Value proposition is identical as competitive differentiation. It’s the basis on which customers would purchase a company’s product or service as contrasting to another’s.
If the company can put it through clearly and the customers and employees agree that it’s correct, then the company is in business. And if the company isn’t able to come up with a good one, then it will likely experience the slow, excruciating loss of share in the market and erosion of margins in profit.
The IT industry is extremely volatile and ever changing, it is next to impossible to survive in this industry without innovation.
Hp provides its customers with products enabled with the latest technology and sky high performance, and all this at extremely rational prices. Adaptive edge architecture used by hp makes it simple for the company to provide to its customers forthcoming needs. By providing regular upgrades hp facilitates expansion of product and solution life.
Even though hp provides its customers with the benefits of latest technology at reasonable price yet in recent times hp has failed to innovate which was made evident by the discontinuation of Ipaq smart phones. The company’s inability to launch mobile internet device in the first half of 2010 has put hp far behind.
Furthermore, revenues from ink sales, a major part of its Imaging & Printing division, have been declining as consumers are not only printing less, opting for online storage and transition of documents, but also buying cheaper, generic-branded ink cartridges. Brands like InkTec and InkWise have gained popularity as consumers were looking to save money in the recession. The shrinking revenue stream is making printing a smaller priority for the biggest manufacturers.
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Hp has its prime focus on innovation and provides the customers with the latest plug and play and constant upgrades. But in context of mobile phones it is however difficult to imply the same as hp has had difficulty in issues with using the windows operating system on touch screen devices which in turn had been responsible for keeping hp branded mobile phones out on the fringe. Though by the acquisition of palm inc. hp looks forward to launch a web operating system based device in early 2010.
Hp marketing mix
Price
Captive Product Pricing
Hp uses captive market in the context that its printers are priced in a way affordable to its customers but it tends to recoup its margin from the sale of its ink cartridges that fit those printers.
Promotional Pricing
Hp makes use of promotional pricing to promote its products by making available various offers and vouchers. Hp gives discount to buyers of large volumes and also to channel members like National and sub distributers who perform further selling
SEGMENT PRICING
Hp also follows segmented pricing whereby household and industrial customers pay different prices for the same product. Different versions of the same product are priced differently because of different features.
Place
Strengthening upcountry focus: for the personal printing range hp will be increasing its sales from 300 cities to 450 cities through channel expansion
Enhancement of availability: 1500 multi brand retail outlets and new personal printing solutions across 400 hp experience zones.
Customer experience enhancement: increase in number of service centers from 273 to 342 and increase in customer support coverage from 114 to 155 cities.
Promotion
Sales Promotion
Hp promotes its products by various money-off offers, introductory offers and other types of coupons.
Launching of sweepstakes: a total of 21 prizes were given out to people who won by submiting teir pictures and a short story about their printer.
Development programs focussed on market: customized solutions offered for self employed,design agencies, photographers and jewelers.
Direct Mail.
Hp also uses direct mail to connect to its potential customers.
Trade Fairs and Exhibitions.
Hp actively takes part in various fairs and exhibitions
Sponsorship.
Sponsorship opportunities that encourage and authorize creative people, is regularly seeked by HP.
Product
Imaging and printing,
The example of a printer.
Core benefit: print, fax, scan, copy.
Basic product: all in one printer
Expected product: high quality, low cost, fast print, low noise
Augmented product: home delivery, largest service network, warranty cover, both windows and mac OS supported, direct editing/designing.
Potential product: further slashing in cost per page, large size print option.
Part 2
DELL VS HP
Hp and dell do have a few things in common. Starting with pricing both dell and hp sell their merchandise directly and maintain a cheaper price. Both dell and hp hold promotions frequently for their laptops. Choice of various designs and colors for their products are offered by both the companies. Both companies offer durable products and last long depending on use and care, a warranty is also offered which can be extended for a price
Dell mission
Dells mission is to be the most successful computers company in the world at delivering the best customer experience in the markets we serve. In doing so we meet the customer expectations of:
Highest quality, leading technology, competitive pricing, individual and company accountability, best in class service and support, flexible customization capability, Superior corporate citizenship and Financial stability.
Vision statement
It’s the way we do business; it’s the way we interact with the community.
It’s the way we interpret the world around us- our customer needs, future of technology and global business climate. Whatever changes the future may bring our vision- dell vision- will be our guiding force.
Hp mission
To provide product, services and solutions of highest quality and deliver more value to our customers and earn their respect and loyalty.
Hp vision
To view change in market as an opportunity to grow, to use our profit and our ability to develop and produce innovative products, services and solutions that satisfy emerging customer needs.
Competitor analysis
DIFFERENCES
Value proposition or competitive differentiation whatever one may call it, may not guarantee success, but it is not likely to get there either without it.
Value proposition to offer customers custom built ibm-compatible computers straight from the manufacturers and for cheaper than other brand names was offered from the beginning by Michael dell.
The major difference between dell and hp is in their chain of supply. Even though hp sells directly to its customers yet it relies heavily on its indirect distribution models. Hp’s focuses on providing its customers with the products of highest quality and latest technology at affordable prices whereas dell in this context focuses on lowest cost with high quality for which dell uses its direct supply model.
Dell took up a new strategy to expand to notebooks, storage, peripheral etcfrom desktops, to contend against rivals like HP.
But recently there have been various complaints and unhappy customers due to poor after sales service provided by dell.
Providing pc at low prices is how dell built its reputation. Yet dell fails to provide a customer intimate solution and if the product starts giving problems after a few months the experience is likely to differ from the original acquisition experience.
Until now dell has stood by this approach because its customers tend to be experienced in the field of technology and aren’t expecting a lot of after sale service. However customers are growing in numbers and that’s where the problems are arising from.
Achievement of a decent market share by dell has in turn led to the company picking up new customers much of whom are novices or first time buyers requiring lot of after sale services.
On the other hand, Hp’s focus to reach the customers is broader than dell, as dell only looks to cater to the unsophisticated and educated customer.
Hp considers the vital markets as different entities and targets them differently whereas dell considers the south Asian market similar to that of U.S. and Europe.
A Shift in Strategy
Dell being essentially a low cost provider does not have enough margins in profit to offer full fledged customer service
But paid customer support was recently announced by dell. Apart from offsetting customer complaints dell is hoping to push up profit by spinning customer service from an expenditure to a profit center.
This however may lead to confusing customers by becoming a services company and in turn confusing the brand name.
HP depends on its customer’s outlook and rating. This tactic helps the company to get continuous feedback about its products and give the support needed for the products in order to accomplish a strong support system. This strategy helps the company to strengthen the relations between company and clients.
Dell in the middle east
Dell does not however use its original direct selling model in the middle east but according to dr moneimne dell still passes on the benefits of the direct selling model like customization, affordable prices, speed of delivery and flexibility.
It is not possible in the middle east to follow the original model due to different customs and legal framework.
Dell follows the principle of ethnocentrism whereas hp follows the policy of polycentrism.
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