“Marketing analysis of computer hardware“Marketing analysis of computer hardware (DEll)”(DEll)”

Master of Commerce

(M.COM 4th Sem.)

FROM

Silicobyte Katni Degree College of Computer Science,Katni (M.P.)

Under“Rani Durgavati Vishvidhalya,Jabalpur(M.P)“

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I Am Pooja Goyanka Daughter

of Mr.Rajkumar Goyanka certify that

the project report Marketing Analysis

of Computer Hardware (DELL) prepared

by me is my personal and an authentic

work under the guidance of “Shri

Pankaj Sir” (Department of

Commerce).

Pooja Goyanka

M.Com. IVTH SEM

(Marketing)

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has visited our shop for her project

work. During the project work her work

and behavior was satisfactory. on the

basis work done by her marks awarded

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Date: - Signature:-…………… Place: - Katni Name: - ……………… Designation: - ………… Office/Institution: - …………..

This is to certify that the project titled Marketing Analysis of Computer Hardware (DELL) submitted in partial fulfillment of the Master of Commerce (M.com) from “Rani Durgawati Vishvidhalya Jabalpur” through Silicobyte Katni DegreeCollege of Computer Katni (M.P.) has been developed by “Pooja Goyanka” is an authentic work carried out under my guidance. The matter embodied in this project work has not been submitted earlier for award of any degree or diploma to best of my knowledge and belief.

Name of the Project g

“Pankaj Saksariya”

Date: - 06/06/2014

I obey great many thanks to a great many people who helped an supported me during the writing of the project.

My deepest thanks to hectraye of “Pankaj Seksariya” the guide of the project for guiding and correcting Various document of mine with attention and cafe . He has taken pain to thought the project and make necessary correction as ad when needed. I express my thanks to the University of “Rani Durgavati

Vishvidhalya Jabalpur” for extending his support.

I would also thanks my Institution “silicobyte Katni Degree college” any my faculity member Mr. Aashutosh Shukla , Miss. Rishu Agrawal (Principal) we get the more information through this project conducted by “Rani Durgavate Vishya Vidhalya” which is essential for our bright future. Pooja Goyanka

M.Com. IVTH SEM

(Marketing)

Title of the Project: - Marketing Analysis of Computer Hardware

(Dell)

Purpose of the Project: -Ans. This is era of computer. Not even one

field work without computer. Various fields like banking, hospitals, schools,

offices of any company has computer. As its permanent equipment. And

hardware makes computer. Thus, I choose marketing of this important

product.

Project is Related to private/Government Sector

Description: -

I. Topic – marketing analysis of computer hardware (Dell).

II. Project is related to – private sector.

III. Motivate by – my inspiration for this topic is my college, silicobyte katni

degree college. and Mr. pankaj seksariya & aashutosh shukla sir also

support me for choosing this project.

After learning computer during my

graduation I felt myself capable of working. In any office as my carrier. As

no field works without computer. Thus, I choose marketing of computer

hardware.

IV. Some minimum requirement of the project title:

a. Educational quantification – at least should be 12th pass out

b. Technical Quantification – fair 2 good knowledge of parts & hardware and

should also be aware of fundamentals of marketing.

c. Experience - its compulsory for good result

V. Requirement of higher qualification for the topic: - no need of any specific

higher qualification but some short term courses of hardware done by

candidate. It is good for hardware related work.

VI. Information of competitive exam training etc. which is related project: -

Competitive exams are not necessary for this project. But training is must

and useful for this project.

VII. Visited place whether private and govt. together information about the

project

Royul computers

C. no. 9993882555

Name :- Aashish Goyanka

Kanak cyber café

C. no. 9993909789

Name: - Abhay Singh

Arvind Technologies

C.no. 07622-401993

Dushyant Gupta

VIII. Visited place name/ date/ information and contact no.

Royul computers

C. no. 9993882555

Name: - Aashish Goyanka

Information: - there I collected information about dell, that how

many

type of products and hardware available in dell.

Kanak cyber café

C. no. 9993909789

Name: - Abhay Singh

Information:-I got warranty related knowledge about dell, that

which type of warranty dell company provide.

Arvind Technologies

C.no. 07622-401993

Dushyant Gupta

Information: - about warranty extend knowledge

1. Warranty plus knowledge.

2. Warranty extends knowledge.

INDEXIntroduction 

Company background

Overview of Dell

DELL’S MARKETING STRATEGY

Situational Analysis

SWOT analysis of DELL

Objectives & Strategy Development

History of Dell Computer Corporation

Computer Weekly report: Dell

Key Facts about Dell

Dell whitepapers from Tech Target’s research

library

Key UK customers

Dell net revenue growth and product vs

services revenue

Conclusion

BIBLIOGRAPHY

DELL COMPANYIntroduction   Dell Company was established in November 4, 1984. It is an

American multinational information technology corporation based in Round Rock,

Texas, and United States that develops, sells and supports computers and related

products and services. The company is one of the largest

technological corporations in the world, employing more than 103,300 people

worldwide. The name of its founder is Michael Dell. He was the youngest CEO to

guide a company to a Fortune 500 ranking.

Since the first Dell PC was introduced in 1986, Dell has continued to shape

the industry by breaking new ground and pioneering critical developments in

home, small business and enterprise computing. The industry of Dell inc.

consist of computer systems, computer peripherals, computer software, IT

consulting andIT services.

