Dell - The reason for selecting Hong Kong.
. 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
.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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.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 and high margin profit. The cost of serving particular market of large portion could gain cost advantages. Dell could become more attuned to the unique needs of customer segments. Moreover, the buying criteria of this segment is not only focus on the cheap price, it is possible to gain the high profit margin because the competitive price with high quality after sales service is an appropriate price strategy.
Competition: Low competitions in this segment specially the order though direct marketing. IBM is the market leader in this segment but using the different market strategy. It shows that Dell is the only one Computer Company mainly though Internet as the sales and market channel.
Level of investment: low investment in this segment due to concentrate all effort to one market compare with different effort to serve mass market. This segment request the long-term relationship with the supplier, it could create the cost advantage. According to the experience curve, using the past experience to forecast and budge the cost in the future,
Business to consumer
Market trend: Growth market, according to the Hong Kong in figures 2002 edition shows that the households with personal computers at home is increasing rapidly from 2000 49.7% to 2001 60.6%.
Profitability: although the profit margin is low in each of sales transaction but the profitability is still maintained in the reasonable level to the mass market.
Competition: there are so many competitors in the market such as IBM, HP and Compaq but Dell still has the high competitive advantage. It is because Dell is mainly using the direct market though Internet and hot line, customer can reach Dell 24 hrs and complete the deal though Internet and hot line without any other human intervention. It means that the target customer may not exactly the competitor customer. It could reduce the competition in the market.
Business to Government
Market trend: growth and attractiveness market, China accessed to the World Trade Organization, the transaction between Hong Kong Government and China Government is increasing rapidly.
Profitability: Government unit will make allowance for the supplier superior quality and reputation for completing contacts on times although the profit not really bases on money.
Technology requirement: lowest technically acceptable due to not the hi-tech group.
Competition: lower competition, government only look for the low price with good after sales service. According to PC market, there are not many competitors invest considerable efforts in bringing the cost down to get the bidding.
Business to non-profit sector
Market trend: growth market, refer to the Hong Kong in figures 2002 edition shows that the no. of student enrolment by different type of educational institution is increasing specially in open university of Hong Kong from 20.5('000) 1996 to 26.9('000) 2001. It reflects the market trend is going up due to the PC is necessary to the students for studying.
Profitability: not focus on sales only because this segment is only giving the narrow profit margin. The attractiveness is the members of this group who are the educated, professional people could provide the valued and professional opinion. Though the word of month as the opinion group, it can create the high reputation in company profile with low cost in sales advertising.
.4 Strength and weakness of Dell
Strength: Dell offers in-person relationships with corporate and institutional customers: telephone and Internet purchasing: customized computer system: phone and online technical support: and next-day, on-site product service.
Dell's Unique direct model: including price for performance, customization, Reliability, service and support, latest technology and Internet sales leadership.
Market leader in United States: research from Intentional Data Corp showed that Dell already the market leader in the United States, surpassed Compaq Computer Corp. for worldwide PC market leadership. Another research from Gartner Dataquest, Dell had 12.8% share worldwide compare to Compaq's 12.1%.
Price performance: Dell offers its customers powerful, richly configured systems at competitive price, lower 15% market price. According to
Cost efficiency: The low inventory and low fixed-asset model results in one of the highest returns on invested capital in the computer industry. Dell turns over inventory every six days on average, keeping related costs low.
Latest Technology: Dell introduces the latest relevant technology much more quick quickly than companies with slow-moving indirect distribution channels.
Customization: Every Dell system is built to order. Customer gets exactly what they want. Dell is the only one PC Company offers such package compare with IBM and HP.
Reliability, Service and support: Dell uses knowledge gained from direct customer contact before and after the sales to provide award-winning reliability and tailored customer service over 75% of technical problem could be fixed such as on sit training and on line service support.
Internet sales leadership: according to www.//biz.yahoo.com shows that the financial summary reported the increased desktop sales, along with the absence of consolidation.
Weakness
No proprietary technology: limited channel to reach the customer only focus on Internet and hot line. Less advertising exposure compare with IBM and HP.
