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A Business model emerged as

a business structure of entire


industry

Presented by Group ‘F’


Dell a success story
• No free lunch in corporate
• Success story written by pro-active initiative
with several strategies
• A 18 year boy Michael Dell started to add up
PC components, like formatting hard disks,
adding extra memory.
• In 1984 Dell founded Dell corporation for
upgrading.
1. Strategic move
• Dell shifted its business model to be a
computer manufacturer rather then merely a
up grader from the very first year of starting
• Here external environment pushed up the
company to take this strategic move.
12.8 billion market size of
Sales and marketing strategy
• Dell adopted direct marketing and sales
supporting reasons-
customer segmentation
1. Businesses and govt. org.– 77%
2. Home and small office users– 18%
3. Education institution – 5%
Staffing and sales force

Out side sales Inside sales reps(


reps(sales and problem solver &
analyze the market) information provider)
Cont..
• Proper access of inside and outside sales force
with online technology
• Executives or sales force were responsible for
post purchase assistance to customer
• Full technical support + installation support+
information support = relationship building
with customer
Cont..
• By inside sales raps Dell used to inform
customer about latest technology in PC’s.
Marketing strategy for small size businesses
and households
• By advertising in trade journals and business
publications and direct marketing.
Distribution in 1990
• Dell entered to penetrate the market by
retailers.
• It was for those who want to feel product
before purchasing
channels-
1. comp USA
2. sam’s club
But ……
• Dell had to withdrawal from retailers
because…….

( refer margins in exhibit 7)


Another strategic move
• Split of sales force according to region. It
bought solution of managerial issues and
market penetration as well.
www.dell.com in 1996
• For problem solution
• For getting direct orders
• Division of traffic of information seekers
Again retailers but not as channel
• For selling old system or outdated systems
• Retailers were allowed to sale these systems
15-20% less then quoted on www.dell.com
• Only few retailers were selected for this.
• Dell did not provide price protection or any
type of return
Strategic move in production, logistics and
procurement
• Lot of manufacturing units,Hence
Easy logistics
Less inventory
Better procurement

• Bin and cell system for no fault production in


customize PC’s
Cont…….
• Shipping contract for better delivery with UPS
and Airborne express
Supplier relationship
• As usual but little bit better then industry
because
1. small number of supplier
2. Good communication with suppliers
New concept- Sony was the monitor supplier.
Shipper used to pick monitor from Sony’s site
and remaining from Dell’s site and sent to
direct to customer.
What now
• Competitor tried to copy direct sell but
couldn’t be so successful
ex. HP couldn’t be successful in relationship
with retailers at the time of direct selling
That is some thing called the benefit of initiator
conclusion
• Strategic moves may push a company into a
sheer of success path if this strategic move
comes with several improvement and with a
plan for filling the gaps.
• That is why, company like IBM or HP ( big
daddy of computer industry) or cheapest PC
maker GATEWAY or ACCER with Korea
technology had to give the way to Dell.

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