HP invent - Company Overview.

University Degree Business and Administrative studies

Fall 2002 Marketing Strategy

Marketing Team:

Adam Murphy

Greg Jenkins

Kevin Connelly

Steve Hopson

Part I: Company Overview

No one ever would have ever expected two Stanford University students, the founders of HP, whose first product was an audio oscillator to escalate to the major PC manufacturer that they have become. Today the small company that started out in a Palo Alto garage has approximately 145,000 employees and is ranked 28 in the fortune 500. Taking a step away from the audio oscillator, HP has become #1 globally in imaging, printing, personal computers, UNIX, Windows and Linux servers, enterprise storage and management software. As well as #3 globally in IT services.

Part II: Target Segments

Home User:

HP is currently ranked number one is the “Home User” segmentation. This is based primarily on the fact that they are so affordable as well as on hand. Any store that you go to that sells PC’s will have a HP or Compaq, which has recently become a subsidiary of HP. On the other hand you have Dell that is the closest to HP in this market that only sells via the web and in rare instances a Dell Store to home users. HP has begun to break down this segment in order to increase their sales. For example a multimedia user can get a custom PC with a better sound card and video card then a user who only wants to use the PC for the Internet. This is a matter that HP should push because with Dell selling most of its PC over the web the consumer already has the opportunity to customize the PC to fit their individual needs.

Student Segment:

This is an important segment for HP to really go after because Dell has taken top rank in this segment due to their great customer service. Dell has the best customer service on a user basis and because the students are in college they do not have the time or the patience to deal with little problems that someone such as the home user can fix on their own. As of this time a Dell is the best PC for them.

Business Segment:

The business segment is a weak segment for HP as far as PC sales are concern. This is also because of the great customer service provided by Dell who is the leading supplier of the PC to most businesses. By changing the marketing strategy towards businesses, to one that has a higher level of customer service, HP will be able to greatly increase their sales. This is mainly due to the fact that HP is already number one globally in Windows and Linux Servers, as well as enterprise storage and management software.

Emerging Market Segment:

The top market for HP to pursue would be the Home user. In general this is the easy market to expand as well as the most profitable. With HP already having the number one spot in personal computers, expanding this segment will not only keep their initial consumers but can take away from the competition. The biggest downfall that HP is experiencing is that lack of promotion for customizable computers. You are able to go to the website and build one to suit you however, this is not were HP makes most of its sales. HP sales mostly through retailers, which would allow them to create a base pc with the desired components for the individual users keeping the products the same for the market segment yet different for each user. For example, an Internet user has no need for a top of the line processor or large hard drive, but for a performance user this will be necessary.

Part III: IMC Campaign

Define the target market:

Hewlett Packard is one of the worlds leading producers of Computers and well known Network Components. Sales in all of these categories were less than expected in 2001 and the need for a renovated marketing campaign is highly needed. In this new Integrated Marketing Communications Campaign we chose to focus on 3 individual markets: Business Networks, Home PCs and College Students.

For the business market we will target large sized enterprises with the need for intranet/network capabilities. These firms require network systems with superior reliability and top of the line speed to efficiently run their businesses. HP Networking Systems will produce the desired results for this customer with our Global Enterprise Solution System. Promotion of these products will mainly be comprised of advertisements within accredited business journals, national newspapers and television advertising.

For the home PC market we will promote our Pavilion Series Desktops. These computers are Internet ready and can be purchase with the highly publicized Pentium 4 Processor. Also, attention will be focused on our newly developed online ordering service, which will help the consumer build a PC with all the features they desire. This personnel-selling method will allow each consumer to individualize his or her PC. To promote these PCs we will use a large television commercial campaign and a few magazine advertisements.

For the college market we will promote our less expensive Compaq 6000 Series Desktops and ...

This is a preview of the whole essay

For the college market we will promote our less expensive Compaq 6000 Series Desktops and HP ze4000 Series Notebooks. These models are ideal for the financially strapped college student who moves to and from campus every semester. They also come with the necessary college software like Microsoft Word, Excel, and PowerPoint. Advertising for this target market will be run entirely through television commercials.

These are the 3 main target markets, which our new IMC Campaign will focus on. They cover a broad array of consumers and priced ranges, in hopes of effectively marketing all of HP’s many computer products.

