Key Lessons to Be Learned from the Treo

A key marketing lesson to be learned from the Treo is that you must recognize who your real customer is. Prior to launching the Treo, Handspring focused mainly on the end user as its real customer. This worked out fine with the Visor because this was a traditional product sold through traditional retailers. With the Treo, however, the customer focus had to shift. Because the Treo was a mobile phone and a wireless Internet device, the wireless phone carriers were a very important element in the chain because their subsidies played such an important role in the pricing of the Treo. They were also very important to the end user because the Treo was of little use unless it was connected to a carrier.

Shortly after launching the Treo, Handspring realized that it had to walk a fine line between satisfying the needs of the carriers and satisfying the needs of the end users. In many cases, it is the carrier that really decides to buy the product. Handspring quickly recognized that if it didn t satisfy the carrier s needs, even if those needs were opposed to the end users needs, there would not be much of a market for the Treo. The carrier is the one who must certify the product, put it into distribution, and sell it to its customers.

Today Handspring is totally focused on satisfying the needs of the carriers.It has account teams that are assigned to different carriers. These teams totally understand how the carriers do their pricing, how they sell their services, and how they think. When they give the carriers advice on how to market the Treo, they give this advice in the carriers context, and the advice is focused on how the carriers can accomplish their mission. Handspring now firmly believes that you must know who your customer is and understand your customer s needs.

The other lesson to be learned from the Treo is that if you can create a preemptive product, you will improve your chances of success. The mobile phone carriers were interested in the Treo because it was a unique solution to their customers problems. For the same reason, the media were willing to publicize the Treo as something that was new and newsworthy. If you can create the ˜ ˜only alternative for your customers, you will significantly increase the odds of your success.

Summary Marketing Plan for: Treo ^TM Mobile Phone, Web/E-Mail Device, and Organizer Handspring, Inc. ^[1] 2001

MARKETING PLAN SUMMARY

1. BACKGROUND. One of the original visions of the founders of Handspring, Inc., was to add wireless capability to an organizer. This came from spending a lot of time with individual users of organizers. The result was the Treo, which was one of the first devices to integrate a mobile phone, Palm OS organizer, and wireless data applications in one compact, fullcolor communicator. Handspring was founded by some of the same people who founded Palm and invented the Palm Pilot.

2. MARKET REVIEW. There were two large consumer segments that represented an opportunity for Treo. The first was the fifteen to twenty million users of Palm organizers. Based on its research, Handspring believed that a percentage of these people would want to replace their organizer with a device that included a mobile phone. The second was the huge number of high-end mobile phone users. The research indicated that a percentage of these people currently felt a need for an organizer, but did not want to carry another device. Handspring believed that a merged device would appeal to many of these people. Given the size of these two segments, Handspring believed that there was a sizable opportunity.

3. CONSUMER USAGE AND ATTITUDES. Handspring used a combination of market research vehicles, including traditional focus groups and informal research that involved talking to a lot of customers face to face, on the phone, and through e-mail over the Internet. This market research, together with scores of unsolicited comments from people asking about a combined device, clearly indicated that there was an opportunity for a multifunction communication device. Many of the users of existing mobile phones, mobile Internet devices, and organizers expressed an unfulfilled need for such a device. Many of those who were shown a prototype combined device expressed a strong purchase intent. It was obvious that a percentage of people wanted to add a mobile phone to their organizer, or to add an organizer to their mobile phone. Many more wanted to add e-mail capability.

4. KEY STRATEGIC MARKETING OBJECTIVES. Handspring s objective was to create a device that would be the only thing a user would have to carry. This one device would be an excellent mobile phone, a great organizer, and a very effective Internet device. There were other combined products on the market, but none of them did everything well. The objective was that when customers bought this new device, they would get rid of their present organizer and get rid of their present mobile phone.

5. MARKETING PLAN ELEMENTS

   1. Brand name . The new product was called Treo. The name Treo came from the idea that the product replaced three things: the phone, the organizer, and the wireless e-mail or Internet device. Research showed that most people liked the name because it was short and easy to remember. Handspring liked the name because it communicated the three different uses of the device. The company even went a step further and created model numbers that were all divisible by three: the Treo 90, Treo 180, Treo 270, and Treo 300.

