fourth draft for word count march 7th

8/6/2019 Fourth Draft for Word Count March 7th

http://slidepdf.com/reader/full/fourth-draft-for-word-count-march-7th 1/21

1

Dell Computers Marketing Strategy.

The CIM defines marketing as The management process responsible for identifying, anticipating &

satisfying customer requirements and profitably

According to Kotler et al (1996) marketing is a social and managerial process by which individuals

and groups obtain what they need and want through creating and exchanging products and value

with others

1. Concept & Process of Marketing

The function of the marketer is to satisfy the customers needs and wants. A successful marketer

must create & satisfy the needs and wants of the customer and be able to anticipate what future

requirements may be and ensure that theyre met. Organisations can be categorized into 4 distinct

orientations. These determine how a business is focused and how services are marketed however,

some overlap will occur.

1) Product Oriented

2)

Production Oriented

3) Selling Oriented

4) Market Oriented



2

Product Oriented Organisation

These organisations base their business strategies on the development and innovation of new

products without having a clearly defined market. Food manufacturers continue to develop and

improve products to attract new buyers. These include new toppings for pizza, new flavourings

etc. There are advantages to this type of orientation; it produces innovative products and will

have a motivated staff as they are encouraged to be creative. However, their innovations will

not be market or customer focused and thus may be prone to failure. Coke Colas Dasani

launched in 1985 and Guinness light in 1979 both failed in the marketplace.

Production Oriented Organisation.

These organisations focus on effecting economies of scale by producing goods in large

quantities. Companies with a production focus operate in markets where demand exceeds

supply and the final market is guaranteed. They focus on constantly improving production

techniques and costs and optimising distribution channels. The weakness with this strategy is

that the end users needs are not addressed. Electronics manufacturers for example, enjoy

profits through economies of scale but they will be led by product and distribution costs.

Sales Oriented Organisation

Sales oriented businesses are focused on the short term profit. They are centred on the Sales

team who are encouraged to make the sale. Little thought is given to aftercare services or

customer satisfaction. Although high profits can be made in a short amount of time, a sales

oriented company can quickly falter when competitors enter the market. Without a loyal

customer base, sales will dwindle. Real Estate agents come under the Sales Oriented strategy.

Marketing Oriented Organisation

A Marketing Oriented organisation focuses its business strategies around the customer. They

support the idea that the customer is king and focus activities on understanding the

customers needs and answering these needs by developing products & services accordingly.

This business is profit orientated but profit is seen as a long term strategy which will be achieved



3

by understanding, meeting and anticipating the customers needs. To succeed in the long term,

they must focus on both profit and market presence. A marketing oriented business will adopt

this strategy in order to embed their products and brands in the market and will be able to face

competition through customer loyalty and strong brand and company image.

This orientation does have its limitations, if the workforce is not fully accepting that the

customer is king, the essence of the marketing concept will be lost.

Kotler et al highlights the differences between the selling and marketing concepts.

EndsMeansFocusStarting Point

The Marketing Concept

The Selling Concept

Factory Existing Selling Profits through

products & promoting sales volume

Market Customer Integrated Profits through

needs marketing customer satisfaction



4

Dell have adopted the Marketing Orientation as they target the needs and wants of their target

market and strive to meet demand more effectively and profitably than their rivals.

Dell could have been classed as a product or production oriented organisation, however they

continue to create variations of their products to meet the customer demand, continue to attract

new customers through media advertising, and provide a one stop shop where potential

customers can visit a user friendly website and purchase all their computer needs in one go.

Dell also adopt a 2nd marketing approach Societal marketing, where an organisation continues to

provide for the needs and wants of a target market but also lives up to certain expectations. Under

Dells Corporate Responsibility banner, it lists what the company is doing in the following areas:

Protecting the Planet Dell is committed to supporting the work of the Intergovernmental Panel on

Climate Change (IPCC) to reduce emissions levels by between 50 & 80% buy 2050

Empowering Youth Dells focus is to link up with NGOs to bring technology to the worlds neediest

children. They have donated more than $8 million USD to this cause.

