HP takes leaf out of Disney’s storybook

The tale of how the world’s largest technology company revamped its marketing strategy by using the art of storytelling has lessons for marketers in every sector.

The art of storytelling has been used since ancient times to engage and entertain people. But now a global technology company is turning away from selling its products using standard messages about functionality and price; Hewlett-Packard is trying to use stories in its marketing to draw in new consumers. 

Many consumer goods businesses already use stories effectively. Ice cream brand Ben & Jerry’s uses the tale of how its hippie-style founders set up the business to emphasise its ethical credentials. Cadbury harks back to its moral Quaker origins with its recent move to using Fairtrade cocoa. But for the technology sector, creative storytelling is still unusual.

Michael Mendenhall, senior vice-president and chief marketing officer at HP, claims that the company’s new approach has required its marketers to adopt a whole new philosophy. He argues: “Storytelling and the ideas of co-creation are at the core of what we do now as a brand. The paradigm is no longer based on interruption – grabbing attention for your product – but a more nuanced approach of engagement.”

This approach is not simply the business trying to create a more touchy-feely external personality to appeal to consumers. It has required a two-year shake-up of every element of the company’s marketing practices and a consolidation of its $1bn (£605m) global media business into Omnicom to make sure agencies are working in a media-neutral capacity to tell stories in whatever medium is most appropriate.

This is down to Mendenhall himself, who arrived in 2007 from Walt Disney Parks and Resorts (see profile, pages 16-17) when HP’s business was suffering from a problem that plagues many large companies; it had grown so much in scale and size that its marketing had become unmanageable. There was no clear narrative for the marketing teams to promote.

Mendenhall, used to bringing the fairytales of Disney to life, says the challenge was to break down the enormous portfolio and departments at HP into a more manageable set of audiences. These could be tackled in different ways by a central team that would understand the story of the overall business and its aims in depth.

Consumer segments

He defined three consumer segments for HP to attract: households, small to medium-size businesses and large enterprises. He broke with precedent and went out to procure agencies for new consolidated ways of marketing and media planning, buying and optimisation.

Brian Bell, a former executive at Lenovo and IBM, who now runs his own marketing consultancy, says HP made the right decision to alter its focus. “A change in direction is an opportunity for any brand and can bring with it great rewards by allowing you to become a preferred brand to a new audience,” he says.

Armed with a global marketing budget of $624m (£377m) – HP is one of the top 50 global advertisers and number nine on the Fortune 500 list – Mendenhall turned to the art of storytelling he had learned at Disney. While his work at the entertainment brand had been about bringing stories to life in parks, he felt HP’s story needed to be told through technology.

“HP has traditionally been very strong in the commercial space, with the consumer business continuing to grow,” Mendenhall says. “But information consumption has changed and we had to reflect this by transforming the brand for all purposes.”

HP now sees digital as the prime method for it to communicate with its customers and show off its capabilities. It also gives people the chance to interact with the brand online through internet-based competitions and co-creation programmes so they feel that they too have a stake in the company’s story.

“Brands are not defined by campaigns any more, but by the consumer ecosystems we nurture to support them. Making things seem magical and part of their everyday lives is essential, so we’ve asked all our partners to embrace this,” says Mendenhall.

Initiatives include a contest on YouTube that invites users to create and share videos that express who they are – without showing their faces – for the chance to win cash or prizes.

Other programmes that HP has introduced include a customer forum launched on its website in January, a deal with MySpace enabling users to print their photos in high quality, a competition with MTV to design new netbooks, its Snapfish photo service and the new MagCloud service, enabling users to design their own print magazines.

Incremental sales

“By opening our doors just a little, we’re harnessing the talent of our customers in a natural way that generates incremental sales and helps to build our brand,” says Mendenhall. This also fits with the company’s The Computer Is Personal Again tagline more effectively than a static one-way advertising push.

Lucianna Broggi, vice-president of group marketing for HP’s Personal Systems Group in Europe, the Middle East and Africa is one of the marketers who has been helping Mendenhall with this challenge. Earlier this year, HP introduced a notebook computer designed by fashion designer Vivienne Tam, using New York Fashion Week as a platform to promote it as a clutch bag on the catwalk in a bid to attract a female audience.

