Marketing Mix AnalysisApple Computers vs. Dell Computers

Jeremy Milliorn - ProductWill Moss - Price

Peggy Harris - PlaceNader Khader - Promotion

This paper describes the elements of the Marketing Mix of Dell Computers and Apple Computers. We will provide details found during research of these elements including Product, Price, Place and Promotion as they relate to manufacturing, marketing, sales and distribution of the products available at each company.

TABLE OF CONTENTS

Introduction...................................................................................................................................................................................................... 3

Target Market.............................................................................................................................................................................................. 3

Competitors.................................................................................................................................................................................................. 4

Product................................................................................................................................................................................................................ 6

Price................................................................................................................................................................................................................... 10

Place................................................................................................................................................................................................................... 14

Promotion........................................................................................................................................................................................................ 17

Table of Figures.............................................................................................................................................................................................21

Works Cited.................................................................................................................................................................................................... 22

2

INTRODUCTION

This paper will introduce the Marketing Mix for Dell and Apple Computers. We have

researched the two companies and will describe both similarities and differences in the

way they approach the marketing of their products. Both companies offer computers and

laptops. Dell offers computers that are designed handle day to day operations of a business

or home user while Apple is more attractive to the world of graphic design. There is some

overlap due to the fact that Apple is found in educational environments covering classroom

activities while the offices of the same campuses might employ Dell.

TARGET MARKET

Dell Computers marketing efforts are aimed at work oriented and business friendly

users. Prior to a re-structuring, it focused on individuals and families. Television

commercials and promotional literature often displayed a “punky” looking teen persuading

a friend and his parents to assist him with purchasing a Dell, "Dude! Get a Dell!” According

to (Rusa, 2006) Rusa, A. (2006) Softpedia (:Dell's New Marketing Strategy. Retrieved on

September 20, 2007, from http://news.softpedia.com)

Dell Computer Company recently secured a business deal with Google. From this

point on Dell Computers will be Equipped with the Google Toolbar and Google Desktop as

part of their standard software installations. This will assist Dell as High schools,

universities and colleges gain more focus as part of Dells Target Market.

Target markets for Dell include businesses and other concerns where productivity is

most important. Processor speed is not as important in financial calculations and word

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processing in these environments. Dell has an offering for gamers that seek a high end

machine that contains components that are combined to provide blazing speeds and

virtually flawless graphic rendering. These can include dual-core and quad-core

processors, up to 4 Gigabytes of memory and a large hard drives that boast a 3 Gigabyte per

second access time and platter speeds of up to 7200 rotations per minute. Dell presents

their product as a low price leader capable of anything the customer may need.

Target markets for Apple include environments where graphic design, video and

audio editing are in demand. The price of Apple computers indicates that they also target

end users with a higher measure of disposable income. The market has included students

in elementary through primary grades where Apple has offered free computers in

classrooms. Their hope of creating future customers is apparent in their firm ranking in

the computer marketplace with a loyal client base.

Apple presents their product as highly advanced and innovative yet easy to use.

With this in mind, Apple Computers Target Market includes middle income individuals

searching for a better user experience. These tend to be people who like to have fun with

technology. This might be people who take pleasure in activities such as editing digital

photos or video. Professionals in media and design are also a part of Apples Target Market

group along with children that often utilize the internet. Ten percent (10 %) discounts are

offered to students for Apple Computers. Artists are also offered minor discounts.

COMPETITORS

The competitors of Dell and Apple include Hewlett Packard, Compaq, Gateway and

Lenovo. An indirect competitor is found in the form of a strengthening core of vendors that

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provide parts to do-it-yourself users and small business that build and upgrade custom

computers for home users and for small office and home office users.

