PC Industry and Advertising

Agenda
 Introduction
 Industry Analysis
 Advertising Strategy
 Recommendation
Industry Definition
 “This industry manufactures, designs, or assembles
personal computers (PCs), laptops, handheld
computers and servers. Operators typically
purchase computer components from dedicated
manufacturers in other industries.”
---IBIS World
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Why This Topic
 Why we choose this industry?
Who doesn’t have a computer?
Other than sleep, how many of you think you
spend more time doing something other than
looking on your computer?
Computer are very relevant to our
generation and important to our daily life.
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Background
 Major Products
Desktops
Portables
Servers
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Background
 Major Markets
 Government Agencies
 Large Enterprises
 Exports
 Consumers
 SMB
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Competition
 Large Number of firms
 Top 5: 2011 market share of units shipped
Company
Market Share 2011
HP
17.2
Lenovo
13
Dell
12.1
Acer Group
11.2
Asus
5.9
Other
40.7
Introduction
Industry Analysis
HHI: 771.5
CR4: 53.5
Advertising Strategy
Recommendation
Competition
 Entry / Exit
 Rivalry
 Popular Brands
 Differentiation
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Competition
Number of Television Ads
Dollars Spent on Television Ads
Asustek Computer Inc
Asustek Computer Inc
Hewlett-Packard Co
Hewlett-Packard Co
Lenovo Group Ltd
Lenovo Group Ltd
Toshiba Corp
Toshiba Corp
Toshiba: 10.7 MM
HP: 53.4 MM
Introduction
Industry Analysis
Advertising Strategy
Recommendation
HP (Red) Vs Toshiba (Orange)
35000000
30000000
25000000
20000000
15000000
10000000
5000000
0
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Government Role
 Supporting policies for industry growth and
competitiveness
 Japan (strong support)
 China (State R&D access, Quasi-state owned
enterprises)
 USA, Korea, Taiwan, Singapore…
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Interesting Facts from 2011 TV
commercial data
 HP was the only company to advertise Desktop
Computers on TV in all of 2011
 Apple Computers, had the largest advertising
budget out of any competitors, but spent 0 dollars
advertising their desktops and laptops.
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Organization
 Several Large famous companies
+ Many small companies
 Many large companies just assemble
products manufactured by other
companies.
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Advertising Strategy
Introduction
Industry Analysis
Advertising Strategy

Recommendation
Primary Advertising Methods
Print
 Informative
Radio
Onlin
e Ads
TV
Ads
Social
 Persuasive
 Comedy
 Celebrities
Introduction
Media
Outdo
or Ads
Industry Analysis
Advertising Strategy
Recommendation
HP
 PC is a personal reflection of consumers' desires
and needs.
 From informative advertising to persuasive
advertising( brand building)
 Celebrity, opinion leader
 Big event marketing ( Super Bowl, GRAMMY®
Awards)
Introduction
Industry Analysis
Advertising Strategy
Recommendation
HP
Advertising Expenditure VS Total Revenue
Total
Revenue($ Billion)
Advertising
Expenditure($Million)
130
700
600
500
400
300
200
100
0
125
120
115
110
105
2007 2008 2009 2010 2011
Introduction
Resource:
Internet
Industry Analysis
2007 2008 2009 2010 2011
Advertising
Strategy IBIS
Resource:
Recommendation
World
HP-Advertising-to-Sales Ratio
Advertising % TR
1.2
1
1.05
0.94
0.8
0.84
0.79
0.61
0.6
0.4
0.2
0
2007
2008
2009
2010
2011
Resource: Mergentonline
A low ratio may indicate that the advertising campaign generated sales.
Introduction
Industry Analysis
Advertising Strategy
Recommendation
HP
“The
Computer
is Personal
Again"
2003
2007
"You+hp"
“Everybody
On”
2010
2011
"Let's Do
Amazing"
 From informative advertising to persuasive advertising( brand building)
 A theme every 1-2years
 From product advertising to integrated marketing campaign
Introduction
Industry Analysis
Advertising Strategy
Recommendation
HP
2007 "Personal Again"
Print
 Launching during Super Bowl XLI----Orange
County Choppers
 Highlighting celebrities: Jay-Z, Gold Medals,
Mark Cuban
http://www.youtube.com/watch?v=fsE0g8CDQo
 www.hp.com/personal
TV Ads
Outdoor
Ads
Introduction
Industry Analysis
Advertising Strategy
Online
Ads
Radio
Recommendation
HP
2010 “Let’s Do Amazing"
 The amazing things Do-ers do with HP
Celebrity+humor: Dr. Dre and comedian
Rhys Darby;
 TV ads and Online Ads
Print
TV Ads
Outdoor
Ads
Introduction
Industry Analysis
Advertising Strategy
Online
Ads
Radio
Recommendation
HP
2011 “Everybody On"
 Music stars (Alicia Keys ) and passionate
individuals
 $33.3 million for Google advertising
 Television: 53rd Annual GRAMMY® Awards+
13-time Grammy Award winner
http://www.youtube.com/watch?v=KAQatc
fVrSs
Print
TV Ads
Outdoor
Ads
Introduction
Industry Analysis
Advertising Strategy
Online
Ads
Social
Media
Recommendation
Dell
Target customers
Relationship buyers:
Large business/government
Educational institutions
Transaction buyers:
Small and midsize business
Individual consumers
2007
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Dell
•
•
•
•
Introduction
Informative advertising of direct selling model and
low retail prices
advertisements have appeared in all types of media
New On-line media advertising
Combative advertising is increasing
Industry Analysis
Advertising Strategy
Recommendation
Dell
2000 "Dude, you're gettin' a Dell!”
2006 Campaign for the XPS line of gaming
2007 Campaign for he Inspiron and XPS lines.
"Work it Out” and slogan "Yours is here”
2009 Dell Ramps Up Twitter Advertising Efforts
2010 Take your own path
2011 "More You" advertisements:
“Dude, you’re getting a lifestyle brand”
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Dell
Advertising to sales ratio
1.46
1.38
1.33
1.19
2011
Introduction
1.17
2010
2009
Industry Analysis
2008
Advertising Strategy
2007
Recommendation
Apple
 Apple uses its own operating system Mac OS X
 Niche Market
art professions; premium-price differentiation
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Apple

