A MARKETING PLAN IS THE FOUNDATION FOR ALL MARKETING EFFORTS MARKETING STRATEGY Mission HP’s business is defined as the entire world’s leader and innovator in providing top of the line electronics, such as digital cameras and printers, as well as providing the top I. T. services any company has to offer. HP continually makes advances in their products to stay the leader in each of the 8 industries and sub-industries it competes in. HP ensures the highest level of service and technology to ensure each person taking timeless shots, or huge firms relying on their I.
T. outsourcing to stay profitable can do so with the full confidence of HP’s name. Its mission is to revolutionize the daily activities of the traveling business person by offering all of the amenities of his or her office in one easy to carry laptop case. Our business creates a new market for business travelers by allowing them to carry their “office” with them wherever he or she may travel to, without needing to return to the office for printing contracts, receipts, invoices, or completing transactions.
Our fundamental goals are to ensure that every businessman and woman, specifically traveling business people, have the ability to bring their office with them under their shoulder and be able to conduct business anywhere using the “Portable Business Desk All-In-One. ” Leaving one’s primary office on a three day business trip, in essence, has no setbacks from being on the road.
Showing presentations, reviewing contracts, editing contracts, printing receipts, reviewing a website with a customer that is not yet “sold”, and being able to complete any and all transactions at practically any location using the “Portable Business Desk All-In-One” will make conducting business on the road just as efficient as sitting in one’s office. That is our value proposition. Objectives ? Execute product rollout ensuring the greatest product awareness amongst business travelers possible, while grasping its overall utility for the target segment. Ensure HP’s name is consistently behind the new product in all forms of marketing and advertisements to position itself as the market creator, innovator, and to warrant further understanding and ultimately purchase the “Portable Business Desk All-In-One. ” ? Mail and/or email monthly newsletters containing “how-to” videos, tips, tricks and advice for using the product to current owners, thus keeping customer loyalty should a competitor enter the market. ? The entire portable office market share for business travelers will be loyal to HP and have 100% market share (among competitors), as HP has the only product in its market.
Total market share among this demographic is to approach 38% by the first year – about 5. 5 million of the 21 million business travelers. Target Markets ? HP will divide the target market into two sections, described below. U. S. business travelers total about 21 million and take over 405 million business trips, domestically, per year that are 50 miles are greater. Most are male and age 30 -49. ? Focus on two segments of the 21 million. Target the 53% of these travelers that are classified as professional, managerial or technical. A 3% market penetration in year one and a 7. % penetration goal in three years is expected. ? Target the 28% of the business travelers that are in sales or service work. 10% market penetration is expected in the first year with an 25% penetration goal in three years. This group’s overall utility for the PBD will be greater due to its ability to complete a sales transaction right there with the client regardless of your location. ? Segmentation variables of focus are: Sex: Male Age: 30-49 Occupation: Professional, Managerial, Technical, or Sales/Service Fields Income: Greater than $45,000
Education: High School Diploma or Equivalent Psychographic: Computer Literate and Owning a Laptop is Preferable Generation: Baby Boomers, Generation X, and Y Social Class: Working, Upper Middle, and Upper Class ? The personal vehicle is the dominant travel mode for business travel, comprising 81% of all trips. The typical business traveler is likely to be male; work in a professional, managerial, or technical position; be 30 to 49 years old; and have an income well above the population average. ose who consider their occupation to be professional, managerial, or technical account for over half (53%) of all business trips. This occupational category represents only about 40% of the general population. Sales or service workers account for the next largest share of business trips, 28%. On the other hand, clerical/administrative workers account for less than 4% of business trips even though they represent almost 12% of the population Those who consider their occupation to be professional, managerial, or technical account for over half (53%) of all business trips.
This occupational category represents only about 40% of the general population. Sales or service workers account for the next largest share of business trips, 28%. On the other hand, clerical/administrative workers account for less than 4% of business trips even though they represent almost 12% of the population. ? About 55% of all business trips are made by individuals aged 30 to 49. Those in their thirties take 28% of the trips while comprising 16% of the population. Those in their forties take 27% of the trips while comprising 15% of the population.
The percentage of trips represented by those in their fifties drops markedly, with only 18% of business trips represented by this age group. Overall, this age group accounts for about 11% of the population. The youngest and oldest groups of adult business travelers, 18 to 29 and 60+ years old, represent about 16% and 10% of business trips, respectively. 3. 0 MARKETING STRATEGY (continued) Positioning The “Portable Business Desk All-In-One, or PBDA, will position itself as the market innovator and continued leader in the newly created portable office industry.
