Brand Equity of HP Laptops

Introduction

As the lifestyle is changing, needs of people are changing accordingly from more technology prone to advancement in electronic devices usage. People want faster paced life, leading to endless dreams to be fulfilled. Desire to achieve excellence in all departments of life makes life more interesting and increases the positive vibrance. Belonging to this information technology era, life without laptops is unimaginable.

Laptop sales in India are at an all time high, due to the growth of a new breed of technology conscious IT users. There has been a drastic shift in working environments coupled with a lifestyle which is always ‘on the move.’ Besides the work-related market, various other segments are capitalizing on these handy portable computers. A large number of households and students are using these portable PCs for entertainment and study purposes respectively.

Industry Background

Laptops are popularly used in India more for their portability rather than mobility. Portability has become the number one factor as to why more Indians are buying these portable PCs. The laptop market in 2009 saw a significant growth. Seen as just the right size to fit on someone’s lap, laptops are taking the Indian market by storm and are certainly giving desktop computers a run for their money. The laptop market in India recorded sales of 7.7 lakh units, growing at 13% in the first half of 2009-10.

The major players in the Indian market are HP, Compaq, Dell, Lenovo, Apple and Acer. Quarterly notebook PC shipment and forecast report stated that 31 million units were shipped in the first quarter of 2009, noting that the notebook PC market shrank 6% on quarter, but increased 35% on year during the period. HP remained in the lead for seven consecutive quarters with a shipment around two million units over number two Dell in the first quarter of 2009-10. HP’s market share was over 20% for six consecutive quarters.

The most popular panel size and resolution was still 15.4-inch with a resolution of 1280Ã-800, which accounted for almost 50% of all notebook PCs shipped in the quarter, while the 14.1-inch segment with a 1280Ã-800 resolution trailed behind with a 22% share. The general features that people look for while making a decision on the laptop are:

Processing Speed of Laptops

The laptops processing speed depends on the usage. Consumers generally go for Intel Core Duo processors or Athlon. If the requirement is a high end laptop, then consumers can opt for Core 2 Duo or Quad Core processors.

Operating System

At present Windows Vista is the operating system in the laptop market. Recently Windows 7 has been launched and laptop vendors are slowly shifting to the latest operating system. Other Operating Systems like Linux can be got on request.

Screen

Screen size is usually 14.1″ or 15.4″. But consumers are going for bigger screen sizes also. The 17″ laptop sales have increased in the recent months, but still is not very high.

Hard Drives

160 GB hard disks is the usual attachment in most of the laptops.

These are the features which one should consider before buying laptops. Searching laptops in Indian market will be easy as all the information is available online.

Company Background

HP is a technology company that operates in more than 170 countries around the world. They explore how technology and services can help people and companies address their problems and challenges, and realize their possibilities, aspirations and dreams. HP applies new thinking and ideas to create more simple, valuable and trusted experiences with technology, continuously improving the way our customers live and work.

No other company offers as complete a technology product portfolio as HP. They provide infrastructure and business offerings that span from handheld devices to some of the world’s most powerful supercomputer installations. They offer consumers a wide range of products and services from digital photography to digital entertainment and from computing to home printing. This comprehensive portfolio helps them match the right products, services and solutions to their customers’ specific needs.

HP India, established in the year 1988, holds the distinction of being one of the first technology companies to set up a base in India. HP in India is one of the largest and most diverse sites for HP outside of the US. HP started its India Software Operations (ISO) in 1989 at Bangalore to deliver enterprise software solutions, product and R&D services to HP customers worldwide. Over the past year, HP’s presence and product portfolio has expanded to mirror almost every activity the company undertakes, be it software engineering, IT services, R&D, BPOs among others. HP India became a billion dollar company in 2005 and continues to expand its presence.

HP is the leader in the laptop market in India. HP laptops feature powerful performance and attractive designs and this is the reason they are the number 1 selling brand in India.