High dependency on component suppliers: great influence by component suppliers
Status of inventory: no channel could show the status of order, difficult to contact the component stock and moving.
No business partner, instead it competes with other companies, such as Compaq and Gateway.
Strategies objective:
. change the customer purchase perception: IBM is not the only choice in PC market
2. emphasis on relationship market
3. country quality effort - made in USA means high quality
4. correction of market strategies - give more effort on Internet sales
2. Relationship marketing becomes increasingly important as
Relationships between salespeople and clients are particularly important when marketing in Asia. Compare with the other countries US and Europe countries, only emphasizing product features, competitive price and reliable deliveries are not enough.
Culture: Asian culture address the relationship dimension is so important. All of the business transactions are related to relationship between clients and seller.
Time and patience: The time period is another important factor to influence the relationship. The long-term relationships take time and patience to cultivate. It could build up the trust and develop a network of useful relationship. Moreover, the quality of relationships is used as an indictor of long-term commitment of a company.
Benefit to all level: consumer relationships with brands and their corporate stable: consumer relationships with retailers: and those between channel intermediaries from manufacturer to consumer. The market trend to buy into this web of relationship when entering such regional Asia market. It involves the require product knowledge training and point-of-sales support material.
Brand power is in decline: After the economic crisis in Asia, customer trends to change the purchase behavior not only reliable on the brand name product. Customer wants the value in general such as after sales service not just brand value in particular. The customer service would be more important than product feature.
2.1 Relationship marketing is very important for Dell Corporation.
Dell's business in Hong Kong mainly emphasis on direct marketing to gain the competitive advantages of the direct model by applying the efficiencies of the Internet to its entire business. The company is increasingly realizing Internet-associated efficiencies throughout its business, including procurement, customer support and relationship management.
Dell shares information with its suppliers on a range of topics, including product quality and inventory. Dell also uses the Internet to deliver industry-leading customer services.
Current business Issues
Compare with the other competitors IBM, HP and Campaq, Dell is not using the distributors and retailers as the channel to deliver product and service to the customer. Customer could not see the real product and face to face enquiry about the service and product features.
Narrow target segment: Customer only though the Internet to get all the information, if customer do not have PC at home, that means Dell could not provide the service Moreover, lack of face to face enquiry opportunities, the target group should be the educated people with basic computer knowledge.
Need for local service centre: compare with the other competitors, Dell is not established the local service centre in Hong Kong. Customer only can use the phone and Internet to have the after sales services.
Supplier site: it is difficult for Dell to determine or forecast the particular components which would be needed. The relationship between Dell and suppliers is only dependent on the mutual trust.
Substitute: Wap beginning to impact PC sales, Wireless technology and interactive TV are beginning to take their toll on PC sales but the big slow-down is still a year away, according to the latest research from analyst firm IDC.
Proposed solution though relationship marketing
Solution General Benefits
To provide latest technology information though Internet much more quickly than companies though slow-moving indirect distribution channels.
To provide more channel to deliver the relevant information though local newspaper advertising.
To provide on site training to educate the customer to reduce the technology problem
To provide the privilege customer service, delivered as part of personalized totally accountable relationship with customer and giving customers the flexibility and choice to decide which solutions best fits to customers'requirement. To reduce the need for local service center
To provide a web-enable solution allowing for easy deployment and global access to the rich functionality of this solution.
To provide the tailor made service to customer with low price.
To use the region supplier achieving the cost effective and not focus on one single suppliers.
To provide the convenience to customer, record the customer date to reduce the purchase time in next purchase and build up the relationship with customer.
2.2 Role of relationship marketing for Dell Corporation in different segment.
Business to Business
Enhance company image through RM: The company is increasingly realizing Internet-associated efficiencies throughout its business, including procurement, customer support and relationship management. Dell committed to providing the right services designed to help improve the customer experience for all of products. DellWare online catalogues provides a comprehensive range of industry-leading software, peripherals, software and add-ons.
Investigate customer needs to provide customized solution: Scalability, performance and reliability were important. Steve Scivally, Internet Technologist at Dell "We need a development platform that will help us to build solutions any way that makes sense, whether purchasing components or develop in-house. Application development cycles are collapsing under Internet time."