Supporting communities worldwide. Dell are active in supporting diverse communities

worldwide. They support those with disabilities, transgender, gay and lesbian communities with the

aim to achieve innovative solutions for a diverse customer base.

However, such a strategy requires an understanding of marketing at three distinct levels: as a

philosophy as a process & as a management function. Dells marketing driven philosophy can be

evidenced in their vision statement.

Its the way we do business. It's the way we interact with the community. It's the way we interpret

the world around us-- our customers needs, the future of technology, and the global business

climate. Whatever changes the future may bring our vision -- Dell Vision -- will be our guiding force.

(Source: http://www.dell.com/ )



5

Marketing as a philosophy starts at the very top and must filter down in the company through every

department.

In order to keep the marketing philosophy of a company alive, its essential that these businesses

carry out regular marketing or process audits.

One valuable tool that can be used in a marketing audit is a SWOT analysis. This highlights the

Strengths, Weaknesses, Opportunities and Threats to a business. If done regularly, SWOTs allow

companies to keep abreast of their place in the market and highlight the threats facing them. Dells

SWOT analysis may cover the following areas:

Strengths: Weakness:

Opportunities: Threats:

Lack of retail presence

No warehousing

Dependency on component parts

su liers

Brand Name

Customers build own model

Leaders in internet sales

Technology leaders

Competition: new technology

constantly evolving.

HP has excellent R&D

department working on new

innovations

Expansion worldwide due to

increasing internet coverage

Expansion into all segments fromprivate consumer to multi

nationals



6

While auditing, it is essential that a company looks outside to the environmental threats that exist.

In Dells case

y The competition HP, Toshiba

y Suppliers manufacturers of component parts.

y Political environment as they expand globally, this is a key factor

y Economic environment fluctuating currencies affect profit margins in new markets.

y Legal environment potential lawsuits due to poor quality goods

y Social & Cultural environment Dell is deeply committed already to the social & cultural

environment but must continue to address this area.

Use of both SWOT & PEST (environmental) analysis help an organisation to develop its strategic

options. Using the points highlighted, the organisation can build its strategy, set its budget

limitations and place themselves in a comparable position to its competitors. However,

organisations come up against constraints while setting their marketing objectives. As the focus of

any for profit organisation is profit, financial constraints may mean that a company has to

compromise between a utopian marketing strategy and a healthy profit margin. Other constraints

may be more pragmatic and include staff that are not sufficiently skilled in marketing or experienced

in a particular market. Constraints may also involve the political and legal climate of a potential

market which the PEST analysis should highlight.

Final objectives must also be set so that the ultimate goals are clear. Increased and sustainable

profits are key. Other goals are increased productivity, increased expenditure on R&D,

rationalization of SKUs, penetration of new markets, & increased market share.



7

Once a companys strategy has been put in place, the target market and marketing mix can be set.

Dells marketing strategy in this area is clear target all areas of society from individuals to

companies to multi nationals. Their marketing mix is diverse and they make much of their inclusion

of all segments of society and advertise their lack of bias based on money, culture, able bodied or

sexual orientation. www.dell.com

Using all of the appropriate tools and being mindful of the constraints, a company should now be

able to implement its marketing plan.

2.

Segmentation, Targeting & Positioning

Any companys strategy or marketing plan, while intrinsically linked to profit margins, budgets and

market growth will be affected by environmental influences over which they have little or no

control. These areas include the political climate of a market, the legal, economic and social climate

and the emerging ecological and technologic factors. In the micro environment, influences including

the competition, customers, share holders and suppliers will determine the success or failure of a

marketing strategy.

Two areas from the Macro Environment that will directly affect Dells approach to the market are

Political & Economic factors. As Dell targets emerging markets such as China & India, the political

and economic issues in these markets will be key to its success. Traditionally, both markets favour

locally manufactured goods & government tenders in both markets favour national brands.