Need for the Study

There are a lot of new brands of laptops available in the market. Many international players are entering the Indian market to try and capture a chunk of this huge market. We would like ascertain whether HP brand, which is currently doing well, will continue to do well in the future also or does it need to change any of its approach with respect to its brand performance. This project is restricted to the brand equity only.

Objectives of the Study

To measure brand equity of HP laptops

Conceptual Framework – Brand Equity

Brand equity refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name. And, at the root of these marketing effects is consumers’ knowledge. In other words, consumers’ knowledge about a brand makes manufacturers/advertisers respond differently or adopt appropriately adept measures for the marketing of the brand. The study of brand equity is increasingly popular as some marketing researchers have concluded that brands are one of the most valuable assets that a company has. Brand equity is one of the factors which can increase the financial value of a brand to the brand owner, although not the only one. Brand equity is measured as a combination of the following five factors:

• Brand Awareness
• Brand Loyalty
• Perceived Quality
• Brand Association
• Other Proprietary Assets

Brand Awareness

Brand awareness is a marketing concept that measures consumers’ knowledge of a brand’s existence. At the aggregate (brand) level, it refers to the proportion of consumers who know of the brand. It can measured using the following measures:

Aided Recall – Either the brand name or both the brand name and category name are presented to respondents.

Unaided Recall – The product category name is given to respondents who are asked to recall as many brands as possible that are members of the category.

Top of Mind Recall – The first brand that comes to the mind of customers is recorded.

Brand Loyalty

Brand loyalty consists of a consumer’s commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy. The various measures for calculating brand loyalty are:

• Switching Cost
• Liking
• Satisfaction
• Waiting Time
• Shopping Effort
• Willingness to Bear Additional Cost

Perceived Quality

Perceived quality is defined as the customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose relative to alternatives. We have measured the perceived quality of the overall brand under the following measures:

• Performance
• Features
• Conformance with Specifications
• Reliability
• Durability
• Fit and Finish
• Serviceability

Brand Association

A key to building brand is to strengthen the associations. A brand association is anything, i.e. a word, a picture, a person, etc. related to a brand. The association not only exists but also has strength, uniqueness to the brand and favorability in the minds of the consumers.

Other Proprietary Assets

The three most important proprietary assets are:

Name

Logo

Slogan

Methodology

Sample Size

We have taken a sample size of 15 respondents. It consisted of 12 males and 3 females of varying ages, across the country.

Data Collection& analysis Methods

The following tools were used to collect data:

Focus group discussions (FGDs)

Questionnaires

Data Analysis Tools

SPSS 16.0 for Windows, MS Excel

Brand Awareness

Brand Awareness is the extent to which a brand is recognized by potential customers, and is correctly associated with a particular product. It is usually expressed as a percentage of target market. Brand awareness is the primary goal of advertising. Brand awareness conveys the intensity of knowledge and understanding that a consumer has about a product or brand. This is usually measured through the three measures – Top of Mind Recall, Unaided Recall & Aided Recall.

Unaided recall & Top of Mind Recall

Unaided Recall is a market research technique used to test the effectiveness of brands, advertisements and commercials in which respondents are asked certain questions to learn whether they are familiar with a particular company, brand, slogan, product or service. In our survey the respondent was asked to mention the names of laptops they know or have heard about.

Out of the unaided recalled brands, the first brand that the respondent mentions is the top of mind recall. Top of mind awareness is there when people can easily recall a brand’s name. Top of mind reacall usually is associated with the brand being in the short term memory. Top of mind awareness is very desirable in target prospects who are likely to buy because it is when they are considering buying an item you really want them to remember a particular brand.

 

The responses obtained are indicated in the table below. In the calculations for the brand equity score, top of mind being an important parameter was given 100 points. To calculate the top of mind score for a particular brand, the percentage of people who mentioned the particular brand in their top of mind recall was calculated out of total respondents. Thus HP laptops got a score of 47 or 47% which is 7 as a percentage of 15.

