Section B, Group 4 Page 1

Hewlett-Packard Imaging Systems Division: Sonos 100 C/F Introduction - Case

Analysis








COMPANY BACKGROUND
Hewlett-Packard Company is an American multinational hardware and software corporation which provides
products, technologies, software, solutions and services to consumers, small- and medium-sized businesses
(SMBs) and large enterprises, including customers in the government, health and education sectors
Revenues : $14.5 Billion (Fiscal 1991)
The Medical Products Group (MPG) , a division of HP having revenues of $900 Million (Fiscal 1991) derived
from a variety of product lines including patient monitoring systems , operating room systems, and clinical
information systems
Key Person : Cynthia Danaher (Marketing Manager , Imaging Systems Business Unit(HP))
Case Facts
Sonos 100 Colour Flow is a cardiac imaging product which uses mechanical arrays to produce two-
dimensional colour flow images
Price : $55000/unit
Target Market : Non-Hospital segment of cardiology( Health maintenance organisations, mobile health labs,
clinics)
Demand for ultrasound usage is expected to increase as population of aging population in USA is expected to
increase
New govt. Regulation may help physician groups to operate their own outpatient clinics, hence increase in
demand for medical imaging equipments
Management Decision Problem
How should the Sonos 100 CF be distributed: through ISYs Direct sales force or through Manufacturers Reps(MR)?
Swapnil Dashora PGP27127 Siddhartha Srivastava PGP27252
Trupti Lohar PGP27128 Ravindra Solanki PGP27253
Abhishek Joglikar PGP27152 Gaurav Somwanshi PGP27254
Sarbswarup Mohanty PGP27179 Vishal Choudhary PGP27262
Prasoon Kumar PGP27236 Brijesh Kumar PGP27213
GROUP 4, SECTION B

Section B, Group 4 Page 2

Key Issues
Stagnating growth in USA ultrasound market (Mature market after initial growth in 80s)
Increasing R&D cost in the wake of limited resources
USA ultrasound market is going through transition phase, which is moving from high-growth, technology
driven market to a slower growth, market driven landscape
Analysis of options

Option 1 : Choose Manufacturers Rep (MR)
Arguments in the favour of option :
MRs are usually former sales managers of major players in this market having significant experience in this
market, great negotiation skills and detailed knowledge of physician reimbursement procedures.
Non-Hospital customers dont care much about value added services to be offered by using Direct sales team
The services of Direst team could be effectively employed to target Hospital market segment
Arguments against the option :
MRs work on commission basis, hence wont be spending much time in developing the market or providing
demonstrations and follow-up service
MRs may not be loyal to the company and rather be focussed towards their own interests
Lack of technical knowledge about the product
Variation of professionalism and selling expertise in MRs
Turnover rate of MRs and additional costs of training and monitoring them
Option 2 : Choose Direct Sales Team
Arguements in favour of the option
Direct sales team would have long term orientation regarding building relationship with customers
Direct sales team would be directly under the control of Sales department
Direct sales team would be loyal to the company
Arguements against the option
Current Direct sales force doesnt has relevant experience and required skills to cater non-hospital segment
of market
Increased cost due to investment in training of Direct sales force

Suggestion
Choose direct sales team for the distribution of Sonos 100 CF
Arguments for choosing Direct sales force :
To emphasise on building long term relationship with customers
Opportunity to develop skills of sales team through training which will be an asset in evolving tougher
market
Section B, Group 4 Page 3

Greater control on the selling process
Loyalty issue