Table of Contents

1. INTRODUCTION .......................................................................... 2 2. MICRO-ENVIRONMENT ............................................................. 2

2.1 Publics ......................................................................................................... 2 2.2 Competitors ................................................................................................ 2 2.3 Customer Markets ..................................................................................... 3 2.4 Marketing Intermediaries ......................................................................... 3 2.5 Suppliers ..................................................................................................... 3 2.6 Market Size & Growth .............................................................................. 3

3. MACRO-ENVIRONMENT ........................................................... 4
3.1 Demographic Environment....................................................................... 4 3.2 Natural Environment ................................................................................ 4 3.3 Economic Environment ............................................................................. 4 3.4 Technological Environment ...................................................................... 5 3.5 Socio-cultural Environment ...................................................................... 6

4. PRODUCT CATEGORY OVERVIEW ....................................... 6 5. TARGET MARKET ....................................................................... 7 6. PRODUCT........................................................................................ 7 7. PRICE ............................................................................................... 8 8. PLACE .............................................................................................. 9 9. PROMOTION ................................................................................ 10 10. CONCLUSION ............................................................................ 11 11. REFERENCE LIST....12

1. INTRODUCTION This report provides a general market overview for the HP Photosmart eStation by analyzing the current marketing situation for the product. This ultimately consists of both micro and macro factors. Further, marketing strategy elements are assessed for the future of the product.

The eStation is a printer developed by Hewlett-Packard Development Company (HP) which is active in IT infrastructure, personal and business computing, imaging and printing (HP News Release 2011). This printer provides for remote printing and other multimedia functions, including internet access. The printer falls in the product category of multifunctional printers (HP website 2011). It is a consumer product as it is aimed at final customers for personal consumption in the convenience of their own homes (HP Printers 2011; Kotler & Armstrong, 2008).

2. MICRO-ENVIRONMENT 2.1 Publics It is important to monitor the general public and media as their opinions affect buying behaviour towards HP products. CNET reviews (2011) list HP printers in the top 5 best printers. Such reviews provide information regarding the value customers place in HP products. HPs winning of awards for global citizenship and environmental sustainability also affects the values portrayed to citizen-action publics such as environmental groups (HP News and Awards 2011). By developing a positive image to the publics, HP gains a stronger competitive advantage.

2.2 Competitors Awareness of competitors strengths and weaknesses is essential for providing customers with greater value and satisfaction relative to competitors. Canon printers is HPs major competitor, offering similar products, and obtaining strong customer reviews. This adds to Canons strength as an industry leader (Canon Printers 2011). Such facts need to be closely monitored to allow HP to effectively promote and differentiate itself from others.

2.3 Customer Markets The target market of the eStation is the typical modern family who require a range of printing needs to cater to the different structures of each household. These include the working age population whom have a wide range of occupations, and the older population whom require simple access to its utilities. The eStation also targets youths who are becoming increasingly connected online (Kaplan, 2010) by including access to social media applications and webmail through the control panel of the device. Evidently, the eStation, catering for all consumer types, is the perfect product to satisfy the needs of the modern family.

2.4 Marketing Intermediaries The marketing intermediaries affecting HP include large technology selling companies that aid in distributing its products, for example, Dick Smith. Generally, the product is sold to these firms, who then resell the product to customers at their own profit. There may also be financial intermediaries in offering warranties for HP products, and referring customer enquiries to HPs technical and administrative support systems.

2.5 Suppliers Suppliers are an important link in delivering value to customers. Supply shortages are detrimental to business as it results in a loss of sales and damages customer relations. Resultantly, supply availability must be closely monitored.

Offering the latest technology, it is unlikely that supply of the eStation is abundant. Therefore, HP must make active efforts in ensuring the availability and constant production of the technologies used as inputs.

2.6 Market Size & Growth 2010 showcased HP leading the market with a share of 21.2%. Whilst this fell from the 22.3% share in 2009, experts predict this number to rise again, blaming the slight loss on the growth of Asian markets (Hingley, 2011). HP (News Release 2010) estimates the global digital printing market to be worth $124 billion by 2014, with the industry experiencing double3

digit percent growth in 2010 alone. This indicates the strong growth of technology and foreshadows further growth. By maintaining their leading position, HP can guarantee an increased market share in an exponentially growing environment.

