HP Channel Strategy

CHANNEL STRATEGY OF HEWLETT-PACKARD (HP) LAPTOP
[Assignment on Strategic Marketing: Course No. 512]
Team: ‘Aurora’
March 12, 2011

Submitted To
Md. Razib Alam

Assistant Professor
University of Dhaka
Depertment of Marketing
Submitted By
Group- ‘Aurora’
TEAM PROFILE
Tania Tabassum 11
Faruk Hossain 35
Imtiaz Hossain 81
Tamanna Tasmin 95
Rukshana Shirin 99
Zahid Hasan Khan 117
Introduction: Hewlett-Packard (HP)
Hewlett-Packard (HP) was founded on January 1, 1939 by Bill Hewlett and Dave Packard.
The decision to create this partnership was made in the now historic HP Garage in Palo Alto,
California. This garage is now considered the birthplace of the Silicon Valley (About HP).
HP has since grown into a technology company that operates in 178 countries, employing
140,000 and offering a comprehensive portfolio of products (Jobs at HP).HP is economically
one of the most successful information technology companies in the world. It is ranked
eleventh on the 2006 Fortune 500 list and second in its industry. Last year they had nearly
eighty-seven billion dollars in revenue, with over two billion in profits. HP is a publicly
traded company on the New York Stock Exchange, which has been steadily growing since
their initial public offering in November of 1957 (HP History).
HP competes in many markets, including computers and peripheral equipment, test and
measurement devices, electronic components, and medical devices. It has 112,000 employees
and over 600 locations around the world. HP is known for its relaxed, open culture. All
employees, including the CEO, work in open cubicles. Many employees are technically
oriented engineers who enjoy learning and sharing their knowledge. The company is
perceived as being somewhat benevolent to its employees, and fast growth has obviated the
need for major layoffs. All employees participate in a profit-sharing program.
HP Network News began as a simple database of the questions frequently asked of the
Computer Products Organization by HP’s network of dealers. Because dealers have direct
access to it, it has significantly reduced the number of phone calls to HP technical support.
The database is constantly mined and carefully managed for even greater usefulness. This is a
classic example of leveraging knowledge, and has been highly successful.
Here is the proposed Channel strategy for HP considering each stage of Product life cycle:
Figure: HP Laptop Channel Strategy Considering Product Life Cycle Stages
Conventional
Distribution
Channel
Intensive
Distribution
+
Contractual
VMS
Exclusive
Distribution
+
Corporate
VMS
Selective
Distribution
+
Corporate
VMS
Exclusive
+
Contractual
VMS
Question 1:
What should be the company’s strategic focus be in each stage?
For each stage of Product Life Cycle (PLC), the following strategic focus can be suggested
for HP Laptop (Kotler et. al, 2009):
a) Development: Gaining Market Insight and analyzing Market Orientation

b) Introduction: Higher market penetration and not becoming profit motive
c) Growth: Substantial profit improvement
d) Maturity: Higher concentration on Competitive Strategy and Customer Loyalty
e) Decline: Searching for Global Market Opportunity
Question-2
Which channel should be used in each stage?
For each stage, relationship matters among the company salesforce and distribution channel
(Still et. Al, 1988). Here, the following channels should be suggested in each stage of product
life cycle for HP Laptop (Cravens and Piercy, 2009):
a) Development: Conventional Distributional Channel

b) Introduction: Intensive Distribution + Contractual VMS
c) Growth: Exclusive Distribution + Corporate VMS
d) Maturity: Selective Distribution + Corporate VMS
e) Decline: Exclusive + Contractual VMS
Question- 3
In Which Stage of the PLC will margins be the highest ?

In the ‘Maturity’ stage, profit margine is highest.At the beginning stage , sales is few amount
but there are no profit margin. In Growth stage , the sales increase as well as the profit . In the
maturity stage the sales and profit margin stay at peak . At the decnine stage the profit margin
curve goes down with the sales revenue.
Questine -4
Which stage(s) should be the most intermediaries and which stage(s) should use the
fewest?
Considering HP Laptop, there should be the most intermediaries in the ‘Maturiry’ Stage.
Because here both selective channel and Corporate VMS are used.
On the other hand, in the decline period less intermediaries should be used to reduce cost.
Here in most cases, Exclusive Channel and Contractual VMS can be used. Here, low-cost
production can be a greater focus, bacause, a firm with a strategy of low-cost production may
place a greater vale of achieving economies of all types (Porter, 1980).
---------------------
References
1. Cravens, David, W., Piercy, Nigel, F., (2009), “Value Chain Strategy”, Strategic
Marketing, MacGraw Hill, 9th Ed, pp 321.
2. Kotler, P., Keller, K. L., Koshy, A., Jha, M., (2009), “Product Life Cycle Market
Strategies”, Marketing Management, Pearson, 12th Ed, pp 291.
3. Oboulo Knowledge Network (2011), “Marketing Channel Analysis of Hewlett-

Packard”, 2008, [accessed on March 8, 2011] from http://en.oboulo.com/marketing-
channel-analysis-of-hewlett-packard-56807.html .
4. Porter, Michael, E., (1980), “The Strategic Analysis of Vertical Integration”,

Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free
Press, Ed, pp 303.
5. Still, R. R., Cundiff, E., W., Govoni, N., A., P., (1988), “Distributive-Network
Relations”, Sales Management, Prentice Hall, 5th Ed, pp 225.

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CHANNEL STRATEGY OF HEWLETT-PACKARD (HP) LAPTOP

[Assignment on Strategic Marketing: Course No. 512]

March 12, 2011

Md. Razib Alam

What should be the company’s strategic focus be in each stage?

a) Development: Gaining Market Insight and analyzing Market Orientation

Which channel should be used in each stage?

a) Development: Conventional Distributional Channel

In Which Stage of the PLC will margins be the highest ?

3. Oboulo Knowledge Network (2011), “Marketing Channel Analysis of Hewlett-

4. Porter, Michael, E., (1980), “The Strategic Analysis of Vertical Integration”,

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