Analyzing HP's Price Strategies on Their Tablet PC

1066 Words4 Pages
Analyzing HP's Price Strategies on their Tablet PC Introduction HP's decision to reduce the price of the TouchPad went counter to the strategies that companies competing in highly commoditized markets need to adhere to. As the demand curve for the TouchPad has proven to be flat, lowering the price would not make any difference in volume, as the market is highly inelastic. By dropping the price, HP has sacrificed part of their credibility as an innovative force in the technology industry. Consumers often equate price and quality, as pricing is often the most potent and long-lasting differentiator a company has (Ernst, Hoyer, Krafft, Krieger, 2011). HP's blunder on this point, assuming one of their most inelastic markets is elastic, costs them market share, millions of dollars and a product generation in this product line. Why Their TouchPad Pricing Decision Is A Mistake The most common mistake high technology marketers make is assuming their products are immune from the price inelasticity inherent in many, if not all, the markets they compete in (Chung, Talluri, Narasimhan, 2011). HP learned the hard way that severe price cuts don't move products in inelastic markets, they send a message they are exiting a business. As pricing is the single greatest communicator of strategic direction in a product lifecycle, its use needs to be thoroughly considered before being used (Berger, Grigoriev, van Loon, 2011). HP's deep expertise in innovation is matched by its depth of

More about Analyzing HP's Price Strategies on Their Tablet PC

Open Document