3. MACRO-ENVIRONMENT 3.1 Demographic Environment Currently, 67.5% of the Australian population is between the ages of 15 and 64 the working age population. The proportion of the population aged over 65 is increasing, currently accounting for 13.6% of the aggregate population (Australian Bureau of Statistics 2011). As the eStation is most likely to be used by the working age population for educational, work, and recreational needs such as printing holiday photos, the market will largely consume this product. This is due to the capability of this demography to use, understand, and adapt to the functions of the product.

However, in the longer-run, given the ageing population, HP will need to either educate consumers on product usage or, develop an alternative. This is due to the inherent difficulty the older population finds with highly technological products.

3.2 Natural Environment The natural environment is evidently impacted by both HP production processes of HP as well through product usage by consumers. However, HP is committed to environmental sustainability and, achieved its objective to reduce energy consumption by its products 9 months prior to its deadline (HPs Environmental Goals and Policies 2011). This results in lower energy costs for consumers and provides for more economical use of HP products. Additionally, with societys growing concern for environmental impacts, consumers are more inclined to purchase from environmentally friendly organisations.

3.3 Economic Environment The economic environment must be closely monitored to ascertain the buying power and spending patterns of consumers. April 2009 November 2010 demonstrates interest rates rising from 3.00% to 4.75%, ultimately dampening consumer spending on non-essential items

(Reserve Bank of Australia 2011). However, Stevens (2011) observed that the steadiness of the cash rate during 2011, staying at 4.75%, has restored some of the buying power and spending.

However, recent financial uncertainty has led to falling profits in retail, as consumers exercise greater caution when purchasing (Berriman 2011). As the eStation is priced at $399, consumers may be more inclined to purchase cheaper multifunctional printers, starting from $49 (Dick Smith 2011).

Resultantly, HP must emphasise the benefits of the eStation to maintain market share. However, in the presence of financial uncertainty, HP may find it difficult to maximise upon sales for the eStation.

3.4 Technological Environment The technological environment is constantly changing and developing, as newer technologies replace the older. Resultantly, proactive efforts for development as well as awareness of recent developments are essential. Having developed a product, which is a first-of-its-kind technology, HP is currently in a strong position relative to competitors. However, monitoring this environment is fundamental to maintain this prominent position.

Further, competitors such as Canon and Brother are likely to follow suit and develop similar products. Therefore, HP must continue its efforts towards product development and innovation.

In July, HP reported a gross of $13billion existing cash with 2054million in shares (HP Reports Third Quarter 2011). This indicates HPs strong market share and high growth rate, labeling HP as a star (Boston Consulting Group matrix) and thus, an industry leader. This ultimately allows HP to engage in product and technology research and development.

3.5 Socio-cultural Environment The basic values, perceptions, beliefs and preferences of a society ultimately impact upon the success of a product, and more widely, the company. In a consumption-driven me society, people use their purchases as a means of selfexpression, buying products which represent their values and beliefs and aid in presenting an outward image to society. By acquiring the eStation, consumers project the value they place in technology as it is incorporated in every aspect of today. Furthermore, it allows for selffulfilment, as by purchasing a highly reputed product, an outward image of higher living standards is projected. Additionally, as the product allows for wider communication through internet functions, it is a social substitute, thereby catering for the growing we society. Finally, organisations need to be perceived as good corporate citizens (Rangan, Sandberg & Karim, 1996, p. 45). By marketing a solution for the entire family, HP achieves this goal and thus can obtain brand loyalty from consumers.

4. PRODUCT CATEGORY OVERVIEW The eStation belongs in the product category of printers under technological utilities. As a product, HP printers are ranked among the top in the industry with many reviews listing HP as the number one printer for features including printing, scanning and copying, help and support and other utilities offered by its products (Top Ten Reviews, 2011). Such rankings are also similarly mirrored by reviews on CNET (2011) whom rank HP among its top five.

