CASE OF THE

PROFITLESS PC
Abhishek Malhotra
Akhil Bajaj
Apoorv Khanna
Kedarnath Kulkarni
Megha Srinivasan
Ramakanta Panigrahy
Richa Sinha
 PROBLEM
Intense competition in the STATEMENT
consumer segment of PC
dragging down the profit line.
Sales were saturating and gross
margin had fallen to 12%.
 CASE SUMMARY
Lindas PoV: Increase customer loyalty by enhancing customer relationships and improving the customer
experience in-store and post sales. Increase profitability by bundling offerings to the loyal customers through direct
channels.

Bobs PoV: Given that PC is getting commoditised, focus on cost reduction by reducing SG&A expenses,
optimizing supply chain, and customer service.

Mikes PoV: Killer App

Victors PoV: Strengths lie in commercial business, and thus participation and investment in consumer business
should be limited. In fact, existing infrastructure of customer service and technical support should be used to service
the consumer segment.
 GEORGE QUESNELLE
VP & Director Marketing SmithKline Beecham

Linda needs to focus on learning more about her product, the customers and
the brand equity that Praxim group enjoys with its customer base.

She will gain far better insights about Praxim's strengths & weaknesses if
she spends time with actual product ends users.

She needs to involve her team - Bob (VP - Commercial) and the others in
the decision making process. This will allow her to get better insights about
the customers and their purchase habits.

Linda should test the ideas that she is proposing (direct sales channel) by
running smaller pilot programs so that she can publish the results and use the
pilot success to convince the team and get their overall buy-in.
 GEOFF MOORE
Chairman & Founder Chasm Group

Buying risk is a key differentiator in marketing consumer packaged goods

and high-tech goods. Consumer packaged goods have negligible buying risk
owing to repetition/habitual purchase, whereas high-tech goods owing to
constant product changes and upgradation results in high buying risk

High-tech consumers look for assurance brands rather than prestige brands

In a commodotized market such as high-tech, consumers go with the market

leader by default, as the market leader is perceived to be synonymous with
reliability and assurance

Geoff Moore believes that market share is a better indicator of a brands'

success and not branding. He agrees with Linda that the industry faces
shortcomings in meeting consumer demands, however disagrees with the
aggressive approach suggested by her
 LARRY KEELEY
President Doblin Group

Larry is right about the Industry undergoing a drastic Shift in Value

migration from manufacturing and retailing to customer support and
consumer needs

Commercial Business gives 80% revenues ; Consumer Business and Others

give 20%

No point spending in improving customer experience a prevailing margin is

low industry wide

Internet is the only channel as it is low capex intensive

Consumer research/surveys are required to properly understand consumer

behaviour
 SCOTT WARD
Professor Marketing - University of Pennsylvania - Wharton

The upper management in Praxim has a narrow approach concentrating on

individual divisions rather than holistic approach.

Lindas approach lack Marketing basics i.e. Segmentation , Target Customers

and Consumer behaviour data, Praxim as an Organisation lacks clarity on
positioning - as a brand or as a tech company?

Lindas plan is generalised on Mr. Middle America, and not on data driven
market research. A concrete marketing plan will give a common vision to
Praxim and clarity on customers and deliverables. Narrow approach rather
than holistic approach
 DONNA DUBINSKY
CEO Co-Founder JD Technology

Product Differentiation: difficult to achieve since core components of the PC

are driven by Intel and Microsoft requirements and other industry standards,
which ultimately make the PC a commodity.

Customer Service and User Friendliness: Adding direct channel and

introducing dedicated call centers would be cost prohibitive. She
recommends that the PCs be pre-loaded with software.

Distribution: Sell directly online

Innovation: Mikes killer app will not conform to the existing requirements of
the PC.
 PHILIP PIFER
Senior VP New Ventures Frito-Lay

Lindas strategy of investing in brand building without increase the value to

the customer does hold water in the business sense.

His point is further strengthened by the fact that PCs are costly and thus
customers would look for functional value rather than just brand.

Praxim can gain first mover advantage by differentiating its products. This
product differentiation needs to be based on market research and customer
insights.

Jack might as well consider exiting the consumer segment business if the
team is not able to arrive at a sustainable and viable business solution.
FINAL COMMENTS!
There is some scope for product differentiation by way of introducing new models catering to the different
customer segments that are identified via a customer and market research. Furthermore, accessories could be
marketed to provide a level of customisation for the customers.

The PC being a commodity has little scope to add intangible benefit. We thus feel that Praxim should exit the
customer segment, if a sizeable addressable market doesnt emerge.

Lindas marketing plan needs more weight and muscle. It needs go deeper into the product and the customers.
She needs to be more inclusive of her team in the decision making process and she needs to build some trust in
the team by executing her plans in the form of small pilots.