Dell Inc.’s Marketing Strategy and Plan

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The Internal Environment

Executive Summary

Dell has participated in the selling of computer products to a variety of customers, including large corporations, home PC users, government agencies and other institutions, Dell aimed at becoming one of the most successful in offering best customer experience in the field of computers. This vision is tied to offering lead technology, highest quality for the commodities, offer prices that are competitive, to ensure individual and company accountability, best-in-class service and support, superior corporate citizenship among others. Computer sales have been modified by implications for customers’ needs and technology shift. The company launched its retailing in addition to direct marketing strategy. The growth of computer usage has also been facilitated by the growth of the internet. Internet has been a potential for commerce and business, as well as for social connection. Amidst much competition, the company has tried its own marketing mix and continues to employ various techniques to counter this competition.

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Marketing goals and objectives

The aforementioned group takes nearly two-thirds of the company’s sales. In addition, the company also targets small and medium business owners as well as home-PC users. Company aims to become one of the most successful in offering best customer experience in the field of computers. This vision is tied to offering lead technology, highest quality for the commodities, offer prices that are competitive, to ensure individual and company accountability, best-in-class service and support, superior corporate citizenship among others. The company aimed at achieving a target of 14% of market share worldwide by 2002. Dell also aims at increasing market coverage outside the United States. It is possible to achieve the stated mission because there is a surge in the demand for computer and the computer products.

Current marketing strategy and performance

Dell performed very well in its marketing strategy of selling products directly to customers using a distinct model of supply chain management. The company was able to meet the burgeoning PC demand, win many shareholders, and pioneer a limitless growth for itself. However, the company begun to deteriorate even after a good success in profit-making. Dell’s business situation and supply chain management strategy became an interest of study by Sunil Chopra the IBM professor of Operations Management. The professor recommended that Dell needed to shift its longstanding direct sales model. He recommended that the company needed to sell its products through retail channels such as Costco or local computer stores in order to stay competitive. The company went ahead to devise a strategy to offer Dimension PCs and Inspiron notebooks through Wal-Mart and Sam’s Club. The company had also decided to use China’s largest electronics retailer to sell computers to the rest of the world. That was September 2007 (Waikar, 2007; Sunil, 2006). It was therefore recommended that Dell should embrace both direct and reseller channels. The recommendation was based on the advice that the sales channel should be chosen on the basis of type of product being sold and it level of maturity. Computer sales have been modified by implications for customers’ needs and technology shift. There has been a shift in the customers’ interest from customization and were willing to choose from a smaller number of off-the-shelf PCs (Waikar, 2007). In addition, PC prices have plummeted. Those direct sales channel built around centralized inventory storage and PC customizability have been affected negatively and therefore the necessity to rethink of a new strategy for marketing. Copra proposed two channels through which Dell could go retail. The firm could also go the option of performing the final product configuration and therefore decreasing inventory costs although there was a possibility of increasing assembly capacity costs. In 2007, Dell decided to offer two PC models through Wal-Mart stores in June 2007 after the ideas propagated by Chopra. The company also opened its first retail store in Russia through its international retail strategy. Michael Dell pioneered the rethinking of the company’s direct sales strategy and noted at one time that the model was a revolution and not a religion. Dell needed to look beyond its sales model in order to sustain profits in the computer market which was becoming more mature. The company had, however, tried retail distribution earlier on, but had stopped this distribution in 1994 due to low profit margins. There are risks involved in exploring the retail channel for Dell. The products of the company could be viewed as the market’s value-end. Because of the limited nature of the company’s retail offerings, it was estimated that the retail project would not result to many gains (Waikar, 2007).

Current and anticipated organizational resources

The company has been a strong player over years, with a number of strengths and weaknesses too. The company has no inventory build ups and sells the latest technologies to customers. The latter is essential because customers want the latest technology in the market. In addition, the latter the technology, the more it is used to solve more recent problems. Competition exists in terms of technology and there is need for a company to continue investing in technology. The company sells products worth of $5M worth. The company however lacked proprietary technology and there was high dependency on component suppliers. It is evident that the company will continue to lead in supplying computer gadgets to its customers in the future. The advancement of computer technology will offer an opportunity for the organization to continue to dominate in the market. As compared to retailers, the company had much lower facility and inventory costs. In addition, the company would incur higher transportation costs. This is while practicing as direct sellers. On the contrary, the direct sellers were able to stock many different products than retailers although the latter were at an advantage to afford instant products and offer more comprehensive support. Dell needs to continue aligning its chosen channel with the product and market characteristics, because the market for the product has been dynamic.

