B6 Laptop Dell

8/8/2019 B6 Laptop Dell

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MARKET ANALYSIS

OF

DELL AND LAPTOP INDUSTRY

Mohita Mehra(B08088) Shruti Bardia (B08109)

VasudhaVerma(B08118) Vikash Prasad(B08119)

VinayGhai (B08120)


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CONTENTSProductandMarketDescription................................................................................................................... 3AboutDell..................................................................................................................................................... 4MarketingObjectivesofDELL....................................................................................................................... 5ProductsandServices................................................................................................................................... 6DELLsCompetitorsandMarketPlayers....................................................................................................... 7AggregateMarketForces.............................................................................................................................. 8MicroenvironmentAnalysis........................................................................................................................ 10MacroenvironmentAnalysis...................................................................................................................... 13MarketingProgram,Strategy,andTactics(4Ps):....................................................................................... 15DellMarketStrategy................................................................................................................................... 16ValueChainAnalysis................................................................................................................................... 18DifferentialAdvantageforeachcompany.................................................................................................. 20ExpectedFutureStrategies......................................................................................................................... 22Segmentation.............................................................................................................................................. 23Targeting..................................................................................................................................................... 24Positioning.................................................................................................................................................. 24ConsumerBehavior..................................................................................................................................... 26AssumptionsinPlanningProcess................................................................................................................ 30ValueProposition........................................................................................................................................ 31CompetitorsTargeting............................................................................................................................... 32Conclusion................................................................................................................................................... 33


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Product and Market Description

Laptop also known as notebook is a small portable computer compared to a desktop. Although the

concept of a laptop was introduced as early as 1971, the first commercial portable computer, Osborne 1,

was available only in 1981. Before Windows 95 came out, laptop was used by research institutions and

untouchable to general public. As technology innovation has been repeatedly occurred, laptop became

portable, inexpensive, and user-friendly. Desktop computers serve all the purposes a laptop does but withtheir bulk and masses of cables theyre not very portable. Thats where laptops gain prominence. Today

Laptop PC industry is dynamic and has high demand from personal users in home and business users in

their office. Its portability provides advantage for the users in terms of business communication tools

anywhere, anytime. Marketing strategy including price war and brand-value creation is more common in

laptop PC industry among major players in 21st century.

In India laptops still form a very miniscule portion of the Indian PC market. Call it a fad, or the emergence

of a new breed of technology conscious IT users (or both), a shift in working styles and the need for

"anytime-anywhere" access to information-all these factors are pushing laptop sales to dizzying heights in

India.

Another factor which has been driving sales of laptops is the recent need for mobile computing andmobile connectivity. The government's focus on improving the IT infrastructure has brought in

technologies like wider wireless network (WAN, Wi-Fi), which allows linking up of mobile devices to the

internet at any place. This has propelled sales like never before. Also, with their fast paced lives, many

professionals and businessmen need access to computers while they are on-the-move.

In the future, we expect that with the advent of technologies that make mobile internet connectivity more

efficient and cost effective, laptops and notebooks will be more popular. Increasing incomes and a further

reduction in prices will also make laptops more affordable. The inclusion of vernacular content and local

language support will make laptops useful in the rural areas as well.


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About Dell

Corporate Objectives

Dells corporate-level strategy is one of growth. Dells corporate website defines its global strategy asOur global strategy is to be the premier provider of products and services, including those that customersrequire to build their information- technology and Internet infrastructures.

Below are the core elements of the Soul of Dell:

1. CustomersDell believes in creating loyal customers by providing a superior experience at a great value.People at Dell are committed to direct relationships, providing the best products and servicesbased on standards-based technology, and outperforming the competition with value and asuperior customer experience.

2. The Dell TeamThe firm believes that their continued success lies in teamwork and the opportunity each team

member has to learn, develop and grow. They are committed to being a meritocracy, and todeveloping, retaining and attracting the best people, reflective of their worldwide marketplace.

3. Direct RelationshipsThey believe in being direct in all they do. They are committed to behaving ethically; respondingto customer needs in a timely and reasonable manner; fostering open communications andbuilding effective relationships with customers, partners, suppliers and each other; and operatingwithout inefficient hierarchy and bureaucracy.

4. Global CitizenshipThey believe in participating responsibly in the global marketplace. They are committed tounderstanding and respecting the laws, values and cultures wherever they do business; profitablygrowing in all markets; promoting a healthy business climate globally; and contributing positivelyin every community they call home, both personally and organizationally.

5. WinningEmployees at Dell have a passion for winning in everything they do. They are committed tooperational excellence, superior customer experience, leading in the global markets they serve,being known as a great company and great place to work, and providing superior shareholdervalue over time.


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Marketing Objectives of DELL

Dell has laid out broad long term companywide goals to drive shareholder value including Deliver sustained unit growth at a premium to the market Execute against its $3 billion cost opportunity Deliver sustained EPS growth Execute on its five core growth initiatives

Grow its retail and the channel for scale and profit

To achieve all these goals, Dell has defined a few marketing objectives. They have been elaborated uponbelow:

Customer Retention

Dells business model appeals to customers desire to save money the industry has had the reputationof selling equipment at reasonable prices, then picking up profits by charging an arm and a leg forsupplies, maintenance services, and other add-on services. Dell applies its sell the best stuff, at thelowest price possible philosophy to all its goods and services, which appeals to the customer desire forbest value for the money.

Dell believes in built to order manufacturing; this reduces the supply chain time constraints anddelivers products faster to the customer.

The online model Direct from Dell gives customers better purchasing experience by reducingforward supply chain constraints.

Allows customer a generic upgradeable PC model, wherein accessories/components could be addedover the base models. This allows them to meet the needs in better way.

Dell maintains quality by choosing the best in class component manufacturers (Intel & Microsoft) andleveraging their scale investment in R&D.

By reducing supply chain components and reducing manufacturing lead time, Dell has been able tomanage its prices competitively.

Uses knowledge gained from direct customer contact before and after the sale to provide reliable andtailored customer service.

Intermediary RetentionThe Soul of Dell is a statement of its corporate philosophy that defines the kind of company Dell is andaspires to become and serves as a guide for its actions around the world. Excerpts from this corporatephilosophy that help defines Dells approach to supply chain management include:

We are committed to behaving ethically...and building effective relationships with customers, partners,suppliers and each other.We believe in participating responsibly in the global marketplace. We are committed to understanding andrespecting the laws, values and cultures wherever we do business... promoting a healthy businessclimate globally; and contributing positively in every community we call home, both personally andorganizationally.We are committed to being a great company and great place to work...

Channel retentionDell has recently entered the channel business while trying to attract various channel partners andexpand their business globally. Channel business, however, has contributed well to Dells growthstrategy.

Global channel revenue $100B; >$200B w/ services

Channel Retention strategy

Dell uses a three pronged strategy in order to retain its channel partners, while continuously expandingthem. One of them is detailed below:


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Flexible Engagement Model

Minimize conflict, build trust and create mutually beneficial relationships Program Office: This ensures that partners meet minimum qualifications to support Dell business in

the given region. Ensures registration of qualified partners and conducts Marcom/Events as interfacebetween Dell and registered partners.

Solution Center: It is responsible for training of registered partners, providing technical support tothem. Solution center also supports partners by providing direct service and support to the channelpartners.

Operations Center: This ensures smooth operation of partner business and continuously evolvesbusiness strategy for them

Online Portal: Dell uses online portal to smoothen the communication with channel partners.Registered Partners and Certified Partners are differentiated through online portal.

Supplier retention strategyDell is committed to communicating its requirements to its suppliers and working collaboratively with themto promote high standards of work and behavior. While the principles do not vary regardless of the levelof supplier, its focus on communicating and reviewing performance against those standards is at targetsupplier list. Suppliers on this list are selected based on location, manufacturing processes, businessrelationship, and commitment to adhere to EICC provisions. Despite this focus, violation of Dell's Supplier

Global Citizenship expectations at any level of its supply chain is unacceptable.

