Monday, April 13, 2009

Pricing Strategies: Hewlett-Packard

According to Fortune 500, in 2008 Hewlett-Packard was ranked number 1 in the computer and office equipment industry compared to its competitors Dell and Apple. HP is a leading global provider of technologies, products and services to consumers and businesses. Over the past years HP has developed high performance technology with a diverse product portfolio, offered strong customer service, and has decreased its prices. HP uses both fixed and dynamic price strategies in order to offer its consumers the best customer service and products.

In terms of fixed pricing, HP utilizes the promotional and bundling pricing strategies. Used as an incentive for consumers to buy more than one product, promotional pricing is used by many computer companies. HP is currently offering several discounted, free, and bundled products and services to appeal to consumers by using both the bundling and promotional price strategies. One example of HP utilizing these strategies is the New HP Pavilion dvgz laptop. Priced at $599.99, if you buy this laptop you receive other services as well as several discounts which include: a free memory upgrade to 3GB memory as well as a 320GB hard drive, $100 rebate, free color customization (stated as a $25 value), $30 off Microsoft Office Small Businesses 2007, $50 off on Blu-ray drive, and free shipping. The second product HP offers is the HP Pavilion dv4t series, also priced at $599.99. If you buy this PC you will also can obtain several discounts and services for free, valued at $436, which includes: $150 instant rebate, free double memory upgrade from 1GB to 3GB (stated at $100 value), free double hard drive upgrade from 160 GB to 320 GB (stated as a $90 value), 50% off High-Definition LED display (stated as a $30 value), $30 off Microsoft Office Small Businesses 2007, and free shipping. Lastly, another product that can be categorized into both the bundling and promotional pricing strategies is the HP Touchsmart tx2z Series. Priced at $899.99, HP offers a $419 discount which includes: $200 instant savings, free double memory upgrade from 2GB to 4GB (stated as a $100 value), free double hard drive upgrade from 160BG to 320GB (which is stated as a $90 value), $30 off Microsoft Office Small Businesses 2007, and $40 off on 320GB Pocket Media Drive.

All of these products and services that cater to the promotional and bundling pricing strategies appear on HP’s homepage in flash reels, have customer reviews and ratings, and if you buy these products within a certain amount of time, you receive 90 days with no payments. Furthermore, right above the flash reels of these HP products is a promotional pricing strategy that offers free shipping for an order of ink, toner, and paper delivered the next business day and all qualifying offers over $49.99.

HP also uses the segmenting pricing strategy to offer its customers a variety of options to pay for its services or technology. According to Business Wire, One of the options HP is giving its consumers is pay-per-use utility pricing which charges consumers for actual usage on a monthly basis. This technology works by measuring the percentage of utilization on each Central Processing Unit. The advantage for HP customers is that they will only pay for processing they are utilizing. They also have the option to use additional processors, therefore processing is not limited.

HP was recently named one of the top 25 companies who do more to satisfy consumers according to BusinessWeek’s third annual Customer Service Champs Survey. Furthermore, HP’s net revenue has continued to increase in the last 4 years (from $79,905 million in 2004 to $118,364 million in 2008). Its year-over-year net revenue percentage increase was 13% in the fiscal year ending in 2008. In terms of assessing the effectiveness of HP’s pricing strategies, I would say that HP is highly successful because it has strong financials and consumers seem to respond positively to its pricing strategies. Strong brand image and marketing initiatives have helped to improve HP sales. In fact, by placing its pricing strategies along with the products and services it wants to sell in the center of the HP homepage, it is using marketing tactics and web design to draw the task-oriented consumers to these special offers. Moreover, HP makes the customer reviews and ratings easily accessible to other consumers when navigating through the web site. This shows the consumer that HP is a trustworthy company which truly cares about customer satisfaction and experience with its products.


Works Cited

“HP Introduces Next Generation of Utility Pricing for HP Superdome Servers; Offering Provides Always-available Capacity with Payments Based on Percentage of Each CPU’s Utilization.” Business Wire 13 Mar. 2003. Bnet. 14 Apr. 2009 .

“Laptops and Tablet PCs.” HP United States-Computers, Laptops, Servers, Printers, and more. 2009. 14 Apr. 2009
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3 comments:

  1. Very strong analysis, Ariana. You've identified their pricing strategies and provided very good examples. Financial data supports the success of their approach.

    Grade - 5

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  2. Ariana:
    You get 5/5 points for overall blog quality. Your posts were very detailed and incorporated media well. You have additional content in terms of postings and your sidebar links. Nice job.

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  3. i was searching about pricing strategies of HP for my college presentation and your info helped me a lot! Thanks a lot ariana for identifying the price strategies and making it available on web so that people can learn!
    Thanks a ton!

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