Dell - The reason for selecting Hong Kong.

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. Executive Summary

Dell Computer Corporation, incorporated in October 1987, is a computer systems company and a provider of computing products and services. The Company's primary product offerings include enterprise systems notebook computers and desktop computer systems. Company mission" Goal: to gain market share and to max. the profit."

Dell entered Asia Pacific in select markets and began investing in regional facilities, and management, service and technical personnel in 1993. Through its Global customer program, Dell is able to provide a specific suite of service and support to its Asian customers with worldwide operations. It provide the global customers with centralized ordering the billing customized products (including proprietary software installation) and the advantages of local deliver and local onsite services.

In this report an examination will be made of the segmentation, role of relationship marketing and changing role of consumer though Internet and how Dell can influence the customer though their decision making process.

The reason for selecting Hong Kong

Hong Kong is one of the world's most vibrant success stories with a flourishing economy built on free enterprise and free trade. Moreover, as the entrepot for China in addition to its acknowledged position as an international business centre, a place where deals get done. Moreover, Hong Kong is more important than ever with China's accession to the World Trade Organization (WTO) , which means unprecedented business opportunities.

Despite the difficult economic situation, Hong Kong still remains one of the most expensive cities to do business, with its strong position than many regional economies that the recovery process will be faster amongst the other regions such as China and Singapore.

Although, Hong Kong's GDP decelerated sharply in growth from 10.5% in real terms in 2000 to a mere 0.1% 2001 but still the best country compare with Singapore 8.6% and China only 7.3%. In additional, China general level of consumer prices was up 0.7% but compare with Hong Kong 3.1% is still lower. It can reflect the different of consumer purchase power between China and Hong Kong. That means China is big but poor compare with Hong Kong is small but rich.

Dell is enhancing and broadening the fundamental competitive advantages of the direct model by increasingly applying the efficiencies of the Internet to its entire business. It means the target customer would be the educated level, experience in using PC and have individual PC at home or office. According to the statistic from www.china,org.cn reported that education scheme is still developing and there were only 390,000 graduate students in the universities and institutions base on the population around with 1.27627 billion people at the end of 2001. The educated people are still not many in China.

Refer to the culture influence, it shows that people in China are less opportunities to have an individual PC at home. They only can go to Internet Café or office to use PC, it trends to reduce the PC business opportunities though direct market and Internet.

According to the IDC Asia Pacific Press Release 2002 showed the PC market in the Asia Pacific region reached 5.39 million units in Q1 2002. The market size is a 12 % increase from Q2 although Hong Kong and Singapore suffered significant double -digit percentage decrease -19.0% and -12.2%. And China has rapidly increased 5.6%. It seems to be more competitive in China market. Legend is a market leader in Asia Pacific and also in China. Dell is only stay in 4th position in Asia Pacific market, it only performs stable in past few months. With a low competitive market in Hong Kong, Dell was placed in the No.2 position in the branded personal workstation market, with 33.4% unit of shipment market share.

To shift successfully into a knowledge economy, Hong Kong must strengthen its IT capabilities, the government is actively promoting entrepreneurship, especially the Pokfulam Cyberport costing HKD13 billion would be completed by 2007. It will create more IT business opportunities. Moreover, Hong Kong is one of the most developed in the region IT spending reached HK$1.71 billion in 2000 and was among the highest in Asia on a per capita basis. More than 2.3 million personal computers were installed in Hong Kong according to "Profiles of Hong Kong Major Service Industries' last updated: 23 September 2002.

After summaries all the factors, Hong Kong is the best city for Dell to do the PC business because of the less competition in market and culture influence. Moreover, USA market is already over supply and Hong Kong market still have the room to be developed according to software industry information centre.

.2 Market segmentation

Business to Business

Target : small business, larger corporation, individual consultants

Demographics

Industry - Mainly focus on financial, insurance, real estate and business is the largest IT user according to the 2002 manpower Survey of the IT industry finds that more than 63,000 employees (about 2.6% of the total working population), those of industry accounting for 41.4% of total IT employment.

The follow industries are wholesale, retail, import/export, restaurant and hotels sector (30.4%).