Research has shown that within the industry of printer manufacturers, factors that contribute to the best printers are strongly dependent on the values and opinions of customers (Vision in Print, 2005). Consumers have contributed the factors of price and quality, the range of products and utilities available, customer service, relationships, the administration and invoicing, communication, deliveries, technical support, customer awareness and compliance, to the makings of a good printer (Vision in Print, 2005). The eStation has been developed to cater to all of these factors by offering a wide range of utilities whilst remaining in a reasonable price range. HP also offers extensive customer service, providing technical support for all of its products, further establishing a quality service for its customers. Such

characteristics have recognised HP (Hewlett Packard) as the leading printing system provider in the world by SEC since 2005 (Top10Land, 2011).

5. TARGET MARKET HP focuses well on the different needs of consumers (Perreault, Cannon & McCarthy, 2009). In recent years the targeting strategy was directed more towards innovators who wanted to use printers not just for printing but for digital color photography as well (Perreault et al., 2009). The newest trend in their target markets is the focus on quick and easy printing using internet and social media. The eStation is promoted to be a great printing solution for entire family. This specific printer is targeted largely at modern families that want or need to stay connected and, value time-efficiency. The printer follows the trend of increased use of wireless internet and touch screens for appliances. Therefore it aims to reach the trendy customer who is technologically aware and is willing to pay for advanced technology.

Additionally, the product is also targeted at the socially and environmentally responsible consumer given that the printer saves energy and conserves resources (HP Photosmart 2011). It is an Energy Star qualified product, it prints two-sided documents automatically and it is shipped in an innovative and reusable bag in order to reduce package waste. Moreover cartridges that are brought back to HP Planet Partners are recycled responsibly (HP Photosmart 2011).

6. PRODUCT The product range refers to the set of all product lines and items that a sellers offers for sale. The length of each product line refers to the total number of products within that line. Additions to product lines, particularly in relation to the eStation, have been a major contributing factor for HPs success, and thus HP should continue this strategy (Ferraro 2010). Given the prevailing economic conditions and the outlook for a downturn in economic activity, HP would benefit from a downward stretch in their product line. By introducing a product on the lower end of the market, HP can use its reputable image to gain the market share on this lower end of the spectrum. This allows HP to have a more wholistic grasp of the market. An upward stretch seems inappropriate given the already high end nature of the eStation and the prevailing economic conditions.

Further, HP can employ the strategy of product line featuring whereby special marketing attention is given to certain products to either increase sales volumes or create awareness within the market of the product. Resultantly, HP may choose to feature the eStation to increase sales, whilst also featuring any new products introduced in its downward stretch to create awareness.

The depth of these product lines refers to the different versions offered of each product on the line. Having a variety is essential as having just the one product would result in reduced sales as consumers do not purchase products they do not need, or alternatively, purchase a product which does not meet their needs. HP currently offers a variety of models of the same product. For example, it offers a 6510 and a 5510 series in its Photosmart printers (HP Website 2011). Similarly, in another product line, the Deskjet, it offers a 1050, 2050 and a 3050 series (HP Website 2011). Each of these series vary slight with regards to price and features. This depth has allowed consumers to find a most suitable product and therefore has ensured the success of HP.

7. PRICE Pricing is the process of determining what a company will receive in of its products. It is the single element of the marketing mix that is revenue generating.

Over time, HP has developed high performance technology with a diverse product portfolio, offered strong customer service, and has decreased its prices. In relevance to the eStation, HP uses both fixed and dynamic pricing strategies in order to offer its consumers the best customer service and products. When closely examining the fixed pricing strategies used by HP it can be seen that the company make use of the promotional and bundling pricing strategies (Goldstein, 2009). Promotional pricing strategies involve promoting a product, typically when it first enters the marketplace. Additionally, it is also used to stimulate demand for products or services where sales are lagging. This strategy of price targets buyers who are looking for a good deal (Bovay, 2008). An example of promotional pricing includes approaches such as BOGOF (Buy One Get One Free) and HP uses this in its promotion of the eStation.

HP is currently offering several discounted, free, and bundled deals to appeal to consumers and in particular appealing to their target market of families. This is a common pricing 8

strategy used by HP as they are able to combine several products in one package deal, helping to increase sales and revenue and additionally also serving to move old stock. Currently, HP has offered the eStation with and an instant $100 rebate and a multipack or XL ink cartridge for a value of $399. As part of its dynamic pricing strategies, HP also uses the segmenting pricing strategy to offer its customers a variety of options to pay for its services or technology (HP News Release). On an average, the eStation has a price range of $350-$400. However, through various pricing strategies and additional discounting, consumers are able to discover good bargains on these HP printers.