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PRODUCT

When discussing marketing strategies the basics are summed up by the four P’s, and

of those who have never heard of this still can probably identify that product must be one

of them. This is simply because when you go to purchase something it is the product you

receive in exchange for your money. Without a core product you do not have a something

to price, place or promote. To clarify the product is most scrutinized by the consumer,

copied by the competitor and most crucial to the proprietary business or creator. The

product differentiation between a Dell desktop or laptop and an Apple desktop or laptop

relates directly to their differentiation in target markets. Dell offers customizable desktop

and laptop computers allowing pricing to be dependent upon components included. Apple

on the other hand has multiple base choices and few upgrades within these choices to

expand their variety.

Apple products run on Apple created operating systems, and since the same

company that produces the computer creates the software for every Mac, total integration

and streamlining are innate. And this is one way they target the market of the tech-savvy.

Whereas, Dell computers usually come equipped with Microsoft based operating systems

but are capable of running Unix, and Unix-like operating systems, such as Linux and Solaris,

which are all PC based operating systems. The variety of software products available for

Dell is not limited to specific compatible components, as is true with Mac, but to only what

exists in the market place. Software available for Apple products must be Mac compatible

limiting many programs, many that are less recreational and more business oriented.

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Apple laptops, formally known as MacBooks, with varieties such as MacBook Pro,

higher end, MacBook Air, thin, light and compact, and MacBook, the common needs version,

reach their target market of more electronic savvy customers through reliable and

aesthetically pleasing devices. MacBooks can run various software types, including

Microsoft’s office for the student or business user to a wide variety of media applications

for the media rich consumer. MacBooks come with built-in video cameras that are

integrated with software to allow easy video conferencing and detailed editing, ideal for

graphic design or video editing whether professional or personal. To optimize these

functions MacBooks use high quality video cards for dynamic video display. To accomplish

such rigorous processes, Intel processing chips are used to provide the fastest speed for

processing multiple jobs simultaneously, another key component to heavy media use and

gaming success. Designed with security in mind, Mac’s operating system is not plagued by

constant attacks from viruses and malware. And thus, Macs are not inundated by

continuous security dialogs requiring consent to do normal tasks allowing you to safely go

about your use without interruption. Also incorporated are easy-to-use parental controls

that let you manage what your kids can do on the computer, and even when. These features

roll over into their desktop selection as well, which is comprised of iMacs, computers

integrated with the monitor, Mac mini, very small desktops, or the Mac Pro, which looks

like the more common tower designed desktop. (Apple.com)

Dell computers are designed to be affordable and customizable for whatever the end

user’s desires are. Applications are limited to what is requested by the customer, keeping

price controllable. Package deals are available for large-scale orders expanding

deliverability of the product. Dell does most their business online or via phone and are built

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to order. If purchased this way the product configuration is your decision not theirs,

enabling customers to feel more at ease with their purchase and limits Dell’s need for sales

staff to convince the buyer. Many low-end needs and small budget customers like this

because you can avoid feeling buyer’s remorse. Dell’s product therefore can vary

drastically, allowing no two computers to necessarily to be exactly identical. When

building your Dell laptop you can begin by limiting what you want with whatever criteria

you deem most important. Choices can be narrowed by choosing model like XPS, Inspiron,

or Studio Laptop, to what operating system you want to run, your memory needs, the

optical drive requirements, your processor desires, hard drive size, or by other consumer

interests like weight, screen size, or price. These limiting selections can be done in

conjunction with each other to let the customer see options as they go. Also, the customer

has the ability to build a desktop or laptop as they go choosing each part along the way and

watching their selections modify the price in real-time. For example I can pick the Inspiron

base model, then I can decide on what size hard drive I want, say a 250 Gigabyte hard

drive; right then the other choices will show add 50 dollars for 320 G or subtract 30 dollars

for 120 G, and if I decide to change to one of those options my running total on the website

reflects these changes. The same holds true for desktops but with one addition and that is

the Gaming model, which offers top of the line computational speeds, memory, liquid

cooling systems, and more to maximize the gamer’s experience.

