PC I ndustry and Advertising

PC Industry and Advertising

Yanyan GaiCeline You

Sheng ChenEdipo Cravo

Agenda Introduction

Industry Analysis

Advertising Strategy

Recommendation

Industry Definition “This industry manufactures, designs, or assembles

personal computers (PCs), laptops, handheld computers and servers. Operators typically purchase computer components from dedicated manufacturers in other industries.”

---IBIS World

Introduction Industry Analysis Advertising Strategy Recommendation

Why This Topic

Why we choose this industry?Who doesn’t have a computer?Other than sleep, how many of you think you spend more time doing something other than looking on your computer?

Computer are very relevant to our generation and important to our daily

life.Introduction Industry Analysis Advertising Strategy Recommendation

Background

Major Products

Desktops

Portables

ServersIntroduction Industry Analysis Advertising Strategy Recommendation

Background Major Markets

Government Agencies Large Enterprises Exports Consumers SMB


Competition Large Number of firms

Top 5: 2011 market share of units shipped

Company Market Share 2011

HP 17.2

Lenovo 13

Dell 12.1

Acer Group 11.2

Asus 5.9

Other 40.7

HHI: 771.5CR4: 53.5


Competition

Entry / Exit

Rivalry

Popular Brands

Differentiation


Competition

Asustek Computer IncHewlett-Packard CoLenovo Group LtdToshiba Corp

Asustek Computer IncHewlett-Packard CoLenovo Group LtdToshiba Corp

Number of Television Ads Dollars Spent on Television Ads

Toshiba: 10.7 MMHP: 53.4 MM


HP (Red) Vs Toshiba (Orange)

Afternoon Dayti

me 1

Afternoon Dayti

me 2

Early

Fringe

1

Early

Fringe

2

Early

Morning 1

Early

Morning 2

Early

News 1

Early

News 2

Late F

ringe

Late N

ews

Morning Dayti

me 1

Morning Dayti

me 2

Overnigh

tPrim

e

Prime A

ccess

1

Prime A

ccess

2

Saturday

Afternoon

Saturday

Early

Fringe

1

Saturday

Early

Fringe

2

Saturday

Morn

ing

Saturday

Prime A

ccess

Sunday

Afternoon

Sunday

Early

Fringe

1

Sunday

Early

Fringe

2

Sunday

Morn

ing

Weeken

d Late

Fringe

Weeken

d Late

News

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000


Government Role Supporting policies for industry growth and

competitiveness Japan (strong support) China (State R&D access, Quasi-state owned

enterprises) USA, Korea, Taiwan, Singapore…


Interesting Facts from 2011 TV commercial data

HP was the only company to advertise Desktop Computers on TV in all of 2011

Apple Computers, had the largest advertising budget out of any competitors, but spent 0 dollars advertising their desktops and laptops.


Organization

Several Large famous companies+ Many small companies

Many large companies just assemble products manufactured by other companies.


Advertising Strategy


Primary Advertising Methods

Informative

Persuasive

Comedy

Celebrities

Print

Online Ads

SocialMedia

Outdoor Ads

TV Ads

Radio


HP PC is a personal reflection of consumers' desires

and needs.

From informative advertising to persuasive advertising( brand building)

Celebrity, opinion leader

Big event marketing ( Super Bowl, GRAMMY® Awards)


Advertising Expenditure VS Total Revenue

2007 2008 2009 2010 20110

100200300400500600700

Advertising Expendi-ture($Million)

2007 2008 2009 2010 2011105

110

115

120

125

130

TotalRevenue($ Billion)

Resource: Internet Resource: IBIS WorldIntroduction Industry Analysis Advertising Strategy Recommendation

HP

HP-Advertising-to-Sales Ratio

2007 2008 2009 2010 20110

0.2

0.4

0.6

0.8

1

1.2

0.940.79

0.61

0.84

1.05

Advertising % TR

A low ratio may indicate that the advertising campaign generated sales.

Resource: Mergentonline


HP

"You+hp"

“The Computer is Personal

Again"

"Let's Do Amazing"

“Everybody On”

2003 2007 2010 2011

From informative advertising to persuasive advertising( brand building) A theme every 1-2years From product advertising to integrated marketing campaign


HPPrint

Online Ads

RadioOutdoor Ads

TV Ads

Launching during Super Bowl XLI----Orange County Choppers

Highlighting celebrities: Jay-Z, Gold Medals, Mark Cubanhttp://www.youtube.com/watch?v=fsE0g-8CDQo

www.hp.com/personal

2007 "Personal Again"


http://www.youtube.com/watch?v=fsE0g-8CDQo

http://www.youtube.com/watch?v=fsE0g-8CDQo

HPPrint

Online Ads

RadioOutdoor Ads

TV Ads

The amazing things Do-ers do with HPCelebrity+humor: Dr. Dre and comedian Rhys Darby;

