368 Part 2 Strategy and applications

to make the product effective. Marsden suggests that there are key ­cross-​­category
attributes which are key drivers for product success and he commends the work of
Morris and Martin (2000) which summarises these attributes as:
● Excellence: perceived as best of breed
● Uniqueness: clear one‑of‑a‑kind differentiation
● Aesthetics: perceived aesthetic appeal
● Association: generates positive associations
● Engagement: fosters emotional involvement
● Expressive value: visible sign of user values
● Functional value: addresses functional needs
● Nostalgic value: evokes sentimental linkages
● Personification: has character, personality
● Cost: perceived value for money.

You can see that this list is also a useful prompt about the ideal characteristics of a
website or online service.
3 The power of context
Gladwell suggests that like infectious diseases, products and behaviours spread far
and wide only when they fit the physical, social and mental context into which they
are launched. He gives the example of a wave of crime in the New York subway that
came to an abrupt halt by simply removing the graffiti from trains and clamping down
on ­fare-​­dodging. It can be suggested that products should be devised and tested to fit
their context, situation or occasion of use.

Case study 8.2 shows how Dell has revised its marketing mix through deep customer
understanding.

Case Study 8.2 Dell gets closer to its customers online

Dell is a technology company, offering a broad range of
product categories, including desktop computer systems,
storage, servers and networking products, mobility prod-
ucts, software and peripherals and services to manage IT
infrastructure for large organisations. Dell are the number
one supplier of personal computer systems in the United
States, and the number two supplier worldwide.
Dell proposition
The main Dell product offerings are:
1 Desktop PCs. Five lines of desktop computer
systems are produced for different markets. For
example, the OptiPlex line is designed to help
business, government, and institutional cus‑
tomers manage their total cost of ownership by
offering stability, security, and managed product
transitions; the Dimension line is designed for small
businesses and home users requiring the latest
features for their productivity and entertainment
needs. The XPS™ and Alienware lines are targeted
at customers who require the ­highest-​­performance
gaming or entertainment experience available. In
July 2007, Dell introduced the Vostro™ line, which
is designed to provide technology and services to
suit the specific needs of small businesses.
2 Servers and networking. The PowerEdge™ line
of servers is designed to offer customers afford‑
able performance, reliability, and scalability. Again
different options are available for different markets
including h­ igh-​­performance rack, blade, and tower
servers for enterprise customers and ­lower-​­priced
tower servers for small organisations, networks, and
remote offices.
3 Storage. For example, storage area networks,
­network-​­attached storage, ­direct-​­attached storage,

