A case study on Dell Inc

Based in the Texas in USA, Dell Incorporation is world’s one of the biggest seller of computer and laptops. It is a multinational information and technology corporation which employed around 76500 people across the world as of 2009.

To talk about of origin of the Dell Incorporation, the concept of the company was developed and founded by Michael Dell in 1984 as in the name of PC’s limited. While he was studying in university of Texas he was 20 yrs old and he founded the company with the capital of $1000. At the period of 2009 the company had the asset valued of worth $26.500 billion.

Dell Inc. was started with a small concept of direct sell to the end consumer by Michael Dell. He was mainly focused to avoid the intermediaries and cut the cost of product and sell it directly to the end user in comparatively cheap rate. Dell’s company PC Ltd. Was able to sell IBM clones for 40percent less than the competition.(1) This strategy gave a way to run the company in instant growth. Once Dell tried to sell its products indirectly through warehouse clubs and computer superstores in 1990 but met with little success and the company refocused on its more successful direct to consumer sales model. Dell started to sell computer by Internet website from 1996.

Dell started to grow up as in the period between1980 to 1990 to become the largest sellers of computers and servers. In 2009 Dell took the 3rd position in computer sales industry as the 1st position took by Hewett Packard and 2nd position took by Acer incorporation. Since the history of computer sales to current position Dell incorporation is not limited with single product. It sells verities of products like servers Data storage Devices i.e., USB storage devices, Televisions, Notebooks, Scanners etc. It also sells varieties of electronic products manufactured by others.

In the mean time of 2006 it was listed in the 25th largest company ranked by Fortune Magazine in the Fortune 500 list, 8th on its annual “Top 20” list of the most-admired companies in the United States. In 2007 Dell ranked 34th and 8th respectively on the equivalent lists for the year. A 2006 publication identified Dell as one of 38 high-performance companies in the S&P 500.

Mission and strategies of Dell

Dell’s mission is “to the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of highest quality, leading technology, competitive pricing, individual and company accountability, best in class service and support, flexible customization capability, superior corporate citizenship ,financial stability.”(Dell)

Dell’s own corporate website defines its global strategy as “our global strategy is to be the premier provider of products and services including those that customer requires to build their information technology and Internet infrastructures.”

Strategic marketing problems of Dell

One problem that is visible in this regard is that it would need to re-evaluation of the current marketing campaign whereby the campaign addresses the consumer at large. By narrowing the scope of the current marketing strategy Dell would be able to achieve niche marketing goals.

Another problem with niche marketing in a pervasive company like Dell is that it tends to reverse some of the process of manufacturing or rather alter it. For example suppliers would have to be unique who can do mass customization at shorter production time frame as well as maintaining quality standards. Dell therefore has to focus on quality control as it gradually integrates this new marketing strategy.

there is also the issue of global positioning. Dell’s consumer base is not a typical American or Canadian but a wide range of customers from Asia, Latin America, and Europe as well each with distinct needs and requirements. The difference in corporate culture as well as professional attitudes towards IT products and services create a difficult need/requirement profile that would be challenging for Dell. As more and more consumers in developing regions like China, Brazil, France, and India grow to appreciate computerized environment, they also have complex needs. This way Dell would have a difficult time to incorporate a pervasive marketing strategy. Instead, it should maintain differential but integrative marketing strategy so that the company has a niche in each of the markets in which it manufactures products.

Strategic marketing alternatives

Price Strategy

Product Strategy

Promotion strategy

Positioning and Target Market Strategy

Market segmentation Strategy

Growth Strategies

Innovation strategies

Market expansion strategies

Marketing strategies adopted by Dell

How dell reached in current position of fame is due to their own marketing strategies which they have adopted. Some marketing strategies which i found followed by Dell are as follows:

Direct Sales Model

The strategy which helped Dell to run in the current position was direct sales approach. The reason behind to use this model is to avoid the intermediaries and sell the product directly to the final user in cheap rate. Direct sales model is a example of market penetration strategy. Direct sales means that dell must reach out to potential customer, either through its own sales force or through advertising and other marketing efforts. (Dell pdf.pdf through Internet)

Market Segmentation

Dell has divided its customers into two parts. One is corporate customers and another is home user customers. It has differentiated the product and services according to its customers. This segmentation is very necessary as business based customers generally need mainframes and different types of equipment opposed to the ordinary user at home who could just need the bare minimum to do his/her computing .