In the latter half of 2009, Dell announced its intention to target users in the emerging markets with

an android phone handset. Dell launched the Mini 3i Smartphone in conjunction with China Mobile

which has an established market presence and claims to have over 500 million subscribers.



8

The economic climate of emerging markets such as China is significant. According to Economy

Watch, China's economy is expanding rapidly. In the last 30 years the rate of economic growth has

averaged 8% growth (GDP) per annum. China is currently the worlds leader in the mobile phone

market but the political influences of government strictures and low cost rivals will continue to be a

threat to Dells dominance of this market.

Michael Dell said in March 2008 that while growth in the U.S. market for PCs would be "OK," Asian

markets would grow more. In 2008, Dell unveiled its low cost Vostro brand targeted towards the

emerging market of India.

To help with the successful launch of two so disparate products such as the Smartphone and Vostro

one aimed at those with a high level of disposal income and the 2nd marketed as a low cost

affordable item, it is vital that market segmentation is carried out. This allows a tailored approach to

each market segment for each individual product.

Once Market Segmentation is complete, targeting and positioning will follow.



9

Market Segmentation Identify segmentation variables and segment the market

Develop profiles of these segments

Target Marketing Evaluate the attractiveness of each segment

Selects target segments

Market Position Identify a differential advantage for each segment

Formulate the marketing mix to be used in the marketing plan for

each segment

The major segmentation variables are clear. When launching the Dell Vostro PC into India, Dell

focused its plan on affordability using the following variables segment and target the market:

Geographic much of Indias population live in very rural areas outside the main cities.

Reaching these remote markets will present a challenge for the marketers. Cultural &

religious divides between different geographic areas must also be addressed.

Democratic According to the FT, over 50% of the Indian population is younger than 25.

This is a powerful demographic for Dell to target for aspirational goods such as PCs.

Personality traits The emergence of companies like Dell establishing manufacturing plants

locally will influence the spending power of the Indian consumers, offering a chance to move

from single to two income households. Aspiratonal or lifestyle consumption will increase

allowing Dell to increase its market share of the PC business.

Lifestyle the Bollywood & cricket culture in India have a significant impact in peoples

lifestyles and these areas can be successful in marketing sought after items such as PCs to

BOP markets.

Benefits Sought this category represents those who may want specific things from the

consumer goods aimed at them such as social media access, online sports coverage,

Bollywood movie downloads.



10

In order to create the required target markets, its necessary to focus on how existing markets are

already served. It is easier to enter a market with no competition than one with an existing strong

brand. In Dells case, the Compaq, HP & Acer are the largest brands in the Indian market. The market

size must also be considered and projected growth patterns and the strength of the brand offered.

Dell is a multinational company with a strong global brand which makes it attractive to the market

although the demographic and economic segments will determine who the target market will be

educated and high earners will be more likely to be targeted than others for high end goods such as

PCs.

Positioning of the product is the final step in the marketing process. Positioning or perceptual maps

can be used to highlight a companys position in the target market. In Dells case, the areas for

positioning may be price and brand awareness.

Nokia

HP Cisco

Dell Accenture

HIGHER PRICE

KNOWN BRANDUNKNOWN BRAND

LOWER PRICE



11

As well as the emerging consumer markets, industrial markets must also be segmented, targeted

and positioned. The industrial market has a more specific set of requirements than the consumer, as

in the case of PC sales, they will be seeking to service an industry rather than an individual. One of

Dells foremost marketing tools is its ability to design and adapt its systems to suit the end user this

is especially significant in an industrial setting. When positioning into the industrial sector, there are

9 divisions of categorisation set out by the Office of National Statistics in the UK. These

classifications include construction, transport, financial, hospitality industries among others.