Although Dell company is an industry leader in personal computers, that’s

just one component of their technology portfolio. To really take advantage of the

possibilities their industry provides, they branched out into an innovative array of

products and services. At Dell, everyone can experience multiple business units,

groups, teams and positions. The products that produce by the company

including desktops, servers,notebooks, netbooks, peripherals, printers, televisions, 

scanners, storage and smart phones.

In 1984, Michael Dell founds Dell Computer Corp.1988, Dell holds initial

public offering of 3.5 million shares of company stock.1989, Dell join the mobile

computing revolution with its first laptop computer, the 316TR. 1994, company

introduce the Dell Power Edge server line and Lithium-ion battery. 2002, the

3100MP projector signal Dell’s entry into the projector market. 2006, Dell

company is the first in the industry to offer free product recycling for consumers

worldwide. In 2008, Dell launches first Modular Data Center. 2009, Dell enters

the smart phone market with the Mini 3i from China mobile, Adoma and Latitude Z

laptops are produce. 2010, Del enters the tablet arena with the Streak, a 5-inch

device designed. In 2011, Dell acquire compel lent, a rapid growing storage

solution provider, to expand their enterprise storage portfolio, and help the

customers better manage data growth, reduce storage costs.

The main business of Dell Company is selling the product of laptops, net books and

desktops. Dell Company is selling different kinds of models of laptops for the

customers to choose such as Inspiron Laptops, XPS Laptops, Alien ware Laptops

and more. Different kinds of models have different functions, sizes, colour and

price. Customers have more choices to choose the laptops for themselves.

What is Dell? Dell, Incorporated is a computer hardware manufacturer and distributor.

The company is one of the world's largest computer distributors in terms of both

quantity of unit’s sold and gross income, and one of the United States' largest

corporations. From 1999 until 2006 Dell delivered more complete computer

systems worldwide per quarter than any other PC manufacturer. However, a bad

reputation stemming from poor customer support had seen Dell's market shrink,

with rival Hewlett-Packard outselling Dell for the first time in Q4 2006. Dell is

now attempting to improve its image with Linux-based desktop and laptop models,

a community-driven idea generation website, and a move to less expensive

AMD processors. Most of Dell's products are IBM PC-compatible desktop, laptop,

and server computers using Intel or AMD processors. The company also markets a

line of HTC-produced handheld computers hand, rebranded computer

peripherals such as keyboards and mice, and Sony-developed monitors and

televisions. Other Dell-branded peripherals such as scanners and printers are

often designed in-house with production outsourced. Dell also distributes third-

party hardware such as gaming consoles from Sony, Nintendo, and Microsoft.

Often Dell will market via the company website third-party devices that compete

with its own products, such as the Palm Tungsten handheld that competes with

Dell's own Axim line.

Dell Computer was founded as PC's Limited in 1984 by university student

Michael Dell. Selling assembled computers from his dormitory room, Michael

abandoned the university during the planning stage of his first in-house computer

design in 1985. The company was so successful that within two years PC's Limited

had distribution offices in Europe, and changed its grammatically-incorrect name

to Dell Computer Corporation. By 1991, seven years after selling it's first

computer, Dell Computer Corporation was listed in the Fortune 500. With much

experience in mail order telephone sales, Dell was one of the first companies to

offer computers for mail order via the Internet. The Dell Coupon program made

many Internet models cheaper than other brands, and continues to be popular to

this day.

Company PerspectivesDell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: highest quality; leading technology; competitive pricing; individual and company accountability; best-in-class service and support; flexible customization capability; superior corporate citizenship; financial stability.

Company background

Dell Inc. is an American multinational computer technology corporation that

develops, sells, repairs and supports computers and related products and services.

The company is one of the largest technological corporations in the world and is

listed as number 44 in the Fortune 500 list. It is the third largest PC vendor in the

world after HP and Lenovo.

Name Dell Inc.

Industries served Computer hardware,

Computer software, IT

consulting, IT services

Geographic areas served Worldwide

Headquarters U.S.

Current CEO Michael Dell

Revenue $ 63.07 billion (2012)

Profit $ 3.49 billion (2012)

Employees 110,000

Main Competitors Apple Inc., Samsung

Electronics Co., Ltd., Lenovo

Group Limited, Hewlett-

Packard Company, Sony

Corporation, Fujitsu Limited

and many others.

Overview of Dell

Dell (Nasdaq: DELL) was founded as PCs Ltd in 1984 and has since grown

to become the number two provider of PCs in the world (HP is number one). The

company, which ships roughly 140,000 systems per day, built its success on the

direct sales model, which it refined to work on the internet. Dell was the first major

systems vendor to factory install Red Hat Linux on corporate systems.

The company, which is the world’s leading provider of flat panel displays,

has about two billion interactions with its customers each year. It ranks 38th in the

Fortune 500 – down four places from three years ago. Dell produced profits of

$1.4bn revenues on $52.9bn in revenues during fiscal 2010. Its net profit margin

during that fiscal year averaged 2.71%. The company, which has a committed

sustainability programme, shipped the first environmentally friendly EPEAT Gold

standard notebook, and powers its global headquarters entirely with green energy.

It offers free computer recycling to consumers worldwide, and also launched two

initiatives, called Plant a Tree for Me, and Plant a Forest for Me (the corporate

version), which are designed to offset computer purchases with tree planting.

