Pricing Strategy - Success vs. Failure

Describe the pricing strategy for a recently launched product that succeeded and one that failed and describe the reasons for different results

The most recent product pricing strategy failure that comes to my mind is the HP TouchPad Tablet case where the product was launched at a price comparable to the iPad that was already a market leader. The product was priced around $499 and this was the most foolish thing to do. The HP TouchPad had no additional features over the iPad to offer and price was its only advantage that it misused by pricing the product too high.

The reasons for HP’s pricing strategy failure can be categorized as:

1. Price too high that matched the competitors price but lacked in features

2. Announcement by HP on the lack of support for VMware and other desktop virtualization softwares that turned away a lot of buyers

3. Inadequate promotion

4. Lack of 3G and Wi-Fi in the initial models

HP realized its mistake and slashed its prices to $99 that finally sold the product overnight.

On the contrary the iPad was launched at $499, which was expensive, but it was launched in a market that did not exist. Apple enjoyed a first mover advantage in this market. The initial response to the iPad was cold and tech analysts didn’t find a reason to invest in a product that was neither a phone nor a laptop. The main issue was the lack of awareness of the product and its subsequent use. Apple fought this issue by running ad-campaigns on iPad functionality and educating people on how the iPad could be used through varied domains from engineering to medical in varied capacities. The educational programs and advertisements paid off and iPad went on to be the most successful product that Apple sold after iPhone in that quarter.

The reasons for Apple’s pricing strategy success are:

1. Proper product segmentation into Wi-Fi and Wi-Fi plus 3G models that gave the customers more choice and flexibility

2. Educational camps that educated the...