The maximum score for unaided recall was fixed at 70. The brand with the highest frequency was given a score of 70 and the brands that followed were given scores of 60 & 50 each.

Interpretation

Out of 15 respondents, HP brand had the highest top of mind recall, followed by Compaq, Lenovo & Dell, which had equal responses. This shows that the investments by HP in their advertisement / marketing communications have been relatively effective. But still considering that only 47% respondents recollected HP from the top of mind, HP should consider investing more in their advertisement campaigns. Top of Mind recall happens with higher repetitions and exposure to advertisements. Advertisements emphasizing the brand HP have to be repeated. This will also help because HP has a wide product assortment.

In case of unaided recall, HP & Dell were leading with very high scores, followed by Compaq, Lenovo and Toshiba. This shows that people know these brands as laptop brands.

The objective of this measurement is to measure the extent to which respondents remembered

the brand when the actual brand name is prompted. A list of laptop brands was given to the respondent and they were asked to select the brands they were aware of. We deliberately included a couple of brands which did not have laptops. Surprisingly people who selected these brands were very less and there seems to be a very high level of awareness about laptop brands. The response obtained is indicated in the table alongside.

Interpretation

HP, Dell, Compaq & Lenovo had 100% awareness or all respondents who participated in the survey were aware about these brands as a laptop brand. Aided awareness was scored out of 50 and the brands with maximum awareness were given a score of 50, second best as 40 etc. We do not need to do anything on this front to increase awareness about HP as a laptop brand.

2. Brand loyalty

Brand loyalty of the customer is often the core of a brand’s equity. It reflects how likely a customer will be able to switch to another brand. Brand loyalty is closely tied to experience and is different from other major dimensions of brand equity. The following scores were obtained by the brands against the four factors associated with Loyalty.

 

Cross Tabs: The cross tabulation was done to see how many people from the group of 15 conform to various parameters. The various cross tabulation are shown as under:

PreferredBrand * PurchasedBrand

The first cross tabulation was done to find out number of people among the group who have purchased the brand which they prefered. So the cross tabulation was done between the prefered brand and the purchased brand. The results of the same are shown below.

 

The above table and the graph below show that only 2 people have purchased HP out of the 6 people who prefered the brand HP, for Compaq it was 2 out of 2 and none for Compaq.

RecommendBrand * PurchasedBrand

This cross tabulation was done to see how many people would recommend the brand who have purchased the brand.

 

The table shows 60 % people who have purchased the Compaq would recommend the brand to people, 100% who have purchased the HP would recommend HP and 80% who have purchased the Lenovo would recommend Lenovo.

Perceived quality

Perceived quality is defined as the customer’s perception of the overall quality or the superiority of a product or service with respect to its intended purpose relative to alternatives. It is also a measure of goodness that spreads over all elements of the brand. It is elevated to the status of the brand asset is helps business to gain financial advantage and gives a strategic thrust which in turn drives how the other aspects of brand is looked.

We conducted two focussed group discussions (FGD) to find out the factors which customers’ perceive as important for accessing the quality of the laptops. The FGDs resulted in 9 factors which were then cross verified through secondary research study. Three factors – Battery Life and Time to Charge had to be removed because of the lack of the suitability in terms of quality image. The rest six factors were taken into account while deciding the perception of the quality of the laptops.

Thus, the seven factors used for assessing the perceived quality for calculating the final brand equity score are:

• Performance
• Features
• Conformance to specifications
• Reliability
• Durability
• Fit and finish
• Serviceability

The users of the brands – HP, Lenovo and Compaq were asked to rate the above attributes on a scale of 1 to 10 (10-Excellent, 1-Poor). In the following explanation of the different factors, the aggregate score is the sum of the score given by all the 15 respondents and the average reflects the aggregate score divided by the number of respondents (15 in our case). The maximum points allotted to each of the factors is100. So the score of each of the factors is then calculated based on the average score.

