HP Consumer Products Business Organization: Distributing Printers via the Internet Case Summary:
Pradeep Jotwani, Vice President and General Manager of the Consumer Products Business Organization of the Hewlett Packard Company (HP) is considering to start selling printers directly to consumers via new electronic channel since he had already sell refurbished printers via internet outlet. He wants to know what products to sell, what prices to set and how to manage with current distribution partners. HP was founded in 1939 by Bill Hewlett, and Dave Packard. The business started by selling technological and innovative products to business, and individual consumers throughout USA, and has expanded worldwide. There are five major businesses for HP; Computer products services and support, Test and measurement products and services, Medical electronic equipment and services, Electronic components, and chemical analysis.
The segment of Computer Products, Service & Support accounted for 83% of HP total revenue including computers plus peripherals and services. HP is well known for technological innovation, product quality and marketing was the key to HP success. The company always considered the needs of its customers and partners and HP believed this was contributed to the success of the company. To mention about HP printers, these products are one of the company’s successes. Even though HP came to the printer market late after Epson, Diablo, and Qume but HP was managed to take the leading position in the market . Moreover, HP still gained some benefits from selling printer supply business under the strategy of razor and blaze which means selling the printers in the cheaper prices, but selling the other supplies in the higher prices. There were three types of printers that HP was selling: Ink Jet, lLaser Printers, Multi functions. Consumer Buying Patterns: There are two types of customers. The first type is called at home buyers. Within this type, there are two kinds of buyers: first time, and repeat buyers. The first time buyers are those who go through all three stages of purchasing decisions (awareness, considerations, and purchase behaviors), and the repeat buyers who buy the products more than one time, and more often. The case showed us that repeat buyers are larger than first time buyer, and more likely to buy “sight-unseen” with increasing in buying from mail order.
The second type of buyers is called Home Office Market buyers. These people are the ones who have offices at homes. They tended to know exactly what they want to buy with the specific price in mind.
HP had three types of distribution channels: computer product superstores, consumer electronic superstores, and office product superstores. What seems to be the most successful channel were computer product superstores because this type of stores focuses on the computers and related items.
This large manufacturer had such a good way to deal with the retailers by handling helps in coordinating the works to increase the level of their business effectiveness. However, HP retailers were responsible for some other functions such as shipping products, sales assistance, after-sale services, and collecting payments from customers, etc.
For its online business, HP was also successful through its retailers, but one of the most difficult criteria for this company to think about was how to put their products into the right place, by the right time, and at the right amount. E-channels for computer products are divided into two types; traditional resellers, and new virtual stores.
S1.Technological Innovation2.Product Quality3.After sales service4.Brand5.Marketing
| W 1.Rely on reseller channel
| O 1.Possibility of being the dominant in the Market. (No player in selling new printer via internet) 2.Can create relationship with consumers directly. (strengthen HP’s brand)
| T 1.Damage the relationship...
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