Pricing Strategies Essay
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When designing a marketing plan each and every component is of prime importance. The marketing plan basically consists of four components or as we call them, the four P’s. The product, price, packaging and the place all combined together can make the product successful. They are all interdependent. The Segway is a new invention in the market and is the first of its kind product. Products of this sort are priced high because it is not long before competitors enter the market and take away the profit share for the firm.
Pricing is important because it helps position the product in the minds of the consumers; it forms an image which helps attract the target market. If the product is overpriced than the target market will not purchase it and the expected sales level will not be achieved, the same will happen if it is underpriced. The main issue with the pricing of Segway was that the product was catering to a different sector and this sector could not afford to spend so much on the piece of transportation.
The price at $4500 was considered to high for a product such as this (PistonHeads. com, n. d). One of the reasons for the failure of Segway in the early years was the price that the company was charging. Customers did not see why the product was priced so high and the utility that they would gain out of it. The market that the product was catering to is the people who walk to work; they either do it to get the exercise or don’t have money to spend on taxi fare.
For those who want to exercise, buying the Segway would be useless as the whole point of exercise would be lost and for the others, the product was too expensive a buy. Also, initially when the product was launched, the market for such a technological product was at its initial stages. The concept did not exist and people did not get used to idea. Today when gas prices are rising, people would consider this option of transportation.
The sales in recent times have been growing as people can not afford to put gas in their cars. From this we can conclude one thing and that is, when purchasing an item there are many external factors that influence the customers decision. People are getting used to the idea of spending this amount as they realize that maintenance of a car would cost them the same amount. (Whiteman, 2008) The marketing strategy that I would have adopted would have been different, assuming that it did not cost much to product the product.
I would have priced the product high but not this high; initially it would have been around the $3000 margin but after a few months this would have come down and more versions of the same product would have been introduced. Also, the best way to market this product was to let the target market demonstrate it and like every other vehicle, take it for a test drive. Once people use it they would realize the ease of use that the Segway would give them. This is an invention and the customers don’t realize its need until or unless they have I in their lives, just like the microwave oven or the cell phone.