TV ads and Online Ads

2010 “Let’s Do Amazing"


HPPrint

Online Ads

Social Media

Outdoor Ads

TV Ads

Music stars (Alicia Keys ) and passionate individuals

$33.3 million for Google advertising Television: 53rd Annual GRAMMY® Awards+

13-time Grammy Award winnerhttp://www.youtube.com/watch?v=KAQatcfVrSs

2011 “Everybody On"


http://www.youtube.com/watch?v=KAQatcfVrSs

http://www.youtube.com/watch?v=KAQatcfVrSs

Dell

Target customersRelationship buyers:Large business/governmentEducational institutions

Transaction buyers:Small and midsize businessIndividual consumers

2007Introduction Industry Analysis Advertising Strategy Recommendation

Dell• Informative advertising of direct selling model and

low retail prices

• advertisements have appeared in all types of media

• New On-line media advertising

• Combative advertising is increasing


Dell2000 "Dude, you're gettin' a Dell!”

2006 Campaign for the XPS line of gaming

2007 Campaign for he Inspiron and XPS lines. "Work it Out” and slogan "Yours is here”

2009 Dell Ramps Up Twitter Advertising Efforts

2010 Take your own path

2011 "More You" advertisements: “Dude, you’re getting a lifestyle brand”


Dell

2011 2010 2009 2008 2007

1.19 1.17

1.331.38

1.46Advertising to sales ratio


Apple Apple uses its own operating system Mac OS X

Niche Market

art professions; premium-price differentiation


Apple Brand image centered

“Jobs wanted Apple to be a cultural force”

High advertising expenditure

In 1984, they spent 2.5 million on a 39 page print ad

Combined TV commercial and Print advertising

TV, Mainstream/Fashion/Popular Magazines

Combative + Catchy Slogans

“The ultimate all-in-one design” “It just works”


Apple Apple used the contemporary art and feature icons

as specific themes to differentiate it with other brands.

Key words and information: ease of use, industrial design, technical elegance


Advertising Expenditure Advertising expenditure

1 2 3 40

100

200

300

400

500

600

700

800

2007 2008 2009

2010

Apple Inc. Advertising Expenditure (in million $)


Advertising Expenditure

1 2 3 40

1000

2000

3000

4000

5000

6000

20072008

2009

2010

ad expenditurerevenue

Advertising Expenditure/Revevue (in million $)


18 page Apple brochure, Bill

Gates as a feature

39 page Macintosh

promotion in Newsweek2.5 million

“what’s on your powerbook?”

celebrities tells their experience with mac

“Imagine That” Apple’s response to

Windows 95

“1984” super bowl commercial, 1min

900,000“Lemmings” super bowl commercial

“Pencil Test” TV sitcom

“Crowd Control” Apple’s response to

Windows 95

“Think Different”, featuring Einstein,

Ghandi, Amelia Earhart, etc.

“Think Different”, in Newsweek and Time

etc.

1983 1984 1985 1988 1990 1995 1998 2006 2010

Apple’s evolution

“Get a Mac”

Timeline


Recommendation


Personal Investment: Buy AAPLCompany Stock Price on Jan

07 2011Stock Price on Apr 13 2012

Gain / Loss

Apple Computers 336.11 605 0.80000595RIM 61.68 13 -0.78923476B&N 15.99 13.67 -0.145090682Sony 36.04 17.36 -0.518312986HP 45.09 24.57 -0.45508982


Personal Investment: Buy AAPL

Desktop ComputersNotebook/Laptop ComputersTablet Computers

Acer IncAmazon.com IncApple Computer IncBarnes & Noble IncHewlett-Packard CoMotorola IncResearch In Motion LtdSamsung GroupSony CorpToshiba Corp

Desktops: US$ 14.98 MillionLaptops: US$ 62.51 MillionTablets: US$466.78 Million

Apple Computers: US$220.49 MillionBarnes & Nobles: US$46.57 MillionRIM: US$ 47.88 MillionSamsung Group: US$ 54.4 Million


Personal Investment: Buy AAPL Apple expected to dominate tablet market

maintaining above 50% market share through 2015

Tablet market sales expected to grow to 60% of PC sales by 2015, eventually expected to surpass PC sales.


VC and PE investments High competition, high cost of failure

Enter Market by acquiring underperforming brand, and invest heavily into an image and advertising

Software over hardware

Disruptive innovation


Documents

PC I ndustry and Advertising