.

DELL’S MARKETING STRATEGY

Dell is one of the largest organizations in the world with respect to its

personal Computer products. The success of the organization has been because of

its ability to reduce costs and create a streamlined supply chain management

system. The organization has been able to offer cost effective personal computers

to customers. It has a direct business model that ensures that computers can be

configured according to customer specifications and directly delivered to them.

This has helped Dell to become an industry leader for many decades. It has

created the conditions for loyal customer base and ensured its success in a

competitive industry. Dell faces significant threats in the form of declining PC

sales. It cannot focus on limited products while it has to rebrand itself so that it

can invest in software and enterprise solutions. Dell needs to have clear and

precise goals. It needs to have a complete strategy for success, which is based

upon efficiency and effectiveness. It needs to develop a comprehensive approach,

which is based upon attaining strategic excellence within a short period of time.

Situational Analysis

Internal Analysis

Dell’s business model is based upon creating a direct model according to the

Requirement of its customer segments. This is done as a means of ensuring that the

Organization maintains its competitive advantage in the computer industry. Dell

knows that it cannot afford to own different parts of the value chain. The direct

business model ensures high levels of speed and reliability. It reduces the inventory

while bypassing the need for dealers. It sells products directly according to the

customers’ specifications. This has enabled the organization to reduce the costs

and risks of moving large finished goods inventories. (Smith, 2012)

Competitor Analysis

Dell’s primary competitors include HP, Acer, and Lenovo. All of these

Organizations have sought to find ways in which they can reduce prices. They have

ensured that innovative strategies are designed as a means of combating the low

costs of Dell. The price differential, which Dell has been known for, is slowing

eroding because of innovative strategies. (Haag, 2006)

The competition within the computer industry is very swift which means that

Dell might lose its future competitive advantage. Dell currently has 18% share of

the personal computer market when compared with HP, which has overall 15%

share. It is considered to be the third largest personal computer vendor in the

world. HP is slowly eroding the competitive advantage of Dell through its

innovative strategies. Additionally, Dell is suffering from a decline in PC

shipments while its share in the server market has also reportedly decline.

(Cooper, 2006)

Dell is also suffering from competitors like Apple which is a market leader in

technology and innovation. Apple’s emphasis on tablet computers and smart

phones is slowly eroding the competitive advantage of Dell, which continues to

focus on personal computer products.

Market Analysis

Dell has been successful in the market because of its loyal customer base

and diversified product portfolio. The organization’s main products are personal

computers, servers, network equipment, software, and computer peripherals. It

also offers cameras, printers, and other electronics. (Matear, 2002)

Dell has created a flexible supply chain management system so that its key

goals can be attained. It has been using online commerce to increase its sales and

revenues. Its build-to-order processes ensure that customers receive products

according to their specifications. (Halldorsson, 2003)

Customer Analysis

Dell’s customers belong to diverse sectors but the youth represent its main

customers. It has aggressive marketing strategies in order to target the young

people. This is in line with its belief that technology can be easily promoted among

the young customers. Dell has used clear and specific objectives in order to

achieve its critical goals. It has crafted a superior business strategy that is based

upon achieving efficiency and effectiveness. (Halldorsson, 2007)

Environmental Analysis

Dell’s business environment has become highly competitive because of the

changes in social, political, and economic trends. The ongoing economic recession

has reduced customer spending and forced businesses to cut down their costs. Dell

has also suffered from this and has been forced to scale down its operations.

Another serious threat is that new players are emerging in the market with the

popularity of tablet PCs and smart phones. These devices are new generation,

which offers computing power in a versatile and smart manner. Hence companies

like Dell are forced to make changes that will enable them to compete effectively in

the market. (Munroe, 2011)

SWOT analysis of DELL

Dell SWOT analysis 2013

Strengths Weaknesses

1. Brand name valued at $7.5 billion2. Product customization3. Environmental record4. Competency in mergers and

acquisitions5. Direct selling business model

1. Commodity (computer hardware) products

2. Poor customer services3. Low investments in R&D4. Weak patents portfolio5. Too few retail locations6. Low differentiation

Dell is one of the world’s best and most known brands. So is it all a rosy picture

for dell. This SWOT analysis of Dell points out chinks in Armour of dell’s fortress.

Opportunities Threats

1. Expand services and enterprise solutions businesses

2. Obtain more patents through acquisitions

3. Strengthen their presence in emerging markets

4. Tablet market growth

1. Growing demand for Smartphone’s and tablets

2. Profit margin decline on hardware products

3. Slowing growth rate of the laptops market

4. Intense competition

Strengths

Brand name. Dell has a very strong brand reputation for quality products.

Its brand is valued at $ 7.5 billion.

Product customization. Dell allows its customers to customize their laptops.

Such services were not originally found within any other major computer

retailer (and currently only Sony and Toshiba allow that), but add great

value to the customers and provides Dell with a competitive advantage.

Environmental record. Dell is engaged in many green initiatives and has

received many rewards for being an eco-friendly business. This is a benefit

when working with public and government agencies.

Competency in mergers and acquisitions. Over the last five years Dell has

spent $13 billion for successful mergers and acquisitions, which brought

patents, new capabilities, assets and skills to the business.

Direct selling business model. Dell doesn’t sell its products through big-box

retail outlets but instead sells directly to consumers and enterprises, keeping

their already thin profit margin to themselves.