Dells approach to global supplier management is built around two key areas:

Supplier Global Citizenship Commitment Electronic Industry Code of Conduct

Products and Services

Dell designs, develops, manufactures, markets, sells, and supports a wide range of products that in manycases are customized to individual customer requirements. Their product categories include desktop PCs,servers and networking products, storage, mobility products, and software and peripherals. In addition, it

offers a wide range of services. To name a few- Infrastructure Consulting Services, Deployment Services,Asset Recovery and Recycling Services, Training Services, Support Services, Managed Services andFinancial Services.


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DELLs Competitors and Market Players

printing products, access devices, consulting, and ITnterprises customers. The company, founded in 1938 and

extremely competitive

s well ng the mo visible dissenter to the thatthe PC busine s. The mpa signs, manufactures and m onal computers and

as been widely acknowledged as the leader in computer design and innovations.

turing company, headquarteredal telephony, electronic devices

innovative products that create and develop new market. In its "Commodity

shiba has also added body strength, superb quality, advanced security,

as ofipment, and

ewlett-Packard/CompaqHHP provides personal computers, imaging andinfrastructure services to both individual and ebased in Palo Alto, California, has a presence in 170 countries across the globe. The company recordedrevenues of $104.3 billion in 2007 and employs 309,000(2008) people worldwide.HP maintains excellent account management for its largest global enterprise. HP is setting the standardin the notebook industry with the best combination of advanced features andprices.

AppleApple Com known for bei st Windows/Intel standardsdominate s co ny de arkets pers

puter i

related software, services, peripherals, and networking solutions. Apple also designs, develops, andmarkets portable digital music players along with related accessories and services, including the onlinedistribution of third-party music, audio books, music videos, short films, and television shows.It is headquartered in Cupertino, California. The company primarily operates in the Americas, Europe andJapan. Apple recorded revenue of $24.01 billion in 2006 and employs 17,787 full-time and 2,399

temporary people.Apples marketing strategy has always be giving away (or nearly so) software to get people to buyhardware. Apple hApples contrary view of marketing may be the wave of future, even as it looks to the past, where thevalue is placed on the hardware. Apple believes that typical notebooks have become commoditized. Theysell for discounted prices and bring in tiny profits. But when laptop is unique, there can be a justifiablepremium, and customers are willing to pay that.

ToshibaToshiba Corporation is a Japanese multinational conglomerate manufacin Tokyo, Japan. The company product line includes digital products, digit& components, home appliances and others. It recorded revenue of $52.265 billion during the fiscal yearended in March 31, 2006.

Toshiba pursues a tightly focused, two-fold strategy. Through its "Differentiation Strategy", Toshiba seeksto offer new value throughStrategy", it seeks to advance the overall business through economies of scale that support worldwidedelivery of competitive products.In developing its new mobile PCs, Toshiba is providing a product embodying its "True Mobility" concept:thin, light, with long battery life. Tonetwork connectivity, and usability. With the resulting PCs, Toshiba will seek to bring new levels of valueto the notebook PC market and to increase market share.

Lenovo/IBMLenovo Group Limited is the largest personal computer manufacturer in the Asia-Pacific region2006. The company produces desktop, laptop, servers, handheld computers, imaging equmobile phone handsets. It also provides information technology integration and support services, and its

QDI unit offers contract manufacturing. The company has executive headquarters in Beijing, China and inMorrisville, North Carolina, USA. It is incorporated in Hong Kong. The company recorded revenue of $13billion during 2005 and employs 19,000 people.On May 1, 2005 Lenovo Group Limited, the leading PC brand in China and across Asia bought IBMs PCdivision. Lenovos consumer strength and market leadership in China can let Lenovo and IBM successfulin the world fastest growing IT market. IBM will be the preferred services and customer financing providerto Lenovo.The promise Lenovo brings to the channel is of a well-capitalized company with low production costs thatcan go toe-to-toe with Dell. Since Lenovo is now a global brand name, the company cannot count simplyon high-end models for the business sector, and hence, has to develop Lenovo-branded notebookstargeting the consumer segment, a weak segment for the ThinkPad line.


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Aggregate Market Forces

arket Size and GrowthM

r induGrowth is evident in the compute

growth are:

stry, especially in laptops. Some of the salient features of this

ssed the sales of desktop computers for the first time in India. The Laptop market is growing at a fast rate because of change in work life of consumers. As the

aptops prices are now almost at par with the desktop computer prices.

of 2007. In Europe and Middle East the salesd well with growth inthe United States rising to 8.8% and also there are strong results in Japan and Latin America.

Indian Laptop market in now in sync with global market. It was in 2005 that sales of laptopssurpa

need for "anytime anywhere" access to information is increasing, the sales of Laptops are alsoincreasing.

Other factors that are responsible for the hike in sales figure are reduction in prices andaffordability. Laptops are now sold at approximately half the price at which they were sold twoyears ago. L

Most important factor is duty free import of Laptops as a personal baggage that has helped a lotin increasing the penetration level of the product among the consumer population. Awarenessabout laptops has also increased over the years.

Spending on computer hardware is expected to grow to $2.5 trillion in 2008.

Global PC shipments grew by 15.5% in the fourth quartergrew more than 20% in 3rd quarter of 2007 subsided. Other markets also performe

On an annual basis, total sales reached 269.0 million units in 2007 with growth of 14.3%.

Growth in Sales by Regions

The United States growth in sales rose to nearly 9%, this is mainly due to expansion of retailamong major vendors drove volume. Dell, improved sales by over 15%lowing gains by HP over the past year. Overall market growth is a good

e most sold PCs with growth of35%, though somewhat slower than a peak of more than 48% during the third quarter. Overall

ourth quarter while growth in severalst growing markets remained above 20% despite slowing from mid-year peaks.

channels and competitionand expanding its lead folsign and shows the impact of competition and holiday demand.

EME saw a strong year end supported by Christmas sales and active vendor marketing acrossconsumer and business channels. Notebooks continue to be th

growth of PCs amounted to 15% which is the fastest since mid 2006

In Japan Growth jumped to roughly 10% from a decline of about 4% in the past two quarters. Theimproved growth is partly due to a weak market a year ago.

Asia/Pacific (excluding Japan) continued to grow by more than 20% with steady growth in themajor markets. Sales in Australia and Indonesia grew in the ffa


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Stage in Product Lifecycle

Product Life Cycle is very short in case of PC and Laptops

Main competitive advantage in the industry used is technology. It is highly protected; there are variety offormats and systems that do not support each other. Increased competition in PC industry acceleratedtechnological advancement which leads to the fact that once we have bought a PC it is pretty much outdated in the following 3-7 month. Furthermore once PC producers consolidated and were able to spentmore on R&D everyone was able to reproduce any technology of any competitor.High pace of technological advancement have also reduced the life cycle of products, reducing time tomarket time.

Now we can see that there are several trends in the industry in terms of technology. There has beenconsiderable technology convergence in the industry.

Dell is producing TVs and Servers which is a base for virtual computing where PCs would disappearedfrom household and replaced by smart TV through which users would be able to subscribe to onlinecomputer services.

Another trend is portability, compatibility and greenness. Customer is pushing firms for more compatibilityand mobility. Life pace has increased, people want to be able to talk to each other, write instant

messages, exchange images and videos, read news and do it on the while walking or travelling to work,plus they want to be fashionable and trendy. All that pushed companies to come up with smaller, sleekerdevices that can connect to each other wireless and it does not matter if the format is different, forexample iPhone.

Profits

Company Operating Income Revenues

DELL Inc $3.4 billion $ 62.49 billionHewlett-Packard $7.3 billion $ 104.3 billionLenovo $499 million $ 16.4 billionApple $4.41 billion $ 24.01 billionToshiba $1.274 billion $ 76.68 billion

Brief Analysis of DELLs Income

Dells operating incomeOperating income was $3.4 billion for Fiscal 2008, or 5.6% of net revenue compared to $3.1 billion for

Fiscal 2007, or 5.4% of net revenue, and $4.4 billion or 7.9% of net revenue in Fiscal 2006.