   2. Product line. The Treo line today has four different versions, all with a keyboard. One is the black-and-white Treo 180. The Treo 270 is a full-color GSM communicator that enables the user to see text and graphics in vivid color. The Treo 300 is a color version designed specifically for the Sprint PCS network. Finally, there is a Treo 90, which has the same kind of design as the other versions but is purely an organizer. As of this writing, the overall Handspring product line is completely Treo.

   3. Product design. Product design was critical to Treo s success. Handspring knew that the design of the Treo was very important in differentiating it from all of the other mobile communication devices on the market. The addition of the keyboard was a key differentiator for the Treo. The keyboard made it easy for the user to find contacts, dial the phone, type messages and enter data quickly and easily. The backlit keyboard also let the user do everything in low light conditions.

   4. Packaging. One of the ways in which Handspring tried to communicate the Treo sales message to consumers in the retail model was through packaging. The packaging for all Treo products showed pictures of the product and examples of the screens (in color for the full-color models). The packaging also explained each of the features of the Treo device, along with product information and a list of the equipment that comes with the purchase. The packaging used by the wireless phone carriers is customized to their specifications.

   5. Pricing strategy. Handspring s pricing strategy for the Treo is to sell the devices to the wireless phone carriers at a wholesale price that will cover all of the company s costs and generate a sufficient profit. The carriers set the retail prices, which consist of a base price coupled with subsidies for users who sign up for the carrier s service. In many cases, the carriers will use discounts to further reduce prices and entice new customers to sign up with them. Retailers may also offer discounts on the Treo. In this case, the customer may get a discount from a retailer or a wireless carrier s store plus a subsidy for signing up for wireless service. A customer may also buy direct from Handspring s web site and then get a subsidy from a carrier for signing up for service. In today s market a customer may pay anywhere from $499 to $299 for a Treo.

   6. Sales and distribution methods . Handspring decided to sell the Treo directly to the wireless phone carriers. The carriers then sold the Treo through their own stores as well as through other retailers. Direct marketing is also a key part of Handspring s marketing strategy. This is one of Handspring s most profitable distribution channels because the company does not have to give margins to retailers and receives a subsidy from carriers for signing up new users. Much of Handspring s direct marketing takes place over the Internet. Handspring spends a lot of time and energy making its web site easy to use.

   7. Advertising strategy. Handspring s primary advertising strategy is to help the wireless phone carriers communicate the benefits of the Treo to their customers. The bulk of the advertising is actually done by the carriers. The Treo is a unique product, and the carriers often include it in their advertising to motivate consumers to sign up for their wireless phone service. In some cases Handspring runs additional advertising in newspapers and on radio to get people into stores to see a demonstration of the Treo.

   8. Internet marketing. In addition to its web site, Handspring also uses Internet marketing. The Treo newsletter is a very successful tool. Handspring tries to make these newsletters really valuable so that people will read them instead of deleting them. It does this by adding tips and tricks as well as alerting customers to new and interesting applications that can run on the Treo. Handspring creates the Treo newsletter internally. It also does classic banner and search engine advertising.

   9. Sales promotion. Handspring produces brochures and other collateral material that it offers to retailers and uses at trade shows.

   10. Publicity. Publicity was an important part of the initial Treo product launch, and it continues to be a significant part of ongoing communications. The public relations objective is to get the media to talk about, write about, and review the Treo as often as possible. Handspring often sends the media Treo units so that they can write independent reviews. The company has been very effective in getting to key writers and motivating them to review the device.

   11. Test marketing. Handspring began to experiment with wireless devices with its first wireless product, called the Visor Phone. The Visor Phone enabled Handspring to learn a lot about building wireless products and a lot about working with wireless carriers. From its interviews with and observations of users, however, the company knew that there was much more to do. There was an obvious need for effective Web access. Handspring could also see that the phone networks were becoming good enough on the data side for a high-quality merged device. All of this led to the development of the Treo.

 

^[1] The brand name Treo is a trademark of Handspring, Inc., and is used with permission.