Dell case study

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A Case Study on the Changes in Marketing Strategies of DELL
Marketing Management
24-01-2010

A Case Study on the Changes in Marketing Strategies of DELL

Contents
Contents.................................................................................................................................................2

INTRODUCTION Since its foundation in 1984, Dell Corporation had beenthe fastest growing entity in the computer industry in the world. It is considered a pioneer and has set benchmarks in direct marketing strategy. The computer industry is a very unique industry as rapid innovations and super fast product life cycles forces the companies to keep up with continuous innovation and varying trends. Such rapid adoption of new technology also means that unsold old stockwould be of no use and had to be discarded or sold at heavy discounts. It is one of the most difficult industries to maintain a competitive edge over the competitors, which Dell had innovatively tackled and came up with strategies such as ‘Just-in time’ inventories and outsourcing of parts to avoid out-dated inventories. From the beginning Dell has been focused on customer service by
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ACase Study on the Changes in Marketing Strategies of DELL

understanding the customer’s needs and providing the most effective computing power to meet those needs. Even until this day Dell has held on to this viewpoint and they have gone from a dorm room based business to a multibillion dollar giant of the industry. The Dell Company maintained their competitive edge by using their easy to usecustomization interface along with maintaining relatively low costs by shipping directly from the supplier to the customer. To analyse DELL’s initial marketing strategy which led to its establishment as the market leader in the PC market, it is necessary to understand Dell’s initial marketing mix.

1. THE RISE OF DELL Marketing Mix can be defined as strategic blend of controllable attributes of amarketing campaign that any company can utilize to alter perception of the consumers favourably to its own product or service offerings to achieve its organizational objectives. In short, it is a model of crafting marketing strategies to suit a company’s objectives. The four attributes of the Marketing mix model, commonly referred to as the 4 P’s can be described as: • Product • Price • Place •Promotion Product The product decision involves deciding what goods or services should be offered to a group of customers. Some examples can be product decisions about Brand name, functionality, styling, quality, safety, packaging, repairs and support, warranty, accessories and services. Dell provided customers with an option of customizing the PC according to their own requirements conveniently oninternet or telephone lines. The product lines were few since Dell did not invest immensely into R&D for new products and technology. They developed improved packing methods

that use the least amount of packaging material possible, while still protecting product shipments. The product’s quality was entry level rather than premium.

Price This key element represents what a company wouldreceive on a unit basis for the product or services being marketed. Pricing decisions can be about pricing strategy, suggested retail price, volume discounts, wholesale pricing, cash and early payment discounts, seasonal pricing, bundling, price flexibility and price discrimination.
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A Case Study on the Changes in Marketing Strategies of DELL

Dell’s pricing strategy decisions were normallyabout achieving advantage for the organisation over competition from others. For example, Dell felt that the margins earned by many competitors were too high and that made them vulnerable to a strategy of lower prices and tighter margins. Armed with a cost-effectiveness advantage, Dell aims at drastically reducing profit margins for their competitors in any new market that it ventures into,...
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