Review of current and anticipated cultural and structural issues

A customer advocate meeting was held every Friday talking about key statistics describing whether customers’ requirements are being met. The people determine what has gone wrong with the process if it cannot meet customers’ requirements as would be expected. All the company employees are exposed to the customers’ concern, by having the customers come in. Distribution is carried out by the company. Customer feedbacks which are collected through phone calls play an important role in improving the company’s products, services, and products. This is by making 50, 000 phone calls every day (Geoffrey, 2009).

The Customer Environment

Dell has been a supplier of computer products for quite a period of time now. The company has participated in the sale of computer to large companies and medium organizations, as well as small companies. The firm also sells computer products and offers services to home users. The current growth of computer usage around the world has facilitated growth of the sales for the company. In addition, there is a possibility that this growth will continue being realized over a length period of time. The growth of computer usage has also been facilitated by the growth of the internet. Internet has been a potential for commerce and business, as well as for social connection. In addition, the internet is playing a very vital role in information exchange, correspondence, as well as education. Companies which deal with these products are therefore earning more and more profits or that they are gaining more markets. Dell has and is continuously aligning its approach to manufacturing, distribution and selling of these computer systems. The firm at one time tried advances in other components such as selling computer server, MP3 music players and handheld computers and printers. However, these efforts were not successful. The company could however not win in this respect and therefore dropped the music players and handhelds after failure (Maney, 2007). It is possible that failure in this respect has occurred because of a number of things. One, the company could have received competition from other companies leading to deterioration of the sales.

Dell is a company well known for offering computer products and services. Customers who are business companies or individuals buy computer products either for personal or for corporate use. Corporate use includes those companies who offer services such as computer internet services and may require one or more support products from Dell. As manufacturers, Dell produces a wide range of products which are demanded by other companies for advancement of their businesses. Diversification has ensured that the company serves a wide range of customers because various customers will want a variety of products. Nevertheless, computer networks have different lines of specialization, and therefore, the company has different types of customers. These range from those who want components for computer and its peripheral devices as well as those customers who want network devices.

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Corporate customers include those customers who also want to sell computer components to other companies or individual customers. These are retail or wholesale companies. Dell however has a marketing strategy that aimed at reducing the prices for their commodities and included elimination of the middlemen to ensure that this objective would be met. Dell also sells components to home users who use them for purposes such as entertainment, keeping of records and processing of personal documents. Of late, many people are discovering the power of connection to their neighbors and the outside world. For example, there are a number of famous social networks which have performed a very crucial role in connecting people and allowing them to communicate. Computer networks therefore have been instrumental in the offering of these services. Companies such as Dell are therefore finding markets for home consumers who know and want to exploit the power of connection and communication.

Another category of consumers of Dell products are institutions such as schools, hospitals and governmental institutions. These have applied computer products for either accomplishing various purposes such as teaching. Schools have harnessed the power of technology to achieve considerable speed in their work such as teaching. In addition, generation of data and statistics, as well as its analysis, as an important aspect of schools and the education sector, has been advanced with the discovery of more accurate, faster and reliable computer tools and networks. This has played a very vital role in the research field. Hospitals have also utilized computer and computer technology to carry out diagnosis for their customers. Keeping of records and data, and their subsequent retrieval and analysis, in such health care programs such medical insurance coverage, has been facilitated by availability of computers.

The External Environment

Competition, Economic growth and Stability, Political Stability, Legal and Regulatory Trends, Social Cultural and Technological Stability

Competition has been tough for the company as far as provision of computer gadgets and products is concerned. There are a number of companies that have offered competition for Dell in the market. These included HP, Apple, among others. Dell looked at other companies as providing battle, and at the same time providing an opportunity for the company to grow together with them. Dell recognized that was good if the companies in the sector worked together because the products were interconnected. Competition in the computer industry has been advanced by the dynamism of technology. The interconnectedness aforementioned included the interface between software and hardware from companies whose commodities were related to those of Dell. Competition in this sector has somewhat been counteracted through formal partnering efforts with other companies. Other objectives have been advanced through partnerships, in addition to counteracting competition. For example, development of standards, which is important in the industry, is ensured through working together.

