Sr. No. 61Saurabh KanojiaSection A
Hewlett-Packard Imaging Systems Division: Sonos 100 C/F
Introduction1.Analyze the direct vs. indirect channel decision for
entering a new segment.Direct distribution, common in business
marketing, is a channel strategy that does not use intermediaries.
The manufacturers own sales force deals directly with the customer,
and the manufacturer has full responsibility for performing all the
necessary channel tasks. Direct distribution is often required in
business marketing because of the nature of the selling situation
or the concentrated nature of industry demand. The direct sales
approach is feasible when: (1) the customers are large and well
defined, (2) the customers insist on direct sales, (3) sales
involve extensive negotiations with upper management, and (4)
selling has to be controlled to ensure that the total product
package is properly implemented and to guarantee a quick response
to market conditions.Indirect distribution uses at least one type
of intermediary, if not more. Business marketing channels typically
include fewer types of intermediaries than do consumergoods
channels. Indirect distribution is generally found where: (1)
markets are fragmented and widely dispersed, (2) low transaction
amounts prevail, and (3) buyers typically purchase a number of
items, often different brands, in one transaction.
2.What is the dilemma for the management in terms of moving the
sales force efforts in the required direction? What is the role of
sales force incentives?The management has choices to make on
various fronts. They re-organized the sales department in which a
layer in the field was eliminated and a new layer was created
between the field and the headquarters. This re-organization was
not accepted as roles and responsibilities are still found out as
clear in some areas. Metrics also differ between marketing and
sales. It seems as sales, support and marketing were united but the
reality is many plans were competing for the same resources. At the
same time, the increasing breadth and complexity of clinical
applications require closer and faster coordination among these
groups.Sales force incentive was provided to ensure more discipline
in a difficult market. By linking the compensation to the dollar
volume of systems sold it helped in motivating the staff to achieve
the set ditrict targets thereby managing the business
effectively.
3.Design a product marketing plan for the new cardiac imaging
product of HP that identifies the target segments and allocates the
required resources in terms of sales force effort.Currently the
sales force is comprised of highly technical people who know
theirproduct very well and are well versed in demonstrations.
However, they have very poor negotiation skills. A manufacturer
representative is another type of sales personavailable to sell the
product. Some competitors use this method, but there are higher
costs associated with using a manufacturer representative versus
the direct sales force,almost double the cost to the company for
every dollar sales. They dont often last longbecause of the higher
costs involved, but they have impressive communication skillsand
can capture the market in non-hospital segments. In the short term,
during the launch of the Sonos 100 C/F, Hewlett-Packard Imaging
Systems Division should launch the product using the manufacturers
representatives because aggressive marketing isneeded to reach
every customer and their good communication skills are necessary.
In the long term, Hewlett-Packard needs to train their sales force
to deal with these kindsof situations where they have to market the
product to a potential buyer, not just informthem about all the
capabilities. This will ultimately decrease costs. The economic
implications are higher initial costs for this product, but this is
necessary and in the long term they can use their own sales team if
they are properly educated and well versed in marketing
methods.
