Hewlett-Packard Imaging Systems Division: Sonos 100 C/F

By : Group B5Ashish RanaNikhil Kumar

Nirmal RajSargam Malhotra

Vivek Busar

Hewlett-Packard Company is an American multinational hardware and software corporation.

Provides products, technologies, software, solutions and services to consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors

Revenues : $14.5 Billion (Fiscal 1991)

The Medical Products Group (MPG) , a division of HP having revenues of $900 Million (Fiscal 1991) derived from a variety of product lines including patient monitoring systems , operating room systems, and clinical information systems

Key Person : Cynthia Danaher (Marketing Manager , Imaging Systems Business Unit(HP))

Company Background

Sonos 100

The Opportunit

y

The Potential

• Colour Flow is a cardiac imaging product which uses mechanical arrays to produce two-dimensional colour flow images

• Non-Hospital segment of cardiology

• Increased customer satisfaction

• Demand for ultrasound usage is expected to increase with aging population in USA

• New govt. Regulation may help in increasing in demand for medical imaging equipment

Product

Market in 1992

US, 41%

Europe, 33%

Japan, 12%

Others, 14%

Overall Market

US Europe Japan Others

Radiology; 328

Cardiology; 287

Others; 205

Product Market in US ($ mil-lions)

Radiology Cardiology Others

SegmentsH

igh

P

erf

orm

an

ce

Full feature SystemsColour Flow, 96/128 channel capabilities$150000 +47% market share and 64% revenue

Mid

-P

erf

orm

an

ce

Phased array or older technologies48/64 channels, lesser quality$90000-$15000016% market share and 17% revenue

Low

P

erf

orm

an

ce

Even lesser qualityOften lacked colour capabilities$55000-$9000037% market share and 20% revenue

How should the Sonos 100 CF be distributed: through ISY’s Direct sales force or through Manufacturers’ Reps(MR)?

Key Issues

Stagnating growth in USA ultrasound market (Mature market after initial growth in 80’s)

Increasing R&D cost in the wake of limited resources USA ultrasound market is going through transition phase,

which is moving from high-growth, technology driven market to a slower growth, market driven landscape

Management Decision Problem

Op

tions

Ch

oose D

irect S

ale

s

Team

Ch

oose M

an

ufa

ctu

rers

Rep

(MR

)

Positives:› Direct sales team would have long term orientation regarding

building relationship with customers› Direct sales team would be directly under the control of Sales

department› Direct sales team would be loyal to the company

Negatives:› Current Direct sales force doesn’t has relevant experience

and required skills to cater non-hospital segment of market› Increased cost due to investment in training of Direct sales

force

Positives:› MRs are usually former sales managers of major players in this market

having significant experience in this market, great negotiation skills and detailed knowledge of physician reimbursement procedures.

› Non-Hospital customers don’t care much about value added services to be offered by using Direct sales team

› Services of Direst team could be employed to target Hospital market segment

Negatives:› MRs work on commission basis, hence won’t spend much time in

developing the market or providing demonstrations and follow-up service› Loyalty to company or own interest› Lack of technical knowledge about the product› Turnover rate of MRs and additional costs of training and monitoring them

Choose direct sales team for the distribution of Sonos 100 CF because:› To emphasise on building long term

relationship with customers› Opportunity to develop skills of sales team

through training which will be an asset in evolving tougher market

› Greater control on the selling process › Loyalty issue

Suggestion

Thank You