marketing strategy of dell

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VALUE CREATION OF MARKETING DEPARTMENT OF DELL
COMPUTERS

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Introduction
Product diversification is a key strategy for Dell as it seeks to maintain a
competitive advantage in the declining PC market. Dell needs to restructure its core
business priorities and develop new structures that can help it to gain leverage in a highly
competitive industry. It needs to develop a comprehensive strategy, which can be based
upon achieving key targets through the focus on innovation and creativity. The
development of a comprehensive approach is essential because it can lead to competitive
advantage in the future.Product diversification should focus on smart phones, tablet
PCs, software, storage management solutions, enterprise services, and supercomputers,
which can help the organization to attain growth within short periods of time. Dell’s
corporate branding strategy is also essential because it must be restructured so that it
helps to target home users as well as corporate users. It should create a competitive
strategy, which should help
it to offer value proposition to its customer.
Dell’s key competitive advantages, which include a lean, supply chain
management system and lowered costs through its direct distribution model need to be
reinvented so that they can offer value added services to home users.Dell is one of the
largest organizations in the world with respect to its personal computer products. The
success of the organization has been because of its ability to reduce costs and create a
streamlined supply chain management system. The organization has been able to offer
cost effective personal computers to customers. It has a direct business model that
ensures that computers can be configured according to customer specifications and
directly delivered to them. This has helped Dell to become an industry leader for many
decades. It has created the conditions for loyal customer base and ensured its success in a
competitive industry.

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Dell faces significant threats in the form of declining PC sales. It cannot focus on
limited products while it has to rebrand itself so that it can invest in software and
enterprise solutions. Dell needs to have clear and precise goals. It needs to have a
complete strategy for success, which is based upon efficiency and effectiveness. It needs
to develop a comprehensive approach, which is based upon attaining strategic excellence
within a short period of time.
Phase 1: Situational Analysis
Internal Analysis
Dell’s business model is based upon creating a direct model according to the
requirement of its customer segments. This is done as a means of ensuring that the
organization maintains its competitive advantage in the computer industry. Dell knows
that it cannot afford to own different parts of the value chain. The direct business model
ensures high levels of speed and reliability. It reduces the inventory while bypassing the
need for dealers. It sells products directly according to the customers’ specifications. This
has enabled the organization to reduce the costs and risks of moving large finished goods
inventories. (Smith, 2012)
Competitor Analysis
Dell’s primary competitors include HP, Acer, and Lenovo. All of these
organizations have sought to find ways in which they can reduce prices. They have
ensured that innovative strategies are designed as a means of combating the low costs of
Dell. The price differential, which Dell has been known for, is slowing eroding because of
innovative strategies. (Haag, 2006)

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The competition within the computer industry is very swift which means that Dell
might lose its future competitive advantage. Dell currently has 18% share of the personal
computer market when compared with HP, which has overall 15% share. It is considered
to be the third largest personal computer vendor in the world. HP is slowly eroding the
competitive advantage of Dell through its innovative strategies. Additionally, Dell is
suffering from a decline in PC shipments while its share in the server market has also
reportedly decline. (Cooper, 2006).
Dell is also suffering from competitors like Apple which is a market leader in
technology and innovation. Apple’s emphasis on tablet computers and smart phones is
slowly eroding the competitive advantage of Dell, which continues to focus on personal
computer products.
Market Analysis
Dell has been successful in the market because of its loyal customer base and
diversified product portfolio. The organization’s main products are personal computers,
servers, network equipment, software, and computer peripherals. It also offers cameras,
printers, and other electronics. (Matear, 2002).
Dell has created a flexible supply chain management system so that its key goals
can be attained. It has been using online commerce to increase its sales and revenues. Its
build-to-order processes ensure that customers receive products according to their
specifications. (Halldorsson, 2003).
Customer Analysis
Dell’s customers belong to diverse sectors but the youth represent its main
customers. It has aggressive marketing strategies in order to target the young people. This
is in line with its belief that technology can be easily promoted among the young
customers. Dell has used clear and specific objectives in order to achieve its critical goals.

