Sjaak Vermeulen, Hewlett Packard’s general manager, consumer products business organisation for Europe, the Middle East and Africa, paid a first visit to Israel last week. The official aim of his visit was to meet customers, partners, and suppliers. In fact, it was also the start of implementation in Israel of the company’s new strategy.
The basis of the new strategy the company has adopted is a focus on the individual consumer and on small and medium size businesses. From a company mainly selling to large companies and businesses, HP intends to become a leading brand in every household. In an interview with "Globes", Vermeulen said the reason why the company was entering the field of consumer products lay in technological developments.
"In the future, every substantial domestic appliance, including dishwashers and refrigerators, will be high-tech products and will embody advanced technology. Because of this, domestic appliances, computers, and telephones will all belong to one field, which HP intends to dominate.
"Globes": What influences your decision to enter a particular market?
Vermeulen: "The size of the market is the determining factor. In Israel, for example, the rate of penetration of computers into households is among the highest in the world. According to our figures, more than 50% of all households have personal computers. This is an attractive market for a company selling advanced products. Technology isn’t strange to the Israeli, he likes it. From that point of view, this is a mature market."
HP is a world leader in computer hardware manufacture, computer and Internet services, and communications products. It employs more than 120,000 people, and its turnover in 1997 totalled $43 billion.
Until 1996, the company focused on computers, printers, and perishable accessories. With the company’s penetration into the private consumer products market, its products in the year 2000 will be many and varied.
The company’s future business areas can be divided into two main categories. The first is computers, printers, scanners, and accessories, adapted for domestic use. The second category comprises various kinds of products integrating different functions (communications, telephony, and computers). Among these will be digital photography products, DVD drives that will facilitate integration between music, films, and computer information, and also domestic devices incorporating fax, printer, photocopier, and scanner in one machine.
Who are your competitors in the drive to penetrate the private consumer market?
"Due to our intention of becoming a leading brand in every area of electronic domestic consumer goods, our competitors come from a wide variety of fields. Apart from computer companies, they include Kodak, with which we compete with our colour printers, Sony, which makes consumer durables, and Disney."
Some international concerns involved in the marketing and advertising activity of their local representatives relate to the local market as part of the global village. Others adapt their activity to the Israeli market. What do you intend to do?
"We give our local representatives the freedom to adapt the strategy to the local market. The new logo is common to everybody, and the declared intention is the same. The most suitable campaign for the Israeli public will be selected by the local representatives from a number of possibilities. The point of sale will also change, and will be uniform in every country in which we operate. But the representative can choose its design from among several possibilities. In a conference planned to be held shortly in Amsterdam, suppliers will be exposed to the new point of sale concept."
The implementation of the company’s new retail strategy manifests itself in the use of tactics characteristic of other consumer areas, such as cosmetics and food - attractive shelf arrangements, sample and try-out points, print samples, sales promotion, and, perhaps most important of all, new, uniform packaging for all the company's’ products.
It seems that the approach that recognises the importance of the point of sale and packaging is beginning to permeate the hardware products field. Are high-tech products becoming more like other consumer products?
"The way high-tech products are usually displayed is boring. It doesn’t offer solutions, but products wrapped in dull packaging. Retailing in this area has to change, because people go to stores to see what’s on offer. Buying is something they can do on the Internet."
Published by Israel's Business Arena on May 7, 1998