royal enfield report

MDI Gurgaon Marketing Analysis of HP Printers

PGP-HR

To devise and implement a strategy to enhance the sales

of

Royal Enfield Bikes

By Group 7

Submitted ToProf. J.N. Godinho

December-2004

Document No. Authorized By Roll Nos. Signature / DateInt/01 Gaurav Kapil

Gulshan ChawlaManasi GhoseNeelesh GoyalShaveta Arora

04PGHR04PGHR04PGHR04PGHR

04PGHR45

/13-Dec-2004/13-Dec-2004/13-Dec-2004/13-Dec-2004/13-DEc-2004

Team 7, PGP-HR Ver 1.0 of 37

http://www.mdi.ac.in/index.asp


Acknowledgement

This project is aimed at understanding the Marketing Practices and implementation,

through Royal Enfield bikes. The attempt has been to tie the various factors like

Environment, Competitors and Consumers to understand the effectiveness of the

present target market of the product. On the basis of the same, the Strengths,

Weaknesses, Opportunities and Threats of/to Royal Enfield bikes have been

identified. Also, an attempt to suggest some recommendations for increase in sales

of the company’s bikes has been made. Several people have played a significant role

towards the successful completion of this project work and the researchers extend

their gratitude to them.

A deep sense of gratitude is owed to Mr. J.N. Godinho, Professor, Management

Development Institute, Gurgaon who extended support and assistance throughout

the project duration. Needless to say, his knowledge and experience have served as

a continuous source of encouragement and motivation. Without his invaluable

support and guidance this project would not have been possible.

Also a note of thanks to the exclusive dealer of Royal Enfield bikes, Mr. Amit

Chawla, who helped in understanding the sales and competition in the bike industry.

Finally a note of thanks is due to all those too many to single out by names, who

have helped in no small measure by cooperating during the project and by providing

constructive criticisms.

Group VII




Executive Summary

Computer hardware market is highly competitive and dynamic today, internationally.

With strong players operating, the key message is “Survival of the fittest”. Within

computer hardware market printer market has grown a lot in last 20 years. The name

“Hewlett-Packard Development Company” strikes first to the mind when one talks of

Computer hardware. Printers are considered as the most successful product under the

umbrella Hewlett-Packard Development Company. It is surprisingly how this brand

has continued to retain position of ‘Market Leader’ for such a long period of time. The

project undertaken aimed at understanding the various variables affecting the

marketing of HP-Printers. These include competitors, customers, company’s strategy

etc. HP printers is operating in a highly competitive environment with players like

Epson, Xerox, Samsung, Lexmark, Canon etc. The competitive environment in which

HP-Printers is operating vis-à-vis competitors has been taken up in detail. Also there is

an attempt to understand the segmentation done by HP-Printers with respect to

Product Life Cycle and competitors.

HP-Printers is the pioneer in the printer market and holds number 1 position in the

printer market. Other brands which emerged in the market have created niche

markets and targeted a specified type of customers. HP competes with these brands

on quality, speed and service based attributes. The only way HP is combating this

competition is by continuous innovation and creativity in terms of differentiation in its

products and other Promotional patterns like through advertisement, sales promotion

scheme, publicity etc. With its various variants, HP is targeting both individual and

industry consumers. If one talks about consumer behavior, people consider HP as the

best. Quality and service are the most critical factors determining the buying




decision. As far as income pattern is concerned, all those in upper middle and high

upper class could afford to buy. Thus, higher income group can be a potential

segment for the company.

Initially HP-Printers started with dot-matrix and inkjet printers, but later extended to

laser , color laser and multifunctional printers with scanner-fax-printer facilities.

Even though HP-printers is the market leader now, but with increasing competition

from Indian as well as foreign brands, it should realize that customer is the ‘king’ and

should make continuous efforts to identify and fulfill consumer needs.

TABLE OF CONTENTSTeam 7, PGP-HR Ver 1.0 of 37



SNo Particulars Page Nos

1. Acknowledgements 22. Executive Summary 43. Introduction 74. SWOT Analysis 85. Consumer Behaviour 146. Competitive Scenario 257. Segmentation Profile for HP Printers 358. Conclusion 379. References 40




Introduction

About The Company Royal Enfield India was set up in 1955 when it started receiving 350cc bikes

in kits from the UK and assembling them in Chennai, India. But, eventually

the entire bike was manufactured in India and a couple of years later the

Company started manufacturing the 500cc Bullet. By its sheer power,

unmatched stability, superior riding comfort and rugged good looks, the

Bullet dominated and continues to dominate the Indian roads. It is the dream

choice of every motorcyclist in India with even the Indian Army and Police

endorsing the Bike.

