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Compaq Computer: Intel Inside?

Business Research Method

Submited to – Prof. Vinay Singh Chawan

Submitted by

Section D, Group 10

Dinesh Kumar P
Kaushlendra Singh
Kaushlesh Kumar
Krishna Kishore Burugula
Manjul Kumar
Podili Madhavi
Samarpan Saha
Managerial Decision Problem
The managerial decision problems that the Mobile Product Division for the Consumer Products
group of Compaq faced were
1. The retail channel indicated in 1997 that the notebook market was moving to the lower
price points. So Compaq with its policy of pricing to hit the standard retail price points
introduced a model with a price tag below $2000 (Presario 1210) but the margins were
too low to be sustainable. Now Compaq needed to maintain the costs so as to make the
product profitable to avoid losing it to the competitors like Toshiba and Fujitsu.
2. One way to reduce costs was to substitute its major cost component “Intel - processor”
with non – Intel processor which required new BIOS and manufacturing technology and
had an uncertain acceptance among the consumers.

Market Research Problem

The marketing research problems faced by the team were twofold.
1. Greg Memo, the vice president of the Mobile Product Division wanted to have few quick
Focus group studies to test the willingness of the customers to pay more for Intel branded
2. Traci Cox, director of market research was in favour of discrete choice study in
conjunction with the focus groups, as they required a trade off analysis, by studying the
willingness of customers to pay varying amounts for various attributes (e.g. branded vs
unbranded processors) as these studies allowed for interpolation between different pairs
of options.

Research Design
The research design included the following methodology
1. 12 one hour quantitative research sessions with each three sessions followed by a one –
hour focus group study.
2. The study included 257 notebook PC consumers (owner or prospective) in Chicago, San
Francisco and Irvine in September 1997.
3. The respondents were chosen so as to match the target market profile.
Suggestions for improvement in the methodology adopted for the study.
1. The study should have had an additional objective of measuring brand value of Compaq
over Intel measuring the impact of Compaq brand on the buyers’ decision on purchase of
the notebook having any brand of processor inside the machine.
2. The respondents should include only the prospective buyers’ of notebooks in near future
rather than the present owners who didn’t wish to buy in near future as the present
owners would have been biased towards their existing brands.