Net incomeNet income was $2.9 billion for Fiscal 2008, or 4.8% of net revenue compared to $2.6 billion for Fiscal2007, or 4.5% of net revenue, and $3.6 billion or 6.5% of net revenue in Fiscal 2006.


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Microenvironment Analysis

Threat of New Entrants: Low

Low capital investment for independent stores

It is very easy to set up a new PC company. As a result, there are tens of thousands of companiesmaking PCs that perform similar functions causing the market to be extremely price competitive.Virtually every components part of a PC, such as the motherboard, hard disk, DVD drive, monitor,

and battery (for notebooks), can be sourced from outside while an operating system can be licensedfrom Microsoft or Linux vendors.

High Economies of Scale

Though it is easy to manufacture laptops and PC, however, to compete with big players, economiesof scale are high which include cost reductions through mass-producing computers and differentsoftware.

Brand name may be a barrier to entry

Although the industry is providing positive numbers, it is controlled by 5 key manufacturers thatconstruct a barrier to entry for smaller computer manufacturers. Each firm has strong brand namesand has the right mixes of resources and capabilities. Small firms lack the resources and capability ofacquiring enough capital to compete with the larger firms. The top five firms own 50.9% of market

share while the other 49.1% are held by smaller firms throughout the world.Dell in particular, would be hard to compete against. Most firms already in the market are finding ithard to learn the lessons Dell is teaching. Dells brand loyalty is very high. They have producedmany ads and slogans to boost their name, as well as high customer satisfaction with a high qualityproduct.

Advanced Technology

Since technology changes at such a rapid pace the main factor of a new comer really making adifferent would be for this newcomer to find a niche in technology and a customer base that has notalready been highly established.The main challenge for new computer industries are that many established firms, like IBM and Apple,have had the financial resources to invest early in both marketing and research which they would nothave now.

High Switching Costs

Switching costs are also high because certain programs can only work for certain computers. Thiscauses a customer to be locked into the product because it can get expensive to buy all new softwarefor a new system. Moreover, Dell has created a unique value for its products and hence Dellcustomer would face a very high switching cost while going for a different brand

Huge Profits And Market Growth

Huge present and potential customer base with high profit margins, hence players are always seekingopportunities to capture market share in foreign markets. In the fourth quarter of the PC market in2006, the U.S. domestic industry recorded 3% unit growth. Any smaller firm with the right resourcesand capability may be able of achieving economies of scale given the openings of the foreign market.

Threat of Substitutes: Moderate

Strong Presence

There is a strong presence of PCs throughout society. It has very few substitutes are paper andpencils or singing to yourself. There are plenty of competitive choices among technology products todo work or be entertained but its hard to find a complete substitute.

Customer Preferences

However customers initially buy laptops and PC for the low cost and usually choose a company thatcan add value in the particular department that meets their technological needs. As technology


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changes, prices decrease, and standardization takes place then computer companies have to keepcustomers from substituting their product by offering more choices at reasonable prices.Thus, substitutes are dependent upon three factors namely prices, comparable or better products andcost of switching to a new product line.

Handheld Devices as future substitutes

Also it is believed that in the near future the PC and laptops will be completely replaced by a newgeneration of hi-technology, digital and hand-held products which perform all of the major functions

yet would be more user friendly, have a greater portability, smaller in size, and offer morecommunicational features.

Bargaining Power of Suppliers: High

Intel and Microsoft as the Powerful Suppliers

Though there are lot of items/commodities the key input, which is the processing unit, is limited tovery few key suppliers (Intel) who take the major share of the industrys profit. Further, lack ofsubstitutes for the processing unit vests more power to the supplier.Also there are Microsoft standards for all PCs and laptops as it supplies operating system to 85 to90% of the market.

Low Margins for suppliers

Due to cutthroat competition such as price wars, the price for computing power has decreased whilethe demand for computer hardware has increased and lower prices should continue to limit revenuegrowth for vendors.To become profitable, vendors must request lower costs from suppliers with a combination of efficientdistribution channels. For suppliers to completely understand consumer demand, they mustcollaborate with the entire supply chain network of each vendor. The demands of the consumers canthen be linked more closely to the suppliers through the valued networks.

Strategic Alliances

Dell uses partnering with its components suppliers as a key strategy to be the low-cost/high-qualityleader in the market. Partnership reduces inventory costs for Dell by providing just-in-time deliveries.Dell is also able to enhance the value of goods and services supplied by effectively using informationfrom suppliers about customer needs and preferences. Moreover bargaining power of suppliers keptunder check and an uninterrupted supply of requisite parts and components maintained

Bargaining Power of Buyers: High

Highly price sensitive

The PC market is highly price sensitive and pricing wars are a common occurrence.The goal for any consumer is to receive the desired reliable computer hardware at inexpensiveprices.Consumers have the option to buy the hardware through direct or indirect marketing. Due to theease of internet most companies such as Dell and Hewlett-Packard have sold directly to yieldsavings by maintaining low inventory levels. This reduction in costs equally affects the desired lowcost of computer hardware by consumer demand.

Insignificant Switching Costs

Buyers want low prices and value for money and will not hesitate to switch brand if the price is raisedtoo high. There is practically no switching cost involved. Apple, however stands out in this regard asswitching from a Mac Book to a PC can involve significant costs.But Dells product, are very reliable and has satisfactory customer service. These two factors helpDell to create certain brand royalty, but that is, given the fact that the Company set the prices verylow. If the price goes up high enough, customers will not hesitate to switch.

Corporate and Institutional Deals

Large customer size can leverage selling efforts with larger orders. Business to business salesusually requires less effort per sales dollar.


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Dell has chosen to solicit a large part of its sales from large institution and industrial customers,(78% of US sales are to businesses, and that ratio holds for most foreign sales as well).

Laptop not treated as a commodity

With large corporations, Government sectors, educational and business institutions being theconcentrated buyers and with the individual consumers treating laptops much as a commodity; theindustry provides a high bargaining power to its buyers. This effect is attributable to very lowprospects of backward integration and ample information available to buyers.

Rivalry and Competition in the Industry: High

Unique Marketing Strategies

Laptop industry is unique in its sense of rivalry among the key players. Though competitors arefighting to capture their projected share of the market, the key players are quite diverse and rely ontheir own strategy. Corporations like Dell are holding on to their market share owing to its unique andinnovative supply chain. IBM/Lenovo on the other hand has been relying on its customer satisfactionservices and response. Apple once again stands unique owing to its own OS and entirely differentconfiguration

Advanced Technology War

Due to the small amount of industry competitors, the computer hardware industry is a verycompetitive and strict industry that must create innovative products and provide productive servicesthat add value.The technological requirements for all computer companies have increased each year and arepredicted to only get more intense and competitive.Every computer company in the industry wants to be the first to introduce the newest technology atthe lowest possible price. Since consumers are better informed about the computer industry as awhole they are better able to put pressure on firms to truly compete aggressively for their businessand loyalty.

Price and Publicity Wars

Firms take active and constant fresh actions to increase their market shares and block their rivals.To differentiate in quality, speed and service is fast moving work with a rapidly changingtechnological landscape and increasingly standardized products. Firms race to introduce newproducts, advertising and promotions are constant.

Strong Supply Chains

Companies that have the proper capacity are using direct sales method to reduce costs and todeliver the best possible customer experience. This leads to greater perceived value and savings.As the industry grows, companies will have to deal with informational complexity of their distributionchannels, especially in the foreign markets. Proper supply chain collaboration should be planned toformulate the proper plans for consumer demand.

Big Players

The computer industry has a few main firms that compete competitively in the in the computermarket for PC, servers and technology services. The relative size of the competitors in the computerindustry, for example, IBM, Dell and HP is very large in terms of the top companies being wellestablished and earning revenues in billions of dollars.However, there is a large network of lesser known manufacturers also competing for profit as well asmarket share. As a direct result, the rivalry is intense. Therefore, the highly standardized productoffering, low profit margins and an excessive oversupply characterize the PC industry currently, thatis ill-prepared for near-zero revenue growth.