In 1990, Royal Enfield entered into a strategic alliance with the Eicher Group, - a Rs.10

billion conglomerate and later merged with Eicher Group in 1994. The Eicher Group is

one of India's leading automotive groups with diversified interests in the manufacture

of Tractors, Commercial Vehicles, Automotive Gears, Exports, Garments,

Management Consultancy and Motorcycles.

Since then, the Company has made considerable investments in modernizing its

manufacturing technology and systems and in 1996, when the Government decided

to impose stringent norms for emission, Royal Enfield was the first motorcycle

manufacturer to comply. Royal Enfield is amongst the first few Indian companies to

obtain the WVTA (Whole Vehicle Type Approval) for meeting the European

Community norms.

Marketing Network

To feel the pulse of the customers, Royal Enfield has set up a wide network of 13

marketing offices, 223 dealers in all major cities and towns, 25 spare parts

distributors and stockists and 150 Authorized Service Centers. The Company also

exports motorcycles to over 30 countries like the USA, Japan, Bahrain, UK, Germany

and many European countries through 5 international offices, 25 importers and over

200 dealers across the globe.




Collaborations

Royal Enfield has existing technical tie-ups with :

- AVL, Austria for new engines.

- FW Egli for high power engines for 535cc and 624cc.

- Criterion Engineers, UK for a new 5 speed transmission system.

- DB Designs, UK for styling.

The headquarters of Royal Enfield Motors is situated at Thiruvottiyur, Chennai, Tamil Nadu, India.

Manufacturing

Royal Enfield's manufacturing operations go through a series of modernization and

improvement efforts, with a number of automated processes. The Company has put

in place modern manufacturing practices like Cellular layouts, Statistical process

controls and Flexible manufacturing systems. The Chennai manufacturing facility has

received the ISO 9001 certification and for managing its operations in a clean and

safe environment, it has obtained the ISO 14001-quality certification.

Royal Enfield ensures that all the components used in the bikes are sourced from the

best vendors in the Indian automotive industry, who are geared to supply according

to the Company’s stringent quality standards. The company works closely with all of

its suppliers, giving them technical and managerial support while maintaining

practices like Direct-On-Line and Vendor Self-Certification.

Infrastructure and Technology Collaborations

To manufacture quality bikes that are well known worldwide for their reliability and

toughness state-of-the-art infrastructure is required, and that is just what Royal

Enfield has done at their Chennai manufacturing facility.

An active in-house Research & Development wing is constantly at work to meet

changing customer preferences and the challenges of Indian and International

environment standards. When introducing a new product, this team undertakes all

related planning which includes a rigorous customer contact program, design,

concurrent engineering and testing processes. The bike Design team at Royal Enfield




is well equipped with high-end CAD/CAM workstations and the latest modeling

software. Top-notch designers work continuously to come up with innovative bikes

designs to meet the markets expectations.

Royal Enfield was also amongst the first Indian companies to introduce Enterprise

Resource Planning (ERP) systems to manage its operations. It also has an online

supply chain management system in operation.

Presently there are five models of Royal Enfield bikes in the market viz.,

Thunderbird Bullet Machismo The 2004 Bullet Electra

Bullet 350 Bullet 500

SWOT Analysis


http://www.royalenfield.com/product.asp?products_id=19&products_location=india












Opportunities

o Introduction of bikes in

entry and executive level

segment

o Encourage the sales with

advertisement

Threats

o Movement of industry

towards premium

segment e.g. Karizma

225c.c

o Entry of exclusive

foreign players

Strengths

o No competition in 350c.c

bikes

o Proven product durability

o Customer retention

o Online supply chain

management

o ERP operated operations

o Introduce customer

relationship management

o Entry of other players

in 350 c.c segment

Weaknesses

o High Prices

o Less Advertisement

o No bike in entry and

executive level segment

o No/little product

innovation

o Lack of attractive finance

schemes

o Increasing awareness by

advertisement

o Innovating with styling of

bikes

o Offering better finance

schemes

Market Environment

In the last six years, the domestic two-wheeler industry has seen structural

changes. The motorcycle industry has been growing largely at the expense of Team 7, PGP-HR Ver 1.0 of 37



the scooter and moped segments. Scooters having bottomed out, and

mopeds likely to do so soon, the motorcycle industry is bound to have a

slower rate of growth - and this may lead to a price-war and pressure on

volumes and growth of the high volume players. Growth will be fuelled by

new introductions, tapping new segments and encouraging faster

replacement / up-gradation through introduction of differentiated /

customized offerings. For both motorcycle manufacturers and their suppliers,

the risk would be of building/ adding huge capacities in anticipation of

continued high growth rates. The motorcycles have consistently gained

market share from the scooter and moped segments to corner a share of

41% of total two-wheeler sales. The table below gives an idea about the

strides made by the motorcycle segment since 1993:

