Yale on Sustainability: Expanding HP’s Laptop Market

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HP laptop

In brandchannel’s series with the Yale School of Management, Yale Center for Business and the Environment and Yale Center for Customer Insights, a team of MBA students proposes how HP laptops might appeal to a wider audience. Their case study below reflects the views of the authors and not brandchannel or Interbrand.

Hewlett-Packard’s (HP) “Living Progress” sustainability work is leading the technology hardware manufacturing sector. However, its first eco-centric consumer product to command premium pricing was unsuccessful: the HP Pavilion dv6929 Entertainment Notebook. At Yale University, we realized marketing the process of being green does not necessarily sell laptops.

HP unsuccessfully implemented all 4 marketing Ps: product, place, price and promotion. We will recommend how HP can use green processes better to differentiate its innovative notebooks from the crowd.

First, laptop buyers do not always consider sustainability when they are choosing products. The main purchasing criteria include price, durability and an array of options to choose from. The advertisement for this HP Pavilion Entertainment Notebook screams “green,” and it’s a surprising move away from the company’s traditional approach of behind-the-scenes sustainability.

Product

The two factors that make this product stand out as green do not appeal to most laptop buyers:

  • The ENERGY STAR® certified notebook included aggressive power-management settings to reduce energy consumption.
  • HP replaced conventional packaging boxes with the messenger bag made from 100% recycled materials.

The standard packaging waste was reduced by 97 percent and continued to deliver equal or better product protection compared with conventional packaging. Customers who purchased the notebook left the store with the laptop and its accessories cushioned safely in the notebook bag. HP failed to understand, however, that consumers were not willing to pay a premium for these green electronic products: the attributes were nice to have but added no value.

HP customers

Price and Place

This Entertainment Notebook was sold exclusively at Walmart and Sam’s Club for $1,100. Unfortunately, the green premium did not appeal to the price-sensitive laptop shoppers at these two retailers. HP’s target market was much less concerned with product branding than value. This led to an unjustified price premium in a marketing campaign that emphasized “good for the environment” but not performance, innovation or functionality of the new design. Successful marketing campaigns highlight the key attributes that customers look for when laptop shopping.

Promotion

HP’s promotion channels did not reach their target customers. While the product won Walmart’s Home Entertainment Design Challenge and received media coverage amongst sustainability professionals, consumers were disconnected from the messaging that highlighted product advantages such as free recycling of their old PC. These consumers did not receive the intended supporting messaging to refocus their interests beyond their personal environment.

Selling the Emotions: Protecting Your Laptop

Electronic products such as laptops are perceived as the epitome of planned obsolescence: designing in failure to sell more. HP can lead the journey to extending laptop lifetimes with this Entertainment Notebook. HP can use its unique messenger bag packaging as a symbol for protection. Success will be measured by marketing product attributes as benefits to consumers’ personal environment.

Personalized laptop bags provide additional value to a consumer at a low cost. This can be seen in the proliferation of firms such as caseable, which provides custom printed laptop and phone cases.

We suggest HP partner with caseable’s print services to make the green messenger bag customizable with photos and artistic graphics. HP can add value for consumer through messages of durability, accessibility and individualism. Now, product differentiation is not based on low-valued green attributes but on high-valued emotional product stories. Bundling the price of the bag and laptop will make it harder for consumers to compare this premium laptop with competitors’ products. Without comparable prices consumers rely on qualitative and emotional product evaluations, which is where the HP Entertainment Notebook has an advantage.

HP bagsInstead of releasing its products exclusively to Walmart and Sam’s Club, HP should target its products to a wide range of IT retail markets. Lenovo, HP’s major competitor in US, has more extensive distribution channels including Best Buy, Amazon, Target, Staples and Costco. Those companies not only share the same target customers at Walmart but are more specifically aimed at the IT market. This adds legitimacy to their product.

The largest percentage of Walmart’s shoppers are ages 35 to 44. However, due to its customizable bag strategy, HP should target younger people—especially students who value this more than Walmart’s demographic. Consequently, HP will win more consumer loyalty if it expands its markets to the younger age range.

Data from Statista shows China and the US are the two biggest PC markets in the world. However, HP’s market share in China remains small compared to Lenovo and Dell. Hence, more attention should be paid to China’s market by utilizing Chinese social media and promotional channels such as Diandian and Weibo, the equivalents of Tumblr and Twitter. These channels appeal to younger consumers who value customizable laptop services. Where HP previously failed to connect promotional material to target customers, they can now succeed by using the correct channels.

Finally we suggest HP should build a cash coupon-back policy for returning laptops for recycling. By doing so, it will provide incentives for consumers to recycle, as well as increase the consumers loyalty to HP products.

HP has the opportunity to take care of its customers’ need by disposing of old laptops and protecting their new ones. Each of these strategies relies on HP shifting the emphasis off of sustainability for its laptop marketing because consumers place greater value to messaging about performance through durability and a personalized laptop experience than to green environmental issues.


By Oscar Benjamin, Kenneth Cloft, Penny (Yiping) Liu, Zoe Wang, Jiani Yang in partnership with Professor Kosuke Uetake of the Yale School of Management, Yale Center for Business and the Environment and Yale Center for Customer Insights.

Click here to see their complete Hewlett-Packard case study in PDF format and read more of our Yale on Sustainability series.

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