World’s largest PC maker.

One of the best known brands in the world.

First PC maker to offer next-day, on-site product service.

Direct to customer business model. Uses latest technology.

Dell has remarkably low operating cost relative to revenue because it cuts out the

retailer and supplies directly to the customers.

Dell’s Direct Model approach enables the company to offer direct relationships

with customers such as corporate and institutional customers.

Dell’s direct customer allows it to provide top-notch customer service before and

after the sale.

Each Dell system is built to order to meet each customer’s specifications.

Reliability, Service and Support.

Dell boasts a very efficient procurement, manufacturing and distribution process

allowing it to offer customers powerful systems at competitive prices.

Dell is able to introduce the latest relevant technology compared to companies

using the indirect distribution channels.

Dell is not a manufacturer; Components are made by the suppliers and Dell

assembles the computers using relatively cheap labor. The finished goods are then

dropped off with the customer by courier. Dell has total command of the supply

chain.

Dell turns over inventory for an average of every six days, keeping inventory costs

low.

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.

Weakness

Commodity products. The large stream of Dell’s revenues comes from

computer, especially laptop, sales, which is a commoditized product.

Computer hardware (commodity) products are sold with a very low profit

margin.

Poor customer services. Once praised, Dell’s customer services

deteriorated due to outsourcing its call centers offshore. Dell invested a

large sum of money in fixing this, but hasn’t yet regained its previous

reputation for customer services.

Low investments in R&D. The company spends a much lower percentage of

its income on R&D that its main competitors and thus, missed an

opportunity to develop strong products for smartphones and tablet markets

as well as to learn new skill and capabilities.

Weak patent portfolio. Due to low spending on R&D Dell hasn’t acquired a

strong portfolio of patents and is now finds it hard to compete in lucrative

smartphones and tablets market.

Too few retail locations. Selling products online saves money and allows for

product customization but provides less visibility for the products. The

consumer finds it hard to trust the products if it can’t hold it first in his

hands.

Low differentiation. Low price was once Dell’s competitive advantage but

the company is no longer able to provide competitive prices. Apart from the

price, Dell’s products are little differentiated from competitors’ products

and are in competitive disadvantage if the price offered by competitor is

lower.

A huge range of products and components from many suppliers from various

countries.

Computer maker and not the computer manufacturer, making DELL unable to

switch supply.

Dell lacked solid dealer / retailer relationships.

No propriety technology

Not attracting the college student segment of the market. Dell’s sales revenue from

educational institutions such as colleges only accounts for a merely 5% of the

total.

Dell’s focus on the corporate and government institutional customers somehow

affected its ability to form relationships with educational institutions.

For home users, Dell’s direct method and customization approach posed

problems. For one, customers cannot go to retailers because Dell does not use

distribution channels.

Customers just can’t buy Dell as simply as other brands because each product is

custom-built according to their specifications and this might take days to finish.

Opportunities

Expand services and enterprise solutions divisions. Dell provides various

services (cloud, security and infrastructure) and enterprise solutions

(servers, networking and storage), which are the most profitable Dell’s

business at the moment. Dell business should focus on growing these

divisions as they promise better growth opportunities and higher profit

margins.

Obtain more patents through acquisitions. If Dell wants to diversify, it

needs new technology patents and new ideas. Dell hasn’t properly

established its R&D facilities to discover new technologies and patents, so

the only feasible way to obtain patents and technologies is to acquire other

companies.

Strengthen their presence in emerging markets. Emerging economies are

the fastest growing markets for laptops, tablets and other electronic devices.

Dell has a good presence in these markets but should strengthen its position

as the company experiences declining market share.

Tablet market growth. Tablet market is expected to grow in double digits

for the next few years and the company has a great opportunity to release

new tablet models and benefit from the market growth.

Diversification strategy by introducing many new products to its range.

Personal computers are becoming a necessity now more than ever. Customers are

getting more and more educated about computers. Second-time buyers would most

likely avail of Dell’s custom-built computers because as their knowledge grows, so

do their need to experiment or use some additional computer features.

The internet also provides Dell with greater opportunities since all they have to do

now is to visit Dell’s website to place their order or to get information.

Since Dell does not have retail stores, the online stores would surely make up for

its absence. It is also more convenient for customers to shop online than to actually

drive and do purchase at a physical store.

Threats Growing demand for smart phones and tablets. With a lower price and

strongly improved capabilities, consumers often choose tablets and smart

phones over laptops. The growing demand for the previous devices takes a

share out of laptops, the main stream of revenue for Dell.

Profit margin decline on hardware products. Dell’s main income is from

selling hardware products, which prices will increase in the future due to

rising raw material prices. This will add to costs for Dell and will further

cut the profit margin.

Slowing growth rate of the laptops market. Growth rate of the computer

market is slowing down and in the near future the markets will become

saturated. It will prove hard for Dell to compete in such market or at least

fight back the lost market share.

Intense competition. The company faces intense competition in all its

business segments. It competes in terms of price, quality, brand, technology,

reputation, distribution and range of products, with Acer, Apple, HP, IBM,

Lenovo and Toshiba.

Competitive rivalry that exists in the PC market globally.

New entrants to the market pose potential threats.

The threat to become outmoded is a pulsating reality in a computer business.