Dell is at a constant advantage in the way of technology. They have the inside track on the latestand greatest. They can also get the new products to market faster, because of the supply chainprocess. All of this adds up to, their ability to anticipate any potential risks the Dell Computers mayexperience, and try to resolve any issues before they come to fruition.


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Macro environment Analysis

In 2007, some of the worlds computer industries experienced expedited border integration and softenedindustry structure, with more notable industry cluster effect and finer division of work. Computer productspresent the trend of mass production and personalized design.

Innovation and convergence are trend in the industry, and stepping up efforts to build industry chainbecomes part of enterprises' competition strategy.

The external environment of a company consists of outside conditions that affect the firms performance.An analysis of this external environment allows a firm to identify the key conditions that affect it and theindustry. The external environment of the computer industry has been analyzed in the light of political andlegal, economic, social, technological and environmental factors. Such external factors usually are out ofthe firm's control and sometimes present themselves as threats.

Political and LegalPolitical factors include government regulations and legal issues determining the conditions under whichcompanies have to operate. In this field, the computer industry has to face certain restraints. Problemscan arise in countries where political stability is not guaranteed, no matter whether companies operateproduction facilities or if they do business with that country through exports.

Many countries still have restrictive policies which are maintained to protect domestic manufacturers andproduction. Such policies often hinder foreign companies from entering into these markets. The onlypossibility to do business in those countries is to establish partnerships with local companies, where theyare additionally forced to accept minority shares and to provide money and technological know-how.

Hardware industry gets considerable support from the Governments in Eastern countries leading to highproduction and reduced cost of product in the region. Now more than ever government agencies areseeking assistance with technology and project support.Policies such as duty free import of Laptops in India as a personal baggage have helped a lot inincreasing the penetration level of the product among the consumer population. Schemes like OneLaptop Per School in India and One Laptop Per Child by UN may prove to be a big opportunity

Laptop industry also faces stringent environmental laws in many countries due to hazardous materialfound in some computers

Both Japanese and American companies are forming alliances with European companies to strengthentheir ability to compete in 25-nation EU and capitalize on the opening up of Eastern European markets.

EconomicThe computer industry expects a growth of approximately ten percent over the next few years. Thisgrowth is influenced by the economic situation in a specific country, having an impact on the purchasingpower of potential customers.

Price is an important factor and hence inflation or fluctuating currency rates in a country might adverselyaffect the industry and margins

The Import-Export liberalization, Exchange Rate fluctuations also impact the sales in computer Industrybecause their supply chain is globally integrated.The GDP growth rate of counties also impacts the sale of computers.Spending on computer hardware is expected to grow to $2.5 trillion in 2008.Real GDP (Gross Domestic Product) growth, rising consumer confidence and currency exchange rates allprovide insight into the health of the computer hardware industry.India has low technology penetration and much room for industry growth.


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SocialNational demand for computers is dependent on the educational level in a country.In the past the demand for laptop computers comprised only of businesspeople. Now, college studentsdemand represents a considerable percentage of the total demand for laptop computers. Also childrenare getting familiar with the use of computers at a very young age.Executives and managers are spending more time working away from the office. These executives aremanaging entire departments from home offices in a sign that telecommuting is going increasingly moremain stream.Also laptops are getting more and more involved in daily life with increasing complexity of work, theincreased acceptance of IT has provided impetus to the industry.

The brand image of a computer and lifestyle trends get more and more decisive for the purchasingdecision. The computer industry adapts to this trend, example by offering a wider range of notebooks andby trying to create a strong brand name.

TechnologicalBecause the rate of technology innovation has greatly slowed, the opportunity for companies to competeon the basis of rapid, significant changes has almost completely been eliminated.

Even then, technology is the most important determinant in laptop industry as crucial low cost leadership

can be achieved through technological advancements and it also provides easy differentiation to thecompany. Increased Research & Development have caused permanent innovation processes which leadto short product life cycles resulting in a faster depreciation of the products.

Wide reach of internet provides a great impetus to the industry.Dual-core technology, the most influential technology in laptop industry had been transited from high-endserver to laptop for mass consumption. The upgrade cycle drives waves of new purchases amongbusiness and consumer customers as technological change transpires.

The educational potential of computer based technologies is wide-ranging. Introducing computer basedsystems not only to manage student interactions, but also to support differences in learning paths andstyles, will allow more effective accommodation of a wider range of student experiences and preferences.

EnvironmentalThe computer industry has over time identified many environmental and energy concerns associated withthe manufacturing and use of equipment; including potential phases for recycling, remanufacturing, andreuse. New designs often require rethinking the materials selection choices for electronics, the kinds ofresources and substances used in manufacture, and also the creation of new production techniques.Therefore, the industry has begun to coordinate supply chain analysis of environmental issues so thatfinal manufacturers have better knowledge of the impacts of the components they purchase fromsuppliers around the world, which consequently leads to a positive image in the industry.

Traditionally, the impact of wastes, including pollutants, was being controlled after they had beengenerated. Now computer industry is trying to use cleaner production to try to minimize the potentialand/or actual economic and environmental impacts of the resources used, the volume and type ofpollutants and wastes generated, and the product itself during and after the production process.

Considering alternative technologies, materials, and processes that reduce releases of toxic chemicals,conserve resources, and lower risks to human health and the environment will help meet the growingglobal demands for extended product responsibility.

The third most important factor is duty free import of Laptops as a personal baggage that has helped a lotin increasing the penetration level of the product among the consumer population. Awareness aboutlaptops has also increased over the years.Spending on computer hardware is expected to grow to $2.5 trillion in 2008.


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Marketing Program, Strategy, and Tactics (4 Ps):

Product

Dell provides a wide variety of both business class and home/consumer class products and services. Thecompany markets specific brand names to different market segments. Some examples of Dell productstypically sold to corporate clients are Dell Power Edge servers, Power Vault, Dell EMC storage systems,and Power Connect switches. A few examples of products for individual and professional customers are

Dell Precision workstations, OptiPlex desktops, Dimension desktops, and Inspiron and Latitudenotebooks.

Dells obvious cash cow is its PC business. Dell has always been associated with the ability to customizetheir products and services in order to satisfy a wide range of customers, including individual consumers,corporate businesses, and retailing businesses.

Dell's unique approach to manufacturing separates the different processes so that Dell is not reliant onsingular production or supplier's chain for equipment production. Though there is no segregation of thedifferent products and services but nevertheless in separating the components enabled it to target thecustomers based on the regions in which the products are manufactured. By assigning each regionalizedproduction center particular component for production not only has diversified the risk of concentration oflabor and production costs but also depending on particular infrastructure.

Price

Price reasonability and the availability of support, after sales services and parts have alleviated Dell'sposition from others. When Dell decides to enter a particular market, it consistently uses the Direct Modelapproach, pricing their product below that of their competitors.

Because Dell products are so customizable, the price is largely dependent on the options and servicesadded to the product. Businesses and individual consumers are able to tailor their products and servicesto meet their needs. The price increases as more options are added, but it gives the consumer the abilityto customize the computer with the options that are most important to them and still get the computerwithin their price-range.

In addition, Dell is a direct supplier, meaning the consumers can order their computers directly from Dellinstead of going through a retailer.Finally, since Dell builds computers on a just-in-time, built-to-order basis, it does not have to keep a stockof components and ready-made computers. Keeping a stock of parts and pre-built computers costsmoney, which ultimately gets passed on to the customer; since Dell doesnt do this, they are able to selltheir computers at a lower price.

Place

Various ways you can order through DELL are On-line, telephone, mail-order.Until fairly recently, Dell computers were only available to be ordered on their website or by phone. Whilethis gave Dells customers the ability to customize their order to meet their needs, it also kept somepeople from buying computers from Dell if they wanted to see and touch the computer before buying it, or

if they werent willing to wait the extra time for Dell to build the computer and ship it to them.

In response to this, Dell recently began offering its products in several physical locations, such as Wal-Mart, Target, and Costco.

