Will the availability of the Internet as a marketing channel for competitors quickly erode Dell's competitive advantage?
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Will the availability of the Internet as a marketing channel for competitors quickly erode Dell's competitive advantage? Riding with the technology wave, many firms invested in the internet and related technologies in an attempt to try to gain competitive advantage over rivals by being the first to offer their products or services online. Many firms although have found serious problems with pursuing this. The profitability of the industry was often undermined as companies competed on price in order to try to build up their market share. Many firms also saw the development of internet capabilities as a separate strategy and not an integrated part of the firm's strategy, often resulting in failure of its online operations. Over the last years Dell, as a company, has proved that the increase in product variety offers the possibility of customisation, when this is combined with modern production techniques, using the internet to take customised orders, it can prove to be a very serious competitive advantage, for the company that cannot erode easily. The sales numbers for Dell's web-site are enormous, at March 1997 Dell was selling $1 million per day through the web-site
as new entries will have to attract large number of customers first and then be able to play an important role in the market, while Dell already has captured a very large and also satisfied and dedicated audience. There is also a widely held belief that once a customer starts working with a vendor, it is much easier to keep that customer than it is to bring in new customers. So if you can build brand loyalty for a web-site early, it gives you an advantage over other vendors who try to enter the market later. Dell implemented its web-site very early and that presumably also gives them an advantage over the competition. Further on the internet can be a very useful tool for other companies that already trade in the pc market. At this point it is useful to mention Dells main competitors in the market, which are IBM, Apple, Wall-Mart, Gateway, Hewlett-Packard-Compaq and also many small local manufacturers in every region separately but there is no reason to probe on each one separately as each company follows their own strategy and different to Dell's strategy, in order to gain larger market share and it is not fair to compare.
Dell has resulted positive brand recognition by consistently building and servicing its low-cost, customized computers to customers. It fosters brand loyalty by continually providing superior customer service and technical support along with continuously incorporating the latest technology in its products. Dell has achieved market focus and competitive advantage by assembling purchased components from suppliers, thereby becoming one of the most successful companies in the global computer systems industry, as it must be noticed that in 2000 it was the No. 1 computer company in the United States and No. 2 world-wide. Dell's potential for continued growth is enormous and at the same time the possibility to erode is minimised, because of its capability of providing up-to-the-minute pc technology customized for and sold directly to individual customers. The internet as a marketing channel can become a very strong advantage for any company, although at the same time Dell has been able to build up a very strong competitive advantage for the company, something that makes it very difficult for any other company in the pc market to compete and attract customers from Dell.
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