Business solutions to clients: Dell.com has been powered by Dell PowerEdge Servers, PowerVault storage system and the Microsoft Web solution platform. It helps maintain the rate of rapid application development while business requirements become more complex and timetables speed up.
Tailor made product: The OptiPlex desktop computer is designed for corporate and institutional customers that require highly reliable system within networked environments.
Just in time delivery: reducing lead-time in its logistics processes is one method of sustaining a competitive advantage. Through the use of just in time, the firm continually eliminates time-consuming activities and adds value to the product.
Cope with budget constraint: By eliminating the middleman in the supply chain Dell is able to exert greater control over cost and quality in the product and the efficiency of the lead-time.
Dell Financial Services: Dell Financial Services offers a range of competitive financial management options from simple hardware leases to complete financial solutions.
Premier Enterprise support: Dell's tiered Premier enterprise support services help satisfy the unique needs of server and storage customers across a wide range of computing environments.
Hardware support: On-line, email and telephone technical support with service options ranging from collect and return and International on-site service for notebooks through to 24 x 7 service for mission critical applications.
Technical support service: Dell's award winning telephone support provides technical assistance on Dell hardware.
Dell Technology consulting, the company offers a comprehensive portfolio of enterprise-level professional consulting service, including the design and implementation of complex storage systems, enterprise hardware training, tuning and proof-of-concept services.
Installation: Installations services will help customer plan ahead, save time, alleviate technicalities and implement new system quickly and effectively with the minimum amount of disruption.
Total cost of ownership(TCO): Dell assists organisztions in reducing TCO and increasing return on investment through a number of particular product line, empower enterprise to gain business advantage by optimizing technology infrastructure. By deloying these products and following Dell's recommendations for managing the technology lifecycle, it can help organization to lower its total cost of ownership over time.
SEC-meet customer deadline: guarantee the delivery time within 6-8 days to provide the confident to customer.
Business to users
Tailored made computers satisfy customer's needs: Dimension desktop computer is designed for customers that require powerful standalone and peer-to-peer desktop solutions. The Smartstep desktop computer, introduced in the third quarter of fiscal 2002, is designed for first time Dell computer. Build to order manufacturing to gain differentiate and sustaining a significant competitive advantage.
Outstanding End-To-end service from improving system uptime to helping customers to optimize new technologies. From the standardization and transition management to custom hardware and software integration. Dell service solutions have been designed to help customers maximize their IT resources.
Reduce inventory cost: low cost high-speed distribution and procurement system only 8 days to deliver.
Latest technology: though the Internet to deliver the up-to -date technology with high speed and time limitation.
High quality and latest version computer to customer satisfy demand, needs and preference: Dell .com reduces costs for customers and for Dell, adapts quickly to customer demands, makes it easier to do business with Dell, provides faster, higher quality service to customers, ad enhances customer relationship.
Fast response, reliable and convenient: At www.dell.com customers may review, configured price systems within Dell's entire product line: order system online and track order from manufacturing through shipping.
Solution best fits to customers'requirement: As the leadership role in service and support delivery, Dell's service could reduce customers'total cost of ownership (TCO) as part of a personalized, totally accountable relationship with customers, it will be more flexibility and choice to decide which solution best fits.
Direct selling to build up closer relationship: Dell is the entire distribution channel from the procurement to the delivery of the finished product/service to the consumer. Customer is able to go online and receive some feedback on the status of order as highlighted in the report.
New Dell Platinum Visa credit card: It enables customers of Dell Home System Co. to buy Dell PCs with no payment or interest for 120 days on the initial Dell purchase, applicants can visit www.dell.com to apply but only available in USA at this moment. Credit Card payment takes less than 24 hrs to approve and therefore are processed much quicker than other methods of payment
Gift certificate (coupon): Dell's new gift certificate enables customers to give high performance, customized Dell computer and accessories at great prices.
Dell's personal leasing programs, available through Dell financial Service and provides the attractive interest to customers.