Participation of organizations in various activities related to passing the benefits to organizations is very essential in the current marketing strategy for all the organizations. Firms are realizing the importance of rendering help to organizations in terms of charitable works and giving. These could include sporting activities, sponsorships for education, as well as other activities. The organizations in turn reap benefits in term of good publicity and increased sales. Research has shown that companies reap benefits by paying attention to social responsibility.

Dell has had investment in building a sense of community in the organization through a number of strategies. These strategies include sponsoring events to give people opportunities for self development. Dell has had an interest of finding out the activities employees like being engaged in so that they can organize for them. This is done through polling. Dell employees have been involved in sporting activities sponsored by Dell within communities. Various activities have helped the company management in the quest to break down informal communication. In addition, performance is partly determined by friendships within organizations. Electronic communication (email) has been utilized within the organization to encourage communication with everybody, and the service is advantageous because it does not allow people to know the titles of those they are communicating with.

The company has encouraged a rather informal style of doing things. For example, there are no designated parking areas for the executives and other people. In addition, the company does encourage informal attires. In addition, there is encouraged talking with everybody among the company staff and employees. There is freedom of interaction. With respect to the firm’s target customers, identify changes in society’s demographics, values, and lifestyles that affect the firm or the industry.

SWOT Analysis

Strength 1: cheaper products thus growth in market share and revenues.

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Those competitors who are offering products at a higher price are able to lose sales whereas the company gains more in terms of market shares and revenues (Madden, 2005). Customers are able to acquire products at cheaper prices. More market shares and revenues translate to customers’ gaining access to products because the commodities may become available to areas where they were not.

Strength 2: Strong and reliable product culture, namely, Scalable Enterprise.

Scalable Enterprise is a strategy of business centered on the customers’ business which is envisioned in the industry standards for the company’s products, services and alliances. The strategy is also embraced in the Dell’s direct model. Dell rationalizes its products and services using this model, which has also been marketed for a few years now. The strategy is aligned with the company’s vision that the computer industry will move away from larger-scale proprietary systems and continue to leverage clusters of high-performance. The company is able, through the vision, to talk with the customers about its overall value position, and engage customers in knowing in knowing how to improve their IT environment and how to make the vision real (Madden, 2005).

Weaknesses 1: Lower quality products as compared to other companies.

Weaknesses 2: poor sale strategy in the first place.

Low quality of products as compared to other firms makes the company to lose in terms of sales as compared to other companies, for those customers who are sensitive to quality of commodities, because these customers pit products from other firms which are of higher quality. In addition, this weakness makes the company customers not to gain in terms of meeting their needs.

As relates to the second weakness, the company has had a poor strategy of selling the commodities. Direct sales strategy was either not as successful, or that it was not satisfactory, and therefore there was need for reconsideration. Poor marketing strategy causes poor availability of products to the customer. For example, direct sales had its own challenges where availability for products to customers was limited and the company had some challenges handling retail commodities after starting retailing its products.

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Opportunities

Opportunity 1: Exploring and trying out a number of other products e.g. in the entertainment field. The company tried to sell commodities such as computer server, MP3 music players and handheld computers and printers. The market for handhelds and music players was not successful and therefore it was dropped. More customers could gain by accessing the company’s products, and may be, such commodities as music players at a cheaper price.

Opportunity 2: online marketing: Online marketing is a very potential tool in the today’s business scenario. Many companies are going online because of the many advantages presented by this opening. More customers will be able to buy commodities quickly without having to travel to the retail or producer shops. There are such advantages such as quick sales and ease.

