Decline and Recovery at Compaq

This classic example from the early 1990s illustrates how Techtel research may be used to diagnose demand problems and, in some cases, predict future demand.

The chart below shows how an extended decline in market consideration of Compaq PCs carried over into purchase activity and, eventually, the company's stock price.

The data is based on quarterly surveys of respondents from Techtel's General Business Panel. These business people have influence over the purchase of PC hardware and software at their companies. Respondents of all company sizes—from one-person firms to enterprises with over 100,000 employees—were included in the studies.

In the chart, "Currently Considering" is the percentage of respondents who reported actively considering purchase of a Compaq PC, while "Recently Bought" is the percentage who actually reported making a purchase. As illustrated in the Techtel Total Demand Model, consideration is a necessary step in the buying process. A sustained drop in consideration is likely to lead to a fall in purchases, which may in turn affect the company's revenue, profit, and even share price.

Compaq regained its strength in 1992 thanks to new marketing efforts. Compaq's effective marketing communications during that time helped boost consideration significantly, and with it, Compaq's North American revenues. The company's share price also responded, by the end of the year doubling from its low point in April 1992.

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