Segway - Still Off-balance?

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Case Details:

Case Code : MKTG125
Case Length : 17 Pages
Period : 2001-2005
Organization : -
Pub Date : 2006
Teaching Note :Not Available
Countries : US
Industry : Automobile

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Segway Story

Segway, headquartered in Bedford, New Hampshire, USA, was founded by inventor and entrepreneur, Dean Kamen (Kamen). The inspiration for the name Segway came from the word 'segue'which meant -'to transition smoothly from one state to another'. The Segway HT was the company's first and most publicized product. It was to be a 'solution to short-distance travel'and was expected to replace cars for short trips...

The Hype

The Segway HT attracted a lot of attention even before its launch. News about the Segway HT first appeared when carried a news item that the Harvard Business School Press had offered Kamen $250,000 to write the story of how the Segway HT came to be made, together with Steve Kemper, a writer.

Some critics thought that the 'leak' on which the news item was based was engineered by Kamen himself. They said that Kamen wanted to build up the hype keeping his product a secret, but at the same time, letting the world know that he was keeping a secret.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Kamen, for obvious reasons, refused to reveal the specifics about the device. However, this led to further media speculation about the product. Some people thought that the product was an anti-gravity machine; while others felt that it could be a helicopter backpack...

The Launch

In December 2001, Segway announced the launch of Segway HT on the popular TV show 'Good Morning America'. Initially the company was to sell Segway HTs only to commercial establishments. The company targeted large scale manufacturing plants, warehousing operations, companies in the travel and tourism sector, universities, and the postal service. The company also announced that the Manchester and Boston police departments would be testing its Segway HTs for their practicality in community policing...

A Bumpy Road

Although, quite possibly, there is no such thing as 'bad publicity', the criticism and negative reviews seemed to have had an adverse impact on the sales of the Segway HT. Much of the criticism against the Segway HT centered on pedestrian safety issues, the exorbitant price of the product, and the company's lobbying efforts...

What Went Wrong?

The company had expected to sell between 50,000 and 100,000 Segway HTs in the first year of its launch. Instead, it managed to sell a paltry 6,000 in 21 months after the launch. Even in 2004, the company could not sell more than 10,000 units. Many critics attributed Segway HT's poor sales performance to how the product was marketed and sold.

Before the launch, it was believed that the price of the Segway HT would be around US$ 2,000. Marketing experts felt that the company made a mistake in identifying its target audience. By describing the Segway HT as a product for everyone, it diluted the effectiveness of its campaign. Moreover, the asking price of US$ 4,950 was way beyond the reach of most people...

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