This will be achieved primarily by its rollout of the PBDA which provides the features necessary to have the feel and business features of a real business office. HP is a near perfect parent company to introduce and position a product to be and stay the industry’s leader. The PBDA will allow the business traveler to no longer use his or her entire car and trunk to carry around the many pieces of office equipment (Ex: Computer/Laptop, printer, scanner, fax, monitor, mouse, paper, pens, staplers, actual internet service etc. all within a single should carried laptop case that assembles into a desk with features and compartments to hold each of the above items and much more. In addition, the business traveler may now fly without the worry of checking bags and/or losing equipment, as the PBD is a standard personal item along with a carry-on of business attire and other items normally brought on a business trip. So, those that used to drive from Miami to New York may now fly with the luxury of virtually bringing their entire office with them.
Their office desk, in essence, may be assembled at any time in 90 seconds in any atmosphere including a client’s home, office, Starbucks, library, or even a park or other location a businessperson would never be able to conduct business. PBDA is a one of kind product. It will be creating the portable office market. Currently the only “competitors” are those that sell small stands that fold up to allow a laptop to sit on top and a keyboard and mouse to sit under. They do not provide the laptop case-like carrying shoulder bag, nor the features to hold the printer/scanner/fax, paper, pens and all other office essentials.
HP understands there will be competitors popping up shortly after the launch of the product The most distinguishing feature the PBDA has, by far, is its ability to be placed on a flat service and within 90 seconds, be assembled, and have all of the working parts of an office right there in a compact neat business desk that, by itself, will create a sense of business savvy and confidence to the group being presented to or the client that needs to be obtained. So, its distinctiveness is the most distinguishing feature using the desirability criteria. Marketing Mix
Product The most important difference in this product is the fact that there is no product that remotely resembles or provides the target segment with the features that the PBDA delivers. Its core feature is its ability to carry one’s “office” under his or shoulder while traveling and set that office up in such a short time. No product delivers what the PBDA does. Besides the PBDA’s ability to assemble into an office in such a short time, it helps create the first impression of the business traveler when meeting his clients, partners, or prospective alliance.
With no product of its kind in existence, a quick assemble will create the “first-impression” that so many businesspeople spends hundreds of hours rehearsing to ensure the sale, perfect presentation, and to ensure the company that the business traveler is representing will be looked at as efficient and technologically savvy before the meeting even begins. As stated, the PBD will benefit the target market by allowing them to bring the efficiency of being in the home office anywhere to give presentations, sell a client, and represent his or her firm in the best way possible.
The benefits include the target segment to access the internet, conduct normal business normally done in an office in a non-traditional atmosphere, and most of all – to be able to pitch the client, edit specific contracts, print them, have them signed, and fax them to the home office to be able to “close” the deal on the first meeting without needing a second visit. This is often the most sought after result of a sales appointment. Price The price will be set by understanding the demand of the target segment through surveys and focus groups. Estimating the demand curve by using the findings that:
The PBDA is extremely distinctive, with no substitutes, thus not allowing a comparison of any other products. Its value proposition of creating a total solution for the business traveler allows HP to price the PBDA with high margins. Its worth and ability to create more income for the target market allows for a greater price, although market penetration is its first goal. Its price will be set with the understanding of the very quick ROI the individual consumer will see after implementing its use into his or her meetings, sales appointments and presentations.
This is part of the advertising campaign. Once the prospective consumer is aware that his or her (Ex: Obtaining a new account for a firm providing retirement plans for medium sized businesses) business appointments or sales calls will have a dramatic increase in success, then their perceived value of the PBDA will increase, thus allowing for a higher price point for the product. This will prove that the product expenditure is not only minute, considering the buyer’s total income – it is one of the few expenses that will increase the buyer’s total income in a very short time frame.
The first year’s pricing objective will be to maximum market share. Market-skimming will be used, but only in the sense that the price is higher because of the lack of competition for the first year. This is to ensure that the newly created market will be penetrated almost immediately. With new features to be launched quarterly as add-ons, and a second generation product to launch upon a competitor’s entry, HP will be aligned to drop the price of the original PBDA, while keeping the next generation PBDA-2. 0 to use the market-skimming objective.
This is only to be executed when the market conditions are just right: Strong penetration with the first model, first large competitor entering the market, and feature add-ons have already been launched during the first year. Low price and product loyalty will combat a future competitor that will have heavy barriers of entry due to HP’s low price and continual feature upgrades that cost only a few dollars. These upgrades will be ready to be released to combat new industry entries without the need for the next model.