IMC Objectives:

Computer sales for Hewlett Packard decreased in 2001 by 14%. This was a dramatic decline in a rising computer market. Nearly $1 billion was spent on advertising in 2001, which was almost completely overlooked. By focusing on the wrong target markets; HP lost sales to incoming competitors like Dell, IBM, and Gateway. The objective of this new campaign is to reawaken consumer’s interest in HP Products.

Through extensive television advertising we hope to take consumer attention away from competitive brand names, and re-instill the value of the Hewlett Packard name. Through these advertisements we will show the ease of ordering and customizing an HP through our website. Once the customer has purchased an HP computer, our high quality of products and technical support will encourage repeat buying.

Budgeting:

The financial department has allocated a $1 billion budget again this year for advertising, but reassures us that this year must see an improvement in sales for it to be maintained. Previous advertising campaigns have been rather ineffective and gone overlooked by the general public. The past campaigns have been confined to magazine advertisements, which simply did not reach enough people. Our new campaign is highly focused on television commercials and should reach many more consumers than previous years. TV advertisements are much higher priced than periodical advertisements, but their reach is much further. The average PC consumer is not one to read many Computer based periodicals. They are the average blue-collar worker who needs a home PC simply to surf the Internet and burn an occasional CD. We believe that to reach this market television advertising is key, and that is where the majority of our advertising budget will be spent.

Main Message Points:

Each consumer wishes to be treated as if they are the company’s only customer. It is this theory, which backs our new advertising slogan, “Built to serve you.” It simply says that every HP PC we build is made just for that one customer and that we will be there in the future for any technical support they may need.

Our job is to provide our customers with the best PC for their needs and their budget. Issues that our advertisements should address are customer service, product quality, and the ease of ordering. By repeating these few key phrases in every advertisement, customers will be reassured that buying an HP is the right choice. They will understand that ordering will be extremely easy, and they will get exactly what they want. Also our excellent technical support will reassure them that help is available, incase of difficulties.

Selling Vehicles:

Due to the nature of our product and our belief in customizing every system, this campaign’s selling approach will be much more personal. Custom products require much more involvement with the customer therefore the use of a middleman would be impossible. It is this short channel of distribution, which allows us to learn from our customers. Our online ordering system and technical support will allow us this necessary customer feedback, which today is an extremely valuable commodity. By hearing directly from our customers we can find out exactly what problems consumers have with HP, and take steps towards correcting them immediately.

Selling Campaigns:

HP has a core competency of home PCs and business networks/intranets. We have lead these industries since the beginning and should continue this legacy. Our products are ever changing, but HP has reached the maturity stage as a company in general. We understand our products, our markets, and what sets us ahead of the competition. Our brand is the best on the market, yet newcomers like Dell and Gateway are stealing our business. This is not because we have an inferior product, but because we have inferior selling campaigns. Our new approach to advertising and customer service is targeting on improving our standings in these areas. By using a Competition based advertising strategy we will directly compare our HP products with those of Dell, IBM, and Gateway. Our excellent track record will prove to consumers that HP products are the best choice. These other companies are utilizing a Pull IMC Strategy. This has consumers seeking out their product, instead of companies seeking out consumers. In such a highly competitive industry HP will have to follow their lead and utilize a similar Pull IMC Strategy in order to get our name out to consumers. With such extensive advertising in the computer industry, consumers are either requesting your product or buying someone else’s. With the $1 billion advertising campaign for this year, HP will be one of the PCs consumers ask for by name.

Positioning and Differentiation:

Hewlett Packard Products have always been high quality, but slightly on the expensive side. This positioning put us at the top of our industry in regards to quality, however, the price difference was not always accepted by consumers. From our recent merger with Compaq Computers we are now able to offer high quality computers at competitive prices. Our Compaq 6000 Series desktop starts at a reasonable price of $399, but still features the highly demanded Pentium 4 Processor. This pricing change would have been impossible without our union with Compaq. By shifting HP to a less expensive computer market we are opening our company up to many more consumers. Putting HP in the middle of a highly competitive computer market it is extremely important to inform consumers of our products superior quality. It is the only issue to set us ahead of the rest in our marketplace.

