HP rode to success by offering low-priced computers, logistical efficiency, and after-sales service. The firm’s maniacal focus on low costs has been a key ingredient in its success. When the company shifted its customer-service call centers to Jamaica and Dominican Republic to cut costs, however, understaffing frequently led to 30-minute waits for customers. Almost half the calls required at least one transfer. To discourage customer calls, HP even removed its toll-free service number from its Web site. With customer satisfaction slipping, and competitors matching its product quality and prices and offering improved service, HP’s market share and stock price both declined sharply. HP ended up hiring more North American call center employees. “The team was managing cost instead of managing service and quality,” Jeff Hatchback confesses.

A. In your own words, briefly describe how HP customers perceive the value of the service they received. 

B. Explain FOUR (4) factors HP should consider when setting its prices.