Dell has been able to affect the location strategy aspect of its marketing campaign. As Dell's products arealways available at the nearest dealers customers develop trust for the "local Dell" thereby achieving theobjective of gaining their trust in Dell products and services, and forming a large and diversified consumerbase.


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Promotion

Dell uses two main avenues to get its advertisements to potential customers: direct mail and online.

Direct mail includes and promotional material sent through the post office. Other channels are On-linemodel, special training and certifications, word-of-mouth, editorials, reviews, sales reps, and awards

Dell in the past have not concentrated on extensive marketing campaigns but this revolutionarized in1999 when Dell changed its tactics by engaging in extensive marketing campaigns."Dude, you should have bought a Dell", became a very popular television advertisement for Dell back in2002. That one advertisement brought Dell's market share up 16.5 percent, which was more than doublethe previous year, according to The Wall Street Journal. In fact, these commercials had an addictiveeffect on the consumers that bought Dell products, and Dell used this ad and others to capitalize on theconsumer computer market. Dell also used television advertisement in a slightly different way to sell theircomputers to the general public. Dell computers can be found on the popular QVC and QVC.com

Dell also used the Internet very successfully to market their computer products. One of Dell's mostsuccessful advertisement ideas came from the "Taguchi method", which was an Employee PurchaseProgram email advertising campaign.

Dell also has a website that they use quite effectively to allow consumers and businesses looking for

computers to purchase them online. Dell's website is very sophisticated as it allows you to choose a bonestock computer, and add or subtract hardware so that the consumer or business person can build thecomputer the way they want it.

Dell always has computers on sale, and Dell also almost always has some promotion offering freeshipping, free memory upgrades, free CRT monitors, and free printers. Dell knows that selling thecomputer is the most important part, and is willing to give an incentive to make a sale. These incentiveswork very well, and make Dell computers very appealing to all of Dell's target markets.Dell also sends out a monthly publication called "Power Solutions" which is a magazine that providesclear, timely, and accurate information and support for issues related to Dell computers.

Dell Market Strategy

Evolution of a strategyWhen Michael Dell first started selling computers and components back in the late 1980s, he laid out thestrategy model of direct sales to customers and build-to-order manufacturing. However, in the early1990s there was concern that direct sales to consumers would not grow fast enough, so sales werepromoted through the distribution channel of large warehouse type stores like Costco and Best Buy. By1994, economic problems and thin margins pointed the company back to direct sales and large industrialand institutional customers. The internet web site was established in 1995 and sales to individuals tookoff. In early 1997, the consumer market got dedicated marketing attention and the production assemblyplants were re-vamped from a traditional linear assembly line to a cell manufacturing process which cutassembly time by 75%.

Dell managed to stick with a pretty close identity to their original strategic plan, even though it has been

tweaked and refined continuously. And, with each step in improvement, they have become harder tocatch. Dell designs, builds and customizes products and services to satisfy the end-user requirementsand offers an extensive selection of peripherals and software directly to its customers.

Dell Direct ModelThe primary method Dell uses in order to realize and sustain their competitive advantage is a distinctive,direct to consumer business model. The model is known as Dell Direct, this refers to their relations withtheir customers as being "direct." The direct-sales model is based upon selling directly to the customer.The customer is able to browse the products and options, respond via selection and complete a payment.Dell will then build the computer to the exact specification and deliver to the customer.


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This build-to-order ("pull to order") system helps Dell focus on the price for performance, customization,service and support. Additionally, Dell is able to differentiate itself from its competitors with its customized

just-in time manufacturing.

Dell effectively recognized the two key areas of the mass customization concept: Effective interaction with the customer to allow them to decide upon their product Highly efficient, flexible manufacturing techniques

One of the key benefits of the direct sales model is it negates the middle men'.The after sales support of Dell had built up an excellent reputation in the industry. This reputationincreased the brand value of Dell which encouraged sales and repeat buyers through brand loyalty.

Dells unique capability was not only through its direct selling but also its efficient manufacturing line.Through collaboration with suppliers, Dell coordinated its supply chain and manufacturing line to reduceits days of inventory to 7 days

Cost Leadership StrategyDell Computers have been the industry leader with their cost-leadership strategy. They strive to providetechnology and support at a lower unit cost than their competitors.

They are a direct model company. Their unique relationship with customers gives Dell the opportunity toknow exactly what their customers want and offer products that their customers need. They have a strongfocus on being a "market taker" rather than a "market maker".

Using on-line and telephone sales and support, Dell has managed to help keep internal costs low,increase value to the customer and provide increased returns to their shareholders.

Their low-cost competitive advantage is working because they have been able to successfully providetheir products and services more efficiently in an extremely competitive market.

A successful Supply chain management has lead to decreased cost in inventory reducing the overall cost.Dell has reduced its turnaround time to less than 5 days with their state of the art real timecommunications with their suppliers.

Business and Global StrategyDells global strategy is to be the premier provider of products and services, including customers requirebuilding their information-technology and Internet infrastructures.

With manufacturing facilities and sales offices throughout North America, Europe, Asia and SouthAmerica, Dell is responsive to their customers wherever they are. This concept is indicative of aninternational strategy.

Also the concept of online buying gives it an edge in distribution network across globe.

As Dell being one of the big gamers in the computer market and to keep its increasing market share andrevenues that Dell gained due to its strategy that is often called as a singular strategy which is to build

and sell products cheaper and more efficiently than their competitors.

Dell uses scalable enterprise strategy which is similar to dynamic computing strategy but with moreconnection to consumers, where dell built its customers loyalty program by trying to be more in touch withtheir customers with its customer service lines.

Dell's primary resources include the most up-to-date technology and IT tools that allow it to effectivelymove along their advanced supply chain and attain the value they are reaching for. Dell's value chainallows Dell and its suppliers to exchange information and interact with each other. The Internet, Dell's keyIT factor in its success, results in lower costs to customers than other retailers because customers tellDell precisely what they want and Dell builds PCs for the customer without experiencing inefficientresources in production.


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Value Chain Analysis

Firm Infrastructure: 170 countries, Direct to customer model, Focus on ROIC, Low Inventory.

HR Management: Knowledge centric and customer focused culture.

Technology Development: Continuous up gradation (N series, Duo core) + Introduction of Internet options

Procurement:Abilitytosourcecheapproductsandleverageoffeconomiesofscale.NoPatentorcopyright.

By reconfiguring the traditional build-to stock value chain model of computer manufacturers, DellComputers defined its biggest core competency and the activity in which it can pursue its competitiveadvantage. First Dell gained cost advantage from its competitors by understanding cost drivers (retailers)in its production and squeezing them out. The implementation of the direct to consumer model solved theproblem of expensive computer born out of the margins asked by the middlemen. Dell Computers alsorealized the differentiation advantage by focusing on their efficient model as its core competency whichresulted to Dell outperforming its competitors.

By reconfiguring the traditional build-to stock value chain model of computer manufacturers, DellComputers defined its biggest core competency and the activity in which it can pursue its competitiveadvantage. First Dell gained cost advantage from its competitors by understanding cost drivers (retailers)in its production and squeezing them out. The implementation of the direct to consumer model solved theproblem of expensive computer born out of the margins asked by the middlemen. Dell Computers alsorealized the differentiation advantage by focusing on their efficient model as its core competency whichresulted to Dell outperforming its competitors.

Primary ActivitiesPrimary Activities

Inbound LogisticsInbound Logistics

Here goods are received from a company's suppliers. They are stored until they are needed on theproduction/assembly line. Goods are moved around the organization. Dell relies mostly on its highlyreliable supplier, where Dell streamlines its operation and relies on its computer monitor supplier to shipdirectly to the customer. As long as its supplier retains its leadership position, Dell would collaborate withit to achieve mutual success.

Here goods are received from a company's suppliers. They are stored until they are needed on theproduction/assembly line. Goods are moved around the organization. Dell relies mostly on its highlyreliable supplier, where Dell streamlines its operation and relies on its computer monitor supplier to shipdirectly to the customer. As long as its supplier retains its leadership position, Dell would collaborate withit to achieve mutual success.