Price difference among brands is getting smaller.

Dell’s Direct Model attracts customers because it saves cost. Since other

companies are able to offer computers at low costs, this could threaten Dell’s

price-conscious growing customer base.

With almost identical prices, price difference is no longer an issue for a customer.

They might choose other brands instead of waiting for Dell’s customized

computers.

The growth rate of the computer industry is also slowing down. Today, Dell has

the biggest share of the market. If the demand slows down, the competition will

become stiffer in the process. Dell has to work doubly hard to differentiate itself

from its substitutes to be able to continue holding a significant market share.

Technological advancement is a double-edge sword. It is an opportunity but at the

same time a threat. Low-cost leadership strategy is no longer an issue to computer

companies therefore it is important for Dell to stand out from the rest.

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Objectives & Strategy Development

Marketing Objectives

The following are the marketing objectives of the organization:

Dell should work on corporate branding so that it can retransform itself

from a PC manufacturer to a firm that provides products and services to

different niche markets. Corporate branding is extensive and Dell should

focus on enterprise level solutions, storage networks, and supercomputers,

which will target the corporate sector.

Dell needs to be cohesive through acquisitions and mergers.

Product diversification should be supported by innovation in the field of

software, enterprise solutions, tablet PCs and smart phones.

Innovative technologies can be developed so that they can be sold at lower

costs. This is the backbone of the organization, which has been successful

because of its ability to manage its logistics.

Dell should enhance its relationships with its customers as means of

ensuring high

Levels of success. (McDonald, 2002)

It should not abandon its PC hardware business but find ways to develop

innovative

Devices that are in accordance with current market conditions.

Dell should employ its key strengths to remove weaknesses

Targeting and Positioning

Dell needs to restructure itself so that it can create the image of a diversified

technology solution provider. Services and software will be the main backbone of

its new marketing strategy. Besides that, its core business, which is hardware, will

remain but it will provide technological and innovative solutions. Dell needs to

target home users as well as different corporate customers. The development of a

comprehensive business strategy is critical for success as it will lead to long-term

growth. (Graham, 2005)

Dell needs to conduct an analysis of the cash flows from the profitable

products and services. This will help the organization to attain strategic

competitive advantage. Dell should focus on its key strengths, which are to reduce

costs, which can be helpful, as it will ensure innovation, and low costs with respect

to new technology. (Jobber, 2001)

Growth Strategy

Product diversification is a key strategy for Dell as it seeks to maintain a

competitive advantage in the declining PC market. Dell needs to restructure its

core business priorities and develop new structures that can help it to gain

leverage in a highly competitive industry. The development of a comprehensive

approach is essential because it can lead to competitive advantage in the future.

(Khan & Khan, 2009)

Product diversification should focus on smart phones, tablet PCs, software,

torage management solutions, enterprise services, and supercomputers, which can

help the organization to attain growth quickly. Dell’s corporate branding strategy

is also essential because it must be restructured so that it helps to target home

users as well as corporate users. It should create a competitive strategy based

upon the lenses of customers and competitors. This can help it to offer value

proposition to its customer.

Dell’s key competitive advantages, which include a lean supply chain

management system and lowered costs through its direct distribution model, need

to be reinvented so that they can offer value added services to home users. The

home users remain the most profitable segments for Dell. (Bennett, 2003)

Cloud computing is another area where Dell can foster growth and

development. It can employ the power of software and storage technologies

through the Internet as means of attaining clear leverage in a highly competitive

industry. Supporting the cloud computing industry is another innovative way for

growth in the market.

Dell needs to appear cohesive through its mergers and acquisitions. This

will help it to have a centralized strategy for attaining growth. It should focus

outwards so that its business processes are flexible, reliable and agile. It needs to

redefine its priorities and make investments in the areas where there are potential

for increased cash flows. This will help the organization to attain success by

leveraging its key products and strengths. (Phillips, 2005)

Selection of Competitive Advantage

Dell can attain competitive advantage by using following strategies:

Product diversification should continue but its core products of hardware

should be given priority so that it can determine profitable markets.

Niche markets need to be targeted by the organization for success.

It needs to focus on branding itself into a complete IT services and devices

provider.

Dell needs to revamp its marketing and business strategies through

efficiency,

Competence and professionalism.

Marketing Mix

Product

Dell’s products should offer tangible and intangible benefits to its customer

segments. New products and services can offer significant advantage and choice to

the customers. They can also provide increased loyalty and brand image for the

organization, which is needed by Dell in order to ensure that it can secure its

future. (Yasin & Zimmerer, 2005)

Price

Dell’s pricing strategies should not exclusively focus on lower prices. But it

can devise ways to find products and services that are innovative but at low prices.

In other services, the organization needs to have clear choices so that it is able to

achieve its critical targets in a proficient manner. (Webb et al, 2000)

Place

Dell should focus on online commerce as the means to reduce its costs. This

can help the organization to offer an online business model that offers

convenience, satisfaction, and excellence for the customers. (Wilson, 2002)

Promotion

Social media is another way to promote its products and services. Moreover,

the Internet should remain the main medium for the success of the organization.

The se of different promotional strategies over the Internet and social networking

sites will help the organization to attain strategic leverage within a short span of

time. (Holloway, 2006).

