Presented by

Rakesh Kumar Prasad

Abhishek Gautem
Swastika Pandey
Vivek sharma
Ankit Goel
Contents

Introduction
HP’s Product portfolio and classification.
Indian Digital Photo Industry -2004
Why HP ventured in Photo retailing.
Stratergy of HP entering the photo retailing market.
SWOT Analysis.
Design of Marketing Channel.
Channel Integration.
Channel conflicts
Suggestion for improvement.
Introduction
Founded in 1938 by two Stanford engineers, Bill
Hewlett and David Packard,
 HP became well known in the computer industry,
manufacturing a range of computers from desktop
machines to microcomputers.
It also became popular for its wide range of personal
desktop printers in the 1980s.
After establishing itself in the printer industry, HP
started shifting its focus more towards imaging and
printing products.
HP’s Products portfolio and
Classification
Durable Goods:
a)Computers
Laptops and tablets PCs
Desktops and workstations
Servers and storage
Monitors
b)Printers and Imaging Products
Printers & accessories
Scanners &Fax
Services:
Software
Indian Digital photo Retail Market
Conventional shifting from analog to digital photo
market.
 sales of 80 million photo film a year and 4 lakhs
photo studio create a huge market.
Trends of 500 studios being digitalized per month
Cameral phones sales likely to touch 4.1 million by
2006.
Why HP Enter in photo retailing
 To reach out a wider base of consumers
Expansion of Business
Huge Indian market for consumables ink and paper.
Add new product and services that will inspire the
customer to explore new uses of digital photo.
Invested 1.4 billion in digital photo environment to
facilitate and growth in consumer photo photo
printing
 To Create new profit stream .
HP’s Stratergy in entering Photo
Retailing Market.
 It runs a programme called Photo Shop (HP digital
studio) that aims to take technology to the rural and
urban masses, converting traditional photo studios
into digital (instant photo printing business).

Targeted of creating 3000 Retail Photo Shops and

aiming 80 cities in 6 month.

Mobilizing Commercial Photographer in the rural

areas.
SWOT analysis
Strength
 High brand equity.
 product depth in the printer market.,reach in the market, and post-sales
support.
 A strong presence in the home segment because of its entry-level printers that
are priced low.
Weakness
 HP should take its competition more seriously and cut prices on printers and
cartridges.
 Post-sales support and services need to be ramped up faster.
Opportunity
 HP would like to leverage the groundwork it has done to take its digital studio
concept to rural land urban masses. This is where it expects the maximum
revenue to come from.
 There’s an opportunity in AIOs and photo printers where Canon's business has
started picking up.
Threat
 HP would be under pressure in the retail photo industry as the presence of
Kodak, Fujifilm,Canon
Segmentation and Target market
Geographical-Rural and Urban
Demographical : Urban- Age, gender, income, occupation,
Education. Rural- Age- 6 to old age, Gender- Male & Female
Behavioral:
 Urban- Occasion: Regular , Benefit : Quality, service, economy,
speed .User Status :Regular
Usage rate: medium to heavy, Loyalty status: Medium,
Readiness stage: Aware, informed, interested
Attitude towards product: Positive, indifferent


Psychographic
Segmentation and Target market
Behavioral:
Rural: Occasion- Special , Benefit- service, economy, speed
User Status – Non User, Potential User, Ist time user
Usage rate- Light
Loyalty Status – None
Readiness stage – unaware, desirous, intending to buy
Attitude toward product- Enthusiastic
Psychographic : Urban : Lifestyle- Outdoor , Personality-
gregarious, outgoing
Rural :Personality- compulsive, authoritarian
Lifestyle- culture oriented
Designing the Channel
For designing the marketing channel system requires
customer needs ,channel objective and identifying
and evaluating channel alternatives.

Analyzing customers desired service output levels.

Establishing Objective and Constraints
Identifying and evaluating major channel alternative
Selecting the Channel members
Training and motivating the channel members
Modifying the channel Design and arrangements
 1-Analyzing the customers desired
service output- Customer Need
Any Channel produce five service output
Lot size- more and more
Waiting and delivery time- Less
Spatial continence-Intensive distribution
Product Variety
Service back up
2)Identifying and evaluating
major channel alternative for HPI
Indirect Marketing channel.