The difference in the product delivered to the market place by Dell and Apple seem

miniscule considering both are computers that can be used for similar functions on a day-

to-day basis. Yet, talk to a graphic designer and they would never consider anything other

than a Mac, whereas talk to a programmer and it has to be PC, get into that question with

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those who know the details of components desired and Dell comes out a favorite. Both

products have drawbacks that end users often use as decision-making tools. Dell can

overwhelm the average consumer at times asking for decisions on elements to incorporate

in the computer that the customer knows little about, this is where the customer service

aspect plays a large role, and phone ordering may be more ideal. And Apple’s Macs come

with everything the overly tech-savvy customer could want but also provides more than

the average user needs or knows how to use. This again is where customer support is

crucial to educate their consumers on different abilities available to provide a better user

experience. Apple’s other drawback, yet possibly a good business decision, is when they do

have problems more often than not the customer needs to visit a Apple store for service,

yet Dell is a PC just as all other computers are, and therefore can be fixed by most any

service center. Dell’s computers are easily adaptable to changes and upgrades of

components but take some knowledge to accomplish. But Macs are less limited in

upgrading internal features yet, the features that are designed to be upgraded or expanded

usually can be performed with no knowledge of what you are actually doing.

Ultimately product differentiation is what sets Apple and Dell apart. It is this

product differentiation that leads to the variety seen in the other 3 P’s of pricing,

promotion, and product placement. It is these simple product variations that have Apple

customers often referring to themselves as cult like, and Dell customers being more the

random anybody. This is how their target markets are directly intertwined to the products

they provide, and why product development is critical to success.

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Figure : Dell Inspiron starting at $499

Figure : Dell XPS starting at $799

PRICE

The four P’s that are crucial to targeting the right market are product, place, price

and promotion. While all four P’s are important a lot of the stress is

put on the price, this is because it does not matter how great the

product is if it’s not priced correctly. Your company might have the

best product, but if is overpriced no one will buy it. The same is true

for under pricing. If you under price a product too much, the

customer will not take the product seriously. This is why it is so

important to price your product correctly. It is true that Apple and Dell both sell

computers, but to whom they sell to and for what purpose is very different and that is why

their pricing strategies are different. For all the differences in terms of product and price

between the two companies there are also quite a few similarities.

Across the board Apple computers cost more than Dell

computers. Apple’s lowest pricing laptop ranges from 900-1000

dollars where as Dell’s lowest start off at about 500 dollars. After

that most of Apple’s laptops shoot up to around $1500 where as

the bulk of Dell’s are around 800-900 dollars. The same is true

for the desktops. Dell has desktops that are actually less than 400

dollars and increase to over 1,000 dollars. Apple on the other hand starts off at around

$1200 (Apple.com, Dell.com).

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Figure : iMac starting at $1199

By just looking at the prices one might think that Apple is over charging or being

unfair in their pricing of merchandise. That is not necessarily the case. Apple computers are

in extremely high demand right now so they are able to charge a higher price. They have a

very faithful group of followers, better known as Mac Heads, who want to buy an Apple

computer no matter what. They have made it so that by owing an Apple computer you are

automatically cool and you have stuck it to the PC man. They also have advertisements like

the PC guy and Mac guy commercial that make PC’s look dumb and Apple’s look smart and

cool. By marketing their product this way and by having a somewhat middle to upper class

target market, they are able to charge a much higher price. As for Dell someone might think

the opposite of a Mac. One may think that if Apple is so cool and great and cost quite a bit

then Dell must not be a very good computer because it is cheap. The reason Dell is so much

cheaper is because they target and really try to cater to affordable priced computers. Apple

has pretty much abandoned the low price computer so Dell is trying to fill that niche.