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It has crafted a superior business strategy that is based upon achieving efficiency and
effectiveness. (Halldorsson, 2007).
Environmental Analysis
Dell’s business environment has become highly competitive because of the
changes in social, political, and economic trends. The ongoing economic recession has
reduced customer spending and forced businesses to cut down their costs. Dell has also
suffered from this and has been forced to scale down its operations.
Another serious threat is that new players are emerging in the market with the
popularity of tablet PCs and smart phones. These devices are new generation, which
offers computing power in a versatile and smart manner. Hence companies like Dell are
forced to make changes that will enable them to compete effectively in the market.
(Munroe, 2011).
SWOT Analysis
Strengths
Dell is the largest PC maker in the world while it is a powerful and loyal brand
among customers. It uses a direct to customer business model that leverages technology in
order to achieve the key goals of the organization. It helps to establish direct relationships
between customers. It also provides top-notch customer services before and after the sales
process. This is an innovative mechanism that enables Dell to have competitive
advantage. (Dell, 2009)
Besides that, it has an efficient supply chain management system with respect to
procurement, manufacturing, and distribution. It leverages technology as means of

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creating streamlined distribution channels. Dell does not manufacture its own products,
which means that it assembles its products using cheap labor and components from
suppliers. This helps it to achieve strategic competitive advantage as it can assemble and
distribute products in an efficient manner.
Weaknesses
Dell is dependent upon large number of suppliers in different countries for its
products and components. It does not have any dealer or retailer relationships, which can
offer significant disadvantages. In addition to that, it does not have any commercially
developed technology, which can be its own patents. This is a disadvantage when
compared with other competitors. (Zeithaml & Bitner, 2003).
Dell’s direct method is problematic for customers who do not have high levels of
awareness and perception. The process of developing computers according to customer
specifications can cause delays for customers who want the product urgently. (Mendelson
& Ziegler, 2009).
Opportunities
Dell can ensure product diversification as means of ensuring success. For instance,
it can offer maintenance and repair services for old products. It can also increase Internet
stores for convenience, satisfaction, and timeliness of customers. This strategy can help it
to achieve high levels of success with an emphasis on attaining key goals through
innovation.
Software is another area where Dell can introduce its expertise as means of

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combating declining sales in personal computers. Dell can also target population
segments in poor countries by offering cheap computers. Small businesses are another
niche market for the organization. (Mendelson & Ziegler, 2009).
Threats
Substitute products like smart phones and tablet PCs pose serious threats to Dell,
which has limited product categories. Competitive rivalry is strong in the PC market
throughout the world. The new entrants into the market have the potential to challenge the
hegemony of the organization. Dell’s direct model might be unsuitable for future growth
as organizations devise new strategies to lower down their costs and pass the benefits to
the customers. The growth of the personal computer industry is slowing which means
Dell needs to focus on product diversification. This approach can help the organization to
achieve its critical goals in an efficient and effective manner. (Dell, 2009).
Phase 2: Objectives and Strategy Development
Marketing Objectives
The following are the marketing objectives of the organization:
 Dell should work on corporate branding so that it can retransform itself from a PC
manufacturer to a firm that provides products and services to different niche markets.
Corporate branding is extensive and Dell should focus on enterprise level solutions,
storage networks, and supercomputers, which will target the corporate sector.

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 Dell needs to be cohesive through acquisitions and mergers.
 Product diversification should be supported by innovation in the field of software,
enterprise solutions, tablet PCs and smart phones.
 Innovative technologies can be developed so that they can be sold at lower costs. This
is the backbone of the organization, which has been successful because of its ability to
manage its logistics.
 Dell should enhance its relationships with its customers as means of ensuring high
levels of success. (McDonald, 2002)
 It should not abandon its PC hardware business but find ways to develop innovative
devices that are in accordance with current market conditions.
 Dell should employ its key strengths to remove weaknesses
Targeting and Positioning
Dell needs to restructure itself so that it can create the image of a diversified
technology solution provider. Services and software will be the main backbone of
its new marketing strategy. Besides that, its core business, which is hardware, will
remain but it will provide technological and innovative solutions. Dell needs to
target home users as well as different corporate customers. The development of
a comprehensive business strategy is critical for success as it will lead to long-term
growth. (Graham, 2005).
Dell needs to conduct an analysis of the cash flows from the profitable products
and services. This will help the organization to attain strategic competitive
advantage.

