Dell Inc. : The Biggest Online Retailer Of Pcs And Related Gear

Dell. Dell’s products—computers, servers and printers—are commodities. Dell tends not to develop the technologies underlying these products. Instead, it purchases the components from firms that develop the technologies (semiconductors and computer software). Dell’s direct-to-customer marketing strategy is not unique, but the extent to which Dell performs this strategy better than anyone else in the industry gives it a competitive advantage. Its size, purchasing power, quality control, and efficiency permit it to operate as a low-cost provider.

By grafting its system of custom direct sales onto the Internet infrastructure, Dell has transformed these activities, creating an innovative and efficient procurement, production, and distribution network. The innovative advance made by Dell in deploying Internet communication as the foundation of its production network, is a process innovation. Although to some extent, the Internet has enabled Dell to create a new product -- a PC custom-configured through Internet communication -- it is the process of organizing flows of materials and information within its network, from customer order to procurement, production and delivery, by means of Internet communication, that defines the innovation at the Firm. The case supports this notion by stating “While most other PCs were sold preconfigured and pre-assembled in retail stores, Dell offered superior customer choice in system configuration at a deeply discounted price, due to the cost-savings associated with cutting out the retail middleman. Additionally, an important side-benefit of the Internet-based direct sales model was that it generated a wealth of market data the company used to efficiently forecast demand trends and carry out effective segmentation strategies. This data drove the company’s product development efforts and allowed Dell to profit from information on the value drivers in each of its key customer

Dell is a software company that started off with changing up the buying aspects of a computer. Dell would personally customize

Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.

• Transactional buyers – SMB and Personal,user call centers, and AD’s by DELL to reach out to them

Dell is the most successful company in PC industry of 21st century. It has shown phenomenal growth record over the past decades & listed as America’s third most admired company. Their core strength lies in Direct model offering closer customer interaction and Virtual Integration. This is giving a low cost advantage to Dell and its competitors are not able to imitate this model for all these years.

For home users, Dell’s direct method and customisation 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.

What is Dell’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion?

“Marketing / Sales” While most competitors supplied machines based on orders from distributors, resellers, retailers, Dell took orders directly from customers. Dell used indicators of a company’s potential PC purchases, such as the number of employees and the number of PCs per employee, to divide customers into two groups: Relationship buyers and Transaction buyers.

Essay 1 : Introduction to Dell 3 Parts - Look at the Business Model in Particular (Is it fit for purpose?) – Then the Ecosystem – The Modularization and mention licensing Look the Paradigm of Dell Conclusion

In 1990, Dell Computer tried selling its products indirectly through warehouse clubs and computer superstores, but met with little success, and the company decided to re-focus on its more successful direct to consumer sales model (Frick, 2013). In 1992, Fortune magazine included Dell Computer Corporation in its list of the world’s 500 largest companies.(www.dell.com). That was when Michael Dell became the youngest CEO of a Fortune 500 company. Michael Dell has been trying to improve efficiency since the third grade (www.dell.com). When he heard an advertisement that said he could receive his high school diploma by taking a test he immediately took the opportunity. Although he failed at graduating high school at 8 years old, he did

This enabled strong customer relationships and increased customer satisfaction. One of the characteristics that distinguishes Dell from its other competitors is that Dell provides the facility to customize computers of their choice and taste and deliver the system to the customer as it is. This is the most crucial and critical success factor behind Dell Computers. Dell’s direct to consumer model concept helped them reach above-average returns and remain in business today. Customers have developed a brand-name loyalty to Dell because of their cost efficient differentiation strategy. Their strategic moves for their products created an image for themselves in the market and is the reason for their dominant existence. This enabled them to earn more market share in the industry. The customer segmentation that Dell focuses on is the corporate segment and large businesses form the majority of its clients. This customer segment targeting is more likely a result of its operational strategy and not the other way round. However, with corporate segment customers seeking high performance, reliable, affordable solutions, Dell fits in comfortably. Dell also appeals to those customers who want hands on experience of the latest technology and the idea of customized computers is very appealing. For Dell, it focused on providing superior quality services to its customers through its sales representatives. It also shifted

1. What are Dell’s FSAs? What are the macro-level requirements for the direct sales model to be successful? What are the major advantages of the direct model, compared with the traditional channel strategy in the computer business?

Pearce and Robinson (2005), tell of Dell’s innovation in this manner, “Dell Computer built its first 10 years of unprecedented growth by creating an organization capable of the speedy and inexpensive manufacture and delivery of custom-built PCs. Gateway and Micron have attempted to copy Dell for most of that time but remain far behind Dell’s diverse organizational capabilities” (p. 151).

Products were first stored in company warehouses and later dispatched to resellers, retailers, and other intermediaries who typically added a 20–30 percent markup before selling to their customers. But Dell sells directly to all its customers, “from home-PC users to the world’s largest corporations”.