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orders • Division of traffic of information seekers Again retailers but not as channel • For selling old system or outdated systems • Retailers were allowed to sale these systems 15-20% less then quoted on www.dell.com • Only few retailers were selected for this.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.