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Marketing Strategy of Dell: by Ravi Prakash Singh ITM College, Executive MBA, Batch 18

Dell's marketing strategy focused on direct sales, build-to-order manufacturing and lean inventory to reduce costs and increase customer satisfaction. This allowed Dell to offer customized computers at affordable prices. More recently, Dell has expanded its product lineup and services to transition from a hardware maker to a solutions provider. Dell has also pursued strategic partnerships and marketing coups to gain competitive advantages.

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4K views24 pages

Marketing Strategy of Dell: by Ravi Prakash Singh ITM College, Executive MBA, Batch 18

Dell's marketing strategy focused on direct sales, build-to-order manufacturing and lean inventory to reduce costs and increase customer satisfaction. This allowed Dell to offer customized computers at affordable prices. More recently, Dell has expanded its product lineup and services to transition from a hardware maker to a solutions provider. Dell has also pursued strategic partnerships and marketing coups to gain competitive advantages.

Uploaded by

ravips4u
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Marketing

Strategy Of
DELL

By Ravi Prakash Singh


ITM College, Executive MBA, Batch 18
INDEX
 Introduction
 Background & Origin

 The Marketing Mix

 Reasons for Dell’s Growth

 Traditional Business Model

 Change in Strategy

 The New Strategy

 Dell’s Marketing Coups

 References
Introduction
 Founded by Michel dell in 1984, headquarter in Round Rock
Austin, Texas.
 2nd largest computer seller, behind Hewlett-Packard(HP).
(Figures as of Apr,2010).
 Currently ranked 38th in Fortune 500 list of companies.

 Ranked 33rd in year 2009.


Background & Origin
 Founded in 1984 with a capital of 1000 dollars.
 In 1985 produced first computer of its own design.

 Changed its name from PCs Limited to Dell computer


corporation in 1988.
 In 1987 started the first international operations.

 In 1992, included in Forbes 500 list.

 In 1996, Dell started selling through website.

 1999, Dell overtook Compaq to become the largest seller of PC’s


in US.
 In 2002, introduced Dell brand printers.

 In 2003, changed its named to Dell, Inc.


Background & Origin
 In 2004, Michael Dell stepped down as CEO and Kevin Rollins
was asked to take his seat.
 In 2005, Dell appeared on 1st place of “the most admired
companies” in Fortune 500’s list.
 In 2006, Dell Acquired Alienware.
 In 2007, Michael Dell replaced Kevin Rollins & became the CEO
once again, as Dell lost its 1st position to HP in a decade.
 In 2008, Dell announced the closure of one of its biggest
Canadian call-centers in Kanata, Ontario, terminating
approximately 1100 employees.
 In 2009, Dell announced the closure of its manufacturing plant in
Limerick, Ireland with the loss of 1,900 jobs and the transfer of
production to its plant in Poland.
The Marketing Mix
Product Price
• Desktop Range • Low-Cost Leadership
• Customized Laptops • Promotional Pricing
• Computer Accessories
• Printers
• Technical Support

Place Promotion
• European Countries • Advertisements
• APAC Nations • Online Customer Support
• Build-to-Order
Reasons for Dell’s Growth

 Was a pioneer in “configure to order” approach to


manufacturing.

 Delivering individual PCs configured to customer


specification.

 In contrast, its competitors were delivering orders to


intermediaries on a quarterly basis.
Reasons for Dell’s Growth
 Implemented “JIT” (just in time) manufacturing approach.
 To minimize the delay between purchase & delivery, it
followed a strategy of manufacturing its products close to its
customers.
 This approach minimized the inventory costs.

 Low inventory is another signature of the Dell Business


Model- a critical consideration in an industry where components
depreciate very rapidly.
Traditional Business Model

 Used Direct Sales Model.


 Lean Inventory Model.

 Maintains a Negative cash conversion cycle.

