Answer Case

Question 1:

Before introducing its inkjet printers, did Hewlett-Packardhave to estimate the demand curve for them? Why or why not?

Answer.

1. It is clear from the facts that the launch of the inkjet printer by HP, was done with an idea to come out with a unique product. The technology used in the inkjet printer was new and hence the consumers were unaware of such a product's availability. Keeping this in mind, a demand curve would have definitely helped HP in achieving success with the launch of the inkjet printer. But then, this uniqueness of the product made it difficult for the company to come out with a clear forecast and hence a demand curve as there was no previous records of sales. At the same time this product had no substitutes, etc in the market too. Adding to this was the fact that HP had no clear understanding about the amount of money that consumers would be happy to spend on this new product. Hence, the estimation of the demand curve was not possible for HP in this scenario.

2. In 1984 HP came up with first Inkjet Printer, which was quite far from the perfect to be a complete knock-out. HP was not only the inventor of the Inkjet printer it was as well the manufacturer of the low cost inkjet printers. Before HP has launched its Inkjet printers there were no market existed for it as dot-matrix printers were the market leaders and consumers barely had any idea of Inkjet printers. There were basically existed no way to determine how consumers are going to react to these new Inkjet printers. But at the same time the new printers have many advantages over the existing Dot-matrix printers like advanced technology, low price etc. HP by their market analysis, consumer surveys, research became quite confident over the success of its new Inkjet printers which were surely going to replace old leader i.e. Dot-matrix printers.

Despite of having economies of scale HP could have chosen Direct Methods of Demand Estimation, like;

i..Consumer Interviews, by taking a representative sample of consumers briefing