Broggi says: “Women are a big segment and also very influential, but they don’t simply want a pink notebook – they like to talk about product features and the whole experience of owning a PC. So we ran a survey and gathered ideas, and throughout the product’s marketing, we ensured women felt part of the conversation.”

A different language

Acknowledging the change in marketing over the last two years, Broggi says that in the past the brand considered itself “very much a technology and engineering company” and “spoke a technology language, which we realised was not working very well”.

The new approach means that “we receive the tough truth from our customers, who are very generous in telling you what they do and don’t want. More than anything else, it means we need to be authentic, keeping the conversation going and willing the story-telling to continue,” Broggi adds.

This transformation has been visible since Mendenhall’s first day with the company, when he launched a campaign focusing on its printer offerings called “What do you have to say?” featuring pop star Gwen Stefani. It was the first time HP ignored TV in its marketing mix and enabled users to associate the brand with a story about how Stefani’s Harajuku Lovers fashion line used HP technology to drive innovation – both as a consumer-facing service and a corporate business in its own right.

Paul Jackson, a consultant at Forrester Research, says the transformation of HP and its new advertising strategy has helped to “de-clutter” the technology giant and make it appear more approachable to customers who can sometimes get lost in the functional elements of technology products.

“Following its high profile acquisitions of IT giants including Compaq and EDS, HP has been very successful at transforming its company and changing its marketing to portray a company that wants to relate with its customers. It’s not a cluttered IT company any more, but it’s actually creating desire and interest through its story-telling methods,” he says.

Technology specialist Gartner also agrees with this. The company reports: “HP’s tactical marketing is strong, with clear messages that translate well throughout the sales channels. However, it adds: “Although the shift in messaging is good, the delivery of truly business-focused solutions has been weak. Strategic marketing is less developed, but HP is building a cohesive message around large-scale computing.”

Both Gartner and Forrester agree that the success of HP in rebuilding its marketing strategy has been embracing the storytelling element that was less obvious in its former approach. But Mendenhall says the company is aware that there is more to do to ensure consumers are not just one-time purchasers but develop relationships with the brand.

All media formats

Pinder adds, “It has been pivotal in ensuring that we can deliver not just in traditional media, but digital media too and really engage with customers. The stories relate to their everyday lives in a way which fits in with modern needs. Michael and HP have forced us to adapt our creative so that it works over all media formats.”

Even with the recession dragging out, Mendenhall is convinced that sticking to the story of engaging marketing campaigns is the right plot for HP. Broggi is equally upbeat, summing up the more inventive ethos of the brand.

 “Five years ago, no one would have thought we would bring out such products and services. A PC was black and serious and it was all about the technology inside,” she admits. “Now it has completely changed. We have moved from a technology product to an accessory. And because it is an accessory you have to think about the person who is going to ‘wear’ it.”

Profile

Michael Mendenhall
Senior vice-president and chief marketing officer, HP

“HP is magical – it inspires its customers with new ideas to express themselves using technology at its best, like Disney does with its services,” says Michael Mendenhall, senior vice-president and chief marketing officer of the world’s largest technology company, Hewlett-Packard.

Mendenhall has a reason to boast. Before he joined in October 2007, the company was known for having a huge marketing budget but little to say. Drafted in from Walt Disney by HP chairman and chief executive Mark Hurd, Mendenhall’s role was to overhaul the brand.

“My objective was to transform HP from being conceived as a dull IT professional’s service brand into a company that could be seen as a world-class global citizen; one whose name was at the top of every customer’s mind, no matter in what capacity they came across us,” he explains.

Mendenhall oversees the marketing of a corporate giant – worth $118bn (£72bn) and operating in more than 170 countries. Despite the onset of the recession and a declining IT market, he claims to be achieving this goal by giving the brand “a unique new persona – one that can be told in many different stories in many different ad formats”.