Recycle and exchange program to both end users and business: offer the opportunities to trade-in the customer's old computer to the new one and provide the exchange program to another model
Upgrade and dispose of computer remind upgrade service and handle the dispose computer
Assure - warranty and regular upgrade: Dell offers customized service portfolios that respond to the specific need of customer. To provide the worldwide warranty and remind the customer regular upgrade. Dell's after sales service though online, telephone and on site support
Suppliers
Alliance with Microsoft and Intel to promote RM with suppliers
Growth together with supplier: At valuechain.dell.com, Dell shares information with its suppliers on a range of topics, including product quality and inventory.
"Kanban" system: According to Just in Time management,, Suppliers or workstations only deliver components when receive a card or e-mail. It works on a daily schedule where components are produce by suppliers depending on the specific order that day. Kanban process is based on fixed production schedules and can be successful with an efficient and effective logistics process.
Virtual integration with supplier and delivery (UPS): co-operate with UPS to achieve the delivery guarantee within 5-8 days.
Government
Strong server caters for large amount of information: Building in manageability and serviceability to simplify government IT staff workloads Delivering required performance features to connected environments without unneeded complexity.
Security of information: security policy program are provided by Dell
Assists long-term technology planning through managed product transitions and emphasizes relevant technology, long-term cost savings.
Education
Set up network for e-school Higher Education knowledge center: Access campus solutions, white papers and case studies.
Higher education online store: Custom configures a system, save an E-quota and buy online
Students, Faculty and Staff Personal Purchases: Special purchase program for Higher Education students, faculty and staff
State & special contacts: get the right price for institution.
EducateU online training: tailor makes for the University students to learn more about Dell's product.
Super server for research: tailor made the serve in school for student to provide the storage data facilities
2.3 The changing role of the consumer through the use of the Internet
The Internet is becoming more integrated into daily left: business rely on the Internet for commerce and real-time information exchange; customer go online to shop, bank and conduct personal Internet as and educational tool.
The power of Internet connection though serve to desktops and notebook to provide the interface so efficient and effective, to workstations used to develop digital content, the ability to provide products and service that enable Internet access and enhance the online experience will be vital for companies in the computer systems industry.
Dell Direct Model includes moving even greater volumes of product sales, service and support to the Internet. It mainly using Internet to improve the efficiency of Dell's procurement, manufacturing and distribution process and further expanding an already broad rang of value-added services. To enhance the direct business models and provide customer experience to higher level though Internet and value-added services. Dell would like to grow its business at a multiple of the high-growth rate anticipated for the computer-systems industry as a whole.
The Dell philosophy is that to truly realize the economies and speed that the Internet provides the organization needs a fundamentally different perspective on the nature of business relationships and on value created for customers.
Internet survey: Similar than the other survey, the information can be obtained though e-mail or via online questioning).is inexpensive method. It is a best way to secure a response is to link completion of a questionnaire into some sort of registration or subscription process. Dell can collect the customer ' s preference not only emphasis on sales data.
Customer's data: the customer data will be recorded once the order though Internet, it could help the date collection and easy to trace customer preference by getting information online for analysis.
Press release: though Internet to release the news to the customers, it could build up the image and deliver the message quickly than the hardcopy.
Internet technology: To enhance the usage on Internet, customer can easier to get updated technical information. Dell's on site training can educate the product knowledge It could be more faster than the normal slow-distribution channel and hotline because of telephone line without any document support.
Faster upgrade service in software through Internet , customer could download the trial software or wallpaper.
Interactive: Increase service level: Provide better service through speed of responsiveness and flexibility, Internet could handle complaint and record the customer opinion, it could increase high quality feedback and cost-effective complaint handling.
Dell solution centre: decision tree customer to the most appropriate product/service. The benefits would be feedback on the client's specific need. Consultant group is mainly handled the specific need to achieve the cost-effective information provision and easily consistent communication. Eliminate constraint on tech support service in terms of both time and labor compare with traditional service model.
Provide comprehensive and comparable information with competitors: It is crucial to know what Dell's competitors are already doing, how they can match and better to provide something of value of client.
Easy to access: 24 hrs 7days per week, customer could access Internet in anytime and any place.