OperationsOperations

This is where goods are manufactured or assembled. Every Dell system is built to order. Customers getexactly what they want. Dell uses knowledge gained from direct customer contact before and after thesale to provide award-winning reliability and tailored customer service.

This is where goods are manufactured or assembled. Every Dell system is built to order. Customers getexactly what they want. Dell uses knowledge gained from direct customer contact before and after thesale to provide award-winning reliability and tailored customer service.

Outbound LogisticsOutbound Logistics

When Dell introduced the direct model, its competitors were selling computers to end consumers viadistributors. Dell, on the other hand, sells directly to consumers and is continuously communicating withthem and benefiting, especially in two areas, seeing sales trends and learning about unmet customerneeds. The company also relies on customers knowledge of what they want to purchase and when theywant to complete the transaction to drive the direct business model. Dell leverages this source ofcustomer knowledge by making it as easy as possible for a customer to place a customized orderelectronically.

When Dell introduced the direct model, its competitors were selling computers to end consumers viadistributors. Dell, on the other hand, sells directly to consumers and is continuously communicating withthem and benefiting, especially in two areas, seeing sales trends and learning about unmet customerneeds. The company also relies on customers knowledge of what they want to purchase and when theywant to complete the transaction to drive the direct business model. Dell leverages this source ofcustomer knowledge by making it as easy as possible for a customer to place a customized orderelectronically.

Marketing and SalesMarketing and Sales

Dells direct to customer model solve the problem for additional capital for marketing and sales. By sellingdirectly to consumer it eliminated retailers along the way. One advantage of this kind of system is that thefirm is continuously in contact with its customers and they are benefiting in two areas concerning salesand marketing, seeing sales trends and learning about unmet costumer demands.

Dells direct to customer model solve the problem for additional capital for marketing and sales. By sellingdirectly to consumer it eliminated retailers along the way. One advantage of this kind of system is that thefirm is continuously in contact with its customers and they are benefiting in two areas concerning salesand marketing, seeing sales trends and learning about unmet costumer demands.

InboundLogisticsProducts fromsupplier toAssembly unit.

Operations

Products

Manufactured

and assembled

with Supplier

Outboundlogistics

Products soldthrough directonline model.

Marketing &Sales

Best price,Direct tocustomer. Lowsales cost.

Service

Well trainedServiceexecutive. Highclass service


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Service

Dell spent dollars training well-educated business segment managers provide state-of-the art advice tocustomers. The company also initiated a collaborative customer-solution teams that collaborate withcustomers to fulfill any unmet customer needs. Because of the nature of work of Dells employees theyare continually being inspired to stay abreast of technology threats and opportunities that may alter thecompetitive landscape in the future.

Support Activities

Procurement

It is on this activity that Dell is weak because Dell do not enjoy protected by trademark or patent orcopyright technology. The technology being used in the industry is shared by all industry players.

Technology Development

Technology is an important source of competitive advantage. And here is one strength of Dell for the firmenjoys better access to technology. Dell introduces the latest relevant technology much more quickly thancompanies with slow-moving indirect distribution channels.

Human Resource Management (HRM)

Dells mission statement is to be the most successful computer company in the world at delivering thebest customer experience in markets we serve. Dell employees, direct salespeople, help-desk operators,

engineers, and the like all have to be knowledgeable and customer focused to ensure Dells continuedcompetitiveness.

Firm Infrastructure

Dell revolutionized the traditional value chain of computer manufacturing industry by introducing the directto customer model. Dell also employed a global business consultancy, to help it develop a set of metricsto judge business-unit performance. By doing so, daily decision making were more efficient. The chieffinancial objective that steered managerial evaluation at Dell was return on invested capital (ROIC).Which leads to no inventory build-up, Dell turns over inventory every six days on average, keeping relatedcosts low.


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Differential Advantage for each company

Ability to design new products

a) Focus On the Best Solution, not just the Best TechnologyA Dell mantra is that today's technology is tomorrow's commodity. Dell waits until the cost of thattechnology falls low enough for it to be stuffed into computers at state-of-the-art factories and thensold direct at a cheap price, which allows the company to drive for share.

b) Dells innovation approach is Listen Solve Impact.They started their innovation process with asking their customers"What would you really want this thing to do? Is there a different way to accomplish that?" Then theymeet with their suppliers and ask, "Can we do this in a different way?" Then they try to come up witha totally different approach that exceeds the original objectives.By questioning all the aspects of its business, they continuously inject improvement and innovationinto their products as well as culture.

Ability to deliver the service

a) Dells build-to-order manufacturing and sales model changed the way companies buy computers. Dellhas excellent supply chain for notebook products and strong marketing execution capabilities. Dellremains the leader in service and support for the largest global enterprises.

b) Dell's climb to market leadership is the result of a persistent focus on delivering the best possiblecustomer experience by directly selling computing products and services online and through catalogs.

c) Dell are strong in the hardware business and have established their own speedy distribution and lowcost manufacturing system.

Ability to Market

a) Dells marketing strategy is simple: satisfying customers and making a profit. By focusing on productcustomization, customer needs and customer service, Dell is still one of the most customer-centriccompanies in operation today.

b) Dells sales and marketing efforts are organized around the needs, trends, and characteristics of ourcustomers. Their direct business model provides direct and continuous feedback from customers,thereby allowing them to develop and refine our products and marketing programs for specificcustomer groups. Customers may offer suggestions for current and future Dell products, services,and operations on an interactive portion of our website called Dell IdeaStorm. This constant flow ofcommunication allows them to rapidly gauge customer satisfaction and target new or existingproducts

Ability to manage

a) Ensuring that customers are satisfied every time they interact with Dell is a goal owned by every Dellteam member. The Dell Executive Leadership Team sets the strategic direction for how they'llcontinue to keep customers at the forefront of all we do - from designing and delivering services andsolutions that meet the unique and evolving needs of our customers to developing innovative newproducts that deliver a superior customer experience.


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Ability to design new products

a) HPs efforts are focused on identifying the areas where they believe they can make a uniquecontribution and the areas where partnering with other leading technology companies will leveragetheir cost structure and maximize customers' experiences.

b) HP Labs, together with the various research and development groups within the five principalbusiness segments of HP, are responsible for their research and development efforts.

Ability to deliver serviceHPs customers are organized by consumer and commercial customer groups, and distribution isorganized by direct and channel. Within the channel, they have various types of partners that they utilizefor various customer groups. The partners include:

i. retailers that sell products to the public through their own physical or Internet stores;

ii. resellers that sell products and services, frequently with their own value-added products orservices, to targeted customer groups;

iii. distribution partners that supply our solutions to smaller resellers with which they do not havedirect relationships;

iv. original equipment manufacturers ("OEMs") that integrate their products with their own hardwareor software and sell the integrated products;

v. independent software vendors ("ISVs") that provide their clients with specialized softwareproducts, frequently driving sales of additional non-HP products and services, and often assist usin selling our products and services to clients purchasing their products; and

vi. systems integrators that provide various levels and kinds of expertise in designing andimplementing custom IT solutions and often partner with HPS to extend their expertise orinfluence the sale of our products and services.

Ability to MarketHP is focused on driving efficiencies and productivity gains in both the direct and indirect business. Themix of HP's business by channel or direct sales differs substantially by business and region. Some of thebusiness segments that caters to different markets

i. Technology Solutions Group (TSG) manages enterprise and public sector customer relationshipsand also is charged with simplifying sales processes across our segments to improve speed andeffectiveness of customer delivery.

ii. Personal Systems Group (PSG) manages SMB customer relationships and commercial resellerchannels, due largely to the significant volume of commercial PCs that HP sells through thesechannels. In addition to commercial channel relationships, the volume direct organization, whichis charged with the management of direct sales for volume products, is hosted within PSG.

Ability to manageTo create an organization that could sustain its competitive advantage regardless of marketplace whimsand what their competitors were building, HP founders based their corporate culture on the integrationand reinforcement of critical opposites. This became known as the Hewlett-Packard Way. HP hasachieved "what appears to be the greatest dichotomy: creating an environment that celebratesindividualism, but at the same time one that is also wholly supportive of teamwork. Although HP peopleare taught to engage in cross-functional teams, they are also rated on the performance of decentralizedbusiness units and personal achievement."