Performance

The performance of the laptops is an important factor as it is critical for the overall perception of the customer in terms of quality of the laptop. The performance is compared across the brands having the same features so that there is no bias and the comparison in not done for two extremely different series laptops.

As it came out in FGDs, this is also related to how the laptop performs like no crash, no hangs, smooth operation and other similar sub attributes.

 

The performance score of the three brands is shown in the table below:

HP scores highest with an average score of 8 followed by Lenovo with 6.93 and Compaq at last with a score of 6.87.

Interpretation

The customers have a favourable perception for HP in terms of performance of the laptops. The Lenovo and Compaq are close together with almost same perception for performance. The HP laptops outscore both of the other brands by almost 10 points. The same perception had also been received in the FGDs and so there is no difference of perceptions between the surveys and FGDs.

Features

 

The customers today look for the customization and so crave for the number of features available for the different laptops. The range of features and the depth under each component become important now because they affect the customer perception for the quality and affect the buying favourability for a brand.

HP again scored highest in this category with an average score of 8.27 followed by Compaq with an average of 7 and at last Lenovo with a score of 6.8.

Interpretation

The customers feel that the feature loaded laptops are of good quality and as most of the HP laptops are feature loaded, they are rated higher in terms of the features. The Lenovo and Compaq laptops come with some standard specifications which mostly are basic ones. Though they can be customised as per needs but the number of options available for different components (depth) are still limited. This doesn’t go favourable with the customers and it is reflected in the score given by them to Lenovo and Compaq laptops as compared to HP which scores higher.

Conformance to Specifications

 

Customers choose the features and specification to get the laptops which conform to them and perform accordingly. So conformance to the specifications becomes an important factor here. The table below shows the score obtained by the three brands on this parameter.

HP stands at top with an average of 7.73 followed by Lenovo at 6.93 and then Compaq with 6.8.

Interpretation:

HP has a favourable impression in the minds of the customers as they feel that HP conforms to the specifications and this makes them give it the highest score. The other brands of laptops are not far behind which shows that there is not much different in the perception of these brands as far as the conformance to the specifications is concerned. All three adhere to the specifications and even the fact that HP has highest score can’t be considered as a great differentiator in terms of perceived quality.

Reliability Score

The perception about reliability of a product directly contributes to the brand equity for a mobile device like laptop which is employed for multiple uses. The surveys & FGDs we conducted indicated how reliability as an important component of perceived quality. Respondents wanted their laptops for mobile needs, especially students for project works & executives who had to do presentations on the go. More than anything, reliability was connected to loss of data due to laptop related malfunctioning which could never be compensated. 

The reliability scores obtained by the brands are indicated in the table above. Each respondent was asked to rate the three laptop brands on their perception about reliability of the brand. The final reliability score was found by aggregating the scores given by all respondents and then finding the average.

Interpretation

The results indicated that HP & Lenovo scored 75 out of 100 for reliability, followed by Compaq with a score of 66. This is inline with the two brands’ various marketing communications that emphasise on reliability. Lenovo & the erstwhile IBM Thinkpad always portrayed a sturdy image, with protections even against accidental drops and first of its kind features like locking hard disk during a fall. HP also proposes its high reliability through marketing communications. Compaq, a value brand from the HP stable is perceived to be less reliable compared to the parent brand HP.

 

The perception about durability of a product directly contributes to the brand equity especially when it is an expensive to own item like a laptop. Our survey told that a normal customer tends to consider using a laptop for atleast 3 – 4 years and minimise the cost on the equipment. Also the FGDs indicated that laptops are very expensive to maintain and replacements of parts are a very expensive business. Thus durability was used as an element to compute brand equity score.

The brand scores on the parameter durability was again calculated by aggregating scores given by individual respondents on perceived durability of the three brands. The average was found and a percentage of the maximum score of 10 was found to provide the brand’s score on durability.