Brand image centered
“Jobs wanted Apple to be a cultural force”

High advertising expenditure
In 1984, they spent 2.5 million on a 39 page print ad

Combined TV commercial and Print advertising
TV, Mainstream/Fashion/Popular Magazines

Combative + Catchy Slogans
“The ultimate all-in-one design” “It just works”
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Apple
 Apple used the contemporary art and feature icons
as specific themes to differentiate it with other
brands.
 Key words and information: ease of use, industrial
design, technical elegance
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Advertising Expenditure
 Advertising expenditure
800
2010
700
600
500
2007
2008
2009
1
2
3
400
300
200
100
0
4
Apple Inc. Advertising Expenditure (in million $)
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Advertising Expenditure
6000
2010
5000
4000
2009
3000
ad expenditure
2008
2007
revenue
2000
1000
0
1
2
3
4
Advertising Expenditure/Revevue (in million $)
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Timeline
18 page Apple
brochure, Bill
Gates as a
feature
1983
39 page
Macintosh
promotion in
Newsweek
2.5 million
1984
“1984” super bowl
commercial, 1min
900,000
1985
“Lemmings” super
bowl commercial
Introduction
“what’s on your
powerbook?”
celebrities tells their
experience with mac
1988
1990
“Pencil Test” TV
sitcom
Industry Analysis
“Imagine That”
Apple’s response to
Windows 95
1995
“Crowd Control”
Apple’s response to
Windows 95
“Think Different”, in
Newsweek and Time
etc.
1998
“Think Different”,
featuring Einstein,
Ghandi, Amelia
Earhart, etc.
Advertising Strategy
Apple’s evolution
2006
2010
“Get a Mac”
Recommendation
Recommendation
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Personal Investment: Buy AAPL
Company
Stock Price on Jan
07 2011
Stock Price on Apr
13 2012
Apple Computers
336.11
605
0.80000595
RIM
61.68
13
-0.78923476
B&N
15.99
13.67
-0.145090682
Sony
36.04
17.36
-0.518312986
HP
45.09
24.57
-0.45508982
Introduction
Industry Analysis
Advertising Strategy
Gain / Loss
Recommendation
Personal Investment: Buy AAPL
Desktop Computers
Notebook/Laptop
Computers
Apple Computers: US$220.49 Million
Barnes & Nobles: US$46.57 Million
RIM:
US$ 47.88 Million
Samsung Group: US$ 54.4 Million
Tablet Computers
Acer Inc
Amazon.com Inc
Apple Computer Inc
Barnes & Noble Inc
Hewlett-Packard Co
Desktops: US$ 14.98 Million
Laptops: US$ 62.51 Million
Tablets: US$466.78 Million
Motorola Inc
Research In Motion Ltd
Samsung Group
Sony Corp
Toshiba Corp
Introduction
Industry Analysis
Advertising Strategy
Recommendation
Personal Investment: Buy AAPL
 Apple expected to dominate tablet market
maintaining above 50% market share through 2015
 Tablet market sales expected to grow to 60% of PC
sales by 2015, eventually expected to surpass PC
sales.
Introduction
Industry Analysis
Advertising Strategy
Recommendation
VC and PE investments
 High competition, high cost of failure
 Enter Market by acquiring underperforming brand,
and invest heavily into an image and advertising
 Software over hardware
 Disruptive innovation
Introduction
Industry Analysis
Advertising Strategy
Recommendation