HP looks to marketing to drive turnaround

HP is looking to place marketing at the heart of its turnaround strategy this year, a vision led by newly appointed CEO and former marketer Meg Whitman, who has increased the size of her marketing directors’ budgets – including those in the UK.

Ellie Goulding
HP and Universal Music Group will stage an Ellie Goulding concert in March as part of the companies’ strategic marketing partnership.

The consumer electronics brand returned to TV advertising in the UK for the first time in a year to promote its Envy X2 hybrid tablet in December and is planning a raft of music-related marketing activity going forward after forging a one year strategic marketing partnership with Universal Music Group – the biggest partnership of its kind for the label (see below), demonstrating the consumer electronics company’s renewed commitment to marketing.

Whitman detailed HP’s wider turnaround strategy in May, which included a move to axe 8 per cent of its global workforce (around 27,000 staff) in order to “simplify” the business. The PC maker said the job cuts would save about $3bn (£1.9bn) a year, which it would look to reinvest in marketing, research and development and other tools that “simplify” the customer experience.

Rebecca Shears, head of marketing for HP’s printers and personal systems division in the UK and Ireland, told Marketing Week: “Meg [Whitman] has a real marketing background and you can see that – previously HP was very sales-led, but now more budget is going into marketing and R&D.”

Going forward Shears is aiming to boost awareness of HP’s higher-end products this year by combining media spend with social media to amplify campaigns and continuing the music-focused marketing approach it first embarked on in 2011 in a bid to be perceived as a “cool” brand.

HP has struggled to arrest the decline in hardware sales in recent years as consumers opt for smartphones and tablets over desktop and laptop computers.

The company posted a $6.9bn loss in the 12 months to 20 November 2012, compared with a profit of $200m the previous year – much of which it attributed to a $8bn write-down relating to alleged accounting discrepancies at Autonomy, the software firm it acquired in 2011.

In October Lenovo replaced HP as the world’s largest PC-maker, shipping 13.8 million units to 13.55 million units respectively in the quarter, according to Gartner.

HP and Universal Music tie-up

New HP devices in around 50 territories now feature free access to Universal’s full catalogue for 90 days and for £3.50 a month thereafter, with the option to download 10 free MP3s per month.

Forthcoming Universal marketing activity for its artists’ output in the region will also point towards the HP Connected Music service as part of the agreement.

As well as streaming services, the two are collaborating to offer music fans “money can’t buy experiences”. In the UK the two companies will stage an exclusive Ellie Goulding gig in March, which will be streamed live online and will be the feature of social media competitions. Last April HP live-streamed a Florence and the Machine gig (not part of the Universal tie-up) using seven HD cameras to capture the action, allowing viewers to flick between different camera angles online. The footage – both during and after the event – was watched by more than 80,000 people.

Olivier Robert Murphy, senior vice president of international new business at Universal Music Group, says: “We’ve moved from the world of the “4 Ps” to the “4 Es” – engagement, experience, exclusivity and emotion.”

Viewpoint

lara profile

HP has an uphill struggle to regain ground lost to the smartphone and tablet titans eating into PC sales. The company’s share price (around $15 at the time of writing) is close to where it was in the 1990s, while that of Apple and Samsung’s has soared in recent years.

As the company’s stock price dropped last year, as did its marketing spend as it desperately cut costs – threateningly giving competitors time to attract consumer awareness.

Under a new leader, who is vocal in implementing her customer-centric focus for the brand, HP looks likely to return to trumpeting its own strengths again – such as its hybrid laptop/tablet devices, enterprise software and smart printers.

It must make sure to couple its heavyweight marketing partnerships with heavyweight local media spend to ensure cut-through in the turbulently competitive hardware market.

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