2002

No. of IT employees

%

Financial, insurance, real estate and business services

26,132

41.4

Wholesales, retail, import/export, restaurants and hotel

9,171

30.4

Community, social and personal services

8,162

2.9

Transpiration, storage and communication

3,914

2.9

Manufacturing

2,540

4.0

Government

2,460

3.9

Construction

369

0.6

Electricity, gas and water

350

0.6

Source: 202 Manpower Survey Report: Information Technology Sector, Vocational Training Council

Company size - home office, only one

- individual consultants, under 20 employees

- small business center under 400 employees

- medium and large business with over 400 employees

Location - Hong Kong

Operating Variables

Technology

Banking and finance - not only focus on electronic money but also new bank-customer relationship through Internet and online/wireless investment etc

Shipping, freight forwarding and logistics - electronic data interchange and Internet-based networks to transmit information and documents with traders

Wholesale and retailing - installed bar-coding and point-of-sale (POS) system for inventory control and sales analysis

Graphics and multimedia - Computer graphics has a wide application in various Hong Kong industries.

User status

All types of users including heavy, medium, light ,non-user also are concentrated.

Purchasing Approach

General purchasing policies: reliable and accurate, supplier proximity to allow JIT

home office leasing system,

individual consultant: expert purchasing, decentralization

small business center: buyer centre, centralization, system purchases

medium and large business: sealed bidding, contractual arrangement

Buying criteria competitive price (cost saving) emphasis on terms and condition, high technologies knowledge request (demanding quality and product performance) , limited number of larger supplier (good reputation in the past co-operation) and short channels (high speed) , critical to success customer service (on going information service and after sales service , personal selling approach,

Current relationships: strong relationship on existing customer, longer term and closer relationship with fewer suppliers, closer interactions among multiple functions

Situational factors

Urgency

Speedy response to customer urgent needs, high speed distribution

Application: solution seeking, assistance in business operation and economic need

Size of Order: large order size

Personal Characteristics

Motivation: multiple buying influences, support company operation

Similarity of personalities Sophisticated, hi-tech people

Perception of risk: risk-taking will be an early purchaser of a new technology

Loyalty: higher loyalty to supplier

Business to consumers

Target: en-users, students

Geographic

Country Hong Kong

Geodemorgaphic

Stable economy and political environment

Demographic

Social Classic and status: Middle to upper class

Sex both gender but seem to be male

Income over HK$6000.00

Age over 18

Family Life Cycle young, single married with child under 6

Occupation: Professional with highly educated, technical managers, officials and proprietors

Behavior in the product field

Attitudes Enthusiastic positive

Knowledge well computer knowledge

Benefits sought convenience, economy and easy to use

User status nonuser, ex-user potential user first time user regular user

Usage rate light to heavy user

Loyalty status medium to absolute

Purchase focus group, word of month and deep concern

Occasion special occasion

Personal Characterizes

Motivation solution seeking

Personality quality concerned, price sensitive, value for money and service and quality oriented

Business to Government

Target: Government, including all federal, state, and local units buying for government institutions such as schools, offices hospitals, and military bases

Operating Variables

Technology - data base support to all the government department

User status - medium to heavy

Purchasing Approach

General purchase policies: good reputation company with large size, bidding, fixed-cost contacts and cost-reimbursement contracts

Buying criteria: low prices and services support, price sensitive with competitive quality, hi-technical specification and captive clienteles

Business to nonbusiness

Target: nonprofit organization such as churches, colleges and museums

Purchasing Approach

General purchase policies: good past business history and clients reference.

Buying criteria: low price with acceptable quality, good after service and captive patrons and match the public scrutiny of policies
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.3 The attractiveness for each segment

Business to Business

Market trend: According to the www.tdc.com statistics shows that Hong Kong 's information technology (IT) market is one of the most developed in the region. The IT spending is increasing from 1998 (HK$14.2 billion) to 2000 (HK$17.1 billion) It also so the small and medium-sized enterprises account for 90% of the total number of local firms, it will witness a rising need of IT to re-engine their business process and enhance their productivity.

Profitability: High profitability in business market due to the large order size ...

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