HEWLETT-PACKARD discovers Marketing
H-P, founded by two Stanford graduates in 1945, has grown to become one of the top computer related companies in the world. The initial product portfolio consisted of a device for measuring sound and a line of electronic testing devices. In 1968, HP came up with its first minicomputer which found immediate industrial application and in 1972 it introduced a handheld calculator which sold exceedingly well, despite a higher price. However, competition forced HP to reduce its price later. All these products were not developed for the mass market but employed two different methods to determine products and markets – ask co-workers what was needed or build a machine for one customer and market it to others. In 1984, HP launched three new products – a compact computer called The Portable and two printers named LaserJet and ThinkJet – for the mass market. This move indicated that the company was becoming more ‘marketing-driven’. IBM being the market leader at that time, the earlier H-P 150 failed because of not being IBM-compatible. Another reason for this failure corresponded to the lesser amounts of gross margins that retailers and chains could get in contrast to that gained by dealing in other personal computers. To overcome past failures, the new H-P Portable was made to be IBM-compatible. Dealers were now offered better terms of payment and larger bulk discounts, which resulted in improved dealer relations leading to a growth in their number in the supply chain. Also, in the past H-P had two separate sales forces– one selling testing instruments and the other marketing computers. A sales force reorganization created a single sales force that now sells all H-P products rather than isolated machines. Thus, with a change in their marketing strategies H- P subsequently evolved to become the market leader.
Questions and Answers:
1. Explain whether H-P has adopted the marketing concept. Tell us what in your opinion is the core marketing concept?
In the initial years, H-P did not concentrate on the marketing concept. It employed methods such as asking co-workers or building a machine for one customer and market it to others.
However, it quickly realized the need for marketing concept to be integrated in its strategy. Marketing concept involves making the product as per the customer needs and then selling the product through advertising and promotion. The company understood that it had to make the computers IBM compatible as per the customer need. It also increased the penetration by a stronger distribution network to reach to its customers. Also the dealers were now given better payment terms and larger quantity discounts which lead to better dealer relations and hence increase in number of dealers. All the above were the major marketing concepts that the company implemented as a part of its strategy.
The core marketing concept in this case is that of market development strategy wherein a same product is introduced into new markets for higher penetration. This can be gauged from the fact that H-P is now trying to offer better terms to increase dealers and hence its market. Also, its marketing executives recognize that only the producers that have dominant market share would survive in future.
2. How has H-P altered its marketing-mix in an effort to become more marketing oriented?
Marketing mix involves 4 P’s of marketing : Product, Price, Place and Promotion.
* In initial years, H-P engineers employed two different methods to determine products : ask co-workers or build a machine for one customer and market it to others. * Later on H-P started to produce products for the mass market based upon its needs. This included introduction of three new products: a compact computer called the Portable and two printer names Laserjet and Thinkjet.
* Initially the products were customized wherein a higher...
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