Marketing mix pricing strategies and implementation

Marketing Mix, Pricing Strategies

Segway Marketing Strategies

The Segway appeared as a response to the quickly changing environment and shifting features of consumer demands. Expected to revolutionize the traveling habits, the Segway failed to retrieve the desired outcomes however. The two-wheeled electric gadget is produced by Segway Inc. And it is based on the invention of Dean Kamen. The reasons for the failure are unclear, but one could point out a poor marketing campaign, high costs of developing, leading to high prices; the current price of a Segway within the United States ranges between $5,350 and $6,400 (Segway by the Bay, 2008). To ensure a future success for the traveling device, certain aspects of the marketing mix should be reconsidered. Some suggestions are presented below for the 4 Ps of marketing (product, place, price and promotion), with emphasis on pricing methods and strategies.

Product

The product strategies must be focused on the benefits the Segways offers its buyers: reduced costs with fuels, speed and the ability to reach destination on time, avoidance of traffic jams, better protection of the environment and no troubles with finding a parking spot. The product placement strategies should focus intensively on the ingenious features of the item and also on the organizational brand.

Price

The pricing strategies to be developed and implemented by Segway Inc. are rather difficult to establish generally due to the challenges faced by the manufacturer. These difficulties generally revolve around the ingenious nature of the product, which can make it problematic to properly address and identify the target audience. The second most important aspect that raises difficulties, and extremely relevant in the context of pricing strategies, is that of rather reduced revenues. Since the company did not meet its set sales objectives, they are now encountering financial limitations, which require increased attention and a well developed and implemented pricing strategy. From this standpoint, the manufacturer could choose to increase the retail prices for their items in the hope that the higher revenues would ensure gains. However, the already high price of the Segway is one of the issues that have lead to the current situation and an additional increase would not be desirable. Consequently, it would be best for the organization to try and achieve a price reduction. This would result from a decrease in the administrative and operational costs. Administrative costs would be reduced through an increase in the operational efficiency; operational costs would be decreased if the company outsourced their manufacturing operations to less developed countries.

Considering that the cost reductions are achieved, the Segway Inc. should implement a retail price of no more than $4,000 per vehicle, with the latest innovations and the most endowments. The cheapest Segway should not be more than $3,000. The pricing strategy should be somewhat similar to the penetration strategy. This often occurs in the case of newly launched items, which are sold at lower prices than the competition's in order to attract customers. The strategy also sees that in time, as the customer palette is better consolidated and stable, the manufacturer will adopt a new approach, aiming to make increased profits, rather than attract new customers. The penetration pricing strategy could be adapted for the Segway, even if this does not fit the characteristics of a newly launched items and the ultimate purpose would be the same.

Once the cheaper item is able to attract sufficient customers, the manufacturer would be able implement a variable pricing strategy. This means that the retail price to the end consumer is built on the multitude of costs incurred in its production and distribution, such as the costs of commodities, the taxes paid to the local and national budgets or the costs with the employees. The retail price must also include a profit for the manufacturer. Increased attention must be placed on the correlation between the pricing strategies and the life stage of the product. For instance, the Segway is now in its incipient stages, it is more of a question mark rather than a cash cow or a star. At this stage then, it has to be supported and financed, and this also means the implementation of pricing strategies which ensure an attractive and competitive price. When it reaches the maturity stage and becomes a cash cow, the price should be higher and stable, to ensure constant and reliable profits.

Another pricing strategy to attract the customer is that of offering discounts based on certain criteria. Such a criterion could be the volume of the purchases. For instance, if a customer buys ten Segways, they get a 5% discount. If they buy 20 Segways, they get a 10% discount from the retail price. Another criterion would not be directly linked to the customers' behavior, but rather on forces independent from both buyer and purchaser. Such a criterion is the season, resulting as such in seasonal pricing. This means for instance that in spring, when it becomes pleasant to be outdoors rather than drive the car, the manufacturer could offer discounts to stimulate sales. This could also happen at the end of the autumn, but with the purpose of selling the items still in stock; these discount sales would be larger than the ones in spring.

Another pricing strategy would refer to the actual payment method. In this order of ideas, the buyers should be given the alternative of paying with cash, credit cards or cheques. They should also be able to pay the price in full or by installments. The manufacturer should implement low interest rates, aimed to motivate the customer to finalize the purchase.

Place

Segway should also reconsider their distribution strategy and use various intermediaries in the process. This would result in a wider and better access to the already existent customer palette of the intermediaries, and also reduced expenditures.

Promotion