One of the reasons why Dell’s are able to sell at such a low price is that the bulk of

their sells are done either online or through the phone. This means

that they do not have to spend additional money to keep a store

open with employees in it. Dell is able to save a lot of money by

doing online and telephone orders because it allows them to have

low inventory. Another reason why Dell’s sell for less is that they allow the customer to

build their own computer (Dell.com). This means that if a customer does not want all the

bells and whistles on their computer they do not have to have it. Dell simply offers a basic

setup and then allows the customer to add on different things according to their

preferences. Adding on obviously makes the computer costs more, but it is still cheaper

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Figure : Apple Macbook starting at $1299

than most computers and creates goodwill with the customer. Also Dell has many different

basic models for the customer to choose between. On the other hand Apple only offers a

few different models and they are all loaded up. They come with a lot of different programs

and new technology, and that is why they come with a higher price tag. This works great

though because Apple targets the kind of tech savvy, artistic consumer who wants all the

extras and does not mind paying for them. Dell on the other hand targets the average

person who wants a computer, student, or office worker and allows them to buy at a lower

price without having to pay for add-ons they do not want. So basically Apple and Dell base

their prices off of their customers’ needs and wants.

Both Dell and Apple strive to help out their customers with prices by offering

rebates and discounts. Dell is really big into marking down their computers. For example

right now they are offering 25% off all their 19 inch

screens. They are also offering 35% off of their refurbished

computers, which once again shows how Dell is trying to

create affordable options for people who want computers.

Someone who might not be able to afford a new computer

could probably afford a refurbished one at 35% off. Dell

also offers rebates on a variety of different models (Dell.com). Apple does not mark their

products down as much as Dell but they do offer other discounts. Some examples of their

current discounts are free shipping with purchases over 50 dollars and rebates of 100

dollars for buying a qualified printer with the computer. They also offer a credit card with

no interest for 90 days and education discounts (Apple.com). It makes a lot of sense of offer

an education discount because usually you will be selling your product in large quantities.

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For the most part Dell and Apple have very different pricing strategies with few

similarities, but that is because they target very different customers. Apple has an almost

cult following that does not really care about the price, where as Dell tries to give

affordable options to the everyday kind of guy as well as business man. It will be

interesting to see how these two companies pricing strategies change in the future. There

are already some rumblings about how PC’s, including Dell’s, are more powerful and have

more features for the price paid compared to an Apple (Silverman, par 8). Maybe someday

in the future Apple will have to start lowering their prices. Only time will tell, but for now

though both companies pricing strategies are very compatible with their target markets.

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PLACE

Dell was the first computer company to provide direct marketing to their customers.

The idea of a computers being sold directly to the user was revolutionary at the time. To

offer this service in a totally online experience made it radically different from any

offerings in existence. Making goods available, in the right quantities, in the right locations,

when customers wanted them, caused Dell to become a success in the world of e-commerce

as well as making them a strong competitor in the world of computer sales.

In this new shopping environment where customers were presented with a

variety of choices, we see an example of how Dell Computers dealt with new clients in a

new and innovative way. For the first time, home users could visit the online store, shop for

and purchase their computers from the convenience of their living rooms, and have their

purchases delivered to their doorsteps. The computers were available in stock

configurations offering a variety of setups designed to meet different levels of productivity.

As the option to customize with more any computer system to include extra memory, more

technologically advanced components such as DVD-RW and graphic intense video adapters.

Dell also includes the option to purchase monitors, and printers and other

peripherals as well as a service contract that varies not only in the length of time of the

contract, but also in the level of service that a customer may request. The technical support

that is provided can be conducted solely by phone or it can be carried out in the form of a

service call conducted by a qualified technician at the location where the computer has

been deployed. This can be in-home or at the customer's office.

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Dell recently expanded their sales locations to include WalMart and BestBuy.

This may have been to improve a perceived decline in online sales. Their brand recognition

provided a boost to the image of the stores they used and the new partnerships with brick-

and-mortar establishments turns out to be a winning solution for all parties involved.

Dell gathers information from customers via organized events and customer

panels which is then used in research and development. Dell has partnerships with a wide

variety of hardware, software, and components vendors. This allows Dell to provide a

broad range of combinations to choose from. The parts are assembled in configuration

centers as orders are received and shipped via ground and air shipping companies such as

UPS.