Identifying the correct division or category is essential in getting the segmentation and eventual

targeting and positioning correct. Industrial segmentation is more challenging than consumer

segmentation due to the complex issues existing in the financial, regulatory sectors.

The differences between the consumer and industrial requirements can be simplified by considering

the considerations for both in purchasing Dell products. Its crucial that Dell understand the reasons

and requirements of both. The considerations for a student consumer target and a small business

user target will be different and should be analysed using buyer behaviour techniques.

According to Stokes 1997, Purchasers involvement in decisions can be broken down into 5

categories:

Low Purchaser involvement in decision High

Routine Impulse Regular Irregular (small) Irregular (large)

A laptop is categorised under Irregular (small) as the purchaser has had a high level of involvement

in deciding to purchase the item and significantly for Dell, which laptop to purchase. Marketing

stimuli help the consumer to decide which laptop to purchase and the role of the marketer is to

ensure that these stimuli are understood and satisfied by their product. The initial marketing stimuli

of the 4ps tie in with economical, technological, political and cultural stimuli to begin forming the



12

process. These stimuli are affected by the individual buyers characteristics and decision processes

and the final purchasing decision is further affected by choice of product, brand, finance, company

name, etc.

For the student, the biggest driver is financial. The student is driven by the cost of the laptop and is

in the low cost market segment. The compromise here will be build quality and performance. The

individual consumer is influenced by the aesthetics of the machine colour, design, etc. Dell is

extremely effective in this segment with its aggressive media campaign advertising its flexibility of

design and offering individual branding of its laptops.

The small business user is less interested in aesthetics and more concerned with performance and

reliability. Dell has a business range of PCs, the Optiplex brand, targeted at this market. Dell

understands this buyers motivation and demographics and offers them laptops that are small and

sturdy for travel, have excellent connectivity for ease of connection when not in the office & have

extra battery life. Dell will further segment this market into the basic business PC and those needing

specific hardware such as design or graphics companies.

Positioning of the product as mentioned above will also be a driver. Businesses will gravitate more

towards the well known brand and compromise on price to ensure and excellent after service while

the student may be prepared to gravitate towards a lesser known brand to ensure a cheap deal.



13

3. Extended Marketing Mix

The goal of any business is profitability and for a marketing oriented organisation, in order to

achieve these goals; they need to address the 7 Ps of marketing or otherwise known as the

Marketing Mix. http://www.cim.co.uk/resources

1. Product

2. Price

3. Place

4. Promotion

5. People

6. Process

7. Physical Evidence.

1. Product: instead of simply sitting back and enjoying the initial profits of its successful

computer business, Dell has continue to strive toward innovation and market based

improvements to the products it offers. It has 1,386 patents listed on its website proof of

true innovation.

2. Price: A product is only worth what a customer is willing to pay for it. A 'want' can be

described as "the form that a human need takes as shaped by culture and individual

personality" Kotler et al (1996). Wants are described in terms of objects that will satisfy

needs. When the means exist for these wants to be met, a market is created for products or

services that meet this market demand. Meeting this demand leads to customer satisfaction.

In order to meet these needs, Dell has cut out the middle man and sells its products through

the internet. This allows them to remain competitive in the market while still offering latest

technology.

3. Place: The means in which an organisation sells its product must be appropriate to the

product and meet customer demand. Dells exploitation of the internet to sell their



14

computer based technology is hugely appropriate and allows all sectors of society including

those disabled or living in remote areas to access the same range of products as those with

access to the traditional high street.

4. Promotion: Promotion is seen as traditional marketing. It is the way in which a company

advertises its product to entice the customer to buy. Promotion includes media advertising,

PR, branding, exhibitions, mail drives, and special offers among others. The aim of all

promotion is to get the customer to buy your product instead of competitors. Dell

successfully promotes its products through highly successful media advertising which is

broadcast during peak time to TV or radio audiences. According to The Business Journal,

Dell gets It and it is the it that elevates them above their competitors.

