Dell Case Analysis Presentation Rev 3

7/31/2019 Dell Case Analysis Presentation Rev 3

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CASE ANALYSIS

DELLS MARKETING STRATEGY WOES

BPMM 6013

MARKETING MANAGEMENT

LECTURER: DR. FILZAH MD ISA


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KOO SUET YAN (JERRY) 806665

WONG HUI YEE (CHLOE) 806667

YAP ZIE TIENG (DENICE) 809403


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Dell Inc. established in 1984 by Michael Dell

With a simple concept: by selling computer systems directly to customers.

Business model expanded to include broader portfolio of products and services,

also added new distribution channels allow them to reach even more end-usersaround the world.

Operational regions: Americas; Europe, Middle East and Africa (EMEA); Asia-

Pacific and Japan (APJ). Global corporate headquarters is located in Round Rock,

Texas.

Dells sales totaled $61.5B in 2011 and employ approximately 103,300 people

globally.


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In January 2007, the Dells fans was devastated with the news of HP taking over

their position as the market leader in the PC industry.

The news was a result of the recall incident in summer of 2006 for the expensive

rechargeable battery packs which believed to have potential of self-ignite.

In addition to this, the SEC (Securities and Exchange Commission) looks into the

way Dell was reporting on their company revenues.

One of the reasons from the top technology industry watchers about Dells issues is

about their unchanging marketing strategy that had been used for more than a

decade when compare to their competitors such as HP, Sony, Lenexa and Apple.

Dell failed to adapt to the facts that the technology is changing everyday and as a

result, they compromised their products quality and customer service as they are

still focusing on their low cost strategy.


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Dell failed to adapt to the facts that the technology is changing everyday and as a

result, they compromised their products quality and customer service as they are

still focusing on their low cost strategy.

From insider of the company, it is said that in Dell, cutting cost is their main

objectives in their business.

Employees finds work in Dells is getting harder from day to day and the only way

to be Dells Hero is save money.

Another issues faced by Dell is their decreasing ability of attracting customers to

visit their website with low cost PC model. Dells business concept has always

been selling computers directly to customer through their website. Reduced visits

of customers to their website reflects the needs of Dell to look into their way of

doing business.


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Their website was not able to compete with special promotions which offered by

other retailers for other brand and to make things worse, the PC market had

switched to notebooks where all the notebooks from different competitors and Dell

come from the same manufacturer.

Dell also failed to extend the purchase pattern of the customers to other products

such as TV with lower electromagnetic interference emissions and DJ music player.


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The main issue faced by Dell is losing its market share in the PC industry.

Dell was once the market leader in the PC markets but as the technology is

changing rapidly, Dell is slowly losing their market share and over take by its

competitors such as Lenovo and HP. From being the 1st, Dell is now rank 3rd largest

PC makers after HP and Lenovo (source from Wikipedia)

Why losing market share?


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Source: Wiki Pedia


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Worldwide top five mobile PC shipment rankings for Q1 2012. | Source: NPD DisplaySearch


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In order to solve their issues, Dell must take the initiative to invest and stay

connected with the changing technology needs.

They will also need to look into their current marketing strategy and be more

customer focused and for the first time, they should care less on the cost.

However, there is also opportunities to Dell to improve on their competitive

advantage which will bring them back to become the market leader.

Another opportunities to Dell is to explore the available sources of differentiation

which will differentiate their products with their competitors and slowly moved

from using cost leadership strategy to product differentiation strategy.


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For Dell to moved from cost leadership strategy to differentiation strategy. Dell

need to develop new strategy aligning with the 4Ps in marketing which is the

product, pricing, promotion and also the distribution.

Since Dell was excellent in their cost leadership strategy, we will not look into the

pricing strategy but will pay more attention to the other 3Ps.


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Dells products had been categorized as boring and not fashionable. This is

understood as Dell target market has always been the corporate buyers.

Therefore, the corporate had concentrated on dull grey models which aimed at the

corporate market without much design to choose from when compare to Apple and

Samsung whose target market is towards the consumer market.

Dell should expand their target market to consumer markets as of today, PC and

notebook is not only a tool in the corporate world but it have become a norm to the

community to have at least 1 unit at the household. This norm indicates that there is

unlimited potential consumers which Dell could target besides maintaining their

business relationship with the corporate markets.

Innovation in technology and quality is the 2 aspects which Dell need to invest and

make themselves emerge again in the market as leader. The case study shown that

Dells products have low quality as a result of reducing cost in producing the

products.


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Consumers have become more knowledgeable due to the Internet and therefore

their expectation on products quality is getting higher. In order to sustain the

business, quality cannot be compromised no matter under what circumstances.