(in %) Scooter Motorcycle Moped

FY93 47.2 25.2 27.6

FY94 47.5 26.7 25.8

FY95 46.8 29.5 23.7

FY96 46.0 30.4 23.6

FY97 43.9 33.0 23.1

FY98 41.5 37.2 21.3

FY99 39.0 41.0 20.0

FY200033.2 47.6 19.2

Source : SIAM

The motorcycle market is broadly structured into economy/commuter bikes

and power, style and leisure bikes. The economy segment of the market

comprises of entry level bikes and typically has the 100 cc motorcycles. The




power, style and leisure segment comprises of bikes up to 180 cc. Royal

Enfield is the only player in the 250 cc and above category and is positioned

as the power and leisure bike manufacturer.

Hero Honda is the leading player in the motorcycle market, with market

share close to 48% followed by Bajaj Auto at 24%. Other players in the

market are TVS motors, Yamaha Motors, LML and Kinetic Engineering.

The Indian motorcycle industry can be broadly categorized in to Indian

motorcycles and Indo-Japanese motorcycles. The Indo-Japanese motorcycle

segment is dominated by Hero group, Bajaj and Escorts in collaboration with

Japanese vehicle manufacturers Honda, Kawasaki and Yamaha respectively.

The Indian motorcycles segment is dominated by Bajaj (M80), Escorts and

Royal Enfield.

In motorcycles sales, western region leads with a market share of 40% of the

total motorcycle sales. South and north regions come second and third with a

market share of 27.5% and 17.4% of total motorcycle sales respectively.

Over the last couple of years since 2000-01, the motorcycle market has more

than doubled to over 4.3 million units in 2003-04. The industry is expected to

continue to grow in future also due to new products, availability of low cost

finance and increase in replacement demand coupled with shift in customer

preference to motorcycles over scooters.




Different players with their offerings of bikes in different segments have been

listed below:

Company Entry Level Executive Level

Premium Level

Bajaj Auto CT100Caliber115SaffireSpirit

DiscoverPulsar150 DTSiPulsar180 DTSiWind 125

Eliminator

Hero Honda CD-DawnCD100SplendorPassion

Ambition 135CBZ

Karizma

Honda Activa/Dio EternoUnicorn

Kinetic Boss EXBoss 115Velocity

GF170 Comet

LML Aderno Freedom 110

Freedom 125

Royal Enfield Bullet 500Bullet 350ElectraMachismoThunderbird

TVS CentraMax 100Star

Fiero F2/FXVictor GLX

Yamaha Yamaha Crux Enticer

Consumer Behavior




It is very important for an organization to understand its consumer’s buying behavior.

Only when a company understands its consumers, it can modify its offerings to

ensure maximum consumer benefit. Somewhere decisions relating to all 4 P’s are

taken keeping in mind consumer. Since today all companies are following marketing

concept, all decision making activities surrounds consumers. To understand the

consumer buying behavior, we undertook a market research to understand what

people think about HP printers as a brand and how much is their level of awareness

with respect to brand. The objectives of the consumer behavior study are:

Factors influencing the buying behavior of consumer

The price-demand relationship analysis

Consumer Loyalty towards the brand

Consumer awareness of the brand

The primary source of data is personal interviews and questionnaire of individual

customers selected on the basis of relevance and judgment, given the academic

nature and the duration of the study.

The study was carried out in Gurgaon. The primary focus was on following

parameters:

Psychographic and Behavioral parameters

Brand Awareness

Comparative attributes

Substitutability

Brand Usage Pattern

Brand Loyalty

Description of sample

Sample size- 35Brief description




OCCUPATION

80%

20%

STUDENTS

EMPLOYED

AGE GROUPS

70%

25%

5%

17-24

24-30

30-37

QUESTIONNAIRE:

This survey is being carried out for printer. The information is being used by

management students for academic purpose only

1. Which brands of printers are you aware of?

HP


INCOME GROUPS

10%

20%

70%

180000-240000

240000-300000

300000+



EPSON

CANON

SAMSUNG

OTHERS ( SPECIFY)

The purpose is to find out the top of the mind brand of the customer. here we

observe that the entire sample is aware of hp printers.

2. Do you have a printer?

Yes

No

This was framed to find out how many people actually owned printers. Here we

observed that 80% of the sample owned printers.

3. If yes then which one?

Hp

Epson

Canon

Samsung

Others

PRINTERS

13%

25%62%

SAMSUNG

EPSON

HP

This question confirmed the market leadership of HP as 62 % of printers

owners owned a HP printer




4. How did u come to know about HP printer?

Print media

TV advertisement

Friends and family

Showroom dealers

Others

Don’t know

In response to this question, we found that the social factors namely the reference

group acted as the major source of information for the sample.