Threats

  • Competition: The computer industry is a very competitive field. There are many companies which are already offering better quality and cheaper prices than does Dell and therefore the company receives threats in this respect. These threats impact the company because it cannot satisfy its customers to perfection if there are no enough revenues from the limited sales. This threat appears to have no time horizon since companies will continue to compete in this respect.
  • Dynamic technology: The problem with dynamic nature of technology is that it poses a threat for the company to keep investing in new products as technology changes in order to stay competitive in the market. Again, there is no time limit for the threat which will also make the company lose in terms of revenue and therefore be limited in offering more commodities to the customers.

Developing Competitive Advantages

The company can align its strength of providing products at a cheaper price with the opportunity of exploring other markets such as those for music entertainment products. This can empower the firm to compete with other people offering the same commodities in the market. The company can also gain a competitive advantage of having a wider range of products in the market. Ensuring good product quality for standardized commodities will enable the firm to compete with others offering products of higher quality.

Developing a Strategic Focus

The strategic focus for Dell as a company aimed at achieving diversification in that the company would have both direct and retail marketing. Diversification of the marketing plan meant that not that the company was not satisfied with selling of the commodities through direct marketing, but that it was willing to diversify in an attempt to increase sales for the commodity. The strategy was aimed at cutting the cost for the product so as to achieve cheap price for the commodity through eliminating the retailer, but it was found to have its own limitations. A strategic focus is based with analysis of the marketing environment, looking at the opportunities, as well as looking at the threats and challenges.

This will enable them to exploit the market properly. For instance, although the company has advanced the notion of online marketing strategy as cheaper, easier, and quicker, there are a number of challenges that have made it not be very attractive as far as some segments of the market is concerned. There are a number of potential customers who are located in areas with internet, but they do not trust online purchases. In addition, online business has been hit in the recent past with a number of problems such as hacking and has become a little bit unattractive to some customers. These hacking incidents have led to many companies losing billions of money, and even customers have been affected as well as lost trust in the business. Reassurance of customers that the channels are safe and secure is important to ensure that the company wins customer trust.

Marketing Goals and Objectives

In an interview by James (Geoffrey, 2009), Dell noted that one required a business model that could avail products and services through comprehension of the change in technology and the customer preferences. He noted that it was important for the company to deliver customers’ expectations. The management of organizations may depend on the type and size. The top management has an important role in determining which investment they needed to make as well as the business they needed to engage into. This role was outlined by the company’s founder Dell.

Product, Distribution/Supply Chain, Integrated Marketing Communication Strategy

Products by Dell as an organization include the computer hardware and other devices. There are various designs used for the products. The marketing channel has been largely debated in the previous section where the company uses direct as well as retail selling. The company utilizes the internet and telephone communication to reach its customers and carry out such activities as investigations.

Marketing Strategy

Various customers purchase computer components and products according to the volume that they require. Small scale users will want small number of products, while large-scale customer will want large amount of products. Issues such as recycling and pollution which are related to the products have been raised since computer and their peripherals involve plastic products.

Although Dell computers and components were available from retailers, the company introduced a marketing strategy which aimed at achieving low prices for commodities and products. Buyers therefore could only purchase products from Dell and not any other place. This allowed the company to pass on the savings to customers in terms of cheaper prices. However, it is evident that such a strategy could only lead to lack of products elsewhere or that the customers would be denied of easy access of Dell products. The burden of the company handling retail in totality was also very tricky. The company however has an ordering channel for those purchasing the commodities through online shops. Through the online strategy, the company has aimed at targeting new customers and can know the customers. Online strategy provided the company with a shop which is accessible around the world by every person. Online marketing has received a very big boost in the current environment and several companies are finding it easier to deal with online buyers because of a number of advantages. Online marketing has provided a cheaper means of selling products by buyers. Buyers are able to access products through online display and photos as well as carry out price reviews without the need to visit suppliers or the company outlets. This has allowed marketing to be cheaper on the side of the customers and the company because both realize that it is a cheaper channel. Online marketing becomes a cheaper channel because of a number of issues. One, the online shop is accessible for customers across the world to make choices and select products and therefore eliminates middlemen. Middlemen are associated with a number of problems ranging from delays, difficulties for customers locating them, and extra expenses by customers going to locating these shops. On the side of the customer, it is easier and even cheaper and fast to deal with the manufacturer online than the middlemen. On the side of the company, a number of advantages have also arisen. These includes cutting of the cost the company could incur in the employing of the many middlemen across the world. Internet has advanced the mission and strategy to have a wider market and therefore the company sells products even in areas where it has no stores. The only challenge in this respect is that it must be willing to transport the commodity. Online consumption of products around the world has been increasing overtime because of increased online customers around the world and the number of people visiting websites. This increase has been accompanied with increase in the number of people accessing products that they want. The internet shop is easier to manage with less and less expenses including maintenance of the shops. Customers find it easier to access the website shop when they have their free time as well as comfort of home.

