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In 1984 Michael Dell was the founder of dell computer to sell custom-made personal system directly to customer. The company has been sell growth from $6 million to almost $40 billion in 25 years. In the world pc, manufacturer industry dell is on no 2nd and in the Fortune 500 list company dell come on 38th position.
The headquartered of dell is in Austin, Texas. Dell is a leading provider of product and services for customer. The main strategy of dell is to focus on deliver the best possible customer computing product and service. The revenue of company in last four quarters totalled $55.43 billion and about 96,000 employees work in solution like technical support and corporate data centre. As per the company executive said by fiscal 2014 the company enterprise business might be reach $30 billion. (www.dell.com)
TRADE AND ISSUE IN THE INDUSTRY:
Before starting the business for any organization, it is very important to look at the market scenario. Because analysing of current market environment will help to feed the planning for future. Marketing business environment made up of three factors (Lomax W and Raman A, 2005):
Internal Environment includes internal customers, wages and finance, office technology.
Micro Environment includes competitors, external customers and suppliers.
Macro Environment includes Political, Economic, Social and Technological forces are called PEST analysis.
This includes government legislation effects companies operation. The dell has to face certain problems in some countries where there is no guaranty of political stability. In many cases, rules of foreign countries may delay the companies to entering in markets. To enter in this market company have to establish partnerships with other company. However, Dell has a good opportunity where free of restrictions. For example, they have opened their market in china in 2001.
The UK and the US both have high inflation rate 3.4 and 1.1 respectively. These will affect the sales of the product. As dell is import and export their part from international market so exchange rate will affect the company. However, currency is not stable these will direct affect the profit of company.
Dell is loyal to their customer. They use unique direct marketing strategy for business. By applying pervasive technology, people and industry will get the great advantage of social and economical. To apply these phenomena, dell is reaching out to customer with new affordable technology. For this, dell started growing its international service to beat diverse facts and ability, add value to understanding the needs of global customer, to improve performance dell develop the network of global supplier and produce technological job.
Demand for computer is high in UK market as education is base on research. Education standard is very high in UK so higher the demand of computer. These days, Teenager is start-using computer at early age. People are using social site for communication and most of technology is base on computer so for next generation it very difficult to live without computer at that time they are more surprise to see dell marketing strategy different from its competitors by this more people start-using dell computer.
Change in technology will more influence the organisations. Consumer's trends are change as technology change. Nowadays more consumers will use online shopping. So company have to update every day with the current market scenario who fail to do this have difficulty to stand in market. Because computer is fastest, growing industry so the pace of equipment change by competitors will affects the company.
Change in government interest will also help the organization for example government help the company for research and development.
SWOT Analysis of Dell Computer
Dell's strategies method is different from any other company they offer direct relationship with customer. They also provide goods and services such as customized computer and internet and telephone purchasing.
A strong industry growth, financial performance and great customer service makes the company different from their competitors in the three reasons: Price for performance, customization, latest technology etc.
Dell does not get success in student segment. Dell mainly focuses on corporate and government marker that affect dell on relationship with the educational market. Secondly, dell's customization method create problem. Because custom-built product take time to delivery to customer as compare to retailer.
Day by day demand for laptop is growing that is another advantage for dell. Second time buyer more relied on dell because of its unique feature of customization. Dell offers its entire product on line so it is convenient for customer to check the product online and place it.
In unstable market, there are lot of threats for computer industry. There are lots of competitors and constant change in new hardware. Therefore, it is necessary for dell to lookout for new things and introduces new laptop.
As dell offer customize laptop but biggest external threats for dell is pricing. There is not more different in price from their competitors. Therefore, customer might choose other brands rather than wait for customize computer to deliver.
Porters 5 Forces:
(Access at: http://faculty.css.edu/dswenson/web/525ARTIC/porter5forces.html)
Michael Porters Five Forces Model
Power of Supplier:
At the present, Dell changes its supplier-management process from manual to automate to react quickly on demand of customer. By doing this they reach to millions of customer with new product. Dell 90 percentage product is purchase online. Supplier place the order base on their requirement and then order go to Dell factory to assemble the product. After receiving, pull signal from suppler it trigger the shipment to place the base on requirement. When the product made it directly through Dell assemble line service.
Threat of new Entrants:
New entrance in the market may create threat for the company because they come up with new product and service at low rate that may affect the other company whom already in the market. For example, if competitors or new arrival come with new technology in hardware industry that affect the Dell.