5. Rank in order of preference (1-5) the parameters considered by u while

purchasing a printer (1 is most imp.)

quality

brand

after sales services

price

printing speed

This question enabled us to access what exactly the customers are looking for when

they go in for the major purchase of a printer. This brought to light that quality and

brand are the 2 major things that a consumer looks for. Price plays a very small as

70% of the sample belonged to high income group.

IMPORTANCE OF ATTRIBUTES

40%

30%

20%

10%QUALITY

BRAND

PRICE

SPEED

6. Evaluate the various brands on a scale of 1-5 (1 is the most imp.)




QUALITY PRICE AFTER

SALES

SERVICE

PRINTING

SPEED

BRAND

IMAGE

HP

SAMSUNG

EPSON

CANON

XEROX

ENABLES US TO COMPARE HP with its competitors on the basis of key attributes. The

results for this question were strongly titled in HP’s favor with HP being the no1

choice in all except price.

7. What is the primary reason for buying a printer?

Convenience

Cheaper printouts from outside

People u know also have a printer

This question helps us to recognize the need for buying a printer. The data here was

not conclusive as both convenience and price were major factors.

8. Who/what will u consult before buying a printer?

Spouse

Children

Friends

Colleagues

Internet

Magazines/newspapers

Brochures

Showrooms

This question helped to know the level of involvement of the consumers. The answers

to this question were clearly indicative of the fact that the consumers were highly

involved in the purchase.




9. Who makes decision in your house as to which printer shall be brought?

You

Your elder siblings

Your parents

Souse

Friends

Children

Others(please specify)

Enabled us to shed light on the decider. Since most of the sample consisted who

were financially dependent on the parents, so it was no surprise that parents were

the main decision makers.

PERSONAL DETAILS:

NAME:

OCCUPATION:

ANNUAL HOUSEHOLD INCOME:

60000-120000

120001-180000

180000-240000

240001-300000

300000+

The personal details were very imp. As they enabled us to analyze the consumer

behavior on the basis of very important personal factors like age, occupation, and

economic circumstances.

BUYING ROLES

Buying roles can be categorized into five roles:-




INITIATOR: this is the person who firsts suggest the idea of buying the

product service. In this case, we found in most cases(65%) the purchase

was initiated by the students of the household in the age group.17-24

INFLUENCER: this is the person whose views on advice influence the

decision. We found the major influence to be the reference groups- friends

(30%) and colleagues (35%).

30%

35%

25%

10%

FRIENDS

COLLEAGUES

SHOWROOMS

INTERNET

DECIDER: this is the person who decides of any component of a buying

decision. HP printers, major deciders (70%) were parents. We realize that this

is due to the predominant student sample and the fact that the most of them

were financially dependent on their parents.

DECISION MAKERS

70%

20%

10%

PARENTS

SIBLINS

YOU

BUYER: this is the person who makes the actual purchase. In our case, this

tended to be the parents.

USER: the person who uses or consumes the product or service. Here, the

initiators and the users tended to be the students.




BUYING BEHAVIOUR

FOUR TYPES ARE:-

HIGH INVOLVEMENT LOW INVOLVEMENT

SIGNIFICANT DIFFERENCE

BETWEEN BRANDS

COMPLEX BUYNIG

BEHAVIOUR

VARIETY SEEKING BUYING

BEHAVIOUR

FEW DIFFERENCES

BETWEEN BRANDS

DISSONANCE REDUCING

BUYING BEHAVIOUR

HABITUAL BUYING

BEHAVIOUR

NUMBER OF PEOPLE CONSULTED

60%25%

15% THREE ORMORE

TWO

ONE

BEST BRAND

85%

10%

5%

HP

EPSON

SAMSUNG

From the above data, we can infer that most of our sample consulted more than 3

people before making the final decision. This is clear indication that the consumer are

very highly involved in the purchase of a printer, which is understandable considering

that a printer is an expensive and long term buy for most.




Also, judging by the response we got, the brand image of a high end sophisticated

item like a printer influences the buying behavior greatly, it is indicative of the kind of

after- sales services that the consumer can expect. The kind of distribution network

that hp has in India has helped promote its brand image in a big way. Moreover, it is

the market leader in printer cartridges as well, which makes the associates between

printers and hp stronger.

Therefore with reference to the figures given above, we can conclude that the

customers of printers exhibit complex buying behavior.

DECISION MAKING PROCESS

1. PROBLEM RECOGNITION: The predominant reason for buying a printer appears

to be the convenience it offers, closely followed by the fact printers from

external sources tend to be more expensive. The students usually reiterated

the convenience factor while professionals requiring a large no. of printouts

voiced the second opinion.

2. INFORMATION SEARCH: consumer information searches may be personal,

commercial, public or experimental. In our survey, the major sources of

information for the customers were the personal sources like friends and

colleagues. This goes to show that in case of printers, word of mouth plays a

very important role.