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Expected Future Strategies

Dell has had a strategy of moving to the services market for years. Businesses, corporations andgovernments need three things in order to recover from a disaster - servers (or mainframes), storage andcommunications. Dell has all three, in impressive quantities.

Dell might release a digital music player meant to compete with Apple's famous iPod.Dell is also reported to be working on software for a range of portable PCs, which will make it possible forusers to organize and download media content from several online resources.

After introduction of computer peripherals like printers and toners, Dell can look at diversifying into LCDand other non-computer goods through strong supply chain giving direct competition to iPod and otherconsumer electronics brands

Open up Dell Retail StoresDell has invested in door-to-door sales calls. If Dell were to open up retail outlets they would be able tokeep the costs of their computers down and they would be able to remain loyal to their three golden rules.The computers in the store could serve as models and sales representatives would be able to assistcustomers with making the online purchase right there in the store, allowing the customer to get acustomized computer. There would be a large financial investment with this option, but it may compare

with the amount of money that they are spending with their current door-to-door approach.

Focus on Involving Customers in Leasing Computers through Dell

FinancialIn some of the regions that Dell operates, they have a leasing program through Dell Financial. Leasingallows a company to transfer residual risk and implement a disciplined approach to technology rotation,and it provides flexible end-of-lease options. If Dell were to allow this to occur in other markets too,customers may be more likely to choose Dell products because this is in a sense a "try before you buy"opportunity for potential customers, which offers the customers a little more security. Also, sincecustomers are making monthly lease payments, there isn't as much of an upfront capital investment. Inaddition, this option helps Dell establish longer term relationships with their customers because when itcomes time to upgrade their computer systems, customers will likely stay with Dell products; though thismay be a difficult option to implement as Dell would be introducing a system that is foreign to itscustomers.

Further Segment and Build Relationships with the Large CorporateAccounts (LCA) SegmentThe LCA segment is where Dell is seeing some repeat buyers. Trust and confidence are important toLCA customers. If Dell were to further segment this market, they would have a better understanding ofthose customers and what their specific needs are. By segmenting their markets, they will be able to buildreal and meaningful relationships directly with their customers and present even more tailored offerings. Itwill reduce the amount of cost savings associated with having all corporate accounts in one segment.This will, however, allow Dell to gain a more intimate knowledge of their customers and continue with thedirect business model. It will allow Dell to capitalize on a strategy that has already proven to besuccessful even more.


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Segmentation

Segmentation on the basis of usageDell divides their market into four segments:

1. Home & home officeHome & home office consumers are interested in custom PCs, and they don t need muchtechnical supports afterwards. The price matters a lot to them.

2. Small businessSmall business usually has particular requirements but limited budgets, and they need moreservice.

3. Medium & large businessMedium and large businesses are willing to spend more for professional products and services.They usually purchase to an agreed plan and they repeat purchases.

4. Government, education & healthcare.Government, education & healthcare have strict requirements for PC and PC systems. Theyspend large amount of money for certain quantity and variety. They require special technicalsupport and lifecycle management.

When you visit Dells website, you need to identify the segment of yourself before seeing products.

How good is the market segmentation criterion?To be useful, market segments must rate favorably on five key criteria:

Measurable Substantial Accessible Differentiable Actionable.

From home & home office to government, education, and healthcare, Dells segments size,purchasing power, and characteristics is ascending.

Each is the largest possible homogeneous group worth going after with a tailored marketingprogram.

The segments can be effectively reached and served as the other segments. All the segments are distinguishable and effective programs can be formulated for attracting and

serving the segments. Overall, Dell has effective market segmentation.

Segmentation on the basis of geographyDell seemingly segments geographically adopting different strategies in the three different regions ittargets.The US market is its strongest market however this is slowly becoming saturated, while the APJ segmentis seemingly the one with the highest growth potential due to the relatively large sectors of the APJ thatare untapped.Dell does not employ a innovation strategy in that it strives to produce new products however that doesnot mean it does not strives for innovation at all. Many of its business process and manufacturing models

have in fact been patented.Dell also segments its markets by national culture. Dell has found that customers in France and Germanyare less likely to make credit card purchases, and are therefore less likely to purchase online. A Germanperson is more likely to be interested in the technical details, but a person in France is more interested inprices. These differences are important because advertisements and promotional materials must bedesigned to appeal to each segment of the market.


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Targeting

Corporate V/S ConsumersDell targets two market segments: corporate and consumers.Also, Dell usually targets more professional highly technical it people rather than normal home users whohave more technical knowhow.

There are several differences between Dells individual consumers and the businesses.

Corporate customers comprise about 85% of Dells sales. Generally, businesses are willing to spend more on computer products than an individual

consumer wants to spend. Businesses typically buy at regular intervals and are repeat buyers, whereas individual

consumers probably just buy one home computer and may not buy again for several years. Businesses usually are interested in more than just the price; they also evaluate what options

come on the computer and how easily they are upgraded.

Hence, keeping in mind these differences, Dell uses a direct marketing model and has in the past mainlytargeted business users.

1. Many large companies in the US use Dell and have also adopted Dell in their foreign plants.2. Dell continues to target such consumers in a direct one to one way with a focus on customization

efficient quality and cost effectiveness giving little importance to design trends or fashion.3. Dell targets these businesses like customers and in so doing views computers as a micro

processor rather than the fashion statement it has become in the individual home users market.4. Dells main focus is on large corporations with secondary efforts on small and medium sized

businesses5. They also target the global consumer directly, but with minimal effort.

New International Market Development

Dell is planning to target new segments and enter new markets with existing products.However, it needs to note that the successful Dell Model might not work everywhere. The product chosenfor expansion should be a commodity where the demand is already in place and the country must alsovalue on-time delivery.

In addition, terrorism, cultural barriers, political systems, and longer ROI must be taken into considerationas well as limits on foreign ownership and tariff barriers

Positioning

Differentiating Attributes:Dells main differentiating attribute is that they build every computer to order and offer powerful, richly-configured systems at competitive prices. They also sell their computers directly to customers withoutgoing through a retailer, which gives them the ability to better understand the customers needs.

So what differentiates them is: Build to order manufacturing Low prices Direct retailing Better customer satisfaction Better information about customers

Dell has also been introducing relevant technology faster than competitors owing to no channel ofdistribution and low inventory. Also low inventory cost helps it to provide laptops at cheaper rates.


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How Dell is positioned

Channel distribution: Dell gains competitive advantage through the way it designs its channelscoverage, expertise and performance. It sets itself apart with their smooth functioning direct channels.Itwas the first laptop manufacturer to come up with the idea of direct selling.

Same for less: Dells overall strategy is same for less. It provides equivalent quality computers at a lowerprice for performance. By maintaining low inventory and cost of distribution it provide same technologyat lesser price. Ithas a reputation of undercutting existing players based on price.

Its positions itself as follows: Business (Relationship= 60%): -global, enterprise, large corporate accounts, federal

government, education, state & local government Small/Medium Businesses (Relationship= 30%): Preferred account division, Business

systems division Consumer Business (Transactional= 10%): knowledgeable buyers.

Apart from the low cost products it has come up with products like XPS M1530 notebook and XPS420

desktop which are for customers who are ready to pay a bit more for a lot more.

Global PositioningThe difference in corporate culture as well as professional attitudes towards IT products and servicescreate a difficult need/requirement profile that would be challenging for Dell. As more and moreconsumers in developing regions like China, Brazil, France, and India grow to appreciate computerizedenvironment, they also have complex needs. This way Dell would have a difficult time to incorporate apervasive marketing strategy. Instead, it should maintain differential but integrative marketing strategy sothat the company has a niche in each of the markets in which it manufactures products.

