Dell: Marketing and Dell Essay

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Introduction & Challenge
Dell has emerged as one of the biggest sellers in the PC market. From humble beginnings in 1983, when Michael Dell worked out of his campus dorm room, to 1996 when we reached $7.8 billion in sales, the source of our amazing success has been our unwavering focus on the customer, termed the “Dell Direct Model.”
The Dell Direct Model was ingenious. Michael Dell took a simple concept, selling direct to the consumer (Appendix. 1), and built a business model that, quite simply, outclassed his competitors. By selling to the customer direct, eliminating the traditional dealer channel and using a just-in-time (JIT) production procedure, Dell has created unparalleled efficiencies in operations. This allows us to provide high quality products at a lower price than our competitors. In addition we have leveraged supplier relationships to build a supply chain that is unmatched; our relationships with our suppliers have facilitated our JIT production model which allows us to enjoy a significant competitive advantage in price, product reliability and product delivery.
It appears that we are perfectly positioned to take advantage of the new online market having sold direct to customers for the last decade and already establishing ourselves as the leader in internet sales. Michael Dell has presented a strategic objective for our company, to “…do at least 50% of our business over the web…” Despite our initial success selling online, we face significant challenges in this new online era:
i) How can we encourage more online purchases? ii) Our competitors are fully aware of the business practices that are responsible for our success and may attempt to duplicate our practices iii) How can Dell Online bring value & efficiencies to our customers? iv) Our profit margins in the PC market are eroding due to market maturation and intense competition

II. Market Analysis
Strengths
* 1st in online market (leading edge brand)
* Cost effective production, quality products at lower cost
* Dell already has presence in the markets (price-performance ratio high)
* Dell has decentralized service force that works in tandem with the online store

Weaknesses

* Customers cannot see the product
* Customers reluctant to buy online, apprehensive about the virtual space
* Harder to understand customers’ needs
* Ease of entry into the online markets
* Heavily dependent on individuals performance- how to ensure quality
* No physical location, lack of personal selling and making a relationship with the customer

Threats

* Ease of entry into online markets
* Dell depends on third party suppliers
* Online virtual space is relatively new and infrastructure is not developed enough
* Online Virtual space could be vulnerable to unforeseeable regulatory changes since the online phenomenon is in its infancy

Opportunities
* Potential huge market, the start of globalization
* More marketing methods – online, podcast, Dell premiere pages
* New technology and integration of PC increasing demand consistently
* Decentralized service force

Demographic: Dell is looking to penetrate into the consumer market and they are looking to put a PC into the homes of many people. There looks to be a growing demand for computers in the household, and Dell would like to accommodate that need. Dell has felt the need to satisfy the consumer market segment and has even changed its catalogue sales division name to Dell Home Sales (DHS). The internet is a new phenomenon with approximately 70 million users worldwide (1997, IDC). With the growing online demographic, Dell want to position itself in the consumer market and reach new homes.
Environment: One of the advantages of going online is being in a virtual space; it is essentially an unlimited resource that can be used without any regrets of harming the environment. There is a growing awareness of the environment and an increased effort to save resources, Dell is positioned well in wanting
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