ClassDiscussion2-HP..doc

Case I – Marketing on the Internet 1-500-021 Instructor: Clare Sham Rev. March 22,2000 HP Consumer Products Business Organization: Distributing Printers via the Internet In spring 1998, Pradeep Jotwani, vice-president arid general manager of the Consumer Products Business Organization of the Hewlett Packard Company (HP), was contemplating the increasing success of eCommerce and its implications for his division. The consumer products group had started selling refurbished printers through an Internet outlet center in December 1997, but Jotwani was now considering a move to sell new printers directly to consumers via this new eChannel. If he were to make such a move, he wondered which products to sell online at what prices, and how to communicate this strategy to the channel partners without damaging the existing distribution structure. Jotwani commented: Channel inflections are very challenging. The last time we faced a similar situation was when we had to transform ourselves from being a predominantly business-to-business company that sold printers through value added resellers [VARs] to a consumer products company that had to reach consumers through the retail channel. Even then there were the doubters, but not only did we make the transition successfully, but we also emerged stronger. The challenge today is to decide on the level of strategic emphasis on Internet distribution so that we emerge stronger after the transition, rather than just defending our position. The decision is complicated by several factors. Companies like Dell have shown that the direct model can work quite well. However, all of our current sales are through retailers and any direct selling efforts may lead to conflict with our retail partners. HP History Bill Hewlett and Dave Packard founded HF in 1939 in a Palo Alto garage. One of HP’s first clients, Walt Disney Studios, purchased eight audio oscillators to develop a new sound system for the movie “Fantasia.” In