Technology

Can HP Make Consumers' Hearts Race?


While long well regarded for making solid, reliable electronics products, Hewlett-Packard (HPQ) has hardly been renowned for its marketing. But that's changing. On Thursday, Oct. 2, HP was set to launch its most daring Madison Avenue foray yet: an artsy $300 million ad campaign designed to show HP printers, digital cameras, DVD writers, and PC/TV hybrids as integral to the lives of digital consumers.

Carleton S. "Carly" Fiorina has been trying to ramp up HP's marketing profile ever since she came aboard as CEO in 1999. She has already won accolades with a "+hp" business-to-business ad campaign, featuring partnerships with the likes of Dreamworks and the U.S. Postal Service. With this latest campaign, entitled "You+hp," Fiorina & Co. aim to transform HP into a vibrant consumer brand, much like Coca-Cola (KO) and Nike (NKE).

In the days ahead, watch for special-effects-filled TV ads showing pedestrians and café-goers in Barcelona morphing between photos and real life, while a 24-page magazine advertising insert -- HP's biggest ever -- invokes artistic styles from Milton Glaser to Russian Constructivists.

NO RESPECT? Never heard of the Russian Constructivists? HP will urge consumers to post photographic essays on a graphically sophisticated HP Web site. Throw in a 10-year tie-in with Disney (DIS) that extends across all its properties from theme parks to films, and the marketing effort goes far beyond any consumer initiative HP has ever undertaken.

Message: HP isn't just a printer maker anymore. "We have not been getting the degree of recognition we need for a company doing $18 billion in that market," says Executive Vice-President and Chief Marketing Officer Michael J. Winkler. That task has taken on added urgency: With $71 billion in annual sales, the Palo Alto (Calif.) outfit continues to struggle in such key markets as enterprise sales, where it posted a $70 million operating loss in its most recent quarter, on revenues of $3.7 billion.

No more ads that simply describe product details. As more brands attain parity with HP on price and features, that approach has become as dated as a 386 PC. "We recognize that the industry is commoditizing," says Allison Johnson, HP's senior vice-president for global brand and communications. "That means the role of brand and marketing become increasingly important."

"LITTLE PRECEDENT." The strategy carries risks. HP is uniquely positioned in that its specialties span everything from multibillion dollar information-technology service deals to small, jazzy digital cameras. Few companies have proven that a single brand can effectively span such a gamut of offerings. IBM tried in the 1990s to create fertile consumer brands with glitzy, big-ticket ad campaigns touting its PCs and its OS/2 operating system only to fail and exit the consumer market entirely.

"There's very little precedent for this to be achievable over the long run," warns Peter Mack, vice-president for client services at brand consultant Enterprise IG. "The sheer scope makes it very difficult."

Success stories, however, aren't impossible. Witness Korea's Samsung, which has been upgrading its image from a humdrum maker of me-too electronics to a so-called "lifestyle" brand with smart marketing worldwide. That's what HP aims to do, and it has one advantage that Samsung lacked: a solid reputation for dependable, well-engineered products.

HOUSE OF BRANDS. The trick will be adding a dose of excitement to HP's consumer image without compromising its reputation for quality, which is especially important with business customers who rely on more sophisticated equipment and services. "If HP can do a good job delivering an essence that permeates everything, it will succeed," says Steven Addis, CEO of brand consultant Addis Group.

Fiorina is mindful of the challenge. After last year's divisive merger with Compaq Computer, she retained and promoted some of the Compaq marketers who had been responsible for such consumer-oriented product successes as the Presario PCs and iPaq handheld devices.

That was a big deal at a company that once allowed its freewheeling divisions to go their own way in marketing and product development -- creating a house of brands rather than a branded house, recalls Bojana Fazarinc, HP's director of marketing and brand management until 2000. "The decentralized organizational structure is very deeply ingrained at HP," she says.

NEW YEAR'S EVE ON MARS. In the weeks ahead, the company will be enlisting celebrities to post their own photographic reveries on the its new Web site, in the hope of keeping consumers coming back. And its 10-year partnership with Disney will start with a joint promotion involving Epcot Center's newest ride, Mission: Space. A fall sweepstakes drawing will offer winners a chance to spend New Year's Eve at the attraction, on the planet Mars. Well, it'll just feel that way.

To maintain warp speed, HP execs know they'll have to keep the pipeline stuffed with intriguing new products that can hold their own against a welter of rival items from the likes of Sony (SNE), Epson, Dell (DELL), Apple (AAPL), and Kodak (EK) -- all of which are stepping up their own investments in digital imaging. Fiorina's August unveiling of 100 products promoted as easy to use was seen as a step in that direction.

Another challenge: Making money in a cut-throat segment of the electronics industry where margins can be razor thin. But

HP is game. If it can get the message across that its products are essential to life in the 21st century, shoppers may buy without having to read the fine print on ads touting the marvels of HP's vaunted engineering. One small step for consumers, one giant leap for Fiorina and HP. By Gerry Khermouch in New York and Ben Elgin in San Mateo, Calif.


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