The costs will be a combination of a fixed cost of $4,550,000 which is primarily to adapt the current assembly lines in one or more of HP’s manufacturing plants. The variable cost per PBD is $52. 00. Not using leather was important in keeping the overall price down. This price also includes a few “upgrades” including a USB hub to connect multiple devices. The price for the PBDA will be set at $104. 50 which includes over $200. 00 in mail-in-rebates for products made by HP such as laptops, keyboards, mice, all-in-one printer – all of which are used in conjunction with the PBDA.
The price is fully adaptable in that there is already a significant margin built into the price and the original price is targeted to the middle-upper level income business travelers. Once market penetration is reached in the higher income bracket or a competitor comes out with a cheaper product, the PBDA-2. 0 will be introduced at the same price or slightly higher and the original PBDA will drop to a level low enough to push the competitor away from obtaining any market penetration. Place
The “Portable Business Desk – All-in-One” will be distributed to retail stores via standard distribution channels, as well as to corporations as a tool for their employees. Although HP is sold globally, it will primarily focus on penetrating the U. S. market. However, it will be distributing to mass retail stores like Best Buy which are in many countries. The solution this product creates in its value proposition will be marketed in the areas its target market will be traveling and spending most of his or her time. Pull marketing will be used for a multitude of reasons.
First, HP has a great brand name and already has many loyal consumers. Next, its advertising channels only need to be adjusted to add this product to their many products in many industries. Airports, airport magazines, commercials on CNBC and primetime are already places where HP markets. The Internet will be heavily used to target business travelers and current HP users. A large demand will be created with little added costs to HP’s current advertising budget. Exclusive distribution with only a few retail outlets will be used.
HP’s quality must be maintained and stores like Best Buy help this perception. K-Mart, Target, and other like stores will not be used. This allows for a strict pricing policy, sale conditions including warranties, and mutual services are issues that will be easily contained using this type of channel. The Internet will be used to market to each registered HP user. Whether it be HP printer owners, cameras, laptops, PC’s, or any consumer that receives information on HP’s products and services will be directly marketed to.
In addition, commercials and other marketing media will direct the consumer to HP’s website to learn more about the product. Here, the prospective consumer will see a video on the assembly and disassembly of the product, its ease of use getting through airports, and be able to swing the “on the fence” buyers. HP will not be using any wholesaling. There is a need to have a tight distribution channel to ensure pricing, advertising, warranties, and to limit liability of smaller retailers hurting the quality name of the HP brand and the PBDA.
In addition, the product must only be sold in stores that allow it the ample space needed to see its true functionality. Also, the sales staff at the few retailers need to be educated on the use of the product. Promotion The primary advertising objective is informative advertising. This is because the consumer has already likely been an or is an owner of a current HP product and the non-existence of the PDMA market makes the product more difficult to explain. It must not be confused with a carrying case that opens up to a stand for a laptop.
Knowledge of the product itself, how it works, how it helps the target market and how it increases the income of the target market are all extensive needs of the promotion aspect of this products marketing plan. By explaining how the product can and will increase a person’s ability to make a sale or perfect a presentation, HP will also be using persuasive advertising. The primary message to express to the target market is that the PDMA will make the life of the business traveler much easier and even turn business trips into quasi-vacations.
The secondary message is that this new product will increase productivity, therefore increasing the income of the consumer using this product. In a poor job and economic climate this message will have more reaction than it normally would. It allows its user to increase his or her income by increasing one’s ability to make a sale or presentation. The primary vehicles will be magazines on airplanes, affiliate commercial advertising with the major car rental companies, airlines, hotels and the Internet. Tie-in promotions will be able to link the target market to the product by using companies like Hilton, Hertz, and Continental Airlines.
As previously stated, the promotion will be done in the places where the business traveler is likely to be or pass their time during and after business hours. It is very important to measure the response from each type of media to be able to make quick changes in the pool if advertising avenues. The sales-effect research will be the primary measure to evaluate the results of each type of advertising. Marketing Research The primary objective of the research will be the level of explanation needed in each type of media advertising that will create enough understanding to he consumer that causes he or she to purchase the product. Will a 30 second segment showing a woman taking only the PDMA over her shoulder to the airport, arriving at a business office, assembling the product, showing the group she is presenting to in awe, and her being applauded upon returning to her office successful be enough to inform someone on the features and benefits of the product? How many words and pictures are needed in a print ad to adequately explain the product to cause the consumer to purchase the product? Focus groups will be able to answer these questions.
