For Princy Bhatnagar, a computer science degree holder from MS University, Baroda, market development comes easily for he has been on the job now for the last three years. He started off as the market development manager in the Information Storage Group of HP, to move to the consumer peripherals recently. His earlier stint in PCL’s product development team helped him gather insights on what products really excite channels. Princy’s challenge is to ensure that HP’s peripheral products, which hit the market at regular intervals, are accepted well by the channels and become hot-selling items in the market. Princy shares with CI the brand vision and channel strategies of HP.
What is HP’s brand vision for consumer products in the next three years?
HP will aspire to be the most admired consumer brand in the entire consumer space and not only within the IT space. If you look at the total consumer space, it involves telecommunications, entertainment and IT. HP’s endeavor would be to rule the intersection of the three spaces.
What strategies are you looking at to grow in the market?
The key strategy or the end-objective of whatever we do will be to create a very strong emotional appeal for HP as a brand and we will work on creative initiatives on a continuos basis. Today, IT purchases accounts for only two percent of any consumer’s impulsive buying decision while consumer durable accounts for over 60 percent.
What we need to work towards is to change the space of comparison and try to shift the consumer’s investment decision towards IT. Market growth will happen on its own if we succeed in this initiative. From a geographic perspective the question is more about market creation in up-country regions and HP plans to lead this initiative in 15 non-metro cities within a year.
With the falling prices of products, how are you protecting the margins of channels?
Principals cannot directly determine channel profitability. At the same time, HP is focusing more on making its business convenient for channel partners. To a very large extent we have polarized the channels thus bringing more focus on the channel which sells HP printers. Within the commercial channel we focus heavily on the sub-distribution partners and our exclusive incentive support for HP-managed channel partners helps them to differentiate themselves from other resellers in the market. This enables a higher margin for the reseller.
On the consumer channel front we have HP-certified retail outlets across the country and they get focused programs from HP which add to their bottom lines. It is worth mentioning that HP is very aggressive in leading the retail charge. In less than 18 months, HP has doubled its retail outlets to more than 150 in 60 cities throughout the country. We are looking at doubling this number as well by March 2001- by reaching out to more geographies, especially up-country markets.
What special schemes and promotions are you planning for the channels?
Schemes and promotions are very tactical in nature and we cannot really comment on this since a lot of them depend on the market situation in a particular month.
What initiatives are you taking to train your channel partners?
HP has a separate team that focuses only on training for channel partners. We have the best training infrastructure in the country today and we provide half-a-day training to three-day training depending on the audience. We are working towards an online interactive training kit for all the sale executives of our channel and would be launching this next year.
What new products and technologies are in the offing in the next six months to one year?
HP will continue to focus on the intersection space of ICE and deliver products which offer an excellent selling proposition in each of these spaces and also work jointly with leaders in each of these markets. Internet is going to fuel a lot of growth in the consumer space and HP is going to lead the way in to the Internet world.
What are the terms and conditions to become a channel partner of HP today?
We have a very thorough and time-tested method of evaluating a reseller for becoming a HP-managed channel partner and this process is a continuous one. We continuously also re-evaluate our current partners. There are a lot of factors that we consider while taking a decision — reseller’s target segment, HP’s addressable space in that segment, market size, number of existing partners in that market, growth for HP business, future potential of the market, credit worthiness, focus on business.
What are your expectations from your channel partners?
In HP we work innovatively with our channel partners. On a quarterly basis we invite channel partners to give inputs on what they expect from HP and then we work towards achieving the expected deliverables. This has helped us tremendously in having reseller mind share since they feel very strongly associated with HP’s business planning exercise.
What is channel’s contribution in HP’s success?
HP has succeeded only because of the contribution of its channel partners and feels very confident of being their growth engine in the coming years. This year most of HP-managed resellers have registered 70 percent plus revenue growth. This is a clear representation of our level of engagement and smooth coordination with our channel partners. Problems exist in every business model and for us and this is a game we have mastered and will continue to innovate with time.
How is the Internet integrated in your business with the channel?
If you are asking about our distributors, then yes, we have an integrated approach. However, if your question is on the resellers, then we would expect our distributors to deliver this business model for the reseller community.