disk and tape back‑up systems, and removable disk
back‑up.
4 Mobility. Notebook computers are targeted at cus‑
tomers who require the ­highest-​­performance gaming
or entertainment experience available.
5 Software and peripherals. Office software and
hardware including printers, televisions, notebook
accessories, networking and wireless products,
digital cameras, power adapters, scanners, and
other products.
6 Enhanced services. Tailored solutions that help cus‑
tomers lower the cost of their services environment
and maximise system performance, efficiency, and
return on investment. These include: Infrastructure
Consulting Services; Deployment Services to instal
and integrate new systems; Asset Recovery and
Recycling Services; Training Services; Enterprise
Support Services and Managed Life Cycle Services
(outsourced IT management).
7 Financial services for business and consumer cus‑
tomers in the US through a joint venture between
Dell and CIT Group, Inc.
Dell business strategy
Dell’s vision is to:
strive to provide the best possible customer experi-
ence by offering superior value; ­high-​­quality, relevant
technology; customized systems; superior service
and support; and differentiated products and services
that are easy to buy and use.
The core elements of the strategy which are evident in
Dell’s marketing communications are:
● ‘We simplify information technology for customers.
Making quality personal computers, servers, stor‑
age, and services affordable is Dell’s legacy. We are
focused on making information technology afford‑
able for millions of customers around the world. As
a result of our direct relationships with customers, or
“customer intimacy”, we are best positioned to sim‑
plify how customers implement and maintain infor‑
mation technology and deliver hardware, services,
and software solutions tailored for their businesses
and homes.
● We offer customers choice. Customers can pur‑
chase systems and services from Dell via telephone,
kiosks, and our website, www.dell.com, where they
may review, configure, and price systems within our
entire product line; order systems online; and track
orders from manufacturing through shipping. We
have recently launched a retail initiative and plan
to expand that initiative by adding new distribution
channels to reach additional consumers and small
Chapter 8 Digital marketing 369
businesses through retail partners and v­ alue-​­added
resellers globally.
● Customers can purchase ­custom-​­built products and
­custom-​­tailored services. Historically our flexible,
build‑to‑order manufacturing process enabled us
to turn over inventory every five days on average,
thereby reducing inventory levels, and rapidly bring
the latest technology to our customers. The market
and our competition has evolved, and we are now
exploring the utilization of original design manufac‑
turers and new distribution strategies to better meet
customer needs and reduce product cycle times.
Our goal is to introduce the latest relevant technol‑
ogy more quickly and to rapidly pass on compo‑
nent cost savings to a broader set of our customers
worldwide.
● We are committed to being environmentally respon-
sible in all areas of our business. We have built envi‑
ronmental consideration into every stage of the Dell
product life cycle – from developing and designing
­energy-​­efficient products, to reducing the footprint
of our manufacturing and operations, to customer
use and product recovery.’
Dell’s sales and marketing
Dell sells products and services directly to customers
through dedicated sales representatives, ­telephone-​
­based sales, and online at www.dell.com.
Customer segments include large corporate, govern‑
ment, healthcare, and education accounts, as well as
small‑to‑medium businesses and individual consumers.
Dell stresses the importance of its direct business
model in providing direct and continuous feedback from
customers, thereby allowing them to develop and refine
their products and marketing programs for specific cus‑
tomer groups.
In its SEC filing Dell emphasises how it listens to
customers to develop relevant innovative technology
and services they trust and value. Evidence for using
the participative nature of Web 2.0 is that customers
can offer suggestions for current and future Dell prod‑
ucts, services, and operations on an interactive por‑
tion of the Dell website called Dell IdeaStorm. It says:
‘This constant flow of communication, which is unique
to our direct business model, also allows us to rapidly
gauge customer satisfaction and target new or existing
products.’
For large business and institutional customers, Dell
maintains a field sales force throughout the world.
Dedicated account teams, which include ­field-​­based
system engineers and consultants, form ­long-​­term rela‑
tionships to provide their largest customers with a single
source of assistance and develop specific tailored
 370 Part 2 Strategy and applications
solutions for these customers. Dell also maintains spe‑
cific sales and marketing programmes targeted at fed‑
eral, state, and local governmental agencies as well as
specific healthcare and educational markets.
Dell Premier
For its large organisational customers, Dell offers
Premier (http://premier.dell.com) which is a secure,
customisable procurement and support site or extranet
designed to save organisations time and money through
all phases of IT product ownership. The main benefits of
Dell Premier are described as:
● Easy Ordering – A custom online store ensures
access to your products at your price.
● Easy Tracking – View ­real-​­time order status, online
invoices and purchase history details.
● Easy Control – Custom access groups define what
users can see and do within Premier.
Marketing communications
Dell markets its products and services to
small‑to‑medium businesses and consumers primarily
by advertising on television and the Internet, advertis‑
ing in a variety of print media, and by mailing a broad
range of direct marketing publications, such as promo‑
tional pieces, catalogues, and customer newsletters. In
certain locations, they also operate Dell stores or kiosks,
typically located within shopping centres, that allow
customers to view their products in person and pur‑
chase online with the assistance of a Dell expert.
Dell online communications
The management of the consumer site was presented to
E‑consultancy (2008). Dell has a t­ hree-​­stage order funnel:
● Marketing communications execution measured by
site visits
● Site merchandising measured by consideration
% (site visits to e‑store visits)
● Store merchandising measured by conversion
% (e‑store visits to e‑receipts).
The presenter explained how Dell aims to understand
and act on customer behaviour based on identifica‑
tion of a series of consideration drivers, for example,
the quality of online advertising; path quality through
site; merchandising/offers and conversion drivers, for
example, configurator ‘ease of use’; accessibility of
decision support tools and consistency of message
through entire path.
Dell will invest in strategic improvements to the site
to improve these levers; examples mentioned included
new merchandising approaches such as customer
ratings and reviews, videos, major ‘path’ or customer
journey changes created through decision support tools
to ‘help me choose’. There are also more tactical initia‑
tives to help deliver the right message to each customer
including customisation/personalisation, real estate
optimisation and message balancing.
More tactical persuasion of site visitors is based on
price moves/optimised price position to market and the
mix of product features. A wide range of different offers
need to be managed. Tactical promotions are driven by
promotional ‘end dates’ which are weekly or bi‑weekly
and include varying:
● Free shipping
● Money off discounts
● Free upgrades (e.g. memory)
● Free accessories
● Finance offers
● Service upgrades.
The presenter also noted how across Europe, the pro‑
motional mix has to vary to reflect the differences in
buying psychology. He summarises the main differ‑
ences between customers as follows:
● UK – all about price
● CH – add value over price
● DE – all about ­high-​­end products in mix
● IT – design is important (!)
● DK – cheap is good
● NO – added value is key
● FR – tailored for France.
Dell’s use of digital media channels
The main digital media channels used by Dell.com in
Europe are:
● Paid search through programmes such as Google
AdWords is used to promote value through time lim‑
ited offers related to the phrase searched upon.
● Display advertising – for example advertising on
technology websites is particularly important for the
corporate market.
● Affiliate marketing – used to protect the Dell brand by
enabling affiliates to bid on terms such as ‘Dell lap‑
tops’ and to target niche audiences such as owners
of gaming machines.
● Email marketing – an e‑newsletter is used to keep in
touch with existing customers and deliver targeted
offers when their hardware may be renewed.
Dell and indirect channels
Although the focus of Dell’s business strategy has been
selling directly to its customers, it also uses some indi‑
rect sales channels when there is a business need. In
 Chapter 8 Digital marketing 371

