Marketing Takeaways From HP’s Drastic Discounting

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ADOTAS – At SocialNuggets, we have been analyzing social media conversations on Tablets and saw some interesting marketing lessons that we thought we will share with everyone.

HP was spending  a lot of money on TV and other advertising for its TouchPad but most of that was misdirected as we pointed in our earlier blog. Despite this huge investment, its share of voice remained distant eighth.

Then HP prematurely announced discontinuation of its tablet hardware, thereby creating what we popularly call in high-tech as a “boat anchor.” Like with every discontinued product we expected its end. However, in the current craze of Groupon-type deal discounting, HP reduced the price of its tablet to $99 from $499 in order to clear its inventory.

Not only did it clear the inventory in a day, but it also decided to actually make more units to satisfy the resulting demand it created. Let me also point out that TouchPad’s share of  voice jumped from a distant eighth to top third. Its net perception, which was fairly high, stayed almost the same and it jumped to the third spot in the SocialNuggets Index, beating out all but Apple’s iPad 2.

So what can marketers learn from this experience?

Any good product can be sold at a deep discount creating a high level of demand quickly. HP TouchPad’s net perception has been fairly high in social media indicating a decent fan base which liked its product. Can you imagine if HP had not announced discontinuation but just a limited-time price decrease?

In this new consumer mindset of buying deals from LivingSocial and Groupon, this may be a better marketing vehicle for companies to introduce new products where they need to gain market share quickly in order to get developer attention.

Also this is an indication to the consumer that you really believe in your product and are willing to incentivize early customers. Microsoft and Nokia may have some lessons to look here to gain on Windows 8 phones but for the long-term contracts!

The ideal tablet price is somewhere between $99 and $399 barring Apple who is on the top of the tablet market with its iPad2. Why $399? HP gained no share at $499 while Asus Eee Pad came up with a decent product and sold it for $399 while continuing to support it unlike HP. We saw its SocialNuggets’ Index position jump as well as it running out of stock. We also noticed that Blackberry Playbook continued to have negative sentiments on its pricing of $499.

Does it give some hints to Amazon for what price should it chose for its tablet at the introduction?

Despite large interest in the low price of HP TouchPad we also found many sentiments on the web indicating that it is a dead end product and so shouldn’t be purchased. HP jumped the gun here in order to announce to Wall Street and ended up jeopardizing the future of its product line for ever.

The sweet spot for tablet pricing lies between $99 and $399. HP succeeded in selling all of the units at $99 that it failed to sell with very heavy marketing expenses and $499 price point. Maybe it should have gone to one of the deal sites like LivingSocial or Groupon earlier rather than investing in misdirected TV advertisements. At SocialNuggets, we have been analyzing social media conversations on tablets and saw some interesting marketing lessons that we thought we will share with everyone.

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