Originally Posted by cloudgazer
It depends on the product. A person paying $500 for a pair of jeans is going to be far more discerning than a person paying $500 for a car.
People pay $500 dollars for a dell laptop without ever using one or seeing the screen, which by my standards would make them very undiscerning consumers.
It does depend on the product.
I think in today's market a tablet is considered a luxury or optional purchase rather than a commodity or necessity.
The purchase of the $500 pair of jeans would seem to be more akin to the purchase of a tablet.
The $500 car is a necessary purchase -- basic transportation (with known/expected problems) at the lowest possible price.
The $500 laptop is a commodity -- does the work of computer at the lowest price.
I believe that most buyers would consider the car and the laptop as expendable -- not so the jeans or tablet.
I do not believe that the TouchPad has established itself as a product worth $500.
By reducing the price 20% (however temporarily) it is attempting to establish itself as a product worth $400.
The fact that some resellers will match the manufacturer's 20% reduction further reduces the perceived value of the product.
Let's see Until a few weeks ago, you had to wait 3-5 business days to get a $500 iPad -- because the demand was so high.
HP began shipping the Touchpad of [supposed] equal value 2 months ago.
Now, you can get the TouchPad for 40% less
-- it does less, it is heavier and slower...
What is the perceived value of the TouchPad? $500? $400? $300? $0?
If the TouchPad had been 1st to market, trying to create a demand for a new category -- a price reduction may have spurred adoption.
As it is, HP has started the race to the bottom and I suspect that most other manufacturers will follow.
Once you sell on price alone, you have no where to go but down!
Apple, OTOH, has great flexibility -- they can release more expensive and/or less expensive tablets (reduce the price on the older model) without damaging the perceived value of their current or new products.