Mba 501

Products, Services, and Prices in the Free Market Economy

University of Phoenix

Microsoft develops and manufactures software products for many computers and is an innovator in the software industry (Marketline). The company will remain the leader with improvements to their operating system software. Apple, Microsoft's major competitor, offers operating system software for both Macintosh and personal computer users. To remain competitive in the software market, Microsoft must continually provide regular software updates and maintain competitive pricing.

The competition within the computer industry is intense. Microsoft is under pressure because Apple also offers similar operating system software to Macintosh and personal computer customers. Microsoft needs to determine what it should do in order to maintain its reputation as the industry’s largest software company.

Microsoft intends to make its prices more competitive to attract new customers. In addition, Microsoft will also consider new marketing techniques to get its software and competitive prices to consumers. However, Microsoft must consider all options before decreasing the price of its software. Since the price elasticity of demand notes consumer purchases are reflected in price increases and decreases, by keeping their costs competitive, Microsoft’s operating system can remain elastic and produce more revenue for the company while selling its software for a lower price (Brue & McConnell, 2004).

An alternative option would be to improve their existing software and increase the price. Consumers will pay more if they know they are getting their money’s worth. If consumers have confidence in Microsoft they will know the software is the best available and is worth the price.

Developing an improved version of its browser software, along with aggressive marketing, Microsoft was forced to spend hundreds of millions of dollars. The most important improvement has been integrating...