Marketing Implementation

Structural Issues

To add to the current direct marketing strategy, the company needed to add a few things to its structure. Retail marketing required the company to have retail outlets or choose from a wide range of companies that would help it in the distribution of commodities. In terms of the internal structure, some things would require to be added, for example, systems for tracking of the retails and distribution. In terms of the internal communication, it has already been discussed that the company has exploited sporting activities which encourages connection and relationships among the employees. In addition, it encourages participation into various activities, such as donation.

Online market has come up with a number of other advantages including easier surveys and carrying out of marketing research based on the customers or potential customers who visit the online shops. These surveys and researches are easier to conduct and have less and less expenses because they are done at one place. The company finds it cheaper and easier because it can only employ fewer persons to carryout market research. Online market research such as carrying out of sale reviews and interviewing of customers is an important aspect that has resulted with advancement of online services. Having customers online has provided an opportunity for companies to carry out other beneficial programs aimed at boosting their sales. These include performing a marketing plan where these customers will be targeted for advertising of the company’s products. Strategies such as sending emails for the customers have been explored. These strategies have resulted with decrease in the expenses incurred in carrying out market research and tracking of sales, as well as other activities. The dynamism of the internet as relates to such issues as changing advertising strategies and marketing strategies is very beneficial as far as internet marketing is concerned. In addition, it is easier to achieve additional attractive features such as good pictures, attractive sites and colors, among others on the internet as they are evolving to attract customers online. The performance of the company as far as sales are concerned is very easy to track.

Evaluation and Control

There are a number of controls that need accompany or precede marketing plan. Input controls in this case would include the financial resources that would be utilized for marketing and the marketing channels. Additional research would be vital to make sure that the marketing plan is improved, as well as making sure that the commodities are also improved. Retail outlets are another control that needed to be put in place in the marketing plan. Training for employees as relates to the new Marketing plan would be essential so as to ensure its success. The company would also require ensuring that internal communication is boosted to make sure that the plan is a success. Output controls could be variable, including the determination of the amount of sales over a given period of time, the level of customer satisfaction, the level of customer retention, the areas covered, among other things.

Whereas the company has continued to dominate in the field of computer, there are a variety of problems and difficulties that it has faced with time. These include issues of quality since the company has not been offering the best quality in the market. There are other companies such as Apple and HP which have been influential as far as quality and pricing of commodities are concerned. In fact, these have provided a competitive ground for Dell since there has more publicity than it. Dell has been lagging behind than these firms and therefore its products have not gained much ground as far as market is concerned. The fact is that the company has provided cheap prices, but lags behind as far as issues of quality are concerned.

Three month Implementation Schedule and Timeline

Month April May June
Activities Week 1 2 3 4 1 2 3 4 1 2 3 4
Product Activities
– Employee training & education on new strategy X X
? X X
?
Distribution Activities
– finalize distribution issues with customers X
– shipping to warehouse X
– shipping to retail stores X
Pricing Activities
hold 20% off sale at retail
IMC Activities
– informational website operational X
– TV advertising X X
– Newspaper advertising X X
– online advertising X X
– in-store point of purchase displays X X
X X
– In store Signage X X

References

Chopra, S. (2006). Choose the Channel that Matches Your Product. Supply Chain Strategy, 2(9): 8-9

Geoffrey, J. (2009). Sales culture: Interview with Michael Dell. Web.

Madden, J. (2005). Summit Strategies Inc.Web.

Maney, K. (2007). Perhaps Michael Dell’s plan to fix his company could use an upgrade. Web.

Waikar, S. (2007). A new channel strategy for Dell. Web.

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