Direct Customers Relationships

Dell has mainly focused on its customers relationships. It provides equal priority to each customer. Through the direct sales model it can find out the need and desire of customer what they want. Vendors who sells their product through resellers often don’t know who their final customer are, so they must rely on secondary market research to identify their own customer trends earlier so it can respond with the desired products before its competitors. It has established a 24*7network mechanism to listen and to provide services to its customers.

Swot Analysis of Dell

Strengths

According to Dell.com, Dell incorporation announces itself as the world’s leading computer company. Dell is the World’s largest PC maker. Started with the capital of $1000 as in the current stage it has collected $2.478billion net income in 2009. For the last couple of years Dell has taken its position as a market leader. Dell’s brands are one of the well known and renowned brands in the World.

Dell avoids the intermediaries and supplies product directly to the end users. It uses Customer Relationship Management approaches with information and technology to collect data on its loyal customers. So that a customer selects a particular PC model, then it goes for to add items according to customer’s choice and upgrades until the PC is fitted out to the customer’s own specification. The components which are used to make a computer ready are made by suppliers, never by Dell. PC’s are fitted by using comparatively cheap labour. You can even keep track of your delivery by contacting customer services. When the goods became ready it will reach among the customer by courier.

Weaknesses

Dell has huge varieties of products and components made by different suppliers and different countries. So sometimes it faces unexpected problems caused by different component which is used for the products. It is a minor case which happened in 2004. Dell had to recall 4.4 million laptop adaptors because of a fear that they could overheat, causing electric shocks or fires.

The main weak point of Dell is that it doesn’t manufactures product. It depends upon other manufacturer and it buys product from supplier and assembles the product as per customer’s choice and desires. So dependability is the main weak point i find in a case study of dell incorporation. Dell buys its component from selected hi-tech component manufacturer .So sometime manufacturer or supplier who supplies for Dell stop manufacturing, Dell has to bear huge loss on its overall sales.

Opportunities

When Michael Dell was replaced by the post of chief executive officer by Kevin Rollins in 2004 the company had got a new blood, management, vision and new strategy. That could lead the organization into a new even more profitable period.

Dell is chasing the diversification strategy by developing a lot of new products to its range. It also provides multiple facilities to its customer such as three in one, two in one for example getting computer peripherals when buying a Dell PC. It also produces non-computing goods such as IPod, and other electronic brands. Therefore the non-computing goods of Dell compete against others. Pursuing a diversification strategy Dell can find out new markets and customers in order to sell its mass products.

Dell develops the low cost price customers in order to sell its retailers all over the world. The produced PCs are unbranded and they should not be known as being Dell, when the customer makes purchase. Rebranding and rebadging for retailers, although a departure for Dell, gives the company new market segments to attack with the associated marketing costs.

Threats

The biggest threat for Dell incorporation is competition in the existing global PC market. Well reputed companies like IBM, COMPAQ also adopting the same kind of marketing strategies, so in the current global market of PC compete with the same kind of product is an emerging challenge for dell incorporation. As with all profitable brands, retaliation from competitors and new entrants to the market poses potential threats. Dell sources from Far Eastern nations where labour costs remain low, but there is nothing stopping competitors doing the same – even sourcing the same or similar components from the same or similar suppliers. Remember, Dell is a PC maker, not a PC manufacturer.

Dell’s commitment to customer value, to our team, to being direct, to operating responsibly and, ultimately, to winning continues to differentiate us from other companies. The Background section provides critical information and history about Dell’s business world

-Economic factors- The recession slows down consumer spending and disposable income reduces.

Dell Inc. addresses these issues in many ways. It manages weaknesses and threats to create a positive outcome.