Interpretation

The table indicates that HP & Lenovo are perceived to be of nearly the same durability (Lenovo a little more). But Compaq lags heavily in the perception about durability. This could be due to the positioning of HP & Lenovo as premium brands, while Compaq is always positioned as a low price, value based product. Another inference we may take from this could be that price and premiumness can cause a difference in perception of quality in the minds of customers. A customer may be ready to pay more for a product considering that durability is directly related to the price of the product.

 

In the FGDs conducted, we got views that the laptop a person carries communicates a lot about his personality. Hence the fit & finish is given a lot of importance during laptop purchases. We had included fit & finish as a component of perceived quality and gave equal importance to this parameter with a maximum score of 100 associated to it.

The above table indicates the scores obtained by the brands for ‘fit & finish’ parameter. The respondents were asked to rate the three laptops on a maximum score of 10 points. The aggregate score was calculated and average was obtained for the 15 respondents. This was then transformed to a score of maximum score of 100.

Interpretation

It was found that HP had the highest score on the parameter fit & finish. HP laptops have always been famous for their stylish designs, and designer exteriors. HP frequently comes up with limited editions, with specially designed exteriors, giving rich look to the laptop. Compaq was rated as the next best. Compaq, being a product targeted at the value segment, has always designed its laptop in a simple and elegant manner in contrast to the bold and stylish designs of HP.

We can see that Lenovo lags heavily in this parameter. Lenovo retained the original IBM Thinkpad designs. Lenovo gives lesser importance to external visual appeal focussing more on ergonomics, robustness and reliability. This was also indicated in the FGDs where Lenovo laptops were criticised for the dull exteriors. Most respondents admitted they were not satisfied with the looks and they modified the looks by applying laptop skins available in the market.

Serviceability refers to the ability of technical support personnel to install, configure, and monitor laptop products, identify exceptions or faults, debug or isolate faults to perform root cause analysis, and provide hardware or software maintenance in pursuit of solving a problem and restoring the product into service. Incorporating serviceability facilitating features typically results in more efficient product maintenance and increases value for the brand in the minds of the customer. During the FGDs, many participants shared the various faults that their laptops had generated and how easy or difficult they found it to get it serviced at an authorized centre. The following table lists the scores for serviceability for the different laptop brands out of a maximum of 100.

The respondents were asked to rate the three laptops on a maximum score of 10 points. The aggregate score was calculated and average was obtained for the 15 respondents. This was then transformed to a score of maximum score of 100.

Interpretation

HP was rated the best serviceable laptop followed by Compaq and Lenovo. HP service centres or HP-authorized service centres are available all over India. Therefore customers find it very easy to simply carry their laptops to the nearest service centre and get it serviced. Compaq laptops are also serviced by HP service centres. Since exclusive Compaq service centres are not widespread, people still perceive that the serviceability is not very high for Compaq, while in reality it should equal that of HP.

Lenovo has mainly authorised service centres and it’s not as widespread as compared to the other two brands. Therefore, it has got a low score for serviceability. Having exclusive Lenovo service centers in all major cities in India may help in improving the perception of the customers.

Brand Association

The FGDs were conducted to get the exhaustive list of the possible associations for the three brands- HP, Lenovo and Compaq. The associations were then used in the questionnaire to select the top two associations from the respondents for each of the three brands. The surveyed people were then asked to rate (5-highest, 1-lowest) the two associations selected by them. The tables below show the scores obtained by each of the associations under different categories. The top two associations were then converted into the score for the three parameters- Strength of Association, Favourability and Attitude.

 

The Business and the Performance came out to be the top two associations with the HP laptops. When converted to score it comes out to be as follows:

 

The brand celebrity association for HP is also seen as Mr. Amitabh Bachchan who justifies the Business and Performance score too.

The animal association for the brand HP also comes out to be Tiger and Lion in equal numbers of 4 each. So the animal association for HP is the Big Cat Family Animals. This can be because the people relate these animals for the performance and focussed attitude like in business.

