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Suppliers
Segway HT incorporated four outside partners in the supply and development of components for the wonder product. These partners had specialized expertise on product development impacting on their ability to transform technical inputs in the business model to economic outputs, what Brown (2010) describes as strategic economic advantage over competitors.
Reputable partners included silicon sensing systems renown for its supply of silicon micro-machined sensors, pacific scientific which is the manufacturer of high performance motors, Delphi Automotive systems a renown supplier of integrated circuits and smart sensors, and Axicon a leading developer and designer of quiet gear systems. This ensured profit maximization by developing a product with a wide market appeal, making the brand name synonymous with short distance human travels, an important concept in marketing.
Brown (2010) identifies this as vertical integration. Afuah (2008) has determined that firms which have technological advantages and have established strong working relationship with suppliers have gained a leadership position in the market against competitors which is evident in the above case study. The firm established strong and reliable working relationship with government agencies, corporations, and the University of Stanford.
This reputable institutions provided testing grounds for the products, gave the product a name and an image while risk aversions in regulatory circles were mitigated. These were brilliant strategic management and brand image ideas. Brown (2010) sees these ingenuities as placing the product and the firm in terms of strategic partnerships and suppliers far ahead of the firm’s competitors besides gaining a large market share.
Customer value
To remain competitive in the market, a product must be unique and address the needs of its consumers. This is demonstrated in the above case study. Segway is a two wheeled, self-balancing, electric powered transporter that is of its kind. In addition to the complex integrated software and hardware, Segway HT had the technological ability to mimic the human body’s ability to balance.
In addition, it was small in size and unique. Thus creating and capturing value in customers. Customers will always go for those products that address their needs and wants and from which value for their money is assured. Customers are the core determinants of a successful business.
According to Afuah (2008), the firm’s products incorporated such elements as efficiency in product characteristics. Segway HT was designed to accommodate an individual with personal weight while occupying a smaller amount of space thus suitable for a wide variety of customers in America, Asian and the European market.
Pricing
The product was priced according to customer needs. As a marketing strategy three versions were developed and priced using flexible pricing mechanisms as Pindcky (2008) argues. These were e Series that sold at $ 7000-$ 900, i Series that sold at $4950, and the lighter p Series at $ 2000-$3000.
Pindcky (2008) asserts that “profit-maximizing price-cost margin is inversely related to the firm’s price elasticity of demand”. According to Afuah (2003), the firm identified and used excellent pricing techniques, and a joint pricing mechanism since other versions of the product were produced.
This product differentiation and unique pricing mechanism incorporating characteristics of the original product placed the product at a competitive edge against its competitors and new entrants. Product diversifications were tailored for different classes of people.
This is a unique marketing mix described by (Brown, 2010). The architect of the product, according to the case study, is a genius innovation blended with a marketing strategy by creating such a brand image that has captured the public mind.
References
Afuah A. (2003). Business Models: A strategic Management Approach. University of Michigan ® McGraw-Hill Irwin Boston Burr Ridge.
Brown A. (2010). Working to end horse slaughter: Retrieved from http://www1.udel.edu/alex/chapt2.html
Pindyck S.R (2008) Microeconomics. 7 ed. prentice hall
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