As Dell is not manufacturing their products themselves, they need to monitor the

quality of their supplier and have close relationship with them in order to ensure the

parts that they supplied, meet the corporates quality expectation.

TOUCH technologies allow an interface to access a computers database without

relying on the traditional keyboard-mouse interface. Almost all of Dells

competitors have products which features the TOUCH technologies as touch is one

of the simplest, most instinctive and universal human actions. This technology isusually used in the smartphones and also tablets.

While most of the PC maker has long begun selling smartphones and tablets, Dell

are still focusing only on desktops and laptops. Dells had failed to merge in the

market by introducing their own tablets and smartphones.


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Dell once tried to sell their smartphones and tablets but it did not sustained. It is

because the products that they offered is not up to the customer expectations. For

example, when other competitors are offering a 3.7 inch screens, Dell comes up

with a 5 inch screen, something that did not differentiate them with their

competitors.

After the failure, Dell did not further invest to the technology but back to the PC.Therefore, Dell should start to look into this source as a new strategy for them to

come back to the market.

Besides investing in the technology, Dell should work on their products design

too.

Customers do not only want a product with the latest technology but also a product

which is fashionable and trendy.


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Dell added colours in their product such as flamingo pink, sunshine yellow, alpine white, ruby

red, jet black, midnight blue and espresso but this is not enough as the physical still remain asthe same.

Today, every product is talking about slim and trendy. Dell products are still bulky and this

makes them loses their consumers. Therefore, products design plays an important aspects for

Dell to invest.


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Dells way of promoting their products is to get rid of middleman and everything is about

direct sales to consumers through online. This marketing strategy had proven to be successfulbut it is not enough to Dell nowadays.

When there is no middleman, it means there is no hands on experience and personal touch

before a consumer purchase the product. All they can do is to view only the products through

images in Dells website. Images can be deceptive and consumers can only feel the products

once it is delivered to their doorsteps.

Retailers, one of the options for Dell to change the way they do business.

Consumer market is different with the corporate market. Corporates buyers do not necessary

need to feel the products before they purchase as they are more concerned on the productsperformance but for consumer market, personal touch and feel is important before they

purchase any products. They need to have the urge to own the products before purchasing and

which is why, Dell need retailers help.


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Distribution strategy is perhaps the most important weapon in a companys

resource.

HPs once researched and found out that 58% of PC buyers had no preference

whether they bought a PC in a store on online. This shows that there is 58%

potential consumers which Dell can target.

As one of the strategy for Dell is to use retailers to promote their products, Dell

need to furthered its commitment to the distribution channel and involve active

involvement from its suppliers.

Production line in Dell could also become more smooth out as they could use thedowntime in PC orders to manufacture models which are destined for retailers.

This helps Dell to manufacture products for different sales channel especially on

slower days to keep the factory utilized.

Dell should fully utilize their website to become the hub of information and worktogether with the retailer to provide the physical products to consumers to feel.


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4.1 How would you describe Dells current distinctive competencies? What

other potential sources of distinctive competency might Dell work to

develop?

4.2 Dell is currently engaged in a cost leadership strategy. If Dell decided to

move towards a differentiation strategy, what might be some sources of

differentiation Dell could explore?

4.3 In terms of Miles and Snow Strategy types, in which category do you think

Dell currently fits? What evidence leads you to this conclusion?


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Cost leadership of Dell, was once making Dell as a leader in the PC industry.

As of sales data collected in this case in year 2007, its proven that cost leadership

no longer the order winner in this industry for Dell.

Access to information is borderless in conjunction with the development of media

communications opens more options to the customers and increase their

expectations.

Change in lifestyle and standard of living had increased spending power which

makes cost is no longer a constraint


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Working towards to become a software and hardware based company throughacquisitions of some software companies.

Further enhancement on customer support and after sales services.

More investment on marketing and product innovation.


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Product Innovation in design with distinctive quality on the product by marketsegmentation.

Promotion work together with retailers to have freedom on promoting Dells

model or product. Giving retailers to have authority to perform promotion strategy

in their own way and also allow the consumers to have touch experience on theproduct.

Physical distribution work closely with upstream and downstream within the

supply chain so that consumer always has the access to the product they particular

want.


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Developed by Raymond Miles and Charles Snow.

- Organizations struggle among internal organization characteristics, strategy, and the external

environment.

The four strategies developed:

a) The Prospector

Innovate, take risks, seek out new opportunities, and grow. The strategy is suited to a

dynamic, growing environment, where creativity plays the major role.

b) The Defender

The opposite of the prospector. Instead of risks taking and seeking out new

opportunities, defender strategy focus on stability or even retrenchment

Concern primarily with internal efficiency and control to produce reliable, high-

quality products for steady customers.

c) The Analyzer

Maintain a stable business while innovating on the periphery. Lie between the

prospector and the defender.

