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Pricing Strategies

Essay by   •  August 11, 2011  •  Essay  •  566 Words (3 Pages)  •  1,435 Views

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Running head: PRICING STRATEGIES

Marketing is a term that refers to the promotion of products through distribution, pricing, brand recognition and advertising. For marketing to be successful the needs and wants of the customer, and their potential reaction to a product, and pricing are often heavily researched prior to the launch of a new product. In December 2001 Dean Kamen of Segway LLC patented a mystery product that was supposed to "change the world". On December 3, 2001 Karmen unveiled the Human Transporter HT. With lofty ideas of replacing the automobile and unrealized sales forecasts, Kamen's Segway HT has not moved mankind nearly as much as Kamen had expected. (Techsoc.org) Historically, Kamen's successes have been based on his abilities to be innovative in research and design, while at the same time being able to pass the developed product off to a partnering company that is able to take the product to market.

Segway, headquartered in Bedford, New Hampshire, USA, was founded by inventor and entrepreneur, Dean Kamen. The inspiration for the name Segway came from the word 'segue' which meant -'to transition smoothly from one state to another'. (Segway-Still off balance).The Segway HT was the company's first and most publicized product. It was to be a 'solution to short-distance travel and was expected to replace cars for short trips. (Hyped 2002)

Before the launch, it was believed that the price of the Segway HT would be around $2,000. Marketing experts felt that the company made a mistake in identifying its target audience. By describing the Segway HT as a product for everyone, it diluted the effectiveness of its campaign. The price of the product reached up to $3000 which in turn affected its sales (Today in Technology History, 2002). Later in 2003, Segway HT p-series was launched. This new version was an upgraded model of 'Segway HT' (version was upgraded to 12.0). But still a fall in the sales figure was seen (expected sales was 50 - 100,000 and original sales was 6000). In the US the price (MSRP, July 2008) of the various Segway models ranges from $5,350 to $6,400 (segway by the bay).

The company regenerated its marketing strategy and decided in 2006 to discontinue all the models prior to 2006. It announced 'new second generation designs' which were introduced with new technologies and upgraded version of the previous transporters. 23,500 transporters were sold in this phase. Various product lines were launched to generate more sales and revenue. The price of the product was too high and it was commented that market segmentation was not done properly (Segway - Still Off-balance, 2008). The marketing strategy was mainly

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