Apple handles the task of placing its products in the market by offering those

products worldwide. This is accomplished through online stores, retail stores, direct sales

and third parties. Apple divides its global market into four segments. The three

geographical segments are Americas, including North and South America, Europe, including

the Middle East and Africa and Japan. The fourth segment is retail. As of the end of their

fiscal year in September of 2007, Apple owns 174 retail stores in the US and 23 stores in

Canada, Italy, Japan, and the UK.

Whereas Dell is mostly occupied in combining components from other

companies in the assembly of their products, Apple is responsible for the design,

development, and marketing of components that are created specifically for their brand.

This proprietary design has made it difficult for Apple to compete with Dell on the ground.

More software and peripherals are currently available, however, the lack of compatible

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software and peripherals has presented a problem for people who would rather not deal

with the challenges this presents.

A possible solution to these challenges is presented in the agreement between

Apple and Intel, a major manufacturer of processors for PC’s. In an effort to escape the

rising costs of processors bought from their former source. To the dismay of many of

Apple’s loyal customers, Apple computers now have the capability to run either the Mac

Operating System or the latest offering from Microsoft in the way of an Operating system.

The 2001 introduction of a Mac version of Microsoft Office also helped to make the decision

to purchase an Apple Computer for those who wanted to have the compatibility with non-

Mac productivity software.

The ability of each of these companies to meet the demand of their customers

and deliver what their customers want where each customer lives is the reason they each

hold their on to their own piece of the computer market.

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PROMOTION

Unlike Apple, Dell Computer offers discount sales along with markdowns for new

products. Dell also has free shipping and multi-purchase offers. The main difference

between Apple and Dell is the amount of items available. Apple Computers are integrated

as a one piece working module. Dell Computers offer the monitor separated from a

standalone tower. With Dell Brand Computers the monitor can be updated without

sacrificing the entire computer. Digital media cards can be installed when needed into the

tower.

Apple Computers have always been considered more expensive. Apple simply has a

combination of higher profits and low market shares. Apple has lowered it's laptop prices

in order to compete with Dell. Apples' latest Profit Margin: 15.13% with an operating

margin of: 19.28%. Dells' latest Profit Margin is: 4.82% with an operating margin of: 5.91%.

[source: Yahoo Finance]

As of January 13, 2006 Apple officially had passed Dell financially. Dell Computer

Company reported earnings totaling $ 71.97 billion dollars. Apple computer Company

reported earnings of $72.13 billion dollars. As of July 27, 2007 Apple doubled Dells

earnings for the period. Apple outperformed Dell with a massive $ 127.81 billion dollar

earned in comparison to Dells' $ 63.65 billion dollar earning. On December 6, 2007 Apple

tripled Dells' earnings with a staggering $ 165.66 billion dollar earning period versus Dells'

$ 54.42 billion (dollars). May 1, 2008 Apple quadruples Dell by earning a registered 158.66

billion (dollars) versus $ 38.97 billion (dollars) earned by Dell.

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Apples' ads infer through conversations that Apple is better and more convenient.

Apple is definitely a more expensive option than Dell. Apples' current promotional plan

includes effective communication with a tablespoon of comic relief.

The price of a Dell Laptop Latitude is $ 1038 (dollars) while the Apple Mac is priced

at $1182 (dollars) including a $183 (dollar) charge for Apple Care. Dell Computers have

available 80 gb hard drive while Apple Computers have 120 gb hard drive. Connectivity for

Dell consists of usb 2.0, serial and pc card. Connectivity for Apple consists of usb 2.0 with

isight camera with ichat, firewire. The warranty on a Dell consist of a three (3) year limited

warranty plus three (3) year onsite service.

Apple Computers has a warranty lasting three (3) years that is included in the price.

The operating system for Dell is Windows XP Professional. Apple Computers' operating

system is Mac OS x 10.s (Leopard). The size of a Dell Desktop is 1.26" (inches) thick it

measures 13.27" (inches) x 9.37" (inches) and weighs 5 lbs (pounds). An Apple Desktop

weighs 5.1lbs (pounds) and is 1.08" (inches) thick it measures 12.78" (inches) x 8.92"

(inches).

