Analysis Of Dell 's Marketing Strategy

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During the early 1990s, computer industry developed rapidly. With the entrance of Dell, the dynamic structure in the industry changed. Between 1994 and 1998, Dell 's growth was twice as fast as its major rivals (IBM, Compaq, Gateway, and Hewlett-Packard). Dell provides high performance PCs at low prices. Its competitive advantage is mainly established by the innovation of the Direct Model and other firm level strategies that enable Dell to utilize its resources and build up its capabilities more efficiently. 1. Industry Analysis through Porter’s Five Forces New Entrants: Moderate. The capital investment requirements are high. Large players derived extensive benefits from the economies of scale. Product differentiation in terms of product itself is low, as hardware and software used are almost universal. Product differentiation in terms of brand is high due to the firm’s marketing efforts. Incumbents have more established and recognized brands. As new players enter, existing players are likely to retaliate. The industry links closely with the supplier, and require efficient distribution channel, hence the requirement in access to channels is high. Large firms are tend to have better connection to various channels. Substitute: Relatively low. In the computer industry, the existence of close substitutes is very low. There is no alternate product that can do the same job as computer do. Although alternative choices like smart phone and ipad provide part of the service

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