head south | Delimiter. Delimiter. Retrieved 24 May 2018, from https://delimiter.com.au/2016/04/01/hp-australia-revenues-tank-performance-sinks/
