Pricing Strategies

Segway 's Pricing Strategy

The Segway Human Transporter (HT ) was a promising product in terms of technological innovation , only to become one of the greatest product and brand flops of all times . In 2003 , disappointing sales led the Segway company to recall a measly 6 ,000 units sold after it was released in 2002 (Kawamoto , 2003 ) Clearly , Segway 's failure was brought about by the lack of fit between the product 's marketing and pricing strategy

For one , the company was trying to pursue a broad differentiation strategy to appeal to both

mass and niche consumers but put a hefty price tag on the Segway HT . Apparently , the managers at Segway miscalculated on the actual consumer demand for the Segway HT and thought that technology necessarily translated into value for most consumers . The product itself did not offer a unique value proposition to consumers aside from the highly unusual look and the ability to manage staircases (BBC News , 2002 ) On the contrary , it had numerous downsides which potentially diminished the product 's desirability . One was that the consumer had to learn an entirely different way of driving a scooter (Reuters , 2001 ) Another disadvantage was its being electricity-operated , which put the consumer at the risk of being stranded when the Segway was low on power

Another reason for the Segway 's failure was that it failed to take into account its potential consumers ' buying power in relation to alternative products . In this line , the Segway failed to justify why a consumer should buy a Segway to navigate an urban landscape for almost triple the price of the traditional scooter . From a consumer 's perspective , the functionality of the Segway did not differ from that of a traditional scooter . The latter is also more practical since it enabled the transportation of more riders and does not carry the same risks of getting stranded due to low battery charge or getting waylaid by a bigger vehicle on the road . Lastly , the company relied more on media hype to market the product instead of carefully building consumer demand . This strategy clearly backfired as more consumers were disappointed when the product , looking like a lawn mower than a human transporter (BBC News , 2002 ) was unveiled

Meanwhile , Segway would be in an entirely different scenario if it did not attempt to put a hefty price tag on the product and if it based its marketing on the real attributes of the product as compared to existing alternatives in the market (Foster , Golder Tellis , 2004 ,

. 182 ) For instance , the Segway could be priced at 1 ,000 to 1 ,500 in to be competitive with traditional scooters and to be accessible to the mass market . Instead of boasting that the product was going to be bigger than the internet (BBC News , 2002 ) for instance , the company should have focused on marketing the Segway as a lifestyle choice . This way Segway would have been able to differentiate itself as a product Likewise , a major marketing blunder committed...