30%

35%

25%

10%

FRIENDS

COLLEAGUES

SHOWROOMS

INTERNET

3. EVALUATION OF ALTERNATIVES: in our context, the total set consisted of HP,

Epson, canon, Samsung, Xerox. The awareness set consisted of hp, Epson,




Samsung, which were evaluated on the basis of price, brand image, etc. to

constitute the consideration and choices set.

4. PURCHASE DECISION: the purchase decision was based on the customer’s

priorities. HP has a good brand image but was perceived to be a costlier

option by most customers. Since our sample mainly consisted of the higher

income group, the price factor took a back seat.

POST PURCHASE BEHAVIOUR:

Competitive Scenario

It’s not easy to make a best choice in bikes. The specifications, style, power, price,

riding comfort and ruggedness make all the difference in the buying behavior of

customers. These factors interrelate in complicated ways to influence the buying

decision Following are the major factors on the basis of which it is decided that which

bike is better:

1. Powertrain

2. Fuel economy

3. Mileage

4. Style

5. Price

6. Top speed

7. Features e.g. e-start option

8. Engine

9. Weight

10. Riding comfort

In the modern technology industry, competition among rival firms is generally

constructive. Firms strive for a competitive advantage over their rivals, primarily by

providing better products and support. The intensity of rivalry among firms varies

across different segments, and in this report, we are interested in analyzing these for




printer industry with focus on individual and corporate customers of printing

solutions.

A number of highly competitive brands in the market have been snapping at the

heels of Goliaths like Samsung, Canon, Epson and Xerox. Samsung is as strong in

technology as HP. But in this segment, no company try to out promote the

competitors by spending large amount of money on advertising or reducing prices of

the products. Here, the competition is in making the product available, taking

initiative in innovation, using great sales force and creating awareness for the pirated

technology available in the market.

Porter’s Five Forces:

Potential Entrants

Strengths:

Stable returns

Access to distribution channels

Industry Growth rate

Weakness:

High entry and exit barriers

High buyers’ switching costs

Incumbents’ defense of market share

High capital requirements

Low product Differentiation

Suppliers

Strengths:

Cater to strong buyers

Supplied product is important input

Relatively fewer substitute inputs

Weakness:

Many competitive suppliers

No credible threat of

Industry Competitors

Strengths:

High market growth rate

Existing strong or aggressive competitors

Strategic stakes are high

Weakness:

High level of product differentiation

High switching costs for the buyers

Brand identification

Buyers

Strengths:

Large number of buyers

Low product differentiation

Buyers’ incentives

Sources of information

Strong brand identity

Proportion of income spent on the purchase

Weakness:

High Switching costsTeam 7, PGP-HR Ver 1.0 of 37



downstream integration

Low product differentiation

Fragmented buyers

No substitutes

High product importance

Substitutes

Strengths:

Technological advancement

Weakness:

No actual substitutes

Bargaining power of suppliers:

Suppliers tend to be powerful when they’re concentrated or organized, when there

are few substitutes, when the supplied product is an important input, when the cost

of switching suppliers is high, and when the supplier can integrate down stream.

Since there are many competitive suppliers in the market for printer industry and

there’s no fear of downstream integration in any way because of low product

differentiation, the suppliers don’t have the benefit of bargaining.

Bargaining power of Buyers:

The bargaining power of buyers is the impact that customers have on an industry. If

the buyers possess strong or growing bargaining power, the market conditions are

such that there exists many suppliers to a few buyers. Such a segment becomes

unattractive since the buyer sets the price. Buyers are powerful if they are

concentrated, if the product represents a significant fraction of the buyer’s costs, if

buyers are price sensitive or when they can upgrade upstream. The buyer power

becomes insignificant if buyers’ switching costs are high, if buyers are fragmented or

if producers threaten forward integration.

The power of buyers is the impact that customers have on a producing industry. In

general, when buyer power is strong, the relationship to the producing industry is

near to what an economist terms a monopsony - a market in which there are many

suppliers and one buyer. Under such market conditions, the buyer sets the price. In

reality few pure monopsonies exist, but frequently there is some asymmetry between

a producing industry and buyers. The following tables outline some factors that

determine buyer power.




The printer is a product found with all the IT industries and almost all other industries

and IT professionals. The buyers are not price sensitive but they’re very particular

about the quality. As printers are available in range of prices, different buyers target

different price range according to their pocket. At the same time it depends what

application does one wants from the printer. Some companies’ need is restricted to

the A4 size printouts but the hoardings and large maps need printer above the range

of even 5 lac rupees. Rather, there’s no upper limit to the price of a printer.

