This is an industry where it can be said that there would be new entrants always. HP will have to compete not only with the restaurant industry, but would also face competition from supermarkets and more. Hence it can be said that in this extreme competitive situations, companies have to retain their unique selling proposition (Porter, 2008; Porter, 1983). The unique selling proposition of HP is that of the addition of Chinese herbs. HP attempts to diversify to the fresh fruit juice market but wants to keep the Chinese herbs and hence would be retaining its USP. So 3) USP strategy which HP is currently employed must be retained as well when diversifying.
Threat of substitutes only happen when customers are able to get a similar product or a similar product experience elsewhere (Finkle, 2012). The costs to switching and more come to play here. Now if HP was to present the fruit drinks with the Chinese herbs then it could be said that the company is actually retaining its unique selling proposition so no other company would be able to present that unique experience to customers.
Three strategies were identified. The first strategy is that of ensuring that a new juice mix, the combination of fresh fruit juices and the Chinese herbs was presented. The second strategy is that of working with repeat consumers in order to find out consumer grievances and more. This is a good strategy as it will directly help the company know why consumers left HP in the first place. The third strategy is that the company should diversify in order to attract its lost repeat consumers back and at the same time also retain its original product. It is recommended that the company focus on the third strategy, both diversify and at the same time retain its original products.
The counter argument that could be made is that in selling original product and also including a newer product just for its repeat consumers, the company might be losing focus on its products. Even technology based companies such as Apple have faced issues when they have attempted to focus on many products (Chen et al, 2013; Worthen et al, 2009). Now HP is a small scale product and too much scattered focus might change its strong points. The rebuttal to this argument is that, the company is not focused on many product diversifications now, it is only focused on an essential product diversification which is needed for the company and hence that cannot lead to scattered interest, instead it will help bring back the lost customers and also retain the existing ones.