HP: No spending cut

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Hewlett-Packard Co.'s plan to pare an estimated 1,770 marketing jobs globally is only the latest phase of an ongoing plan to streamline the business and is not expected to significantly impact HP's advertising and marketing spending, according to Peter Van Naarden, director of advertising and brand management.

The cuts, disclosed last week, will reduce overlapping product marketing, market development and related marketing functions within the 88,000 person company by April.

"This is part of the broader issue that HP is trying to address," Mr. Van Naarden said. "We have too many marketing people and too few resources in terms of programs, including advertising. We typically have had a lot of people who are doing marketing just for one product line."

While the cuts span all marketing disciplines, the majority are expected to come from HP's Business Marketing Organization and Consumer Marketing Or-ganization, which handle all product marketing. However, HP's lean Palo Alto, Calif.-based corporate marketing unit is in the process of bulking up a bit.

Despite the marketing cuts, Mr. Van Naarden said HP won't let up on global marketing and ad spending, and he said the company is gaining efficiencies through its recent media consolidation. Still, "HP is feeling the pressures of the economy like any other company. " Budgets need to be planned on an annual basis, and we think that in times of economic recession, if you can speak about that, the opportunity is there to really stand out," he said.

Mr. Van Naarden added: "I can assure you that we have absolutely no plans to reduce budgets."

HP reported spending $1.1 billion on global advertising in the year ended Oct. 31, down from $1.3 billion in fiscal 1999 and $1.2 billion in 1998.

HP won't reveal its 2001 ad budget for the fiscal year started Nov. 1, though Mr. Van Naarden has said marketing spending - which includes advertising - will increase at least 10% (AA, Nov. 27).

Mr. Van Naarden conceded that some monies might be redirected to address shifts in marketing priorities on an as-needed basis. "We want to be better coordinated, and have the right level of advertising in all quarters," Mr. Van Naarden added.

HP this month revs up the next phase of its global "Invent" campaign via Omnicom Group's Goodby, Silverstein & Partners, San Francisco, highlighting actual inventors within the company who toil on next-generation projects in labs and offices around the world.

HP's realignment, spearheaded by Chairman-CEO Carly Fiorina, has culminated in the trimming of 83 product lines to just 16, efforts to reduce manufacturing costs and personnel, and consolidation of media at Publicis Groupe's Optimedia, London and San Francisco.

These moves, made over the course of a year, come as technology marketers large and small struggle to gain greater efficiencies amid a softening economy, weak consumer demand and dismal earnings forecasts.

Microsoft Corp. continues to refine its Central Marketing Organization created last year and has moved to adopt a more integrated approach to media buying and planning. Co-op-style advertising programs in which partners share costs have become more popular, such as ads featuring IBM Corp. and partner company Siebel Systems, and advertising linking Microsoft, Intel Corp., Compaq Computer Corp. and Dell Computer Corp. HP last year ran ads showing how HP's technology powered high-profile Amazon.com.

HP reported disappointing fiscal fourth-quarter earnings of 41 cents per share for the quarter ended Oct. 31, a dime below analysts' estimates.

Decision-making on marketing and brand strategy takes place within the company's Marketing Council, a small group that meets monthly. An advertising council oversees advertising-related issues and priorities. Ms. Fiorina is said to take an active role in both.

Copyright February 2001, Crain Communications Inc.

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