Power of Buyers:
As Dell offer their product and service through e-commerce. Therefore, it is very reliable to customer to buy product, as it is dynamic. On the other site, in the computer market their other supplier so the customer has choice to buy cheapest and best product.
Threat of Substitutes:
As new products are coming everyday in the market, so this might slow down the growth of computer industry for example, digital TV, set-top box and Apple i-phone.
In every market, there are lot of competitors. As Dell is moved in new market, so its competitors are Apple, Sony, Phillips etc.
Dell divided segments in two major parts relationship and transactional. In Relationship customer buys constantly and in larger quality. On other side, transactional customer buys smaller quality. Both are further divides in sub- segmented. Relationship segment is for corporate, government and medium business while transactional segment is for home and small business. In addition, to handle all business customers dell has employ account manager.
Dell currently divides the market in three parts according to customer need as follow:
Segment 1:-Includes educational institutions, Large Corporations & government's uses For Example Optiplex Desktops and Latitude Notebooks.
Segment 2:- Includes Small Businesses & Home Users For Example, Dimension Range of PC's
Segment 3:- Individuals or Small to Medium size Business For Example, Inspiron range.
Targeting and Positioning
Targeting is the second component of marketing strategy that defines competitive scope. Whom will dell sell service?
Positioning is the third component of marketing. That defines: how going to sell their service?
Earlier, company has forgotten to target its market as a result they have difficult to identify basic need of customer. Nowadays, Customer is looking for valuable product as compare to spend money. Customer is looking for value added product and quality service. Therefore, to cover this issue dell has to segment different product and service as compare to market.
The six main product dell offering are desktop PCs, servers and networking, storage, mobility, software and peripherals, enhance service and financial service.
Desktop PCS: To target the different market dell using five lines desktop model. For example,
Optilex line : To help corporate and government customers dell design these model by offering security and stability.
Dimension line: This model is design for home user and small business because they want latest features for entertainment.
XPS tm and Alienware: This one is design for entertainment and gaming purpose.
Vostro tm: This one provides specific needs such as technology and service for small business.
Servers and Networking: Same as desktop pc dell have different options for servers. Such as tower servers for remote servers, small organization and corporate customers. The main purpose for design of servers is to give customer better performance and scalability by using PowerEdge tm servers.
Storage: Such as network storage, removable disk backup, disk and tape backup system.
Mobility: To target customer dell design laptop to provide facility like entertainment.
Software and Peripherals: This includes software and hardware, digital cameras, televisions, printers etc.
Enhanced Service: Dell Customized service help the customer to better environment service and return on investment. Main enhance service are infrastructure, deployment, recycling service and training.
Financial Services: This includes joint enterprise between Dell and CIT group, Inc.
Dell Marketing Strategy:
Dell vision is to provide different product and service that are reliable to use. They offer high- quality, customized system and relevant technology.
Dell has unique customer service. For example, customer can make the order my using telephone or website. Dell also offers customization for product. Like customer can select any configuration and price range from their product line.
Dell has simplified information technology for customers: Dell has implemented the information technology to provide direct relationship with customers about product and software solution.
Dell offer customer choice: They are various options for customer to use service and purchase produce such as website, telephone and kiosks. In addition, customer can select any configuration and price range from their product line track their order.
Customer can purchase custom-built product and custom-tailored service: Dell is using just in time strategy. In this one, they do not make stock before but when customer makes order, they provide the customer with latest technology by these reducing inventory levels.
We are committed to being environmentally responsible in all areas of our business: For product recovery dell using environment consideration in every stage of its life cycle.
Marketing Mix of Dell:
Marketing mix include 4P's that are price, product, place and promotion.
Dell thinking is different from any other brand they believe that provide more benefits to the customer as per their needs. They do offer verity of product for both business and home class. For customer requirement dell can customize their product design, and base on this dell manufactures and sell Inspiron and Latitude laptop. Inspiron laptops are targeted to customer who required high performance and on the other side Latitude targeted to corporate and government. Product can be bought using telephone or by website.
