NEW NO. 1 PACKARD BELL NEC FACES TRIO OF PC CHALLENGES

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Packard Bell NEC, newly crowned as the No. 1 U.S. PC marketer, still must sort out marketing for three distinct brands.

But the company says it's making a major commitment to traditional advertising with its flagship line through new agency M&C Saatchi Agency, New York.

Packard Bell is considering a "general theme" of "America's favorite computer," said VP-Marketing Mel Ransom. Advertising is slated to start this summer, with the focus on the fourth quarter.

Packard Bell Electronics and Japanese giant NEC Corp. last week merged their non-Japanese PC operations, effective July 1, extending an existing alliance. Old Packard Bell will be in charge of the new Packard Bell NEC, with NEC owning about a 40% stake.

Packard Bell now has three brands: Packard Bell for the home, NEC for business, and Zenith Data Systems for government and education. Zenith Data was acquired in April from Packard Bell investor Groupe Bull.

COMBINED 15.2% SHARE

Packard Bell NEC's three brands had combined U.S. PC market share last year of 15.2%, taking the No. 1 spot from Compaq Computer Corp., which had 12.3%, according to Dataquest. Compaq will remain No. 1 globally.

The company has its work cut out for it: The operation has an image of low quality and poor customer service and is dogged by reports about financial woes. Zenith Data sales have slipped, and NEC is a respected brand but a small factor in PCs outside Japan.

Packard Bell hired M&C Saatchi in May, attracted by the agency's work for British Airways.

Mr. Ransom's goal is to build Packard Bell's "brand equity," a decided shift from the past focus on price-and-item retail ads. Brand ads could help change perceptions about quality and service, and NEC's involvement suggests financial stability.

CO-OP CONTINUES

The Packard Bell brand is keeping its mainstay retail co-op effort, meaning that Mr. Ransom is increasing costs even as PC industry margins fall. But he said Packard Bell is committed to a long-term brand campaign. The budget isn't set.

"Over time," he said, "this investment will be repaid in increased revenues and, ergo, profits."

M&C Saatchi will advertise the Packard Bell brand in the U.S., Asia and possibly other markets. No decisions have been made on whether the shop will handle all three PC brands.

According to tracking service Adscope, Zenith Data last year spent $9.3 million in the U.S. via Hodkins Simone & Searls, Palo Alto, Calif., while NEC spent about $7.4 million on PC ads through Hampel Stefanides, New York.

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