Figure 1: Dell Computer Banner

PROMOTION STRATEGY

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Markdowns and discounts offered by Apple are rare although there is a little known

Apple Store website. At that website there are specific discounted rates that are included in

the custom website price list. This website is exclusively available to schools and

businesses. Apple surpasses its competition by consistently upgrading its visibility,

usability and designs of their products.

In the year 2007 Dell researched its familiarity or competitive association with

American producers of common products. The results of this research prompted Dell to

maneuver itself among the minds of Americans alongside premier brands such as Dove,

Slimfast, Sunlight, Vaseline, etc. Dell also has an assortment of additional products

including printers, cameras, televisions and many more technologies. Dell PROMOTIONS

also include redeemable coupons that are available for limited time frames. These

discounts are for itemized component parts and are available online. Dell Also Promotes

through special offers, gift packages and daily deals available for it's customers.

Apple Computers has extended it's e-doors to Japan at www:apple.co.jp/japanstore.

Apple Computers are associated with promoting primary colors to differentiate from other

systems. Apple focuses also on offering new features and services to gain customer loyalty.

Apple does not allow cloning of it's product. That guarantees protection and tight control

over manufacturing of their system.

CONCLUSIONS

Both Dell and Apple Computers are in high demand at many libraries. Both Apple

and Dell systems have 1 GB memory. Another common trait shared by the two computer

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systems are LCD widescreen WXGA (128 ox 800). Both Dell and Apple have optical drives

with DVD/CD-RW COMBO DRIVES.

Dell Computer Company is owned by Michael Dell. Dell outsells Apple because it

sells more machines. Apple makes a completely larger profit because its machines sell for

completely higher prices. In my opinion both of these companies (Dell/Apple) provide a

priceless service regardless of their price tags.

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TABLE OF FIGURES

Figure 1: Dell Inspiron starting at $499.............................................................................................................................................10

Figure 2: Dell XPS starting at $799....................................................................................................................................................10

Figure 3: iMac starting at $1199............................................................................................................................................................11

Figure 4: Apple Macbook starting at $1299......................................................................................................................................12

Figure 5: Dell Computer Banner............................................................................................................................................................18

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WORKS CITED

Silverman, Dwight. “Tech Blog.” 6 Aug. 2008. Chron.com. 11 Nov. 2008. http://blogs.chron.com/techblog/archives/2008/08/the_price_difference_between_macs_and_pcs_wid.html

Apple. 11 Nov. 2008. http://www.apple.com/mac/

Dell. 11 Nov. 2008. http://www.dell.com/

Apple Developer: http://developer.apple.com/business/macmarket/target.html

Apple.com: http://www.marketingapple.com/marketing_apple/2007/10/apple-adding-us.html

Datamonitor Company Profiles Authority: http://libproxy.lib.csusb.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=buh&authdb=dmhco&AN=5B0A0C20-9BB6-4284-A575-AC0F2261F45C&site=bsi-live

Apple.com ( 2007 ) HOMEPAGE.RETRIEVED ON SEPTEMBER 20, 2007, from http://apple.com

BODDIE, J. ( AUGUST, 2005 ) BEHIND APPLE'S STRATEGY: BE SECOND TO THE MARKET.RETRIEVED ON SEPTEMBER 20, 2007, from http://hbswk.hbs.edu/archive/4970.html.

Dell.com. ( 2007 ) HOMEPAGE. RETRIEVED ON SEPTEMBER 20, 2007, from http://dell.com

ONLINE PROMOTIONAL CODES. ( 2007 ) DELL FOR ME. RETRIEVED ON SEPTEMBER 20, 2007 from http://www.onlinepromotioncodes.com/Promo -Codes/dellforme.com/

RUSA, A. ( 2006 )softpedia:DELLSNEWMARKETINGSTRATEGY. RETRIEVED ON SEPTEMBER 20, 2007, from http://news.softpedia.com/news

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