Small Retail Photo shop in Urban and rural area

Franchisee
Shop in shop concept
“Exclusive Experience Zone” in shopping mall.
3)Establishing Channel Objective
and constraints.
1) To target customer of both urban and rural market .
2)To reach out a wider base of consumers.
3)Providing digital photo printing facility through HP
printer.
4) To establish the photo studio instead of photo
laboratory to reduce the operating cost .
5)To create a wide market for selling the Photo related
accessories.
6)To support for the debut in digital camera market.
Type of Distribution
Selective distribution in Urban area
Intensive distribution in Rural area
Channel Integration and system
Vertical Marketing system (VMS)
VMS comprises the producer, wholesaler(s), and retailer(s)
acting as a unified system and attempt to control channel
behavior and eliminate the conflicts that results when
independent members pursue their own objective.
There are three type of VMS
1)Corporate VMS
2)Administered VMS
3)Contractual VMS ( In case of HPI )
a)Wholesaler Sponsored Voluntary chains
b)Retailer Cooperative
c)Franchise Organization.
 Channel Integration –Contractual VMS
( In case of HP)
There are two possible channel design in case of HP
photo retailing
Independent Channel Design
1) Establishing photo studio by small entrepreneur
2)Mobilizing the commercial photographer in the rural
area.
3) Creating a photo studio in the high traffic cyber café.
Hard Vertical integration
1)Creating a photo studio in the existing HP color Photo
lab and departmental store.
Vertical Marketing System Alliances

Another form of contractual agreement

Allow two or more organizations to benefit from each
other’s strengths.
In case of HPI, Its eventual goal is to expand studios mix of
shop-in-shop concept at existing photo labs, High traffic
cyber cafes and Departmental stores which are already
established and have a consumer base.
HP will also use top photo outlets to provide counters for
selling HP Photo related accessories and consumables
( paper & ink)’ .
Retailers were chosen as channel partners
because:
They are growing larger
Enjoy substantial channel power
Act as buying agents for customers rather than selling agents for
suppliers
Often operate on low price / low margin model
Operate in saturated markets and fight for market share
Retailers act as buying agents for customers rather than as
selling agents for suppliers
The Need to Reduce Distribution Costs
Distribution costs often account for a significant percentage of
the final price of Products
Sometimes distribution costs are higher than the manufacturing
cost or the costs of raw materials and component parts
Vertical Marketing System Franchising
Advantages Disadvantages
Franchisor
1. Capital for growth 1. Lower potential profits
2. Faster growth 2. Controlling service quality
3. Additional management 3. Controlling firm image
4. Additional income
Franchisee
1. Lower risk 1. Franchisee fees
2. Established brand name 2. Lack of freedom
3. Successful business plan 3. Controlled by franchisor
4. Expert assistance
Problems faced by HPI in the
expansion Plan
 In handling the competition in the photo industry by
the established competitor in this segment.
Maintaining a flow of inventory( printers and photo
related accessories.
Mobilizing Commercial Photographers ( 4 lakh) in
rural areas.
Channel Conflicts
 Causes of channel conflicts
1. Goal incapability
2. Unclear role and rights
3. Differences in perception
4. Intermediaries dependencies on the manufactures.
5. Expectational differences
6. Communicational difficulties
Type of Channel Conflicts

Vertical channel conflicts- between different levels of the

same channel. There may be a conflict between the HP
and retail photo studio on cost of printing one unit of
photo or discriminated pricing strategy or profit
sharing .
Horizontal Channel conflicts-occurs among firms at the
same level of the channel, i.e retailer to retailer( Kodak and
HPI, Canon, Konica, Fuji).
Effect of Channel conflicts in HP
1. Conflict between photo labs and cyber cafes, between
photo studios like Konica, Fuji, Kodak and HP led to
decreased efficiency.
2. Conflict was impetus to both HP & its channel partners to
reappraise their policies leading to increased channel
efficiency and thus positive effect.
Achieving Channel Cooperation :
Channel Cooperation, achieved via effective cooperation
among channel members.
It was achieved by ensuring that all channel members regard
themselves as components of the same organization.
Suggestion for Improvement of
Channel design.
Six ways to improve channel’s performance
1. Make it a priority. Devote resources to channel
management – preferably at least one dedicated manager
whose sole responsibility is to manage those relationships
and build the marketing programs to drive revenue
through the channel.
2. Develop measurements and track performance. Know
your best sales performers at each point in the channel. By
tracking orders, volume and total revenue at each point,
identify and improve underperforming partners and keep
top performers happy.
Suggestion for Improvement of
Channel design.
3. Communicate- Build relationships at each step of your
channel. If you’re not talking with your partners, how can you
identify problems and solve them? And how will you know
whether your programs are working and how to make them
better?
4. Drive revenue through the channel- Take ownership of
the marketing campaigns that will drive revenue at all levels
through the channel. The partners have to focus on building
their own customer base, not marketing product .
5. Avoid pricing conflicts- Establish a pricing strategy and
stick to it. If channel conflict arises because of price, attempt to
resolve it ASAP.
6. Address conflicts swiftly- Since distrust and channel
conflict is common, it’s important to address problems quickly
to find a solution.