The audience will be very specific in that the groups will be comprised of people that travel at least 6 times per year for businesses. These groups will be able to test the ads in magazines, commercials, emails, and HP catalogs. This will explain how to convey the message of what the product is, how it is used, and its benefits. In addition, experimental research will be used in a few select Best Buy stores across the nation. This research will only be done shortly before the launch, as HP does not want to tip off potential competitors that may enter the market.
The sales staff will be educated on the product and different types of floor space, shelf space, and even a “live-person” that stands behind a desk with the PBDA to show its assembly, disassembly, and answer questions to regular best buy shoppers. Another experimental research would be to place a full page ad in some of the in-flight magazines. There would be a web address and phone number to purchase the product. This, too, must only be done shortly before the product launch. Every month, there should be newsletters emailed to each buyer of the PBDA.
This will include tips on how to use the product, sales tips, how to save on travel etc.. However, the primary objective of this newsletter will be for the consumer that has already purchased the product to take a survey on how he or she likes the product and to rate possible feature add-ons and to gather research for the next model. This will also help keep competitors from gaining market share by knowing exactly what the consumer wants or needs that the PBDA does not provide. FINANCIALS Break-even Analysis The sales for the first year are estimated to be 922,000 million units sold with an average price of $104. 50.
This estimate was found by adding the market penetration percentage estimate for the business traveler professionals and salespeople. This equates to total revenue of just over $96,000,000 in the first four quarters. As stated above, fixed costs are estimated to be $4,500,000 with a per unit variable cost of $52. 00. The contribution margin is the total revenue for year one minus the variable expenses for year one. See below to illustrate these figures. | |Sales, Expenses, and Income | | | |Sales (922,000) |$96,349,000 |$104. 0 | |Less |Variable Expenses |$47,944,000 |$52. 00 | | |Contribution Margin |$48,405,000 |$52. 50 | |Less |Fixed Costs |$4,500,000 | | | |Income Before Taxes |$43,905,000 | | The break-even point for total number of units sold and total revenue is depicted below. The break-even point is reached very quickly.
The specific estimate is for the break-even point to be reached shortly after the first month, assuming equal monthly sales. The center vertical axis is the break-even point and any number of units less than 85,714 is a net loss. The break-even number of units is 85,714 with break-even revenue of $8,957,143. The break-even number of units is calculated by dividing the fixed costs by the contribution margin. The break-even dollar amount is calculated by multiplying the average sales price per unit times the break-even unit figure. Sales Forecast: lst year by month; 2nd and 3rd years by quarter Jan |Feb |Mar |April |May |June |July |Aug |Sept |Oct |Nov |Dec | |Units |76833 |76833 |76833 |76833 |76833 |76833 |76833 |76833 |76833 |76833 |76833 |76833 | |Sales in | | | | | | | | | | | | | |Millions |$7. 875 |$7. 875 |$7. 875 |$7. 875 |$7. 875 |$7. 875 |$7. 875 |$7. 875 |$7. 875 |$7. 875 |$7. 875 |$7. 875 | | |Year 2 |1st Q |2nd Q |3rd Q |4th Q | |Year 3 |1st Q |2nd Q |3rd Q |4th Q | |Units |1. 15Mil |288k |288k |288k |288k | |2. 3Mil |575k |575k |575k |575k | | | | | | | | | | | | | | |Sales $ |118Mil |29Mil |29Mil |29Mil |29Mil | |236Mil |58Mil |58Mil |58Mil |58Mil | | Important Risks to Consider All figures are assuming that no competitors are in the market. Any company at any time could potentially unveil a competing product during the sales year or even prior to HP’s rollout. • The initial sales forecasts are based on estimates and market penetration may be considerably less or more, thus significantly changing these figures. • The variable cost per unit is based on estimates and the price of raw materials may fluctuate, thus changing the figures. • The fixed costs are estimates based on making changes to assembly lines in two manufacturing plants that are working at less than 20% capacity.
These plants may reach its capacity in a shorter amount of time. If this occurs than an additional plant and assembly line must be used and the fixed costs will increase significantly. • Figures assume that major retail outlets will allow ample floor space, product education to staff, and shared air-time. • There is always an economic risk inherent. The PBDA could be considered wasteful spending if there were further economic downturns. • HP’s initial research is inconsistent with real market attitude and consumer decision making in purchasing the product. Although market penetration figures are considered conservative, consumer demand could always be less than original estimates. Important Components of Sales Performance • Each of two or three retail centers must comply with education and training for the selling of the PBDA. • Each retail center must comply with giving ample floor and shelf space • HP must have the feature add-ons ready to unveil should monthly sales begin to decrease and the PBDA-2. 0 must be ready to rollout should a competitor emerge. • Internal corporate sales team must meet and exceed all sales goals.