History of Dell Computer Corporation

The largest direct-sale computer vendor in the world, Dell Computer

Corporation sells desktop personal computers, notebook computers, network

servers, and a variety of computer peripherals and software. The manufacturer

sells its equipment directly to consumers, largely businesses and government

agencies, through its toll-free number and its web site. Dell also sells workstations,

network servers, and high-end storage products. Founder Michael Dell holds 14

percent of the company and continues to run the company as CEO.

Early History

Dell was founded by Michael Dell, who started selling personal computers

out of his dorm room as a freshman at the University of Texas in Austin. Dell

bought parts wholesale, assembled them into clones of IBM computers, and sold

them by mail order to customers who did not want to pay the higher prices charged

by computer stores. The scheme was an instant success. He was soon grossing

$80,000 a month, and in 1984 he dropped out of school to found Dell Computer.

At the time, the PC industry was dominated by such large firms as IBM, while

smaller, lesser known mail order firms sold IBM clones at a steep discount. Dell

used low-cost direct marketing to undersell the better known computers being sold

through such high-overhead dealer networks. Dell placed ads in computer

magazines, gearing his merchandise to buyers who were sophisticated enough to

recognize high quality merchandise at low prices. Customers placed orders to Dell

by dialing a toll-free number. As a result of these methods, Dell's computers

became the top brand name in the direct mail market.

Dell achieved sales of $6 million its first full year in business, approaching

$40 million the next year. Dell hired former investment banker E. Lee Walker as

president in 1986 to help deal with his firm's explosive growth. By 1987 Dell held

a dominant position in the mail-order market, but it was clear that the firm had to

move beyond mail order if it was to continue growing. To accomplish this goal the

firm needed a larger professional management staff, and Dell hired a group of

marketing executives from Tandy Corp., another maker of low-cost PCs. The

group built a sales force able to market to large corporations and put together a

network of value-added resellers, who assembled packages of computer

components to sell in specialized markets.

The Tandy team soon helped raise gross margins to 31 percent, up from 23

percent a year earlier. Rather than merely undercutting the prices of competitors,

they set prices in relation to the firm's costs. The new marketing department soon

ran into trouble with Michael Dell, however. Battles erupted over advertising

budgets and the number of salespeople required for corporations and resellers.

While Dell believed that the new team did not understand direct selling and was

trying to create a traditional marketing department with an overly large sales

force, the Tandy group alleged that Dell lacked the patience to wait for the sales

force to pay off. By early 1988, most of the Tandy group had resigned or been

forced out.

Regardless, the firm continued growing rapidly, opening a London office

that sold $4 million worth of computers during one month in 1988. Dell also

formed a Canadian subsidiary. Early in 1988 the firm formed various divisions to

raise its profile among corporate, government, and educational buyers. With

reported sales of $159 million in 1987, the firm went public during this time,

selling 3.5 million shares at $8.50 a share.

Increased Competition in the Late 1980s

The firm faced several challenges, however. Announcing their own clone of

IBM's new PS/2 computer system well before it was actually ready, Dell later had

trouble reproducing important aspects of the PS/2's architecture, and the

computers were delayed significantly, embarrassing the young company.

Furthermore, Dell faced competition from several Japanese manufacturers, which

were offering IBM clones at low prices. Further, having had trouble meeting

demand, Dell used money raised from its stock offering to expand capacity and

warehouse space, leaving the company with little cash. When it overestimated

demand during the fourth quarter of 1988, the firm suddenly had no cash and

warehouses full of unsold computers.

Dell responded to the increasing competition by increasing the level of

technical sophistication in its computers. Half of its 1988 sales came from PCs

using the Intel Corp.'s 80386 microprocessor, the most powerful PC chip at the

time, and the company began producing file servers using the sophisticated Unix

operating system. Dell also hired computer scientist Glenn Henry away from IBM

to work on product development. Scrapping the company's first attempts at cloning

IBM's PS/2, Henry initiated new plans for producing clones. Henry built Dell's

research and development staff from almost nothing to 150 engineers, who began

working on ways to combine the function of several chips onto one chip.

When Intel released its 486 microprocessor, Dell began speeding to market

the computers that could use it. Another of Henry's goals was high-quality

graphics, which required better monitors and special circuit boards. By mid-1989

Dell had finished initial attempts at graphics hardware, giving it inroads into the

higher end of the PC market.

Despite these advances, Dell still had a research and development budget of

$7 million, compared with the hundreds of millions spent by larger competitors

like IBM. Dell's share of the PC market was only 1.8 percent, but it was still

growing rapidly. U.S. sales for 1989 reached $257.8 million, while sales in Britain

increased to $40 million and a branch in western Germany realized the break-even

point.

Dell considered itself as much a marketing company as a hardware

company, and its sales staff played an important role in its successes. Dell's sales

personnel trained for six weeks or more before taking their seats at the phone

banks, and, along with their managers, they held weekly meetings to discuss

customer complaints and possible solutions. In addition to fielding questions and

taking orders, sales staff was trained to promote products. They helped buyers

customize orders, selling them more memory or built-in modems. Orders were then

sent to Dell's nearby factory where they were filled within five days. The

telemarketing system also allowed Dell to compile information on its customers,

helping the firm spot opportunities and mistakes far more quickly than most other

PC companies.

