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Term paper on Dell Computers – Marketing Strategy

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Term paper on Dell Computers – Marketing Strategy

Post  PapersQueen on Sat Jan 23, 2010 7:58 am

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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PapersQueen

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