PROMOTION
Dell Computer follows a traditional promotional strategy that includes direct mail catalogs, television advertising, Internet advertising, and print advertising. The direct mail catalogs provide a sampling of the products that are offered on the Web site, and can be ordered directly over the phone. The television advertising is used to promote the quality of the product as well as the price point, and also to reinforce the customer service that is available for after-sales support. Advertising is also used to promote particular price incentives that the company may be offering on specific products during specific periods of time, such as price discounts or rebates on selected systems (Booker, 2004).
PRICE
Dell Computer takes advantage of the fact that it does not have the overhead associated with retail operations and passes its savings along to customers. This is not a premium brand, but instead focuses on offering value for the consumer dollar. At this point, many consumers do not differentiate between the well-known brands of computers—including Hewlett-Packard/Compaq, Gateway and Dell—so price becomes a significant decision factor for many customers. By offering custom systems at what are perceived as competitive prices, Dell has successfully built a niche for its e-commerce business (Booker, 2004).
MARKETING STRATEGY
The company has successfully built a marketing strategy that incorporates all of the marketing mix elements. By not having retail stores—a "place" decision—the company is able to keep its costs down and pass the savings onto consumers, thus affecting the "price" aspect of the marketing mix. By promoting price and value in its advertising, it is able to reinforce its product images as being high-quality while reasonably priced. There are no obvious contradictions in the marketing strategy of Dell, and the company's success illustrates the effectiveness of its marketing mix.
YEAR: 2005
As of January 2005, Dell Computer Corporation (Dell) was the world’s largest direct-selling computer company, with 57,600 employees in more than 80 countries and customers in more than 170 countries. Headquartered inn Austin, Texas, Dell had gained a reputation as one of the world’s most preferred computer system companies and a premier provider of products and services that customers worldwide needed to build their information-technology and Internet infrastructures. Dell’s climb to market leadership was the result of a persistent focus on delivering the best possible customer experience. Direct selling, form manufacturer to consumer, was a key component of its strategy.
In 2005, Dell was also ranked as America’s most admired company by Fortune. Approximately one of every six computers being sold in the world was a Dell machine. Dell’s revenue growth at 19% was 7% higher than the industry average and its operating efficiency resulted in net margins of 6% while the rest of the industry lagged behind at only 1%. Dell was no longer the underdog of the PC business. Instead of resting on its success at the time, Dell realized that the PC business was slowing down and chose to build a diversified IT portfolio. Dell moved into servers and storage, mobility products, services, software applications and also challenged the then dominant printer leader, HP. CEO Kevin Rollins reckoned that aside form the PC category, Dell is neither the leader nor the biggest and that would keep the notion of being the underdog alive and well in the company, the same notion that inspired Dell some two decades ago to challenge the PC orthodoxy with stunning results.
In 2005, even after 21 years of operations, Dell could perhaps match a startup company in its informality and execution speed and energy. A benchmark for flat organizations, Dell used its structure as a competitive advantage and localized decision making. If an issue did not require a higher up’s attention, then the decision would be made without involving him. The efficient channels of communication and the accessibility to the management ensured that even without the dampening effects of bureaucracy. Similarly, the senior management also harvested the speed of the flat structure to quickly roll out strategies and to respond to the competitive markets.
CONCLUSION
Dell has demonstrated that e-commerce can be effective when it is used as part of a comprehensive marketing strategy that includes all aspects of the marketing mix. The company offers a product that is perceived as performing well, and that meets the price needs of consumers as well as their technological needs. Although the company does not use retail sites, it has demonstrated that computers can be built-to-order through mail order and Internet sales, and that customers will return for after-sales peripherals and additional purchases in the future.
REFERENCES
Booker, E. (2004, June 7). Dell at 20. B to B, 89, p. 10.
Dell shuts down white-box channel effort. (2005, March 17). eWeek, n.p.
Frigo, M. L. (2004, January). Focusing strategy on fulfilling customer needs. Strategic Finance, pp. 9-10.
“The Education of Michael Dell,” Fortune, March 7, 2005
”Education Without Excuses: An Interview with Michael Dell and Kevin Rollins,” Harvard Business Review, March 2005, pp. 102-111