In 1990 Dell set up subsidiaries in Italy and France and began selling some

computers through large computer stores, whose high-volume, low-margin

strategy complemented Dell's established operations. The firm was making

important corporate inroads as well, developing client/server computing systems

with Andersen consulting, for example, and introducing powerful servers using the

Unix operating system. As a result, 40 percent of Dell's $546 million in 1990 sales

came from the corporate world, up from 15 percent in 1987. Dell became the sixth

largest PC maker in the United States--up from number 22 in 1989--and retained a

Staff of 2,100.Furthermore, the company's emphasis on customer

satisfaction paid off, as it was rated number one in J.D. Powers & Associates' first

survey of PC customer satisfaction. That year, however, Dell manufactured too

many memory chips and was forced to abandon a project to start a line of

workstations. As a result, 1990 profits fell 65 percent to $5 million, despite the

doubling of the firm's sales.

Price Wars in the Early 1990s

Also during this time, the traditional PC market channels were in flux. With a

recession dampening sales, PC makers engaged in a furious price war that

resulted in slumping profits nearly across the board. Compaq, IBM, and Apple all

had profit declines or were forced to lay off employees. Furthermore, Compaq

filed a lawsuit against Dell, which it eventually won, claiming that Dell's

advertising made defamatory statements against Compaq. Nevertheless, the

economic recession actually benefitted Dell. While customers had less money, they

still needed PCs, and they purchased Dell's inexpensive but technologically

Innovative IBM clones in record numbers. Consequently, annual sales shot up

toward $1 billion.

In the early 1990s, notebook-sized computers were the fastest growing

segment of the PC market, and Dell devoted resources to producing its first

notebook model, which it released in 1991. The following year it introduced a full-

color notebook model and also marketed PCs using Intel's fast 486 microchip.

As the PC wars continued, Compaq, which had been a higher priced

manufacturer stressing its quality engineering, repositioned itself to take on Dell,

releasing a low-end PC priced at just $899 and improving its customer services.

The new competition affected Dell's margins, forcing it to cut its computer prices

by up to $1,400 to keep its market share. Dell could afford such steep price cuts

because its operating costs were only 18 percent of revenues, compared with

Compaq's 36 percent. The competition also forced Dell away from its attempts to

stress its engineering. Dell executives began speaking of computers as consumer

products like appliances, downplaying the importance of technology. Reflecting

this increased stress on marketing, Dell began selling a catalogue of computer

peripherals and software made by other companies; it soon expanded into fax

machines and compact discs. Dell's database, containing information on the

buying habits of over 750,000 of its customers, was instrumental in this effort.

Toward the end of 1992 Dell's product line experienced technological

difficulties, particularly in the notebook market. In 1993 quality problems forced

the firm to cancel a series of notebook computers before they were even

introduced, causing a $20 million charge against earnings. The firm was projected

to hold a 3.5 percent share of the PC market in 1993, but Digital Equipment

Corporation, whose focus was minicomputers, nevertheless topped Dell as the

biggest computer mail order company. To fight back against Compaq's inexpensive

PC line, Dell introduced its Dimensions by Dell line of low-cost PCs. Sales for the

year reached $2 billion, and Dell made a second, $148 million stock offering.

During the early 1990s Dell also attempted a foray into retail marketing, the

most popular venue with individual consumers. In 1990 Dell placed its products in

Soft Warehouse Superstores (later renamed CompUSA) and in 1991 they moved

into Staples, a discount office supply chain. Dell agreed to allow the stores to sell

the products at mail-order prices, a policy that soon caused Dell a lot of grief. The

value of existing computers on store shelves plummeted whenever Dell offered a

new computer through its direct sales, and Dell had to compensate retailers for

that loss. With its direct sales channel, Dell had never had inventories of old

computers that it could not sell, because each of those computers was made

specifically to fill a consumer's order. Dell abandoned the retail market in 1994.

With price wars continuing, Dell cut prices again in early 1993 and extended

the period of its warranty. However, increased competition and technical errors

had hurt Dell, and despite growing sales, the firm announced a quarterly loss in

excess of $75 million in 1993, its first loss ever. Dell attributed many of the

problems to internal difficulties caused by its incredible growth. It responded by

writing down PCs based on aging technology and restructuring its notebook

division and European operations.

Like most of its competitors, Dell was hurt by an industry-wide consolidation

taking place in the early 1990s. The consolidation also offered opportunity,

however, as Dell fought to win market share from companies going out of business.

Dell moved aggressively into markets outside of the United States, including Latin

America, where Xerox began to sell Dell computers in 1992. By 1993, 36 percent

of Dell's sales were abroad. That year, Dell entered the Asia-Pacific region by

establishing subsidiaries in Australia and Japan.

Late 1990s Expansion

After a loss of $36 million in 1994, Dell rebounded spectacularly, reporting

profits of $149 million in 1995. That year, the company introduced Pentium-based

notebook computers and a popular dual-processor PC. The company grew by

almost 50 percent that year and the next, raising its market share to approximately

four percent and entering the company into the ranks of the top-five computer

sellers in the world.

Expansion continued on many fronts in 1996. Dell introduced a line of

network servers and was soon the fastest-growing company in that sector. The

company also opened a manufacturing facility in Penang, Malaysia. The most

important development that year, however, was Dell's expansion into selling

directly to consumers over the Internet. Within three years, Dell was selling $30

million a day over the Internet, which would come to account for 40 percent of the

company's overall revenue. Dell achieved enviable efficiencies using the Internet

to coordinate the orders of consumers with its own orders of parts from suppliers.