Threat of Substitute Products:

In Porter's model, substitute products refer to products in other industries. To the

economist, a threat of substitutes exists when a product's demand is affected by the

price change of a substitute product. A product's price elasticity is affected by

substitute products - as more substitutes become available, the demand becomes

more elastic since customers have more alternatives. A close substitute product

constrains the ability of firms in an industry to raise prices. The competition

engendered by a Threat of Substitute comes from products outside the industry.

A printer has become a basic necessity for any IT industry in addition to other

industries and individual customers. The Photostat, carbon copies and fax cannot

substitute printouts. This product has got so deeply engraved into the minds of the

consumer is difficult to be replaced or for that matter even substituted.

Threat from new Entrants:

It is not only incumbent rivals that pose a threat to firms in an industry; the

possibility that new firms may enter the industry also affects competition. In theory,

any firm should be able to enter and exit a market, and if free entry and exit exists,

then profits always should be nominal. In reality, however, industries possess

characteristics that protect the high profit levels of firms in the market and inhibit

additional rivals from entering the market. These are barriers to entry.

In the starting, HP had the monopoly in the printer segment but later on, the market

was inundated with many printer models from Samsung, Lexmark, and Canon etc.

The segment of printers priced between INR 10,000-20,000, HP saw good

competition from Samsung, Epson & Lexmark. In higher price range esp. in the

multifunctional printer segment, Canon & Xerox has been giving a tough competition

to HP.Team 7, PGP-HR Ver 1.0 of 37



Comparative Analysis in Printers Industry

Players--> HPSamsun

g Canon Epson XeroxComparative

Factors Customer Knowledge Product Innovation Quality strategy Line-extension Strategy Sales aggressiveness Effective sales promotion Competitive toughness Performance Dealership system Replacement policy/ Parts management Total 18 16 13 3 12

Legend for level of advantage

2 Highest1 0 Lowest




Comparative Analysis in Printers Industry: Competitors of HP Printers have been studied under various parameters and a comparison has been drawn for these in the above excel sheet.

Samsung:

Samsung is a key player in printer market with strong brand awareness and act as

strong market challenger to HP. Samsung printers are technologically sound as HP

printers with key features like no noise i.e. noise level below 48 dB as compared to

other printers being 52 dB or 54 dB. These printers have got lowest noise level

among all the competitors. Only Samsung printers provide free auto duplex printing.

For others, the duplex facility is either expensive or not available. Samsung’s quality,

sales force, dealership and promotion schemes are as effective as HP. In the color

laser printer class, Samsung is giving tough competition to HP.

Canon:

Canon has an edge over HP in photo printers. It does not have as good sales force as

HP has. Moreover, its distribution system also has a setback as compared to HP. But

in photo printers segment, Canon has proved its superiority by having more share of

mind of the customers. Recently, Canon has employed integrated circuited

manufacturing techniques to produce a print head capable of delivering a print

quality that in many cases exceeds the results of more costly six ink systems of its

competitors. The secret to the i965’s speed lies in the print head. Unlike other

manufacturers who must assemble their print heads from a multitude of components,

Canon employs a proprietary etching process similar to that used in semi-conductor

manufacture. the result is smaller nozzles, greater nozzle density and longer print

heads. The extremely precise 10-micron diameter nozzles are almost half the

diameter of Canon’s nearest rival and are placed seven times closer together.

Minuscule 2pl droplets are ejected with high frequency and accuracy. Combined,

these features produce a print head that puts more ink down on the page in less time

– for record breaking print speeds.




Xerox:

Xerox Corporation (NYSE:XRX) is a $15.7 billion technology and services enterprise

that helps businesses deploy smart document management strategies and find

better ways to work. Its intent is to constantly lead with innovative technologies,

products and solutions that customers can depend upon to improve business results.

Xerox provides the document industry's broadest portfolio of offerings. Digital

systems include color and black-and-white printing and publishing systems, digital

presses and "book factories," multifunction devices, laser and solid ink network

printers, copiers and fax machines.

Xerox gives competition to HP in multifunction printers. Xerox is No.130 among the

Fortune 500 companies. The company's operations are guided by customer-focused

and employee-centered core values -- such as social responsibility, diversity and

quality -- augmented by a passion for innovation, speed and adaptability.

HP as Market Leader

HP has the largest share in the printer market. HP Imaging and Printing posted record

third quarter revenue of $5.6 billion, up 8% year-over-year. During the quarter HP

shipped almost 10 million printers, bringing total shipments to approximately 320

million units worldwide. Business hardware grew 8% year-over-year driven by strong

unit shipments in color and mono lasers, business inkjets and multinational printers.

Home hardware decreased 5% with All-in-One unit sales growth offset by declining

single-function printers and normal seasonality. Supplies grew 9% fueled by strong

growth in color and monochrome laser supplies. Digital Imaging grew 11% as strong

digital camera unit shipments helped offset an expected decline in scanner market.

