Thursday, July 26, 2012

Hewlett Packard (HP)'s WebOS and Touchpad Failure Case Study - Pricing - Promotion - Place- People MIX

Pricing: Touchpad proved that pricing is the major determinant of buyer choice. At introduction, HP followed a reactive strategy. It priced the product to meet competition, believing it’ll help maintain status quo. This strategy backfired and led to very tepid sales, which led to the product demise. HP tried price skimming too to survive, by announcing a $100 discount. It increased sales marginally. At decline stage, when HP decided to clear the shelves by selling at $99, the product flew out of the shelves and in fact created a hype equivalent to that of Apple. This showcased an elastic demand and that there’s a market for cheap tablets.
Promotion: The communication strategy also is a main factor in product success or failure. The company never elaborated on the POD’s. The features showcased in the commercials were the visual appeal, ease of use and flicking of unnecessary windows. It never focused on the real differentiators like Synergy. It didn’t provide developers any incentive to work on WebOS and also allowed developers access only after the product came to market. So, the product was introduced with minimal applications. Also, it used Russell Brand, Lia Michele and Manny pacquiao as its main message source. These actors’ are definitely not a great fit to sell Technology. They are not experts or considered trustworthy. This led to the low brand attitude.
Place: When the HP Touchpad went on fire sale there was no integrated point-of-sale or inventory count within the HP web sites. The web sites kept showing items in stock, but in reality HP ran out of stock long back.  While all this was happening, no one in HP customer service was well-informed of the plans for the fire sale. They could not confirm orders, availability, price-match guarantees, etc. HP’s inefficient handling of channel partners, created chaos. Neither the new, reduced price policy nor the conditions of sale were communicated to its retail channel partners, including Best Buy, Wal-Mart, Staples, Office Depot, Kmart / Sears, Amazon, Costco, Radio Shack and so on. Apparently none of them got any clear direction about what to do with the sale. There were currently hundreds, probably thousands of customers who are unclear of their orders, who do not know whether they will get a TouchPad or not and who are struggling to get through customer support channels of all these retailers. And it all started with a sale of a tablet which, just 3 days back nobody cared for.
As this train wreck unraveled, HP  had seen a demonstration of every mistake that could be possibly committed on marketing decisions, inventory stocking and tracking, online retailing, channel partner communications, customer relationship, infrastructure scaling, grievance addressing, sales ethics and what not.
People: Though not part of the traditional mix, this factor played a crucial role in the creation and demise of the product. The chaotic six weeks when HP prematurely introduced Touchpad and withdrew it, the customers, investors and even employees didn’t get precise information. This led to low motivation levels among employees and reduction in confidence in investors and consumers.

1 comment:

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