 What-the-customer-wants manufacturing

 JIT helps in building the computers just after the user


places the order.
 Customized systems at affordable rate.
The Direct Sales Model
 Dell’s model is based on build-to-order process, where
company builds each PC on demand.
 Customers can choose what components they want for their
computer, Dell then assemble the order and ships it.
 This strategy improves customer satisfaction and reduces costs
and risks to the company.
 Direct sales in conjunction with build-to-order is a powerful
model for both Dell and its customers.
 Customers get what they want, rather than be forced to
choose among a fixed set of options.
What-the-customer-wants Manufacturing
 This can be considered as one of the benefits of the direct
model.
 Developing and building only those systems that customers want.

 Eliminates the excess cost of buying too many components


having high storage and inventory costs
 By doing this eliminates the possibilities of selling the surplus
at a loss.
Negative Cash Conversion Cycle
Dell has a negative 45 days CCC
(Cash Conversion Cycle), which
means that their sales are converted in
hard cash 45 days BEFORE the sale.
Lean Inventory Model
The key components of this model are:
 Value: Defined from the final customers’ perspective.

 Flow: Creating a continuous flow from one business


process to the other without interruption and in the
most direct manner.
 Pull: Producing a product only when the customer
asks for it.
Change in Strategy
"The direct model has been a revolution, but it
is not a religion”, the direct model may not be
a panacea for all regions in all times. The
similar statement to reassess the conventional
IT services could be the same case. Of course,
it should be great to see Dell innovate another
surprise in the near future.”
-- Michael Dell
The New Strategy

 For 2 decades, Dell was known as a company who


manufactures and sells hardware.
 Took drastic measures to increase the profitability.

 Masterminded the change in entire product line-up.


The New Strategy
 The new Product lineup:
 Power Edge servers

 Power Vault and Dell storage products


 Power Connect switches

 OptiPlex desktops

 Latitude notebooks

 Dell Precision workstations


 Inspiron notebooks

 Dimension desktops
 Dell monitors
 Software and Peripherals

 Premier Services 
The New Strategy
 “Innovation is the key”
 Dell launched “all in one” printer, that can scan,
copy and fax are #2 (private label of Lexmark), behind
Lexmark.
 The Dell Printer software automatically detects
when ink is running low and directs user to the Dell
website.
 Advertisement through its website http://www.dell.com
providing offers like free shipping of orders.
The New Strategy
 Simplify-IT strategy
 Educating the prospective customers about the services
which are provided by dell directly through its website
http://www.dell.com

The New Strategy
 Started extensive partnership with companies like Google.
 Under the deal, millions of Dell PCs were loaded with
the Google toolbar for Web and PC search, before they're
shipped to consumers.

 Changing its image from hardware manufacturer to a


solutions sellers.
 Replaced IBM in Q2(2008) to become a leader in storage and
server segment.
The New Strategy

 Dell has started CFI (Custom Factory Installation)

 Not available with any other manufacturer.

 Under CFI, Dell custom installs software and hardware not


generally available on the Dell’s sales shelf.
The New Strategy
 Launched Premier.Dell.com
Dell Marketing Coups
 Low and Medium Size Server Market

 Analysis 1: Servers have higher margins

 Analysis 2: Competitors were treating servers as a cash cow for


feeding the PC market.

 Dell entered market at about 20% lower price and told


customers “even if you don’t buy from Dell, ask your vendor
to match Dell’s price.” Server Dropped 17 percent in one
year and reduced the size of the cash cow for competitors.
Dell Marketing Coups
 Analysis: Laptop owners want long life batteries.

 Dell tied up whole channel by contracting SONY to


manufacture.
 Dell arranged a chartered plane for reporters and
analysts, gave them a laptop and flew to Los Angles…
4 1/2 yours later, they still had power.
References
 http://money.cnn.com/magazines/fortune/fortune500/2010/snapsh
ots/1053.html
 http://www.dell.com

 Direct from Dell: Strategies That Revolutionized an Industry –


By Michael Dell
 http://www.forbes.com

 http://moneycentral.msn.com

 http://news.cnet.com/Dells-new-goal-Double-in-size/2100-
1001_3-875117.html

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