5. People: Having motivated and trained staff is essential for promoting both a business and its

products. After sales service offers added value to a product and will draw a consumer to a

business for future orders. Building customer loyalty is a crucial part of a marketing

oriented business.

6. Process: The process in which a product is developed, marketed and eventually sold to a

customer is essential to the final level of satisfaction of the customer. The process of

marketing should be audited regularly by any business to ensure that market trends are

being followed.

7. Physical Evidence: Customers expect a high level of presentation from a companys store or

in Dells case, its virtual store - their websites. They must be well presented and easy to

navigate in order to invite return custom.



15

4. Marketing Mix

The Vostro brand of laptop discussed above is aimed at the small business markets. It is

targeted towards the more affordable end of the market rather than its costlier counterpart the

Insprion line. The Vostro can be marketed in 2 diverse markets by successfully segmenting the

markets and by choosing the correct Marketing Mix. A useful tool in determining this marketing

mix is a mind map as illustrated below.

.

Although 7ps are addressed in this map, we will focus on the principle 4 Price, Place, Promotion &

Product. Using the USA & India as the 2 target markets for the Vostro, 2 disparate marketing mixes

can be used to determine the requirements of both markets. This market segmentation will also

address issues relating to international marketing.



16

CaseSnippets/Update

Dell·s market share in U.S. and Worldwide (in Q1 2009) compared to other top PC makers

http://www.casestudyinc.com/Dell-Supply-Chain-Case-Study

Mix 1 USA Mix 2 - India

Price: The established market here will be

able to sustain a higher price and thus

greater margins for this product. As an

established brand, Dell can afford to pitch

the item at a competitive price. In the graph

above, it can be clearly seen that Dell, along

with HP enjoys most of the market share in

the US. The level of competition in the

domestic market will make moving into

emerging international markets an attractive

option.

Price: With much less disposable income,

the price for this market must be lower to

achieve sales. As an emerging market, the

price will need to be low enough to ensure

good market penetration. Considerations of

using it as a lost leader to gain this

penetration and brand recognition may be

made. Dells lack of market share outside the

US can be seen in the above graph.



17

Place: Dells traditional distribution channel

is online marketing which allows it to do

away with the middle man in the retail or

wholesale outlet enabling Dell to keep its

pricing competitive. However, in the US, it

has recognised the power of leading retail

outlets and has begun selling its products

out of Walmart, which in itself is considered

a well branded and affordable outlet,

perfectly matching Dells ethos.

Place: In 2007, Dell began production in its

new manufacturing plant in India. Now it has

more than doubled its production output. In

2008, Infosys, one of Dells largest customers

was presented with the first made in India

PC which allowed Dell to overcome the

governments strategy of promoting national

products over imports. Lower production

costs in India will help Dell with Porters cost

leadership strategy. This strategy also

ensures Dells high level market entry.

Promotion: In the technologically advanced

market of the USA, promotion of the Vostro

will be carried out by a wide range of multi

media advertising campaigns. All sectors of

the market can be reached through

sophisticated marketing channels such as TV

& computer marketing. Social networking

sites reach thousands of users for minimal

outlay. Using social marketing sites engages

customers in conversation and allows

instant feedback. The return of investment

vs traditional marketing is high.

Promotion: This is a bigger challenge for Dell

as a much smaller percentage of Indias

target population will have access to the

technology available in the US. Door to door

campaigns, free gifts, leaflets and radio

campaigns will have a much greater reach.

Among the more educated segments, social

networking will have the same effectiveness

as in the US big impact for minimal outlay.

Focusing on a small product range for

international markets complies with Porters

Focus strategy.



18

Product: The product from a marketing

perspective should reflect what the product

means to the customer or what the

customers requirements are from the

product. Marketing of a product in 2 distinct

geographical areas needs to address the

individual characteristics of these markets.