Suitable marketing Strategy and implementation plan for Dell

Marketing Strategy

Product: Dell’s unique approach to manufacturing separates the different processes so that Dell is not reliant on singular production or supplier’s chain for equipment production. Though there is no segregation of the different products and services but nevertheless in separating the components enabled it to target the customers based on the regions in which the products are manufactured. By assingning each regionalized production center particular component for production not only have diversified the risk of concentration of labor and production costs but also depending on particular infrastructure.

Price: For the above reason Dell’s product pricing reflect the affordability of the local consumers. For example basing plants in Xiamen, China Dell has been able to provide products and services at the local prices without iincurring additional costs to price. Price reasonability and the availability of support, after sales services and parts have alleviate Dell’s position from others. Place: For this reason, Dell has been able to affect the location strategy aspect of its marketing campaign. As Dell’s products are always available at the nearest dealers customers develop trust for the “local Dell” thereby achieving the objective of gaining their trust in Dell products and services, and forming a large and diversified consumer base.

Promotion: Dell in the past have not concentrated on extensive marketing campaigns but this revolutionarized in 1999 when Dell changed its tactics by engaging in extensive marketing campaigns. The “Be Direct” attitude has changed the way consumer view Dell as the local producers. They also tend to have exclusive trust in exploiting the company as evidence from the customer from UK who complaint against Dell’s promotional campaign, that the company does not follow its promise. However, apart from the ad hoc mishap in its marketing campaign Dell has been successful in its promotions. Yet, it is time again to revise this campaign as many of its rival is begining to follow the same trend (“Dell Launches New Consumer Advertising Campaign” 1999).

Positioning and Target Market: What Dell needs to achieve now is to focus on positioning of its products. Earlier, Dell’s consumers can be anyone and anywhere. The advantage of not categorizing customer is that it allows Dell to anticipate different kinds of consumers yet not targetting specific group of customers. In the recent years however, as Dell has grown, the customer base changed from individual professionals to corporate type. Therefore, the new positioning strategy should follow the new target market and produce accordingly. The target market feature must be changed accordingly so as to tailor products to these corporate needs

Recommendation and conclusion

A simple formula” eliminate the intermediaries and sell for less” made Dell a reputed fastest growth company. In a short span of time, how much reputation company has gained is the best part i found in this case study. Dell was founded in 1984 with a small concept of sell others product but in the current period Dell has earned customers loyalty. It has won the consumers faith. How it became possible, the reason is absolutely its marketing strategies and trends. Today Dell Inc. is ranked No.2 and one of the fastest growing PC Company worldwide. Marketing situation Dell is in a very favourable one in my perception. Customer buy Dell brand because of the qualitative brand and the reputation that Dell has gained over the years along with the fact that the brands are marketed pretty well too. Marketing however, is not Dell’s top priority. As discussed in the case and the article, Dell is more concerned with delivering good computers to the customers at the cheapest cost

In comparison to its mission statement and current condition i found that Dell Inc. and the team of its management focused on rapid change, globalization, technology, innovation diversity and e- business. The unique part is that its website dell.com which they launched for to their corporate and public sector customers.

In respect of my views market penetration and market segmentation is the best part of Dell’s marketing strategy. Dell has done a good job in identifying their economy and hence penetrating those aspects of markets leaving less room for ambiguity. The e-business which they have adopted is a very cost efficient method of selling their product. I recommend dell that what they are doing, keep continuing but customers desires and needs are dynamic. Use to take customers feedback and do improvement.

In the current global competitive market the main challenge for Dell is competition. Top competitors for the Dell Inc. are Gateway, Hewlett Packard, and IBM. They are also manufacturing the same kind of product and following the same kind of marketing strategies. If Dell does not keep attention about these competitors it should bear huge losses in the future sales and profit. So what i recommend to Dell is that what they have won is customer’s faith and keeps it up. Watch the global market and competitor. Find out the customer’s changing perception about product; try to provide better quality and services with low cost than competitors.