MARKETING PLAN MEMO
TO: Mark Hurd, CEO
FROM: Stephanie Willson Herda and Kimberly Peterson
DATE: December 9, 2005
SUBJECT: Marketing Comparison of HP and Cannon in Printers for Students
Hewlett-Packard is trying to keep an edge against its competition by having extraordinary customer service. HP can better reach one of its target markets targeting college students by focusing on the parents who buy their college children printers. Three changes to HP printers are needed to better serve this niche and maintain Hewlett-Packard’s competitive edge against competitors such as Canon. The first is to make the ink more affordable, the second is to eliminate unneeded features from the printers, and the third is to make it easier for people to compare HP printers to other models properly.
Hewlett-Packard has been around long enough to get a large enough following of returning loyal customers. Focusing on customer service has been Hewlett-Packards answer to competition for the new millennium. With the new generation becoming the buyers for tomorrow there needs to be an understating of what motivates these first time buyers to make that most important purchase that will set their potential loyalty to that company for the long term.
Customer Service is becoming the primary distinguishers for companies today. Noting on the primary importance of customer service, you, Mr. Hurd, stated on the HP website, “I want HP to be known as the company customers can trust to deliver – that once we make a commitment, they can bank on us to live up to it. If we can do that, HP will be successful, but most important, our customers will be successful”.
There is an urgency in your message towards all employees to focus on the customers and the service given to them, and to help and solve the costumer’s problems in order to improve the business they provide with HP. Hardening Marketing, Hewlett-Packard’s marketing solutions provider, surveyed HP customers and sales representatives which helped them to “improve the overall effectiveness of HP’s communications” by refocusing upon HP’s customer service objectives. (Harding Marketing)
Hewlett-Packard seems to have been taking Hardings advice seriously. One of the most successful customer service aspects of HP is it’s willingness to share HP’s research in order to help make customers feels like they are involved in the business process.
2. Competition and Old Revenue Makers
Canon has also been focusing more on their customer service as well. Liew Sip Chon, Canon Marketing new president and chief executive, is planning to achieve customer service by training and developing his staff in order to make them more professional and service-oriented. “All that infrastructure won't count for anything if our people (don't know their stuff) and can't execute their work with a smile.”(Raj)
Before Hewlett-Packard’s major push towards customer service, HP had gained most of its profits primarily on ink cartages. With the overall growth in printers declining, HP printer chief Vyomesh Joshi realized that they had to make a major transformation in order to ensure HP's dominance in printing and imaging.
Hewlett-Packard is finding that the big problem today with most PC owners is that they already have printers, which is why the demand is expected to nearly flatten in the coming years. While waiting for customers to upgrade their printers, manufacturers have their sights set on the newest customer - the college student. This tightly budged consumer is primarily motivated by cheap prices first, brand second. Peter Burrows with Beg Elgin report that, “HP has been trying to compete by restructuring the company in order to cut costs”. (Burrows)
3. Survey Findings
The survey found in Appendix A outlines questions in search of the motivation behind a college student’s choice of printer. The results of student’s surveyed were surprising and publications in the media seem to echo those findings as well. Even sales associates promote items which are congruent to the survey and the research found in publications.
The findings in the survey showed that 63% of college students who own a printer, own a Hewlett-Packard and 16% own a Canon. It also found that 63% of college students had their printers purchased for them by their parents and 95% said they would buy that same printer brand in the future. 83% of the parents chose to purchase an HP for their student. The final analysis of these findings identified that the largest target market for a college student’s first printer were the parents that buy printers for their children.
There are few main points of differences between the Hewlett-Packard and Canon printers geared towards college students. Upon researching the differences there seemed to be a lot of confusion among consumers and even sales people regarding the differences between brands. Generally, opinions tended to indicate that if you want to print photos, then a Canon is what you are told to buy. However, if you are looking for printing documents, then you are pointed towards the Hewlett-Packard.
Considering that our target group is parents who want to purchase a printer for college papers known as document printing, they will most often be encouraged to purchase an HP for their student. So far this study has been favorable towards Hewlett-Packard for when parents are in search of a printer. However, HP’s first weakness is also encountered due to the fact that students are on a very limited budget, so their primary complaint amongst HP owning students is the cost of the ink.
4. Weak Ink
Sebastian Rupley reporting for PC Magazine conducted a reader survey on printers. Rupley found that, “Hewlett Packard earns a significantly better average rating this time around, as it has for many years, but Canon’s absolutely stellar ratings, especially amongst newer printers and photo printers, look to be helping it slowly pull away from the perennial favorite.”
Rupley then points out that people are unhappy with the cost of Hewlett-Packard’s ink regardless of its high quality. It is then brought to light Canon’s latest advantage in printing, “This weak point (ink cost) seems to be giving Canon its climbing power in taking over HP’s spot in the lead.”