Online support as after sales service: post the common technology problem and solution on Internet as the part of after sales service.
Reduce cost: reduce cost of operation by leaning online compare with the traditional business model, customer can though the Internet to place an order, all the operation transaction can be done on Internet. Reduce Channel cost, eliminate the middle man between supply chain and customer, Dell is able to gain control over cost and efficiency of the lead-time, Just in time model could reduce the inventory cost for Dell. It also facilitate logistic with shorter deliver time and speed up process.
Virtual Integration The Internet is shrinking time and distance it is reducing cost and adding velocity to business refer to as Virtual Integration It is essentially an information sharing process, which could be in relation to design databases or methodologies. Internet has made it possible for Dell to work in real-time with suppliers and customers.
Break location barrier: improve access to information, every computer connected to the internet is theoretically in contact with every other either directly, via e-mail, or information posted on web sites. Customer could access information not only from Dell Hong Kong web-site also worldwide.
Dell Premier pages to further personalize the relationship between the organization and customers, using the Internet , Dell has create personalized WebPages called Premier Pages, It designed for large corporate organizations containing information on accounts, procurement and purchase order processes unique to that customer.
3 Overview of Hong Kong people using Internet
Since the emergence of the first commercial Internet Service Providers(ISPs) in 1993, Internet use business and house holds has increased leaps and bounds. At present, 61% of household in Hong Kong have personal computers (PCs) at home and 80% of household's computers are connected to Internet. Moreover, 37 of business establishments have Internet connection.
From June 2002, Hong Kong had 2.6 million Internet users. Internet traffic volume reached 15,485 terabits via broadband networks during that month. Business transaction from selling goods, services or information through electronic means amounted to HK$7.6 billion in 2000 tip 63% from 1999 according to report on 2000 annual survey of storage, communication, financing, insurance and business service, Census and Statistics Department.
Business to Business
B to B involves companies using the Internet for making transaction with supplier sand services providers. The transaction though using electronic data interchange over propriety network before migrating to the Web. It may use commodity trading such as steel, souring activities or supply chain management. As Hong Kong is the business centre, the transaction though Internet will become more in the coming years. According to Andersen Consulting, Hong Kong companies can save 5%-20% of total spending on operating resources by souring their supplier through the Internet.
The "Survey on e-Business Adoption in Hong Kong" conducted by Hong Kong Productivity Council in December 2001 showed that e-business adoption among small and medium sized enterprises have been slow to adopt e-Business due to lack of financial and human resources However, 55% of the respondents have plans to implement e-business strategies in the next six months.
Business to Consumer - on consumerism
B to C occurs when a company sells its goods or service to the consumer over the Internet. B to C transaction though Internet is increasing specially in online stores, and site offering financial service (particularly bank and securities), ticket services and information services. According to household survey conducted by the Census and Statistics Department, not many consumers though Internet to do the purchase transaction it only around 5.6%, it means e-commerce is still an early stage in this segment.
Customers though Internet to purchase still not very common in Hong Kong. They are mainly concerned about the security problem and online retailers are trustworthy and fulfill their requirement. As the survey of Taylor Nelson Sofres mentioned that 8% of Hong Kong Internet users shop online in 2001 and Hong Kong consumers tend to use a mixed online/offline strategy, surfing for information online and then making an offline purchase.
Government tends to use e-transactions
In January 2000, the government had enacted the Electronic Transaction Ordinance and established public key infrastructure to enhance public confidence in the legality and enforceability of e-transactions. Hong Kong Post and tradelink are the recognized public certificate authority for e-transactions.
To promote the use of Internet in Hong Kong , the government has launched the Electronic Service Delivery Life Scheme (ESDLife) including Government-to-Citizen (G2C) and Government-to-Business (G2B) on services.
3.1 Decision making process for B to B and B to C segment
Business to consumer
Problem recognition:
Customer recognizes to change the current situation, the stimulates could be internal or external.
Internal: PC is not only the office equipment, it also to be the necessarily product at home. Customer senses the demand of PC at the early stage. It will start to purchase the new computer. Customer may be dissatisfy with the existing computer can stimulate a need such as outlook, too old, not enough power to fulfill the requirement.