Since being appointed, he has revamped the brand, incorporating a digital strategy into every aspect of the company’s marketing and communications. Mendenhall called a review across the group’s advertising and media and earlier this year consolidated its $1bn (£605m) global media business with Omnicom Media Group, in a bid to give the brand a single identity wherever it appears.

Asked what he wants to achieve through such radical change, Mendenhall grins with a Hollywood smile. He explains: “The problem was that while we are the most massive tech provider in the world today taking in our breadth, width and depth,  we weren’t intertwined with the day-to-day lives of people and so were missing golden opportunities. It was almost forgotten that we are a technology company and so had a duty to be online more.” He laughs at the irony of the situation.

Having worked at Disney in different marketing roles for the past 17 years, Mendenhall has a passion for creating entertaining content, and sees the digital environment as the best place for HP to showcase this in its ads. Nielsen estimates that HP spends $624m (£377m) globally on marketing, while its spend in the UK is estimated to be £4m.

Mendenhall is used to managing such funds. He left Disney as its executive vice-president in charge of all marketing and communications for Walt Disney Parks and Resorts, a $10bn (£6bn) global business. While his budget is still stratospheric compared to most businesses, how he allocates marketing funds now is different from his Disney days.

“The consumption of information has changed dramatically in the past decade, and it became important for us to look at how our shift in media optimisation has changed over that time. If I’m going to put the magic back into HP and introduce a new style of story-telling across the media, I need an agency network that’s well connected and will get the best value out of each location – essentially, that’s why I consolidated,” he stresses.

He made this decision after global research for the company showed that consumers go to search engines and HP’s website first to find out about new brand offerings. Word of mouth and broadcast advertising were lower down the pecking order. This is true for all three divisions of the company looking after both businesses and consumers – the Imaging and Printing Group, Personal Systems Group and the Technology Solutions Group.

“The company continues to evolve and become dynamically very different; my priority is to execute this brand repositioning well through consistency in our brand approach. We aren’t just a gatekeeper company, we are an innovation hub that carries massive importance to people’s lives. Our choice of media and method of ads has to resonate this. It means we don’t think simply on cost, but where we will see the best metrics and the best relationship with our customers worldwide,” Mendenhall claims.

He argues that it is the brand’s job to prove its magic through the art of story-telling and ensure that as audiences and media formats continue to fragment, the company can adjust to the changing markets effectively.

“What we’re willing to pay for viewership may change as click per mile changes and audiences fragment but we’re not seeking to abandon conventional channels that have a purpose,” he argues. “What you tend to find is great content always wins. Great content and great storytelling means people will be attracted to it and will want to consume it.”

Mendenhall knows what he is talking about. In June, he was asked to address the audience at the International Advertising Festival in Cannes. “It was like a sauna there, the lights were too bright and the heat just radiated,” he says. It’s just one of a number of conferences he has spoken at in recent weeks, as well as serving on a number of boards, including the Boy Scouts of America. He says he only gets back to Palo Alto to see his family on rare occasions. “But I can definitely say I’ve seen many conference halls and clocked up many air miles,” he jokes.

But despite doing so much and having so many business divisions to look after, Mendenhall just can’t sit still. In the past year, his workload has increased following the purchase of IT giant EDS. “It’s damn hard work, but at the end of it all it’s well worth all the challenges I face with my team especially with the upheaval brought on by new media,” he laughs.

Mendenhall needs to stay positive as times are just beginning to get tricky for HP. Revenues declined 3% year on year, to $27.4bn (£16.4bn) in the three months to 30 April 2009, compared to $28.3bn (£16.9bn) the previous year, resulting in a 2% cut of its headcount – equating to more than 6,000 jobs, on top of the 24,600 posts HP is in the process of axing in relation to the EDS acquisition.

Mendenhall acknowledges: “Times have been tough and the company has not been immune to this. The recession is a fundamental reset in every economy around the world. We’re in the process of revamping our brand; the recession has given these efforts an even greater sense of urgency and relevance.”

He adds the winners coming out of this recession will be the brands that can rationalise the internet, aggregate digital networks and offer their own social cloud services. He concludes: “Among other things, the recession has highlighted that as brands we may have lost the power of one-to-many communications, but if we’re smart, we can harness the exponentially greater power of many-to-many to spread the word for us.”