Unlike Canon’s customer competitors who complain about their ink costs; Canon customers are highly satisfied with their ink. Canon printers also allow for third-party ink, unlike Hewlett-Packard. Third party ink is significantly cheaper than any manufacturer’s ink and it is not allowed by most manufacturers. Canon, who does allow it, has customers rating both third party ink and Canon ink as being very high in quality. (Rupley.)
It seems that these readers echoed clearly what the university students that were surveyed in Appendix A also were also complaining about. Ink being a major expenditure for a college student may well open these students to learning more about a rival company such as Canon.
5. Comparison Shopping
Hewlett-Packard also seems to be confusing audiences with its direction. The most popular model for college students are the All-In-Ones which are cheap, small, and functional. However, HP is getting some negative publicity since people can not distinguish which printers to compare with Hewlett-Packard’s competitors. The Best Buy employee that was interviewed found in Appendix A seemed to have difficulty in comparing different HP models against Canon models.
In Forbes Magazine, Steven Manes chose to compare two printers, one being Hewlett-Packard and the other Canon, by price as his indication that they were similar models to each other. Manes reports how he tested the two inkjets of what he believed was comparable cost, size and weight. What he found was that Canon will charge twice as much as the Hewlett-Packard for extra items and that the HP held 50% more paper.
Things began to go downhill when Manes began printing photos. To Manes the Hewlett-Packard took twice as long, he annoyingly had to swap in a special ink cartridge, left white margins around the photos, and put ugly vertical streaks in images that came out perfect with the Canon. Manes praised the Canon for producing borderless prints and there was no changing of the ink cartridge. He then sums up his feelings to the readers with, “HP’s attention to quality seems to be slipping. If you really need a versatile portable printer, pick the Canon.” (Inkjets to Go.)
6. Too Many Bells and Whistles
Then, Business Week reporter Larry Armstrong investigated the differences between the Hewlett-Packard and the Canon printer, but this time the journalist rightly compares the correct printers with each other. Armstrong points out, “If you’re cramped for space – trying to squeeze all your electronic gear onto a dorm-room desk – it’s time to consider an all-in-one-printer.”
The comparison between the Hewlett-Packard and the Canon model is key. In this article they compare the $100 Hewlett-Packard to a $250 Canon. Whereas Manes in Forbes was comparing printers by price, Armstrong was comparing printers by function. Considering that our target is looking at a first time printer, that needs to be small, and being bought for a student, the $100 HP is a clear winner against the Canon. The article also admonishes that “where space is really tight you’ll want to see the HP models. They’re about the size of a bulging briefcase.”
The Hewlett-Packard receives praises until you get to photo printing where Armstrong, “Wasn’t impressed with the picture quality. The HP prints are a little fuzzy and lack detail.” The Canon on the other hand received a lot of recognition in this area. (Printers.)
Hewlett-Packard’s rush to answer the call for photo printers was met by new challenges in the expense to customers since it uses a lot of ink. Another problem with HP trying to meet this need has been the use of the one large color cartridge, which had to be replaced as soon as a single color ran out. “This was bad news for Hewlett-Packard Co., the leader in home printers, which makes a lot of money selling ink and paper to consumers.”(The Mossberg…Snapshots.)
HP has been promoting themselves in several ways. First, HP has been offering a discount on printers through the purchase of a computer. Sometimes HP will also offer free printers with the purchase of a laptop. HP also offers rebates on select printers as well. Canon does not have such a promotion strategy since they do not make computers, but they do offer mail-in rebates.
Hewlett-Packards and Canons are sold at major computer outlets such as Best Buy and Comp USA. Hewlett-Packard seems to get extra promotion in the store and from direct mail catalogs. Products can also be purchased directly from manufacturer’s websites.
In comparing the websites, HP seems to be the easiest to use. Hewlett-Packard was easier to navigate through and find a product. Upon reaching HP’s printer page, the items are neatly categorized along with an option to display more information if needed. All of this made it very attractive, and as a customer, we think this makes it easier to buy a product off of the website.
Comparatively, Canon just displays their items cheaply on the page and the tabs for more information aren’t as easy to reach as opposed to Hewlett-Packard’s. They also require a lot more steps before coming to the printers section. However, Canon does recover some ground with downloadable for customer projects such as scrap booking, which is the number two hobby in America. These features are accessible straight from the Canon website.
Hewlett-Packard has answered that by partnering with Snapfish that can be found at http://www.snapfish.com/. The imaging-and-printing business is a very critical unit for HP because in 2001 all of Hewlett-Packard’s profits were generated from this unit, which is why HP bought an “online-photography site Snapfish earlier this year and is developing a digital-photo kiosk.” (Wall Street Journal. Aug 12, 2005).
8. Targeting Our Market
Hewlett-Packard’s third weakness is its need to be clearer regarding which line of printer is targeting for which consumer and for its specific job. It seems that HP is confusing its audience when it adds features to its products such as the photos to a simple printer meant for college students. This can seem like a great feature, but it’s not the primary reason for why the parent chose to buy their student a particular printer.