Operating profit of $837 million was also a third quarter record and represented

14.8% of revenue.

Strategies followed by HP Printer Industry:

Customer Knowledge: HP is a customer centric industry and takes

consultation from the customers and studies their needs. In other words




through market research and intelligence gathering, HP studies its customers

—both industry and individuals and utilize the data in improving its products.

Product Innovation: HP is an active product innovator. Presently more than

eight types of HP printers are in the market with further specifications and

varieties. HP printers range from black & white inkjet printers to

multifunctional all in one printers. HP launched more than 660 new products

in 2003 and closed the year with 21,000 patents in force worldwide, up from

17,000 in year 2002. HP spent 43.7 billion on R&D, focused in areas of

innovation where it made unique contribution and lead. HP invested more

than $1 billion in software across its portfolio, $600 in building the HP brand,

$400 million innovating its internal IT systems.

Quality Strategy: HP designs products of superior quality and it is also the USP

of the company. That is why HP is known for its brand image.

Line Extension Strategy: HP produces its printers for all industry requirements

and individual users. This strategy gives HP an edge over all existing printer

manufacturers and prevents the competitors from sharing the mind and heart

of the consumers.

Aggressive sales force: HP has three national distributors in Delhi, Mumbai

and Chennai and 2000 resellers all over the country, thus making the product

available to the customers at their doors. This huge sales force serve the retail

giant works closely to improve both the products that go to the stores and the

process by which they get there.

Effective sales promotion: HP’s sales-promotion department trains its brand

managers on the most effective promotions to achieve particular objectives.

The department develops an expertise of these deal’s effectiveness under

varying circumstances. At the same time, HP tries to minimize the use of sales

promotion or low prices.

Performance: HP printers are known for their reliability and durability. It is key

buyer consideration in the choice of printers.




Dealership system: HP has three distributors at the national level in Delhi,

Mumbai and Chennai. It also has online retailing and reselling facility. Some of

its online retailers are amazon.com, compusa.com, staples.com,

computers4sure.com, Vikings, etc.

Service: HP gives warrantee on its products and has a replacement policy in

case of a faulty product delivered.

Other advertisement done for HP is by following ‘push’ methodology, range addition

and offer addition. HP also offers lease and financing options to the buyers with low

or no rate of interest. HP believes that “In this frenzied and competitive marketplace,

you not only need to provide customers with solutions to their business problems, but

to close a deal, you also have to give them more value for their dollar than the next

provide ”. HP Financial Services delivers financial tools to help the customers to

achieve superior business results by closing more transactions, closing larger

transactions, closing more profitable transactions, adding value to the customer

experience and thus keeping more customers.

Segmentation

The Printer industry is growing at a very fast pace with the arrival of several

global players. There was a time when HP was considered as the sole organized

player in the printer market but over the last couple of years more organized players

are making their presence felt in a big way. A watch is no more a luxury or industry

specific need but it has become an extension to a person’s lifestyle. The consumer

has become very technology savvy and the choice doesn’t depend merely on the

function but also on the printing and color quality. With the emergence of this trend

there are a variety of brands available in the market, giving rise to a cutthroat

competition among the players. Therefore the companies are trying to focus on the

buyers whom they have the greatest chance of satisfying. A majority of the players

have adopted target marketing, identifying the major market segments and targeting

one or more of these by developing a variety of each catering to a particular

segment.




One way to build market segments is to identify preference segments. The

printer market reveals distinct preference clusters, called natural market segments

on the basis of the features of the printers as against the price. This is as depicted

below –

There are various factors that come into play while effectively identifying a good

market segment –

Measurability: Consumers in the printer industry can be placed within or

outside each segment on the basis of a measurable factor, price. The following

segments on the basis of price characterize the printer market –

Top of the line – These are basically the color laser multifunctional

printers introduced in the market by different companies, available in the price range

of above Rs. 5 lac.

Expensive – These printers are also in color laser printer segment but

the range is Rs. 25,000- 200,000. These brands fall in the price range of Rs. 6000 to a

high of Rs. 1lac.

Up market – Printers falling in the range of Rs. 5000 – Rs. 20000 are

included in this group. These are the black and white multifunction and color laser

printers specially produced for industries which need to take printouts of big

hoardings etc.