'A name, term, sign, symbol or design, or a combination of these , intended to identify the goods or services of one seller or group of seller and to differentiate them from those of competitors(Kotler P, 2002). '
Dell uses several brand names for its different product ranges:
Optiplex for office desktop computer
Dimension for consumer desktop computer
Studio for student computer
Inspiron for consumer laptop
Latitude for commercially focused laptop
Product lifecycle of DELL:
Product life cycle means any product of the company the time that introduce in market and until the stops producing as it is no longer profitable.
The hardware company such as Dell, technology keeps changing as per customer required so the product and components have short life cycles. Therefore, company have to keep proper management of new launch product and keep introducing new product to deal with competitive market. There are four stage of product life introduction, growth , maturity and decline.
1. Introduction: First stage of product life cycle where new product introduced and volume is very low. At this time, technology is new in market so its take time to lead by this affect the delivery system of company. Dell correctly estimate the new components needs so they do not have too much time to lead in market for example Adoma.
2. Growth: Second stage volume growth is very high. Therefore, Dell have to constantly keep track with suppliers to ensure position of parts and check that supply chain is not affect by the part shortage for example studio.
3. Maturity: At this stage, volumes are very huge but profits are lower because the competitors already come up with new product. As demand are less than the previous two stages. Here Dell has profit margin is less per components because there is price competition for example latitude
4. Decline: At this stage, Dell would soon to stop producing his product because the product sales would drop. Dell has o take is decision in order to technology is become older. Also, have to plan in advance so that it would not affect the other stage of sales and supply chain for example Dell stop the production of inspiron.
Pricing is depending on the product life cycle. As different products come in market everyday so there is limit for company to stick with one price. Dell offer customer to low price and profitable PC. For this reason dell, attract local customer to product price. Because dell product price is largely depend on option and service as product are customize. Dell is aging its market share price.
Goods and/or service are moved from the manufacturer to provide goods/service to customer from a channel. It is good for the customer to find dell in nearest point and always give for the services so its build the customer trust to dell. Dell always give his best service to solve the customer problem so its increase the dell sales and profit. For example, dell latitude and inspiron series.
For distribution, dell using supply chain management process to sells the product to customer in offline modes via Internet or telephoning. For shipping the product to customer dell using DHL and FedEx services to fulfil the requirement of customer. Dell using direct distribution strategy in this one they contact with buyers discuss price with customer and do market research. In upstream of direct distribution, dell using business to business and EDI technology to communicate with its supplier and in downstream, dell using business to consumer technology to communicate to telesales.
Promotion is a tool the company use for marketing communication. Previously, Dell did not concentrate on marketing but after revolution in 1999 dell change its marketing strategy. Dell markets its product using internet, catalogs, mailing and customer newsletters. Dell has recently started promoting using different retails shop such as Wal-mart, Best buy and Staples. Dell advertising is straightforward there is no hidden charge. Dell has recently started social media and blogging to direct contact with customer query by using wikis, twitter etc.
Dell advertise its goods and service using internet, direct marketing publications such as newsletter and leaflet. They also put their kiosks in different shopping centres to allow customer to view product and purchase online. They are also using blog side for communication as http://www.direct2dell.com/blogsite. In addition, http://www.dell.com/ website gives the information about search and shopping. For customer to contribute ideas and suggestion they using http://www.ideastorm.com/.
Dell has to open their physical shop in emerging country like India, Brazil and China because still customers are not aware of e-commerce and the latest marketing trends.
Now a day's HP follows new marketing strategy such as they stop asking shipping charges on computes products so Dell has to follow the same strategy to compete in the e-market.
Dell should introduce some high quality and performance laptops with limited edition to eye catch high profile customers as Apple is doing currently in Market.
Dell should offer to governments and private sectors to sell computers in very cheaper prices as it will attract middle class customers to buy their own from Dell because in day-to-day life they will interact with those computers. For Dell it will be a free advertisement.
Dell should focus on computer accessories market where hp is doing product diversification.
Dell should look into promotional activities with an innovative approach as other ecommerce shops are providing to online customers.
The demand of online selling Notebooks for dell is increasing effectively however the supply is diminishing and there is a long waiting time for customers to deliver, which makes customer dissatisfied.
Dell is the best hardware manufacturer company in the world in the terms of profits after HP because of their founder Michael Dell. By using his unique marketing strategy, Dell makes his space in between Microsoft, Intel, Acer and Hewlett Packard.
As like there competitor HP, Dell also have to expand in that market. By using the external market, Dell will make more profits and opportunity.
Therefore, Dell has to diversify its product and service to different sectors.