the US it sells products indirectly through ­third-​­party

solution providers, system integrators, and ­third-​­party Question
resellers. During financial year 2008, Dell began offer‑ Describe approaches used by Dell within their site
ing Dimension desktop computers and Inspiron note‑ design and promotion to deliver relevant offers for
book computers in retail stores in the Americas and different types of online customers.
announced partnerships with retailers in the UK, Japan,
and China. Dell says: ‘These actions represent the first
steps in our retail strategy, which will allow us to extend
our business model and reach customers that we have
not been able to reach directly.’
Source: Security Exchange Commission filing 10‑K for Dell, 2007.

Price

Price variable The price element of the marketing mix refers to an organisation’s pricing policies which
The element of the are used to define pricing models and, of course, to set prices for products and services.
marketing mix that
involves defining product
The Internet has dramatic implications for pricing in many sectors and there is a lot of lit-
prices and pricing erature in this area. Baker et al. (2001) and more recently Xing et al. (2006) have noted two
models. approaches that have been commonly adopted for pricing on the Internet. Start‑up com-
Pricing models panies have tended to use low prices to gain a customer base, while many existing compa-
Describe the form of nies have transferred their existing prices to the web. However, Case study 8.1 showed how
payment such as outright easyJet discounted online prices in an effort to meet its objectives of online revenue contri-
purchase, auction, rental,
volume purchase and bution. In this case, price reduction was possible because of the lower overhead of process-
credit terms. ing a customer transaction online in comparison with on the phone. Similarly, to acquire
customers online booksellers may decide to offer a discount of 50% on the top 25 b ­ est-​­selling
books in each category, for which no profit is made, but offer a relatively small discount on
the less popular books of the long tail to give a profit margin.
The main implications of the Internet for the Price aspect of the mix are as follows.
1 Increased price transparency and its implications on differential pricing
Quelch and Klein (1996) describe two contradictory effects of the Internet on price that are
related to price transparency. First, a supplier can use the technology for differential pricing,
for example customers in different countries. However, if precautions are not taken about
price, the customers may be able to quickly find out about the price discrimination and they
will object to it. So, customer knowledge of pricing is enhanced through the Internet. This
is particularly the case for standardised goods sold through online retailers. Not only can
customers visit sites of rival suppliers, they can visit sites of ­price-​­comparison engines. It is
difficult to retain price differentials if all customers are aware of these differences. Currently,
this is probably not the case. However, research quoted by Baker et al. (2001) suggests that
only around 8% of active online consumers are ‘aggressive price shoppers’. Furthermore,
they note that Internet price brands have remained quite broad. Online booksellers’ prices
varied by an average of 33% and CD sellers’ by 25%.
There appear to be two main reasons for this: first, pricing is only one variable – consumers
also decide on suppliers according to other aspects about the brand such as familiarity,
trust and perceived service levels. Secondly, consumers often display satisficing behav-
iour. The term ‘satisfice’ was coined by Herbert Simon in 1957 when he said that people
Satisficing
behaviour are only ‘rational enough’ and that they suspend or relax their rationality if they feel it is
Consumers do not no longer required. This is called ‘bounded rationality’ by cognitive psychologists. In other
behave entirely rationally words, although consumers may seek to minimise some variable (such as price) when mak-
in product or supplier
selection. They will ing a product or supplier selection, most may not try too hard. Online, this is supported
compare alternatives, by research by Johnson et al. (2004) who showed that by analysing panel data from over
but then may make their
choice given imperfect
10,000 Internet households and three ­commodity-​­like products (books, CDs and air travel
information. services) the amount of online search is actually quite limited. On average, households visit