The company's web site also provided technical support and allowed consumers to

track their orders from manufacturing through delivery.

Dell continued its exponential growth in 1997 and 1998, reaching profits of

$944 million in 1998. The company introduced new products and services,

including a line of workstations, a leasing program for individual consumers, and

a line of storage products. Dell also expanded its manufacturing facilities in the

United States and in Europe. In 1998 it established a production and customer

center in Xiamen, China, raising the number of its overseas plants to three. By the

time Dell sold its ten-millionth computer in 1997, it was a close fourth behind IBM,

Hewlett-Packard, and Compaq in the computer industry. By mid-1998, it had

captured nine percent of the market and the number two spot.

Following on the success of its direct sales over the Internet, Dell opened an

online superstore of computer-related products in 1999. Gigabuys.com offered

low-priced computer hardware, software, and peripherals from various companies

in the industry, although Dell continued to sell its own products at www.dell .com.

The company also expanded its Internet offerings in 1999 with Dellnet, an Internet

access service for Dell customers.

Although Dell had faced competition from numerous small companies

imitating Dell's direct-selling strategy, it encountered stiffer competition in the late

1990s from the big players in the industry. Compaq, for example, began selling a

new line of personal computers over the phone and through its web site. While

Dell's growth showed some signs of slowing in 1999, few doubted that Dell would

continue to maintain a lead position in the industry, given its hit combination of

direct sales and made-to-order merchandise.

Principal Divisions: Dell Americas; Dell Asia Pacific; Dell Japan; Dell Europe,

Middle East, Africa.

Principal Competitors: Compaq Computer Corporation; Gateway, Inc.; Hewlett-

Packard Company; International Business Machines Corporation (IBM).

Chronology

Key Dates:

1984: Michael Dell founds Dell Computer Corporation.

1988: Company goes public with 3.5 million shares of company stock.

1991: Dell introduces its first notebook PC.

1993: Dell establishes subsidiaries in Australia and Japan.

1996: Company begins selling over the Internet.

1997: Dell introduces a line of workstations.

Additional Details

Public Company

Incorporated: 1984

Employees: 29,300

Sales: $18.24 billion (1999)

Stock Exchanges: NASDAQ

Ticker Symbol: DELL

NAIC: 334111 Electronic Computer Manufacturing

Computer Weekly report: Dell

This special nine-page report from Computer Weekly analyses the challenges

facing Dell, its financial performance, the services it offers, its place in the IT

market and its future strategy.

Packed with graphs and diagrams, the report is essential reading for any

organization already working with, or thinking of working with, Dell.

Key Facts about Dell

• Net revenue: $52.9bn

• Net earnings: $1.4bn

• Specialisms: PCs, printers, enterprise servers, storage, networking, services

• Employees: 96,000 worldwide

• History: Started in 1984 by Michael Dell, incorporated 1986.

Registered UK office

Dell UK

The Boulevard

Cain Road, Dell Campus

Bracknell, Berkshire

RG12 1LF

Registered Scotland office

368 Alexandra Parade

Glasgow G31 3AU

Scotland

Dell whitepapers from Tech Target’s research library

• Dell's Data Protection Solution

• Dell Advanced Infrastructure Manager 

• Dell AIM Demo

• How Dell connects infrastructure 

• Update Dell Server Hardware with Dell Open Manage Essentials

• Managing Dell Blade and Chassis Using Dell Open Manage Essentials

Key UK customersLarge enterprise

• RES (Renewable Energy Systems)

• Betfair

• Double Negative

Public sector

• Bracknell Forest Council

• Newport City Homes

• Lodge Park College

• Haberdashers’ Aske’s Boys’ School

• University of Leicester

• University of Dundee

• Hammersmith and Fulham Primary Care Trust

• Bedfordshire and Luton Mental Health and Social Care Partnership Trust

SMB

• Pensions First

• KN Networks

• Catalyst2

• Redington

Dell net revenue growth and product vs services revenue

Conclusion

Dell has been successful in the PC market because of its supply chain

management and direct business model. It has a flexible and reliable supply chain

management system that reduces inventory and costs. It reduces risks of operating

in a competitive industry. Dell has a brand image among its customers because of

its cost effective rates. All of these factors have made the organization very

popular among the customer segments.

However, Dell has been facing stiff competition as the trend in the PC

markets has changed. It has faced new entrants and new technologies that erode

its traditional competitive advantage. Dell needs to devise a vibrant business

strategy that is based upon product diversification. It should also continue with its

primary model of computer hardware. Furthermore, it is through the emphasis on

a strategic edge that the organization can attain success in the long term. The

long-term growth should be based upon using its competitive advantages.

BIBLIOGRAPHY

• http://www.dell.co.in/

• http://en.wikipedia.org/wiki/Dell

• http://money.cnn.com/magazines/fortune/fortune500/2013/

snapshots/1053.html

• http://www.slideshare.net/8097174415/dell-corporation-strategy.

• http://infotechlead.com/2013/08/07/hp-leads-indian-pc-market-

with-25-share-lenovo-acer-dell-apple-dip-in-q2/.

• http://www.idc.com/getdoc.jsp?containerId=prUS24213513

• http://www.interbrand.com/en/best-global-brands/2013/Best-

Global-Brands-2013.aspx