Marketing Management mid-term exam

Duration: 2 hours
Type of exam: Closed book
Maximum marks: 30

Read the case study titled ‘HCL Beanstalk: All in One Desktop Relaunch’ and answer the
following questions:

Answer Key

(1) Describe the Value Proposition of Beanstalk offered in 2007 (8 marks).

Value proposition has four dimensions:

(a) Promise of value – predominantly emotional value, premium lifestyle based offering
badge value or trendy image
(b) Target Group – high income family specifically children, women and aspiring young
professionals
(c) Compelling differentiation – exclusivity, space saving and uncluttered design
(d) Reason to believe – high price, compact and beautifully looking. However, HCL
brand perception was not of premium brand (HCL could not provide support for
compelling differentiation, hence consumers did not perceive this product to be providing
the promised value) [Both arguments are justified].

(2) Based on the case, develop a segmentation plan for the AIO market (7.5 marks)

The approach could be to try and list all the possible variables that need to be
considered in developing a plan:

(i) Retail vs. business markets.

(ii) Home use/commercial or small office/home office (SOHO).
(iii) Family vs individual purchase.
(iv) Demographics of consumers etc.

The decision-making processes, purchase criteria (brand, features price) etc.

may also be considered.

Next, students should define the mechanisms by which the segmentation processes
can be evaluated. The key checks are:
 (a) Each segment should be distinct from other segments. The needs should be
mutually exclusive and collectively exhaustive.
(b) Each segment should be homogeneous within in terms of needs.
(c) A segment is likely to respond similarly to marketing initiatives.
(d) Each segment should be accessible through marketing efforts.
(e) Segments should be sizeable and commercially viable.

Relevant exhibits should be referred to for this answer. A clear logic should be
followed in defining the segments and there should no contradiction while defining a
segment (e.g., consume profile).

(3) Should HCL target a large customer segment or look for a few niche segments?
Which customer segment should HCL target? (7.5 marks)

Current market standing of HCL in the ICL context:

From Exhibit 1 of the case, some conclusions can be made about the percentage share of
HCL The data shows that the fall from first quarter-2010 to fourth quarter-2011 has
largely to do with ECC (education), B2B (very large business) and B2B (government
segments). The B2C home segment has also fallen but the decline but the decline
occurred in 2011 and may be attributed to some extent to the lack of AIO’s in the fast-
changing desktop portfolio (See Exhibit 4). Hence, AIO launch in the B2C segment
seems to be a good opportunity and this category appears to have the potential to compete
in the big segments.

Analysis of AIO form factor:

The data give in Exhibit 8 gives details of the top five products in the third quarter of
2011 which account for just more than 50% of the AIO sales. There are at least 20 more
products in the SKU category (see page 5 of the case). The Zenith product had a six
percent market share. So, the products outside the top five had to be lower than this figure
and the balance remaining was 42% of the market share. This indicates a fragmented
market.

The type of price point that Zenith is operating is very low and does not seem to be the
range in which HCL is likely to operate (see Exhibit 9 of the case) It is unlikely that HCL
would target pure price seekers.

HCL is a major desktop player and has failed to replicate the position in laptops (see page
2 of the case). Thus, it would need to gain substantial market share to command pre-
eminent position in the market. Its expected to focus in business markets where it has
strengths. HCL needs to get at least the planned eight percent share in the retail market to
leverage its strength in business markets. With the type of market share HCL has in retail
market (see Exhibit 4), that would not be easy. It can focus on niche segments but market
may be too small. Thus, with the channel presence HCL has in the PC market, we can
conclude that the focus should be exclusively on bigger segments and only value for
money seekers and value seekers qualify as possible alternatives.

(4) Develop a positioning statement for HCL Beanstalk AIO. Justify your
positioning statement in not more than 200 words (7 marks)

Two alternate positioning – mainstream or niche

Mainstream Positioning – is the most likely choice of the company considering the sales
objective of 8% market share

TG – Vibrant, young and aspirational consumer - School student and SOHO – typical
family of four living in Tier I and II city - parents
Brand – Beanstalk
POD – Flexible (lightweight), child driven and style
Value for money seekers

HCL Beanstalk is the brand of AIO for middle-income families in Metro, Tier I, tier II
and Tier III having young and aspirational children (TG) that gives value for money, as it
is convenient, stylish, lightweight and easy to move (PoDs) because it can serve multiple
uses such as children’s educational and entertainment requirements (RTB)

Similarly for SOHO also you can develop