Within the USA, the expectations may be

higher due to the vast number of PCs

available and the sophisticated marketing

campaigns already in place. High

performance, value add ons, aesthetics will

all be factors in this market.

Product: In India you sell one cigarette at a

time, not a package. So there is a lot of

localisation. The biggest mistake companies

make often, is to assume that the way they sell a

product in their own country is the way to put it

into another country Philip Kotler.

The marketing of the Vostro in India must

take into account the difference between

the emerging markets and well established

markets such as USA. The expectations of a

new market will be different and emphasis

may be on value for money over high end

models. Due to the vast size of India and its

cultural differences from state to state, focus

must be on what the customers

expectations are from this PC. Using

differentiation strategy from Porter, Dell can

position itself against existing similar

technology in this market.

According to Ansoffs matrix, Dell will be adopting a Market Development Strategy and as such will

need to identify new distribution channels and new market segments. Once the marketing mix has

been recognised, the segmentation of these markets must be further broken down into consumer

and business markets.



19

The consumer market can be broken down into sections; Convenience, Shopping, Speciality &

Unsought Goods. Dells products will come under the Shopping category and it is Dells job to ensure

that the consumer is offered what they want in terms of price, build quality, performance, looks and

after service. Buyer behaviour as covered above will be an important part of the marketing focus for

this market.

Selling to a business is categorised as organisational marketing. This category includes businesses,

institutions, government and distributors. Dells computers are considered Accessory Equipment and

the decisions regarding purchasing will depend on the industry itself but will primarily be driven by

budgets and price. The buyer behaviour discussed in section 2 above will be relevant in this

marketing sector. Dells online presence makes it very easy to target this market. There is no need to

deal with distributors or retail outlets, the entire transaction can be done online the ease and

speed of this is particularly relevant to the industrial section. This type of marketing will not be

appropriate for the governmental market as they work predominantly using tenders. Dell will submit

a bid which will include pricing and delivery dates, service commitments, and quality assurances. The

tender is awarded based certain criteria. Likewise, non-profit businesses must be targeted

differently. Although the line between this sector and the private sector is becoming blurred, cash

flow will always be an issue and thus Dell may have more success marketing the low end Vostro

model.

Although Dell offer an excellent after care service package, the product that theyre selling is

tangible and sales can be monitored and tracked. In some industries, the product that theyre

selling is a service. This can be seen in the hospitality sector. This sector is very susceptible to

variability of the sales team, seasonality and even the weather. No two services will be identical and

they are even susceptible to perishability as certain offers may be centred on calendar events such

as bank holidays and as the consumer will not actually be taking ownership of the product its vital

to persuade them to purchase the perceived value of the service. The 7ps of marketing as outlined



20

above can also be applied to the marketing of a service industry although the People, Process and

Physical elements will be especially significant.

Reference:

http://www.economywatch.com/world_economy/china/

http://www.dell.com/downloads/global/corporate/environ/Opti_Enviro_Brochure.pdf

http://news.cnet.com/8301-1001_3-10026957-92.html



21

http://moodle.bl.rdi.co.uk/file.php/608/output/MarketingPrinceples/01_02_04_001.html

http://www.indiamag.in/dell-launches-%E2%80%98venue%E2%80%99-and-windows-7-phone-

%E2%80%98venue-pro%E2%80%99-in-india.html

http://www.consumerpsychologist.com/cb_Segmentation.html

http://www.statistics.gov.uk

http://www.bizjournals.com/triad/stories/2005/01/10/editorial3.html

www.dell.com

http://future-business.info/michael-dell-exclusive-interview-with-small-business-advice-tv-episode-

2.html

http://www.thetimes100.co.uk/theory/theory--the-extended-marketing-mix-(7ps)--319.php

http://www.ft.com/cms/s/0/cd516aa8-749a-11db-bc76-0000779e2340.html#axzz1GImblZQM

Bibliography:

Business Studies, 4th Edition

fourth draft for word count march 7th

Documents