Michael Mendenhall: Vital stats

Age: 47

Responsibilities: All aspects of HP’s corporate marketing operations globally.

Previous career: Mendenhall spent 17 years at the Walt Disney Company in various roles, directing all marketing and publicity activity for Walt Disney Parks and Resorts.

Other activities: Member of:

  • The World Economic Forum’s Global Agenda Council on Marketing and Branding,
  • The Academy of Television Arts & Sciences,
  • The CMO Inner Circle,
  • The senior advisory board of the Executive Marketing Council,
  • The CMO Club and the Marketing 50.

He also serves on:

  • The boards of the USA Swimming Foundation,
  • The Churchill Club,
  • The San Gabriel Valley Council of the Boy Scouts of America.

Michael Mendenhall on…

HP going wrong:

“Our businesses were so fragmented that we were wasting the strength of our good name and lacking a core common identity.”

Media fragmentation:

“It’s no longer about what you pay, but how you can drive traffic through a built-in audience of brand advocates. Traditional media may not deliver this. It’s up to the agencies to remedy this thought pattern.”

Engaging consumers:

“By opening our doors just a little, we’re harnessing the talent of our customers in a natural way that generates incremental sales and helps to build our brand.”

The recession:

“It’s never been more important to invest in our customer relationships and find more cost-effective ways of doing so. The winners coming out of this recession will be the brands that can rationalise the internet.”

Online marketing:

“In the digital world, we can take the operating model that catapulted network television to its perch and go one step further, by fine-tuning and delivering messages to very specific audiences in a very cost-effective way.”

Customer relations:

“Marketing cannot be simply a reflection of what consumers want a brand to be – increasingly it needs to be a two-way dialogue where the brand draws on consumer perceptions but there is also an element of independence and personality in order to foster a give-and-take with the audience.”

Top tips

Michael Mendenhall’s top tips for pleasing the corporate board

1 The board wants to understand how you optimise your investments; it needs to know where and how you optimise the mix to deliver encouraging and appropriate results for the future of the company.

2 You have to show that you are aware that each division is under its own pressures and each country presents new challenges. As a large global company, we are very focused on the emerging and BRIC economies looking for growth, while also trying to ensure steady custom in the developed nations.

3 You have to emphasise the value of marketing to your company and how any radical plans you have will affect it and its presence in the media.

4 Always be ready to defend new strategies – there is a pressure to remain somewhat consistent but objectives and tactics might vary. It’s important to stress that successful strategies are not being abandoned for new strategies in macro-economic conditions, or you can wind up with difficult propositions – instead you should be true to what your brand is and reflect this.

5 You have to defend the increasingly blurred lines between communications, marketing and traditional advertising, as well as new investment in digital. You cannot abandon brand efforts without adverse impact, but with budgets under enormous pressure, marketers must have a defence ready for every single penny spent and have good evidence prepared when people ask what the ROI was.

Facts & figures

Hewlett-Packard

  • Headquarters: Palo Alto, California.
  • HP has more than 1 billion customers in more than 170 countries on six continents.
  • HP has about 321,000 employees worldwide.
  • HP is number nine on the 2009 Fortune 500 ranking.
  • HP’s revenue for the four fiscal quarters ended 31 October 2008: $118.4bn (£70.8bn).
  • HP dedicates $3.5bn (£2.1bn) annually to its research and development of products, solutions and new technologies.
  • HP is number one globally in the printers market, desktop PCs and notebooks marketplace, disk storage systems, automated software and system management systems market.
  • It is number two globally in Pocket PCs and workstations and IT services.
  • The company ships more than 1 million printers per week and 48 million PC units annually.
  • One out of every three servers shipped worldwide is from HP.
  • HP Software makes calls possible for more than 100 million mobile phone customers around the globe.
  • HP helps 50 million customers store and share over 4 billion photos online.
  • HP supports the top 200 banks and more than 130 of the world’s major stock exchanges.

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