Current scenario and problems faced:

Dell's core positioning of being the cheapest on the market has beeneroded by new entrants including Taiwanese brand Acer, which grew by155% between 2004 and 2006 to become the bestselling laptop manufacturerin the UK. So its neither the cheapest nor the coolest laptop in the industry.

Another problem that is visible is that it would need to re-evaluation of the current marketingcampaign whereby the campaign addresses the consumer at large. By narrowing the scope ofthe current marketing strategy Dell would be able to achieve niche marketing goals.

Although Dell has been good in marketing to the type of buyer who understands what they arelooking for, such as gamers, it is missing out where the mass market is concerned

In 2005, after the start of blog dell hell there has been a lot of negative publicity and it is losingits credential as the best service provider in the industry.

Apart from it as it pays maximum focus on institutional buyers (90% of their sales go toinstitutional buyers.), mass market is being neglected.


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Consumer Behavior

The purchase process with regards to a computer involves the consumer visiting a store where an entirerange of branded PC's is visible and tangible to the customer.

Information concerning the product can be obtained from communication with a sales representative.However, there are certain consumers who can use the internet to obtain information concerning theprices of different computers.

The drivers of value in the physical space are the traditional 4 P's of marketing or the marketing mix-product, price, place (distribution) and promotion. Alternatively in the virtual space, the internet toolkitwhich consists of commerce, communication, connectivity, community, content and computing is vital indriving value.

Consumer Decision Making Process and Implications for DellWhen purchasing products the consumer generally follows a consumer decision making process. TheConsumer Decision model can therefore, be applied to e-commerce retailing and purchasing as well asthe process of physically visiting a store to purchase a product.

This process consists of five stages:

Need recognition stage

Consumers acknowledge unfulfilled needs in several ways such as when the current product fails toperform adequately or if a product that is superior is observed in comparison to the one in current use bythem. Consequently, by monitoring consumer trends, PC manufacturers and retailers such as Dell mustknow consumer needs such that they are able to communicate a need or raise consumers' awareness ofunperceived needs or problems.

Searching for solutions

After acknowledging the "need recognition", consumers begin searching for solutions and information inorder to help them fulfill their need, this search can either occur internally or externally. Dell needs tomake sure that it has enough visibility in the market so that its products get noticed by the prospectivecustomers. It needs to manage one of the 4 Ps, that is, Place, very efficiently.

Evaluation of alternative options

After having acquiring the information the next stage of the decision process involves the evaluation ofalternative options identified during the search process. The internet enables the consumer to compareproduct prices and features across retailers in different global locations-tailing. Thus, Dell needs to ensurethat all its products have enough visibility online. It needs to ensure that the customers get the requisiteinformation in minimum time through online assistance.

Purchase

Purchase becomes the most important stage in the consumer decision making process because it hasbeen seen that consumers sometimes purchase something completely different from what they intendedto initially purchase. For this, Dell already offers customization at affordable prices. It can look at furtherincentivisation.

Post Purchase Behavior

Post Purchase Behavior reflects how satisfied a customer is with the product he/she has bought. Dellhas to ensure an efficient after sales service to minimize post purchase dissonance. Dells suite ofscalable support services is designed for IT professionals and end-users whose needs range from basicphone support to rapid response and resolution of complex problems. Dells support services includewarranty services and proactive maintenance offerings to help prevent problems as well as rapidresponse and resolution of problems.


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Questionnaire Analysis

A questionnaire was drafted to study the general consumer behavior in the Laptop industry. It gave someinsights which can be used by Dell or any other manufacturer for that matter. In spite of the small samplesize, we have been able to draw some interesting conclusions.

Majority of the respondents were currently using a laptop (over 95%). It may be accrued to thesample taken which mostly comprised of students and young professionals.

Majority of them own the laptop themselves. But there is this small percentage that is usingcompany laptops (11%). This offers an opportunity to Dell to tap such institutional buyers and getbulk orders.

It can also target the individual buyers. It calls for extra effort given the direct sales model of Dell.However, with the kind of returns this segment offers, it would be unwise to not tap this segment.

The most preferred brand comes out to be HP (around 34%) with Dell being a close follower(around 27%). Dell needs to look into the reasons for such a behavior. The most preferred featurein laptops emerged to be a fast processor (around 82%) followed by the weight of the laptop (ataround 70%). Other valued features are affordability, battery backup and brand. These are thefeatures that the customer most values. Hence, it becomes imperative for any laptopmanufacturer to incorporate them in its final product so that it can compete in the market.


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A majority (around 52%) has been using their laptops for over a year. It has importantrepercussions for Dell and the laptop industry in general.

o Firstly, it needs to pump up its after sales service.Maximum complaints tend to pour in after the first year. This is the time when Dell needsto ensure that its customers remain satisfied or it might lose them to competitors whenthese customers decide to replace their laptops. Also, a positive feedback fromcustomers goes a long way. One satisfied customer is capable of getting ten more.

o Secondly, it needs to promote its products to those looking for a replacement.Usually people replace laptops after a year or so of use only and not before that. Dell cantarget these customers. It needs to ensure that not only do its existing customers comeback to it but also make its competitors customers shift.

For a staggering 70%, this is their first laptop. However, a large number (35%) has replaced itslaptops at least once. This gives an indication of the number of people who might be looking at areplacement in the near future. This is supported by a figure of 30% of those who are lookingforward to replacing/buying a laptop in the near future. Such numbers indicate the pace at whichthe market is growing not just of the first time buyers but also of the repeat buyers.

Since a whopping 85% use the same laptop for personal and official purposes, Dell need notsegment on the basis of use. However, it can still target on the basis of who buys this laptop.

A majority (over 50%) is willing to shell out money in excess of Rs. 50000/-. This means that Dellcan invest in expensive technological innovations and pass on the costs to its customers who arewilling to pay up for the added features. As far as the 40% are concerned who are willing tospend something between 30 and 40 thousand, Dell should have a good number of featurescombination in place that the customers can choose from.


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People prefer to buy a laptop as and when they need it (around 60%). Hence, Dell needs toensure that it has sufficient inventory and sound relations with its suppliers to ensureuninterrupted supply of components. Only 12% of the respondents wait for a scheme while 15%would purchase if they were to join an organization that needed them to own a laptop. Dell canlook at entering into exclusive contracts with such organizations (be it educational or commercial)to offer its products to the new recruits.

These basic questions offer a deep understanding of the customer psyche. It is important for anorganization to know how its customers think and what drives their actions. Once it has this information, itcan put it to good use.


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Assumptions in Planning Process

Market Potential Assumptions

There are no radical changes in the technology which could shift demand considerably from PC,laptop and server markets.

There is consistency in the industry trends and behavioral pattern of consumers. There is no slowdown in the global economy which could impact income levels of consumer

segment considerably. No introduction of stringent environmental regulations related to electronic waste disposal which

could impact consumer buying behavior There is no major natural calamity in the consumer rich geographical segments of industry.

Forecasting Assumptions

Dell uses ForecastX for demand planning as part of their forecasting exercise. The projections of Dellare contingent on following factors:

Dells ability to obtain additional financing in order to fund manufacturing and other operations. Dells forecast has dependence on contracts with suppliers and major customers. Any breach of

such contracts may lead to variations in the forecast volumes. Dells capability to maintain competitive pricing for its products. Competitors strategies are not able to cut into the Dells business. Dell is able to introduce new products into the market consistently on time. The perceived values

of the new innovative products are realized by consumers in line with expectations of Dell. Dells ability to retain its key officers and follow same management practices. Dells ability to maintain its competitive positioning of direct to customer model. There are no spillover effects of prospective business ventures or combinations on the Dells

business.

Other assumptions

Dell has prudence in planning and policy making with respect to contemporary market scenario. There are no legal sanctions imposed on Dell during the said period. There are no political disturbances in the target geographic segments of Dell.


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Value Proposition

Mission

Dell emphasizes best to be direct with the customers leading them to configure their PC of their owninterest and also it stands best in customer experiences where market they serve. Dell diverts part of itsfunds to customer service programmes reducing its physical marketing.Initially Dell initially lacked

Documents

B6 Laptop Dell