Using current HP corporate clients to promote this product to is essential for corporate sales. • Should Internet sales be less than expected, a telemarketing sales force must be ready to follow-up with all prospective buyers that are current HP consumers or those that have responded to advertising and not purchased. CONTROLS Revenues will be tightly monitored because of the few distribution channels. Daily inventory reports from the large retailers and internal sales reports from the corporate sales team will be compiled into weekly reports.
The retailers will use an automated inventory tracking system that emails its figures to HP. HP will then compile the retailer reports with the total sales reports. These reports will divide the revenues by: Retailer, Internet Source Code, and Corporate SIC Codes. Every three months these reports will be compiled to complete revenues generated from the PBDA segment to be included in HP’s Quarterly Reports. There will also be a compilation summary and report in HP’s 10k Annual Report. Expenses will be monitored by compiling all costs associated with each type of advertising on a monthly basis.
The fixed costs will be closely monitored at the plant level to ensure little to no fluctuations. The operations manager for each plant will compile all costs associated with manufacturing and distribution and submit costs on a monthly basis. Every three months these reports will be compiled to add to the quarterly financial reports required by the SEC. The quarterlies will then be compiled to complete the 10k Annual Report. How will you monitor expenses/revenue? Identify what methods/reports and how often? Marketing effectiveness will be assessed in a very simple manner.
There will be bi-weekly goals for each distribution channel. Should the sales in a given distribution channel not meet the goals, then it must be reassessed. Changes will occur, new procedures will be implemented and, if needed, goal metrics will be adjusted accordingly. Environmental market changes will be the simplest metric to monitor. Since there are no competitors, the primary assessment will be if any other firms are planning to unveil a competing product. Otherwise, HP already has economic consultants in place to assess the economic conditions that may or may not affect the sales of the PBDA.
Marketing Organization It is HP’s long used policy to outsource certain services when management feels it is beneficial. Since HP has had many successful product rollouts in many industries, there is a multitude of project managers and marketing directors that are qualified to execute this marketing plan. There will be a group of the top 6 project managers and/or marketing directors that will, in essence, each “interview” for this position. It is important to see who can review this marketing plan and critique its positives, negatives, and ive constructive feedback on exactly how to make this brand extension have a greater possibility of success. Mark Hurd, the CEO, of HP will personally sit with each of the top six to review their reports on this plan and assess his or her ability to execute this plan and be able to make quick decisions when changes are needed. The logistics will be delegated by a newly appointed operations manager. In addition, Mr. Hurd will also need to appoint a new marketing director. Since this is a new industry and a completely new product, there is no single person that can automatically take any specific role.
Careful choices must be made for an overall project manager, marketing director, and operations manager to execute the PBDA brand extension marketing plan. Contingency Planning The vast majority of the risks were explained in the sales forecast section. However, there are a few that are important to reconsider and to identify mutations of certain risks: • A competitor enters the market very early in the execution of this plan. • Multiple competitors enter the market and it becomes difficult to differentiate from the competition. Competition offers lower prices and/or more value. Gas prices increase precipitously and business travel is cut by greater than 50%. Businesses move to use software, such as GoToMeeting to fulfill the lack of face to face business. • There is a massive economic downturn, greater than the recent mild depression and demand decreases rapidly. • The demand is grossly overestimated and the product is simply not moving. Conversely, demand is significantly greater and HP cannot keep up with demand. • There is a product defect after hundreds of thousands or millions of units have been sold.
Risks will be monitored in many ways. The project manager will delegate the duty of monitoring possible competitors entering the market to one of his managers within the new team. HP’s economic advisors will report to the project manager enabling he or she to make decisions on the changing economic climate. The operations manager will closely monitor all reports on a weekly basis for any presumed risks or risks not thought of. Customer surveys will be reviewed and data will be compiled to watch for any pattern of concerns voiced by the consumer.
Adaptation to any and all adversity will be handled in the most efficient manner possible. No issues will be disregarded. Any issue that arises will be discussed among management and decisions must be made immediately to ensure the greatest response to minimize negative effects on production, quality, image or any aspect of the successful deployment of the PBDA. References: http://www. ustravel. org/search/terms/number%20of%20travelers%20on%20business http://www. ustravel. org/sites/default/files/page/2009/09/ForecastSummary. pdf table