Outline
- Introduction
- A brief history of Dell
- Purpose of the paper
- The 4ps and Dell’s strategy strategies
- Need to diversify to other products lines and form strategic partnerships with reputable suppliers and software companies for strategic advantage and greater profitability
- Pricing Strategy
- The company should try market skimming pricing strategies
- Market Segmentation and Targeting
- To successively market its products to the two markets the company should adopt a differentiated marketing strategy
- Market segmentation targeting and strategy
- These fits very well in these company’s marketing strategies, enabling the organization to effectively meet them
- Additional organizational and marketing strategy behind Dell’s success
- References
Introduction
Dell Corporation started as a minute business ideal of Michael Dell while he was still in college. At the age of 12 years, Michael Dell the founder of the present Dell Corporation ignited a business that dealt with mail order stamps and which was able to make monthly gross revenue of close to $2000; factor that made him realize his business talent and potential. Michael’s parents had wanted Dell to study medicine.
When he enrolled in the University of Texas for a premed course in 1983, Michael realized a business opportunity in computers retailing and started selling personal computer accessories from the college hostel, where he purchased computer parts such as random access memory (RAM) chips and microchips and disk drives for IBM for IBM computers at a cost from the IBM dealers and used newspaper advertising to sell them at low prices; as lower as 10-15% relative to the regular retail price (Arthur & Strickland, 2000).
It’s this move that formed the strong foundation of the dell corporation that can today boast of business success characterized by unmatched market presence, market leadership and competitiveness, large capital base, successful marketing and a wide range of unmatched quality products.
However, with the dynamisms of the business environments that are spearheaded by the rapidly changing technology, variations and shifting in the consumers need and the ever piling competition in the market place, it is inevitable and impetrative that Michael keeps on reviewing Dell’s marketing strategies so as to maintain the companies’ marketing success path, maintain the favorable market success, effectively protects its market niches from the ever aggressive competitors as well as enhance organizational growth and more productivity (Arthur and Strickland, 2000). This paper therefore seeks to review Dell’s current marketing strategy, its limitations and identify areas that need to be changed to the better to enhance the companies marketing effectiveness and business growth.
The 4ps and Dell’s strategy strategies
Although Dell has to a greater extent achieved massive results in organization of the 4ps, the changing market needs as well as the changing organizational goals greatly necessitates variations and improvements of these strategies every other time. The company, and its unique product strategy that is entrenched in the business model “build-to-order manufacturing”, is the envy of many competitors who view it as a success in avoiding piling of inventories in the stores and the ease in which the company can introduce products variation and new pc models to the market when its necessitated by the market need.
However, the company needs to take leadership in introducing exceptional product features that differentiate Dells products from the competitors in terms of appeal, quality functionality and reliability. To achieve this dell must invest more on continuous marketing research (research and development), so as to be the first in determining what is best for the customers (both individual and corporate customers). Moreover, the company needs to diversify to other products lines and form strategic partnerships with reputable suppliers and software companies for strategic advantage and greater profitability.
Pricing Strategy
Dell’s pricing strategy depends on the customers’ specifications and the cost of build- to-order production (Arthur & Strickland, 2000). As a result, the price of the products depends on the customers’ ability and order specifications. However, since the company is reputable and has succeeded in building a successful brand it can apply the market skimming pricing strategies. In addition, they can couple this by setting the price floors especially for complete pc Dell brands. Very low prices can be mistaken for poor quality especially if the target markets are not very price sensitive. In Dell, promotions have been notably mean.
To build stronger brand popularity and customers appeal however, Dell need to enhance its promotion especially to create basic awareness and expand its markets, especially now that it intends to incorporate industries and government agencies into its target markets. For the consumer markets the company can make use if distributors (only retailers) so as to reach the widest markets as possible and to increase the company’s markets presence and popularity in the grassroots and globally. For the industrial and government markets the current direct selling would be the best strategy since they are few and have unique needs especially for servers and other business information systems.
Market Segmentation and Targeting
To successively market its products to the two markets Dell’s products have to adopt a differentiated marketing strategy. First the purchasing behavior of an individual differs from an institutional buyer. In addition, the uses and application of computer products will vary between the two buyers (Phillip Kottler, 2005). Similarly, the levels of the company’s involvement with the buyer after the sale of the product will vary.
An individual or personal customer is likely to demand less after sale service than an institutional buyer. For instance, a personal purchase for a Pc will be more influenced by psychological factors and emotions because he or she is more sensitive to whether his or her psychological needs are met by the product features. For the Dell Corporation, serving the two target markets is a strategic business diversification and expansion strategy for greater profitability and risk management. It has however concentrated more on the consumer segment and only started venturing into institutional segment recently. As such, the consumer segment is larger than the corporate market. Nevertheless, the latter is rapidly catching up and may soon surpass it.
Market segmentation targeting and strategy
Dell’s marketing strategy is greatly embedded on superior quality, best prices, unmatched brand creation, differentiated customer services and commitment to efficiently and cost effectively meeting consumer needs of course for ultimate profitability. The marketing segmentation and targeting therefore fits very well in these company’s marketing strategies, enabling the organization to effectively meet them.
Dell corporation treats customers in both segments as equals as far as quality and reliability of the products are concerned, irrespective of whether it’s an individual or institutional buyer. However, the market segments greatly influence the companies marketing goals. The company sets different marketing goals for different segments especially which have to do with pricing, product features and differentiation, customization, customer services, promotion and distribution goals.
Additional organizational and marketing strategy behind Dell’s success
Apart from the 4p strategies dell continues to employ a set of unique, differentiated and difficult to imitate organizational and marketing strategies that succeed in building the unbeatable “brand Dell” and which have actually maintained it on top of the United States Computer Applications Market.
These strategies includes but not limited to, highly monitored quality management, partnering with highly reputable computer accessories manufacturers and distributors so as to enhance the Brand Dell, partnering with reliable suppliers rather than forward integration to minimize cost while ensuring efficient just- in- time management, adopting a differentiated approach to employee developments and notable diversification to the overseas markets in an attempt to seek market presence outside the United States of America (Arthur & Strickland, 2000).
In addition, the company is greatly spreading its portfolios by expanding its product lines, for example, it is now offering printers and application software. Due to the lengthy distribution channels characteristic to traditional independent distributors and retailers, Dell has since the onset of 2000 perused a disintermediation strategy thus sell directly to the customer either individual or institutional (Arthur & Strickland, 2000).
References
Arthur A and A J Strickland (2000) Dell Computer Corporation: Concepts and Cases, Strategic Management 12th Ed, McGraw-Hill Irwin. Web.
Phillip Kottler (2005), Principles of Marketing 12th Ed “The Marketing Systems”. Web.