Hewlett-Packard is doing a great job in advertising, see Appendix B. In the past years, Canon’s marketing has gone down compared to HP not only nationally but internationally as well. You do not see Canon anywhere in the media anymore. When you turn on the television, most of the printer commercials you see are by Hewlett-Packard.
When you think about HP, you can easily associate it with the + symbol that you see on their ads. This symbol is all over, so as soon as you see it, you think of Hewlett-Packard, which usually would follow the symbol. Canon has not yet associated its self with a brand icon. Since HP gets more promotion, people tend to lean towards the Hewlett-Packard product over the Canon.
Hewlett-Packard and Canon both have slogans, but they differ a little because HP’s slogan is about the overall company while Canon’s slogan is specifically designed for its printers only. Hewlett-Packard’s slogan is HP “invent” which is easily recognizable to the general public. Canon’s slogan for their printer segment is: “There is no Substitute”.
9. International Exposure and Leadership
Internationally Hewlett-Packard has done a great job in promoting itself. In Holland, HP is more known more for their computers; therefore the brand recognition brings Hewlett-Packard printer sales. HP also markets their product aggressively in Europe. They are keeping the image fresh in the minds of the European consumers, which is one thing that Canon has not been doing.
Due to the European saturation of Hewlett-Packard, Canon has chosen to focus in India looking to obtain a 30% growth in the year 2006. Alan Grant, president and CEO, Canon India, said, “The new augmented strategy at Canon is all about building the industry’s best technology portfolio together with aggressive marketing initiatives, putting it to work for our customers.” (Choudhary.)
Overall, Hewlett-Packard seems to be finding some creative ways to remain at the top of the printer markets. In Fortune, Peter Louis reported the HP to be “THE BEST OF THE REST. These products were significantly better than their rivals-though not necessarily cheaper.” (Winners and losers of 2003) Hewlett-Packard is still the industry leader and will remain so with the great new strategies that HP has been engaging along with the suggestions that follow.
Hewlett Packard is already doing a stellar job in advertising and promotion. Customer service has also been receiving a lot of recognition and is helping HP to maintain its repeat of customers. Where Hewlett -Packard needs to place it’s focus in keeping it’s lions share of university college students is to focus on it’s weaknesses that seem to be giving Canon and other competitors an edge.
Therefore, Hewlett-Packard needs to focus on making the ink more affordable. Since quality didn’t seem to be much appreciated when considering price, HP may want to pursue the idea of creating a second class ink specifically made for college students. This option could be made possible with no expenditure, by allowing a third party to make cheaper HP inks like Canon does. Hewlett-Packard could even make a profit off of this by setting up a licensing agreement with these third party ink makers.
Second, it seems relevant for Hewlett-Packard to back off of adding photo printing and other such added elements to printers for the basic needs of a college student for the purchasing parent. Hewlett-Packard should instead focus on making the printer small, trimmed down, easy to use, and affordable. HP will be putting out a printer that will meet the needs of their first time customer, the college student, will create for Hewlett-Packard a long time customer in the long run who can afford the upgraded version in the future.
Third, Hewlett-Packard needs to be clearer with customers, sales people, the media, and all other interested parties as to which HP printers compare to their competitors. This will help promote more clearly what Hewlett-Packard is offering to its specific target. The intended target will then be able to more confidently and quickly make its purchasing decision. These three simple components will help HP continue into the new millennium as strongly as it had in previous decades.
Channel Times. Anjali Choudhary. New Delhi. Oct 20, 2005.
Customer service crucial in realising goal: Liew. Adeline Paul Raj. Business Times Kuala Lumpur: Feb 2, 2005. p. 02
Harding Marketing. http://www.hardingmarketing.com/success/lit_model.cfm. 2005
Hewlett-Packard Co. Wall Street Journal. (Eastern edition). New York, N.Y.: Sep 13, 2005. pg. 1
Inkjets to Go. Stephen Manes. Forbes. New York: Apr 28, 2003. Vol. 171, Iss. 9, p. 102
PC Magazine. Sebastian Rupley. September 20, 2005. Vol 24, No 16 (p.92-93
Printers. Larry Armstrong. Business Week. New York: Aug 8, 2005. Iss. 3946, p. 77
The Mossberg Solution: Testing Out a Speedy New Home Photo Printer; H-P Uses Special Paper, Single-Color Cartridges For 14-Second Snapshots
Walter S. Mossberg. Wall Street Journal (Eastern Edition). New York, N.Y.:Aug 24, 2005. p. D.5
Wall Street Journal. (Eastern edition). New York, N.Y.: Aug 12, 2005. pg. B.3
WHY HP IS PRUNING THE PRINTERS. Peter Burrows, with Ben Elgin, in San Mateo, Calif. Business Week New York: May 9, 2005. Iss. 3932, p. 38
Winners and losers of 2003. Peter Lewis. Fortune New York: Dec 29, 2003. Vol. 148, Iss. 13, p. 187-190