CASE ANALYSIS OF HEWELETT PACKARD SYSTEMS DIVISION: SONOS 100 C/F INTRODUCTION

DILEMMA: The main problem in this case is what segment ie hospital or non hospital should be targeted by the marketing and sales department for the launch of SONOS C/F 100 The other problem was how the sales force team should be designed to reach this targeted segment quickly and effectively. The external force of change in technology also dictated how the structure of sales force team should be. ALTERNATIVES: 1. Target the hospital segment 2. Target the non hospital segment with MRs 3. Target the non hospital segment with direct sales force. 4. Target the non hospital segment with MRs and direct sales force both

ANALYSIS OF ALTERNATIVES:
1. Target the hospital segment: This segment consists of hospitals and specialty clinics which required high performance ultrasound coloured imaging scans. They preferred quality information first then the price negotiations. But this option should not be considered because of the maturity of demand in this market. Also there are already high performance products of HP so cannibalization and unnecessary brand dilution can occur. 2. Target the non hospital segment with MRs : The non hospital segment consisted of private clinics, physician offices etc which required low performance scans. Price negotiations began from the very start ie after the product demonstration by salesperson. So salespersons need to offer financial packages as a promotional offer. Only Medical representatives covering this segment will have an advantage of reduced costs to company, more reach, better pitching skills, more volume in terms of no of representative of the company. On the other hand there will be no control of the sales manager on the MRs. Their loyalty to HPs products would be absent. 3. Target the non hospital segment with direct sales force only : Non hospital segment is spread geographically over the entire US and there are many individual equipment requirements.

Employing direct sales force would be advantageous as they have complete product knowledge, dedicated time and effort and can be easily controlled by the sales manager. But HP will incur a huge cost of training and employing them. About 420000 $ per person would have to be incurred to cover the geography. 4. Target the non hospital segment with MRs and direct sales force both : This is hybrid channel will be more useful for HP. The cluster of customers for non hospital segments is in 5 cities ( New York, LA,Chicago, San Francisco, Miami ) accounted for 60% of the sales. Thus having a direct sales force team in these cities will have the best ROI. The remaining sales were from 15 other cities, rural hospitals and clinics, so MRs can cover theses territories for HP.

RECOMMENDATION: The option 4 according to me is the most feasible one for HP because the efficiency and effectiveness to reach potential customers in the shortest time period would be possible. LIMITATIONS FOR THIS ACTION: There can be conflict between direct sales force and MR regarding the performance evaluation and variable bonus and compensation offered by HP The MRs may not necessarily spend all their time on HPs product and pitch other competitor products where commission is high.