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Dell should focus on its key strengths, which are to reduce costs, which can be helpful, as
it will ensure innovation, and low costs with respect to new technology. (Jobber, 2001)
Growth Strategy
Product diversification is a key strategy for Dell as it seeks to maintain a
competitive advantage in the declining PC market. Dell needs to restructure its core
business priorities and develop new structures that can help it to gain leverage in a highly
competitive industry. The development of a comprehensive approach is essential because
it can lead to competitive advantage in the future. (Khan & Khan, 2009).
Product diversification should focus on smart phones, tablet PCs, software,
storage management solutions, enterprise services, and supercomputers, which can help
the organization to attain growth quickly. Dell’s corporate branding strategy is also
essential because it must be restructured so that it helps to target home users as well as
corporate users. It should create a competitive strategy based upon the lenses of customers
and competitors. This can help it to offer value proposition to its customer.
Dell’s key competitive advantages, which include a lean supply chain
management system and lowered costs through its direct distribution model need to be
reinvented so that they can offer value added services to home users. The home users
remain the most profitable segments for Dell. (Bennett, 2003).
Cloud computing is another area where Dell can foster growth and development.
It can employ the power of software and storage technologies through the Internet as
means of attaining clear leverage in a highly competitive industry. Supporting the cloud
computing industry is another innovative way for growth in the market.

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Dell needs to appear cohesive through its mergers and acquisitions. This will help
it to have a centralized strategy for attaining growth. It should focus outwards so that its
business processes are flexible, reliable and agile. It needs to redefine its priorities and
make investments in the areas where there are potential for increased cash flows. This
will help the organization to attain success by leveraging its key products and strengths.
(Phillips, 2005).
Selection of Competitive Advantage
Dell can attain competitive advantage by using following strategies:
 Product diversification should continue but its core products of hardware should be
given priority so that it can determine profitable markets.
 Niche markets need to be targeted by the organization for success.
 It needs to focus on branding itself into a complete IT services and devices provider.
 Dell needs to revamp its marketing and business strategies through efficiency,
competence, and professionalism.
Marketing Mix
Product
Dell’s products should offer tangible and intangible benefits to its customer
segments. New products and services can offer significant advantage and choice to the
customers. They can also provide increased loyalty and brand image for the organization,
which is needed by Dell in order to ensure that it can secure its future. (Yasin &
Zimmerer, 2005)

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Price
Dell’s pricing strategies should not exclusively focus on lower prices. But it can
devise ways to find products and services that are innovative but at low prices. In other
services, the organization needs to have clear choices so that it is able to achieve its
critical targets in a proficient manner. (Webb et al, 2000).
Place
Dell should focus on online commerce as the means to reduce its costs. This can
help the organization to offer an online business model that offers convenience,
satisfaction, and excellence for the customers. (Wilson, 2002).
Promotion
Social media is another way to promote its products and services. Moreover, the
Internet should remain the main medium for the success of the organization. The use of
different promotional strategies over the Internet and social networking sites will help the
organization to attain strategic leverage within a short span of time. (Holloway, 2006).
Conclusion
Dell has been successful in the PC market because of its supply chain
management and direct business model. It has a flexible and reliable supply chain
management system that reduces inventory and costs. It reduces risks of operating in a
competitive industry. Dell has a brand image among its customers because of its cost
effective rates. All of these factors have made the organization very popular among the
customer segments.
However, Dell has been facing stiff competition as the trend in the PC markets has
changed. It has faced new entrants and new technologies that erode its traditional
competitive advantage. Dell needs to devise a vibrant business strategy that is based upon

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product diversification. It should also continue with its primary model of computer
hardware. Furthermore, it is through the emphasis on a strategic edge that the
organization can attain success in the long term. The long-term growth should be based
upon using its competitive advantages.
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