External: New technology is quickly to deliver to the customer compare with before. Customer realized that it is necessary to upgrade or replace their own one to catch up requirement such as new software. Advertising stimulates their need.
Strategies:
Dell's strategies could be more high profile than Business to Business. To enhance every chance to gain the customer attention, Dell can emphasis on Dell direct model though Internet to provide the variety of service to customer.
Mass media: advertisement on Newspaper, computer magazine, to stimulates demand
E-mail marketing: regular send out the e-mail to inform the customer promotion and new technology. Most important purpose is to invite customer to visit Webster.
Road show: establish more road show at university to educate the student
Trade exhibition: Dell could join more computer exhibition in Hong Kong let customer aware the brand name and get the information.
Information search
After clarify the need, customer will need to search the relevant information The customers looks for information either from external sources or from memory.
From memory: scanning memory to determine what has been done to resolve the problem in the past such as recall the memory of first time purchase the PC.
From external sources: There are many channel to access the information such as reference group (friends), advertisement, road show, magazine, mail etc. The information also come from brand names or price.
Strategies: Provide more variety set for customer to select or tailor made by their requirement. It is the competitive advantage compare with the other competitors IBM and Hewlett-Packard and Compaq,
Quick ship: building select configurations in 48 hrs to speed as gift giving to friend.
Dell Outlet: Promotion PC sells in special price and free ground shipping though Internet place an order.
Corporate with Intel to inform customer upgrade the PC such as Pentium 4 processor at 3.0GHz with hyper-threading technology.
Corporate with Microsoft to launch Window XP to evoke the customer to replace the old PC.
One stop shop: provide for all customers PC needs, mainly to provide convenience to customer.
Games: provide more entertainment in Internet to keep customer to stay longer.
F & Q: encourage customer to frequently asked question on web-site
Evaluation of alternatives
The product alternatives that are considered comprise the individual's evoked set. It means usually share some characteristics: For example, customer recall the memory but not much of the technical aspect and only a few major brands in mind.
The way products are mentally grouped influences which alternative will be considered Customer may emphasis on the product features
Some brands are more strongly associated with these categories than are other: Customer may compare with the other competitor's reputation and brand awareness
Strategies: provide more details information in web-site and provide the variety product package. Also, the toll fee service for enquiry is important. Outrageous desktop deals save on these special desktop configurations. Also provide the data transfer service to the customer.
Refer to the important client reference to gain the customer confidant and build up the reputation.
Purchase Decision
After evaluation the customer buys the preferred alternative or a substitute It may be influenced by risk. Risk is personal and related to the consumer's perception. Customer will consider the product feature which can be perform of expectation The product will be valued of money and fulfill the home decoration such as spare. Also, customer will consider the time to make purchase such as during working hours, promotion period and after work etc. In additional, the order processing is user friendly or complexity or spending long time to handle also influences the customer to make up their mind. Finally, the payment method is directly impact the customer to purchase your product.
Strategies: basing on customers'own decision to reduce the time to make up decision. Dell Financial department promote the Dell visa card for customer to buy the PC online. It takes less than 24 hours to approve and therefore are processed much quicker than other methods of payment. Pay 0% interest for 6 months on any Dell purchase for well-qualified buyer.
Security: Dell's provide a secure online experience by Dell's Secure Shopping Guarantee, which ensures customer data is safeguarded.
Post-purchasing behavior
After the purchase has been made, customer may feel of unease that the goods may not represent good value, or reinforce their purchase decision by looking for message that confirm their past beliefs
Strategies: Providing reassuring message, after-sales service such as on-line telephone support, telephone technical support, second business day on-site and general customer care. Any customer purchase particular product with current year limited warrant and at-home service. Follow up calls and recommendation on adding web-site is also important for customer to deliver comments.
Dell's total satisfaction policy: return product up to 30 days if customers are not completely satisfied.
Business to Business
Need recognition
Problem recognition can occur as a result of internal and external:
Internal: the most common events leading to problem recognition as following:
New task: Company decides to develop a new network so it is necessary to purchase the new PC or company change the business nature.