Mass Market – These printers in the price range of Rs. 2500 – Rs. 5000 include

some inkjet and dot-matrix printers




Segmentation Profile for HP Printers

Individual Customer Profile

Segmentation Factor Segment Description

Geographic

a. RegionAmericas, Asia-Pacific, Europe, Middle East, Africa

b. Density Urban

Demographic

a. Age 12 and above

b. Income INR 2.5 lac and above

c. Occupation Professional and Technical

d. Social Class All upper middle and upper uppers

Behavioral

a. Benefits Utility/Service

b. User Status Regular user and potential user

c. Usage Rate Medium to heavy user

d. Loyalty Strong

e. Readiness stage Intending to buy/Interested

f. Attitude towards Product Enthusiastic

Industry Consumer ProfileTeam 7, PGP-HR Ver 1.0 of 37



Segmentation Factor Segment Description

Demographic

a. IndustryAlmost all Industry/Educational institutions

b. Company Size Small to very large industries

c. LocationAmericas, Asia-Pacific, Europe, Middle-East, Africa

Operating Variables

a. Technology Inkjet/Laser/Multifunction

b. User Status Light users to heavy users

c. Customer Capabilities

Many services like selling computers with all accessories and different printers

Purchasing Approaches

a. Purchasing Function Organizations Both centralized and decentralized

b. Nature of existing relationships Both weak and strong relationships

c. General Purchase policies Contracts or direct purchase

d. Purchasing Quality and service

Situational Characteristics

a. Loyalty High Loyalty

Conclusions

HP is the most successful and established company in Printer market. There are

number of conclusions we can draw from this project:Team 7, PGP-HR Ver 1.0 of 37



1. Environment: The environment of HP Printers includes

Micro Variables: Company, Consumers (most important), public, employees,

intermediaries etc.

Macro variables: Demographic factors (age, income, gender, social status),

economic factors, etc.

Hp is the market leader in the printout segment with a market share of 62%

Quality, printing speed, after sales services and brand name are two major

appeals in the product.

The company should try and integrate all its micro and macro variables. Both

micro and macro variables complement each other and go hand in hand.

Company should ensure that it is able to extract maximum out of both these

variables. An organization like HP is successful today because it has integrated

all the elements of supply chain and other variables in its environments

2. Consumers: Changing technology is the key factor which prompts consumers

to choose a product in computer hardware. HP has been the market leader

because it has continuously innovated in the printer segment and came out

with new and useful features. HP should try to satisfy the customers’ quench

for innovative features and usability by bringing variants in the existing

product line. HP need to concentrate on consumers at two levels:

a. Existing customers : Retaining a customer is much harder that getting a

new customer. As a number of new companies have stepped in the

market of printers, HP should take feedback from existing consumers

and modify their offerings accordingly.

b. Potential customers : These are the people who buy printers but not

from HP. It is very critical for HP to identify reasons for their non-usage.

The research done shows that the biggest reason for non-usage is

price difference in the various printers available in the market. As the

individual customer has to see his pocket before investing in this

product, this could be a big threat to HP as the competitors are

introducing their products in low price range with same features HP-

Printers is in maturity stage but still it needs to concentrate completely

on its consumers and continuously aim at providing offerings that




ensures maximum consumer satisfaction thus ensuring brand loyalty in

the long run.

There is a high level of involvement of the customers in buying the product

A large % of the initiators in the buying of HP printers are students in the

age group 17-24.Major reference group include friends and colleagues. This

product is characterized by complex buying behavior. In spite of having a

comparatively high price, it is the convenience of the printer that has

increased to demand. In the awareness set, no. 1 recall was Hp printers.

3. Competition:

HP is facing competition on two fronts- based on price and based on service attribute.

Company needs to formulate strategies for both kinds of competitors. To face the

competition based on price, HP should offer promotions like free gift; price offs, etc

so as to induce customers who are more interested in maximizing physical

satisfaction by getting more at fewer prices. Whereas for competition serving service

conscious customers, HP needs to advertise more to highlight their large number of

outlets and dealers.

The printer is a product found with all the IT industries and almost all other industries

and IT professionals. The buyers are not price sensitive but they’re very particular about

the quality. As printers are available in range of prices, different buyers target different

price range according to their pocket. At the same time it depends what application does

one wants from the printer. Some companies’ need is restricted to the A4 size printouts

but the hoardings and large maps need printer above the range of even 5 lac rupees.

Rather, there’s no upper limit to the price of a printer.

Thus, we can conclude by saying that HP has been successful in being market leader

for past number of decades and with its ability to change with consumers need and

increasing competition, it can continue to retain its market position forever. It needs

to keep a close check on competition and anticipate their strategies. Also a proper

integration of all variables in the environment can help HP continue to be a market

leader.




References

Textbooks:

Marketing management by Philip Kotler

Advertising and consume behavior by Sutherland & Sylvester

Websites:

www.hp.com


http://www.hp.com/



www.canon.com

www.samsung.com

www.xerox.com

Discussions with Business Development team at HP, Delhi based in Gurgaon (NCR).


http://www.xerox.com/

http://www.samsung.com/

http://www.canon.com/


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