Internet Marketing Strategy Paper

University Degree Business and Administrative studies

Introduction

Marketing is a critical and complex business function with the simple goal to maximize revenue and sustain operations. The use of the Internet has become one of the main tools that can be applied to a business’ marketing strategy. An organization’s web site offers an unrivalled opportunity to measure significant aspects of marketing effectiveness since customer behavior can potentially be monitored in real-time and responded to accordingly. This paper will discuss product, place, and target market of Dell Computers, a “click and click” organization and then contrast with competitor differentiation discussion of Gateway, Inc., a “click and mortar” company.

Dell Computers Strategy

Place - Where will the business operate (i.e. geographic, virtual)? Place means “making the goods and services available in the right quantities and locations – when customers want them (Perreault and McCarthy 1999, p298). How does that apply to the Internet? The internet can be used as a distribution channel, allowing direct sales to customers. The supply chain is shortened as firms conduct direct transactions between suppliers and end users without the involvement of intermediaries. To date, high-tech companies have been the leaders in direct Internet sales, such as Dell Computers, who have sold and marketed from their website. As one of the leading makers of desktop and laptop computers, their business was founded on the basis of direct marketing techniques. The transition to Internet based marketing was smooth for Dell. At the Dell, web site customers can enter the exact specifications for a new computer, and Dell will ship it to them within five days. The sales of Dell’s computers continue to grow annually.

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The following points summarize Dell Computers marketing strategy for product and place, their target market and differentiations from competitors:

Product

Primary focus is “built-to-order” servers, storage, and personal computers
Secondary focus is computer peripherals, handheld devices, computer accessories and software

Place

Internet
Primary approach is direct to customer
Secondary approach is indirect, utilizing channel partners
No physical location for consumers to shop
Considered a “click and click” company

Target

Primary target audience has been large companies, education and government agencies
Secondary target is the consumer
Recent shift to larger focus on consumer market with the ...

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The following points summarize Dell Computers marketing strategy for product and place, their target market and differentiations from competitors:

Product

Primary focus is “built-to-order” servers, storage, and personal computers
Secondary focus is computer peripherals, handheld devices, computer accessories and software

Place

Internet
Primary approach is direct to customer
Secondary approach is indirect, utilizing channel partners
No physical location for consumers to shop
Considered a “click and click” company

Target

Primary target audience has been large companies, education and government agencies
Secondary target is the consumer
Recent shift to larger focus on consumer market with the Dell Dude campaign
Consumer psychographic targets emphasize workers, seekers, pioneers and surfers

Differentiations

Internet only, “click and click” company
Focus on customer service from end to end
“Built-to-order” computer products rather than pre-packaged
Offers user empowerment in ordering product

Dell Computers is an excellent example of a manufacturer that has successfully used the Internet to manage many of the channel activities. Dell doesn't use any retail stores or distributors; all sales are made directly to its customers. The Internet offers a direct way to connect to your customers, and provides a means to ‘touch’ them and ask them ‘how can the company serve them?’ This is a way to create specific products for well defined customer segments based on their requirements. For example, Dell Computers serves their customers and offers user empowerment by allowing their customers to define a desired system configuration, place an order, make payment and wait for their system to arrive at their home or office.

Competitor Differentiation - Gateway, Inc.

Gateway, Inc. takes a localized approach, utilizing its website, call centers and nationwide network of Gateway retail stores to build direct relationships with consumers, small and medium businesses and government and education institutions. Unlike Dell Computers, “…Gateway sells direct via mail-order and the Internet” (Perreault and McCarthy 1999, p301), however, Gateway’s retail stores, (referred to by Gateway as their country stores, speaking to their slogan “Gateway Country”) offer consumers a chance to see, touch and play with the product they are going to buy before they place the order. The Country stores strategy could be the only differentiating card for Gateway, even though the company has struggled with the concept to date, as seen in a recent article entitled “Gateway shuts doors at four stores” dated January 15, 2003, by John G. Spooner, a staff writer at CNET News.com. Spooner says “Despite the closures, Gateway thinks its stores give it an important strategic advantage in selling PCs and consumer electronics, such as digital cameras, because it lets buyers go face-to-face with its inventory. The PC company has 268 stores in the United States, down from a high point of 326.” (Spooner 2003)

Although the company tries to be competitive, Gateway has not been offering the best value. The best value has been coming from Dell, if you look at price and service-quality levels. Gateway needs to use every resource available to get consumers into stores to remain a viable competitor. Even with the diversification of place (Internet and store presence), Gateway is still behind Dell. That proves that focus has to go to all portions of the business in order for success to occur, not just one aspect. Thought should be given by Gateway to the concept of “spreading too thin”. Gateway has diversified so much in product and place without honing its customer service, that it has not gained market share, but lost. Dell Computers has survived as the number one provider of personal and business computers with its primary approach, “direct to customer”, despite place diversification from leading competitors. What is the number one reason that Dell has held its lead? …customer service and an innovative marketing approach! Whose getting a Dell now Dude?

Works Sited

Perreault, W. D., Jr. & McCarthy, E. J. Basic marketing: A global-managerial approach: 13th ed. University of Phoenix Special Edition Series. Burr Ridge, IL: Irwin/McGraw-Hill, 1999

Spooner, John G. “Gateway shuts doors at four stores” CNET News.com. 15 Jan 2003. 30 Mar 2003. <>