Modified rebuy: company has experience to purchase PC but not really satisfactory configurations and company searches for another supplier.
Straight rebuy: The old PC was broken down and need urgent to replacement.
External:
Get information from trade show, advertisement or receive a call from a sales representative who offers a better product or low price, advise from service technical people to buy the new one.
Stratiges: Dell stimulates problem recognition by direct mailing, telemarketing and call on prospects. Or organize a round of conferences or seminars about the new technology. The conference on providing information on how to use the products and better understand the technology.
Information search
After having recognized a need, it is important to have the dissuasion with the others such as user, influencers, deciders, gatekeepers and buyer to establish the buying criteria including reliability, durability, price and other requirement.
Strategies: Dell can render assistance to the buyer in their phase by describing the various criteria to consider in meeting this need. Full set catalogues also available for this situation.
Suppliers search: Company will find the appropriate suppliers though trade directories, do a computer search, phone other companies for recommendations, watch trade advertisement and attend trade show.
Strategies: get listed in major directories, develop a strong advertising and promotion program, and build a good reputation in the market place. Dell joins Microsoft to launch the Window XP operating system, as highlight of Dell's computer is more reliable and efficient. Dell business affiliate program give customer to earn revenue as encourage visit to increase site traffic.
Extranet: build up the extranet for some large client to build up the relationship and quick response to specific need. It could cost-effective fast to deliver information to customer such as promotion. Customers also place the order though extranet to gain the cost-effective and save time. Communication with in the supply chain would be done via an exranet, where suppliers are also made aware of the production time-scale.
Proposal solicitation:
After scanning the most of suppliers, the qualified supplier will be invited to submit proposal.
Strategies: fully research, writing and presenting proposals to mention Dell capabilities and resources so that it could build up the differentiation between the competitors. Refer to case study on web-site and attach the annual report to show the strength to customer.
Supplier selection: According to the proposal to select the best fit supplier, company will consider several factor to select the supplier such as price, reliability, reputation, service and flexibility.
Strategies: Dell could provide the lower price with high quality service to win the buyer's confident. Also able to show that "life-cycle cost" of using its product is lower than competitors not only focus on the price. Dell could emphasis on country of origin to get more confident to customers.
Purchase Decision
Order-routine specification: Company need to make up the final decision with the chosen supplier. It will list out the requirement list and sign up the contract with multi-division for approval.
Strategies: Dell needs to identify who is decision-maker and approach immediately. Dell customer-financing program can provide the tailor made payment method to business via contract, low cost entry at start using Dell, provide leasing service. Volume sales: flexibility to handle the large order to offer the competitive price. Incentive for prompt decision to encourage the company quickly to make up decision.
Post-purchasing behavior
In this stage, the company reviews the performance of the particular supplier. There are some methods to evaluate the performance. Contact end users, rate the supplier on several criteria using a weighted score method or aggregate the cost of poor performance to come up with adjusted cost of purchase.
Strategies: On site training: Provide the on-site training to business and let staff to learn the basic PC knowledge and more Dell's information. Through extranet to deliver feedback and satisfaction survey. Remind upgrade service also available on after sales service.
4. Conclusion
From this assignment, we can learn more information about Dell Computer Corporation and Hong Kong computer market though market research. Although, Dell is not the popular computer in Hong Kong but still selected it as the segmentation country because so many factors as already mentioned of the assignment. As the low profile computer company in Hong Kong, we recommended Dell to maintain the direct model and provide the cheap price with high quality product/service as the competitive advantage in the market. Compare with the mainly competitors, IBM and Compag, Dell could increase more marketing activities in Hong Kong to push up the brand awareness in the market because the brand loyalty is very important in Chinese society.
China really is the potential market for Dell to entry but not at this mention. As already mentioned in the assignment, the statistics reflected that the direct model is not very popular in China, Dell is necessary to work hard in relationship marketing to beat this weakness. The most effective method is set up the strong business in Hong Kong first as the early stage. After observed the experience, it would be easily to go to China market.
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