Two target area: Stable environment but efficient to keep current customers. Target

new and more dynamic environment where growth is possible.

Attempts to balance efficient production for current product or service lines with thecreative development of the new product lines.


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d) The Reactor

Reactor respond to environmental threats and opportunities in the ad hoc manner.

Top management has not defined a long term plan or set an explicit mission or goal,

so the organization takes whatever actions seems to meet the immediate needs.

Dell prone to be Reactor as they only have been hovering over Make Cheap PCs

and Build to Order. There has not been another strategy or containment plan when

this no longer sustains.

To better position and to win the competition, organization needs to be Analyzer.


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Dell had a string of disappointing quarterly profits as the company has reached the

limits of its make PCs cheap and build them to order strategy.

Competitors had caught up and Dell had fail to identify new strategic directions that

could provide a new edge.

For quite some time that, Dell is only focus to the pricing strategy that they are

unaware that this trend is getting off the hit.

The current market demand is about lean, innovative and high end design but they

Dell designs are still bulky and conventional.

Consumers are willing to pay more for better quality and high end products.


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Price no longer is the first priority for consumers.

Dell loses the business to its competitors like Hewlett Packard and Lenovo.

Blooming competitor like Apple and Samsung has rocked the PC market with iPad

and Tab with their keyboard less Touch technologies.


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Dell has learnt its lesson and they know that they have to change for the better.

Understanding the ever changing market demand that Dell needs to venture into

other variation.

The next plan to gain competition thru acquisition. They now acquire in order to

leap frog their competitors.

Acquisitions means taking over something which is already exist and established

and put into good use.

With acquisitions, theres no need to reinvent the wheel and it reduce the risk of

develop from scratch.

Dells vision is to become a true end-to-end solution provider.


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In 2006, Alienware, a manufacturer of high-end PCs popular with gamers.

The company acquired EqualLogic on January 28, 2008, to gain a foothold in

the iSCI storage market. Because Dell already had an efficient manufacturing

process, integrating EqualLogic's products into the company drove manufacturing

prices down.

In 2009, Dell acquired Perot Systems, a technology services and outsourcing

company, mainly active in the health-sector, founded by former presidential

hopeful H. Ross Perot.

In 2009, Dell acquired Perot Systems, a technology services and outsourcingcompany, mainly active in the health-sector, founded by former presidential

hopeful H. Ross Perot


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In 2009, Dell acquired Perot Systems, based in Plano, Texas, in a reported

$3.9 billion deal. Perot Systems provided Dell with applications development,systems integration, and strategic consulting services through its operations in the

U.S. and 10 other countries. In addition, the acquisition of Perot brought a variety of

business process outsourcing services, including claims processing and call center

operations.

On February 10, 2010, the company acquired KACE Networks a leader in Systems

Management Appliances.

On August 16, 2010, Dell announced plans to acquire the data storage

company 3PAR.

On November 2, 2010, Dell acquired Software-as-a-Service (SaaS) integration

leader Boomi.


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Dell reimagines the all-in-one computers for consumers

- XPS One 27: Powerful Simplicity, Powerful Creativity- Inspiron One 23 and Inspiron One 20: Big Value, Minimal Space

Dells new 12th Generation PowerEdge Servers extend performance and efficiency gains

to Scale-out and mainstream customers.

Dell enhances enterprise solutions portfolio with PowerEdge servers designed to deliverunprecedented performance and manageability.

Dell continues to innovate to deliver features that are industry firsts and make the PowerEdge

12th generation servers the companys highest performing, most manageable servers ever. With

this new server series, customers ranging from small businesses to hyper-scale data centers can

help maximize efficiency by streamlining and automating operations, help achieve better

business application performance and business continuity.

Dell unveils high-performance XPS and Vostro Solutions for families, multimedia

professionals and businesses

- The XPS 8500 Desktop: Advanced Performance for Creatives

- The Vostro 470 Desktop: Power for Business

- Inspiron 14R and 15R Special Edition Laptops for Immersive Entertainment

- Rapidly Expanding High-Performance Portfolio


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On Friday February 24, 2012 Dell acquired Backup and Disaster Recovery

software solution AppAssure Software of Reston, VA. AppAssure delivered194 percent revenue growth in 2011 and over 3500% growth in the prior 3

years. AppAssure supports physical servers and VMware, Hyper-V and

XenServer. The deal represents the first acquisition since Dell formed its

software division under former CA CEO John Swainson. Dell added that it will

keep AppAssures 230 employees and invest in the company.