8. PLACE Place, or placement, refers to the channel, distribution, or intermediary through which goods and services are moved from the manufacturer or service provider to the user or consumer. As part of channelling the eStation, HP needs to make six basic 'channel' decisions (MarketingTeacher.com). These involve: Using direct or indirect channels? For example, HP can place products, making it directly accessible to consumers or they can decide to place products indirectly via a wholesaler. Using single or multiple channels? HP has decided to use multiple channels to distribute the eStation assisting to increase sales and revenue. The cumulative length of the multiple channels. Types of intermediaries used to channel the product. Number of intermediaries at each level, for example is the product available on a global level. In the case of HP, the eStation is available in numerous countries and their services (such as support) are also accessible all over the world. The companies to use as the intermediaries, ensuring to avoid 'intrachannel conflict.' HP uses retailers such as Harvey Norman, Bing Lee and The Good Guys to channel its product. This allows healthy competition yet avoids conflict. Using a retailer as an intermediary to channel the eStation is an advantage for HP as retailers have a much stronger personal relationship with the consumer. The product is promoted and 9

merchandised by the retailer, allowing HP to focus its attention on manufacturing and developing new products. Furthermore, the retailer is usually well reputed and has a brand name attached to it, for example, Harvey Norman. This assists in drawing in customers and generating sales for HP.

9. PROMOTION HP is widely known for its seven figure advertisement budget used to promote their products (Fernandez 2009). Sales objectives generally include enticing customers to try a new product, to attract competitors customers and then to maintain this customer base (Kotler & Armstrong, 2008).

On a large scale, HP can use extensive advertising, through television, magazines, newspapers and more, to gain widespread awareness of the eStation. However, on a more concentrated level, there are various promotional strategies which can be employed to achieve such objectives. For HP and the eStation, redeemable coupons, cash-back offers, premium offers and point-of-purchase promotions can be utilised.

Redeemable coupons are those which offer a discount on the purchase of a product. For example, HP may insert a redeemable coupon in a magazine which has a wide outreach. Similarly, cash-back offers may also be so distributed. Premium offers refers to a situation where goods are offered free of charge, for example, offering free ink cartridges with the purchase of the eStation. Point-of-purchase promotions refer to in-store promotions. For example, HP may run a demonstration session of the eStation in-store. Such strategies have successfully been employed by HP for its other products (Print Friendly 2009).

In addition, the eStation printers use particular ink cartridges thereby compelling consumers to buy replacement supplies (Perreault et al, 2009). In this way, an ongoing relationship is created, and therefore strengthened, with the customer.

10. CONCLUSION Within the current marketing situation, where microeconomic and macroeconomic environments hold a strong influence, the eStation is a to be a successful product within the product category of printers under technological utilities. The existing product is seen to be viable as it belongs to a well reputed company with loyal customers. Additionally, there is an 10

increased demand for the eStation and thus a strong growth potential exists. However HP should continue innovating new ideas and developing product improvements in light of market competition. Furthermore, taking into consideration the accurate target market, product, place, price and promotion will assist HP to be successful in generating revenue and thus the company can maintain and further improve its current market position.

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Hewlett-Packard Development Company, 18 May 2010, HP Accelerates Growth Opportunities for Graphic Arts Customers with Expanded Digital Printing Portfolio, news release, accessed 8August 2011, <http://www.hp.com/hpinfo/newsroom/press/2010/100518b.html>. Hewlett-Packard Development Company, 2003 HP Introduces Next Generation of Utility Pricing for HP Superdome Servers HP News Release, 11 March 2003, accessed on 15 October 2011, <http://www.hp.com/hpinfo/newsroom/press/2003/030311a.html>. Hewlett-Packard Development Company, 2011, HPs Environmental Goals and Policies, Hewlett-Packard Development Company, accessed 27 August 2011, <http://www8.hp.com/us/en/hp-information/environment/goals.html>.

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