Company
Overview
Dell is among the world's leading computer manufacturers
that has transformed and diversified into variety
of business segments over the years. Products
range from Dell PowerEdge servers, Power Vault,
Dell EMC storage systems as well as PowerConnect
switches for corporate clients. For individuals
and professional customers products range from
Dell Precision workstations, OptiPlex desktops,
Dimension desktops, Inspiron and Latitude notebooks.
Apart from these core products, the company also
offer products and services range including printers,
projectors, Axim handhelds, and other accessories.
More recently, the company has announced intentions
to explore LCD television/computer monitors as
well as digital music players (Annual Report 2004).
Spanning over 20 years, the company has always
been associated with designing, manufacturing
and customizing products and services to satisfy
a diversified range of customers including individual
customers to corporate and retailing businesses.
The company's philosophy to deal with customers
one-on-one has become a management model for other
companies. Having gained the market leadership
position in computer products and services, Dell's
team have always been careful in sustaining its
marketing strategy of providing standard-based
computing solutions (Official Website 2004).
Today Dell is the third largest computer manufacturer
in the world. On January 2004 Dell reports net
revenue approximately $41,444 millions and 46000
employees (Annual report 2004).
Marketing Environment
Dell's strategy is global. It realizes that being
closer to the customers is essential in carrying
out its marketing strategies as well as in enabling
it to build customer base. First by establishing
the Internet infrastructure for booking/orders
related activities it has been able to increased
its customer base from existing markets. Using
the same infrastructure it has been able to carry
out its marketing strategies in new offices as
well. However, Dell differentiate in its marketing
tactics in that it believes in establishing a
brick and mortar market presence. This is why
the company has established sales offices and
manufacturing outlets across North America, Europe,
Asia and South America. This way it has been able
to gauge the local customers' needs as well as
services desired (Official Website 2004).
Apart from the above customer level niche marketing,
Dell also believes in reducing competition through
collaboration. Unlike other leaders in the industry
such as HP and Compaq, Dell does not believe in
taking over existing competitors to eliminate
competition. Instead the company have always pride
itself in using partnerships and associations
for integrated marketing. For example Xerox's
addition to the company as a partner for providing
printing products and services has served the
purpose of integrating one more technology to
its lists of comprehensive business services.
As James Vanderslice, Vice Chairman of Dell says:"By
adding Xerox to our roster of preferred printing
partners, we are even better equipped to serve
our customers with a full range of office printing
technologies that provide end-to-end solutions.
The Xerox brand is synonymous with quality, technology
leadership and world-class services. We share
these core values." ("Dell and Xerox
Forge Strategic Marketing Tie" 2000).
Not only Dell believes in industry wide collaboration
but also in global collaboration. It has based
offices in different countries of the world as
strategic plan due to the fact that it would be
able to reach the niche market effectively. By
breaking the dominance or monopoly of other computer
companies, Dell would be able to capture the market
by providing products and services at competitive
pricing strategies.
In the past Dell has initiated corporate branding
campaign "Be Direct" in which it targets
consumer base with new advertisements that differ
from the traditional industry. The campaign focus
on consumer benefits of new technology rather
than comparing its products with other rival products
or company. The idea is to project the concept
of a virtual home, a hi-fi office and a dynamic
playful environment whoever uses Dell products.
The essence is to keep up with the tagline Dell4me
in the new advertisements. The headlilnes therefore
runs like "I want a PC that will make my
stereo fear for its life" which indicate
how Dell will integrate different technologies
into one combined product - the desktops.
Similarly, servers, printers, laptops as well
as PCs will aim to achieve the same motive ("Dell
Launches New Consumer Advertising Campaign"
1999).
Ever since Dell has following this campaign albeit
not entirely succesful in achieving the aim of
becoming the world's number one computer manufacturers.
Some of the reasons are given in the following
sections.
SWOT Analysis
Strenths: Dell's dynamic organizational structure
allows it to achieve diversified targets. By allowing
the components to directly become integrated in
the manufacturing process of Dell, it has been
able to reduce middle channel costs. These components,
such as OEMs, CMs, logistics, system integrators,
repair and support companies, component suppliers,
third party HW and SW suppliers and distributors
have become each of the company's manufacturing
processes so that ease of provision to the customers
is possible. This reverse organizational process
structure differ from other industry leaders.(Kraemer
and Dedrick 2004)
Weaknesses: Within the strengths lies Dell's weaknesses.
Much of its strategies have to rely on the capacity
and capability of these manufacturing components.
Continuous updates and process improvement is
required so that they can keep up with Dell's
pace of development.
Opportunities: Having established an integrative
and virtual network, Dell has been able to achieve
the high level of corporate outcome that challenged
most of the industry leaders. The established
value web corporate model have also allow Dell
to have global wide access to customers and market.
Reaching any niche market in any continent is
therefore not a problem for Dell's marketers.
Threats: However, due to the integration of components
in Dell's organization structure, Dell compete
not only compete at the final product level but
also at the suppliers level. Third party software
and software for example have great competition
for price and product categorization which could
eventually affect Dell's position in the market.
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.
Problems in Strategy
However, this does not mean that Dell ignore its
initial consumer demographics. Instead it should
clearly subdivide groups so that marketing campaigns
should be followed accordingly. This way, it will
not follow a single profile customer for marketing
campaigns and promotions but rather segregate
their features for effective marekting strategy
implementation. One problem that is visible to
the author 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 integrate this new marketing
strategy.
Global Positioning
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.
Furthermore, Dell has also to keep in mind that
some of its marketing campaigns would be difficult
to carry out due to government regulations and
local industry close economy. For this reason,
Dell need to re-evaluate its strategic locations
that has these limitations by shifting to regions
with more liberal trade policies (Kraemer and
Dedrick 2004).
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