In March 2012, Dell agreed to buy SonicWall, which acquisition was

completed 9th May 2012, a company with 130 patents. SonicWall develops

security products, is a network and data security provider.

On 2 April, 2012, Dell announced that it wants to acquire Wyse, global market-

leader for thin client systems

On 3 April, 2012, Dell announced that it has acquired Clerity Solutions.

Clerity, a company offering services for application (re)hosting, was formed in

1994 and has it headquarters in Chicago. At the time of the take-over aprox. 70

people were working for the company.


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Dell enhanced Alienware portfolio. Delivers exceptional mobile gaming experience.

Alienware, Dells high performance PC gaming brand, is taking the mobile gaming

experience to a new level with its enhanced gaming laptop portfolio that lets gamerschoose a system that best fits their mobile lifestyle. The enhanced systems include: the

M14x, a powerful 14-inch laptop for the gamer who requires a balance between mobility

and performance, and the 3D-capable M17x for an immersive high-definition, surround-

sound sensory experience.

Dell strengthens virtual network architecture portfolio to help customers deliver

results faster.New hardware and software additions to its Virtual Network Architecture portfolio, an

opening networking framework for efficient IT management and workload intelligence.

Dell introduced the Dell Force 10 MXL 10/40 GbE switch, its first 40 gigabit blade

server switch for the Dell PowerEdge M1000e blade system, designed to support

demanding workloads in traditional, virtual, public and private cloud environments.

Dell revolutionizes design and performance with new line of dell precision

workstations.

Dells newly redesigned portfolio of Dell Precision tower workstations announced

today delivers superb performance, accessibility and best-in-class chassis design to

help creative and design professionals deliver results faster. Dell engineered its tower

workstations to enable engineering, product design, animation, and other graphics and

compute intensive professionals increased productivity and minimized downtime sothey can focus on their innovations.


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Dell expands services warranty options for purchase at retail outlets with the new Dell

service card.

Malaysian consumers can now enjoy the convenience of extending the warranty on their Dell

systems at authorized retail stores nationwide. Dells pre-packaged Dell Service Card for retailoffers owners of any Inspiron, XPS or Alienware products a variety of warranty upgrade

options to protect their investments for up to three years. Todays consumer demands

outstanding service and support for their technology products. With the new Dell Service Card,

they now have the choice and convenience to extend the warranty on their Dell systems hassle

free at retail stores.


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Dell sees strong demand for highly anticipated, award winning XPS13. Not just sleek, this

13 inch ultrabook is also fast and powerful.

Delivers Everything & More in Compact Design: 13 inch Edge-to-Edge Display in near 11

inch Form

Offers Superb Craftsmanship and Uncompromising Performance in a Sleek, Lightweight

System.

Lightning-fast Boot Time and Resume Enable Seamless, Always-on Connectivity

Features ProSupport for Business-friendly Deployments

Dell fosters talented Malaysian with 1st Dell Malaysia Scholarship Awards

Dell has awarded scholarships to nine promising young Malaysians to help them pursue their

tertiary education and provide them with an opportunity for a rewarding and challenging career

at Dell, through the Dell Malaysia Scholarship Awards. The scholarship awards mark the first

time Dell is offering undergraduate scholarships to Malaysians and signifies the companys

commitment to providing educational support to young talent.


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Dell is committed to using its technology, funds and people talent to initiate programs that bridge

the technology gap among underserved youths across the globe. The companys signature global

giving program, Dell Youth Connect, promotes education and helps build math, science, literacy

and technology skills among young people. The Dell Malaysia Scholarship Awards are yet anotherexample of the companys efforts to give back to the community.

Dell Strengthens Go-To-Market Structure in Jan 06, 2012.

Sales and marketing unified in single organization, simplifies decision-making and

enhances customer-focus

Names Steve Felice, President and Chief Commercial OfficerAnnounces retirement of Paul Bell, President, Public & Large Enterprise

Dell moves all of its customer business segments (Public, Large Enterprise, Small Medium

Business and Consumer) under Steve Felice, who has been named President and Chief

Commercial Officer.

The move will create a sales organization that is more customer-focused, more collaborative and

better able to deliver innovative and practical solutions that meet customers needs.

Whether this more collaborative approach will turn around more innovative and customer-

centric products remains to be seen. Dells moves seem indicative of a company looking to re-

invent its consumer brand, which still seems like a computer company. Dells tablet efforts have

made hardly a splash; meanwhile, its brand is underrepresented or often absent at most big

box retailers.
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Dell Case Analysis Presentation Rev 3