 

The Tough/Robust and Features came out to be the top two associations with the Lenovo laptops. When converted to score it comes out to be as follows:

 

The brand celebrity association for Lenovo is also seen as Mr. Saif Ali Khan who justifies the Tough/ Robust and Feature rich image of the brand Lenovo. This association may be because he is also a brand ambassador for Lenovo.

The animal association for the brand Lenovo is Dog as seen from the responses of the people who responded to the survey. Six people out of 15 said Dog as the animal which should be associated with the Lenovo laptops. This brings out the features of the laptop which shows they are trustworthy, robust and extremely rich in features.

 

The brand celebrity association for Compaq is seen as Mr. Shahrukh Khan who justifies the Affordability and Service image of the brand Compaq. This association may be because he is also a brand ambassador for Compaq.

The animal association of Compaq comes out to be Cat which sort of justifies the affordability part.

5.Other proprietary Assets

The three proprietary assets studied in this survey were – Name, Logo & Slogan. This was important as any marketing communication will be using the three assets and the impact these makes will determine the brand equity and hence the consumption of a brand. The respondents were asked to rate the three brands for the three assets on the basis of the three factors – Attractiveness, Effectiveness, Uniqueness

For example, the respondent was asked about how attractive, effective and unique the name of HP laptop is, followed by the logo and slogan of HP. The scores for each factor was calculated by finding the aggregate score given by all the respondents and then the average. The final score of each brand against each of the assets were found by multiplying the score of the asset against the three factors.

Name

 

It was found that name HP had a very high score in all the three dimensions and has the highest score of 49 among the three brands. Compaq follows HP and the name Lenovo was found to have scored the least and was found to score the least among the three brands in each of the dimensions except uniqueness, where it stands second.

Interpretation

The name of HP was found to score an average of 7.8 out of 10 for uniqueness, 8 for effectiveness and 7.8 for attractiveness. This indicates that the name HP is contributing to the brand equity. But in the case of Lenovo, we see that the name scores very low in terms of attractiveness and effectiveness. Such brands may consider re-launching products under different brand names or a brand like Lenovo can for brand extensions with more attractive names

2. SLOGAN

 

The above table indicates the ratings for slogan of the three brands on the dimensions of attractiveness, effectiveness and uniqueness. The slogans were given to the respondents namely – HP – Laptops are Personal Again, Compaq – Inspiration Technology, Lenovo – New World. New Thinking

Interpretation

We can observe that HP scores highest for slogan, followed by Lenovo and Compaq. Though the slogan for HP scores highest relatively, the score seems to be low. This could be because the respondents are not able to relate the slogan to the product or because they are not able to associate it with themselves. This could be because HP used this slogan initially for desktops when it came up with the slogan Computers are personal again. But laptops are always personal equipments for self usage and saying “Laptops are Personal Again” does not make any more impact.

Looking at the other two brands, Lenovo and Compaq lag heavily and needs considerable improvement in their slogan. This could even be due to lack of sufficient exposure of the slogan to customers or again inability of the customers to relate slogan with themselves or the product.

3. LoGo

The above table indicates the ratings for logo of the three brands on the three dimensions. The respondents were shown the different logos of the three brands and asked them to rate them against attractiveness, effectiveness & uniqueness.

As we can see, HP scored the highest for the logo, followed by Compaq and Lenovo.

Interpretation

HP has a very high score for brand logo, with very high score in each of the dimensions Attractiveness, effectiveness and uniqueness. Compaq follows and Lenovo was found to lag heavily in this dimension too

The above table indicates the brand equity score of the three brands. We can find that the brand under study HP has scored the highest score of 1405 out of 1920. It clearly indicates why HP is the market leader in this range of laptops. Compaq from the HP stable is the second valued brand. We have seen the brands under the individual dimensions in the previous sections.

We can see that HP leads the other brands in every dimension. The strategies adopted so far has been satisfactory.

Suggestions for further Improvement

Improving Brand Awareness

From the brand equity table, we can see that HP scores full against unaided recall & aided recall.