Part IV: Income Statement

Part V: Break-even Analysis Spreadsheet

Part VI: Additional Spreadsheets

Part VII: Place and Logistics

The most recent trends show that consumers are looking to the web to purchase goods or services. This is true in our industry, individuals turn to the internet to purchase PCs for home use. This direct channel of distribution is effective, but it is still developing. Currently, we believe that indirect channels of distribution are our best channel of distribution.

When designing an indirect distribution plan, we must consider the degree of market exposure is desired, which middlemen or wholesalers to use, and how to manage the channels of distribution. We will use an intensive market exposure campaign to market our products to all areas of the United States. This exposure will fit our marketing objectives, which are that our product is affordable and it is built to suit anyone. Our middlemen will be retailers and computer hardware stores. Stores like Best Buy, Circuit City, and Media Play will carry our products. Also, any other similar type retailers will be allowed to carry our home or office PC products. When it comes to managing these channels of distribution through middlemen, we will have to effectively use our sales force. We will divide the United States into 6 main regions, and then into smaller districts from there. We will have individuals in charge that are HP employees to monitor and manage our distributors. In the future we plan to do this over the internet, where our customers (middlemen) will be able to monitor their inventory and sales online. Within the channel management, we will experience potential conflicts and must be able to deal with them.

Some potential conflicts we may face are the types of relationships we have with our middlemen, how to handle conflicts, what are the channel objectives, and the role of the channel captain. To reduce the conflicts or problems that may arise, we will reduce scarcity among the channels. This will eliminate too many middlemen competing for too few customers. We will implement clearly defined roles and responsibilities to our middlemen that will be reviewed and analyzed quarterly. At these meeting, new goals and objectives will be discussed because the market does change from time to time. If we experience conflicts in our distribution channels, we will see the results in our end customers. Our end customers will have a negative purchasing behavior when buying our products and we cannot have this attitude toward our products. To effectively manage potential channel conflict we will establish mutually agreeable business goals with our channel partners. Also, we will clearly define channel roles and responsibilities, and use pricing solutions, and rebates and incentives to encourage desired performance from our middlemen. To help facilitate these actions we will use channel captains, or managers who help direct the activities of a whole channel and tries to avoid, or solve, channel conflicts.

In vertical marketing systems the goal is to coordinate strategies and the activities of the channel members. Being that our primary channel members are retailers we are going to use a more controlled vertical marketing systems known as the contractual system. From here our system would branch down to the retail cooperative organizations. In this instance a legal agreement will be signed by both HP and our channel members that specify how certain channel functions will be performed. We are choosing this system because we do not want to have all of our eggs in one basket, like in an administered system. Because we are dealing with retailers, who often come in and out of business, or get bought and sold by competitors, we are going to spread our products out among distribution channels. The contractual system will in essence keep us protected from major losses and enable us to enforce how we would like our products to be marketed and sold.

The last aspects we must address are the transportation systems we are going to use. For our PC’s that we will be moving regular semi truck transportation will be sufficient. If needed, additional air shipments can be placed on a need basis. The cost to use standard methods will fit in our budget.

Part VIII: Final Analysis

If we were to inherit $50,000, we would buy stock in this company. I would buy stock in this company because the company has just launched a new marketing campaign. With this new marketing campaign, sales are expected to rise, and revenue is expected to increase. From these expected sales and revenue increases, HP will do well in the open market leaving us with a good solid investment.

An environmental threat that may affect the performance of HP’s stock is the economical state of the country. This effects how the stocks will perform because if the economy is not doing well, the stock may not do well. But if the economy is doing well, the stock is more than likely to do well also.

Based on our analysis in part V, our firm is operating above the break-even point. We see the financial future of our firm as continuing in the direction it is heading now. We see this because of the general direction our firm is heading in. Also, our firm plans to be more of a competitive force in our market area.

We do not expect to experience new market for growth because the firm is already worldwide. What we do see is our firm taking business away from our firm’s competitors. We think that our home office personal computer product line will be successful. We think this because our firm is providing a product that is going to be an essential tool in the future market, along with providing superior customer service. From the annual report, we foresee our company being at the forefront of our market.

Bibliography