Hello everybody! Before we’re starting, just a question:
How many of you have heard of Dell computer? In theory, everybody.
So, our presentation of this firm consists of 3 parts which are: Dell’s background, its marketing strategy and its position in the PC market.
1. Company’s background.
Michael Dell is the Chairman of the Board ofDirectors of Dell Inc., an American technology company.
Imagine you could have been in Michael’s position if you had had the same idea as he did back in 1984, you could have been at the head of this firm.
Indeed, barely twenty years of age, like us and fascinated by computers, Michael Dell started his own business while in college with a capital of $1000, the minimum authorised by Texas’ law. Thecompany he started was PC’s ltd., which was the forerunner to Dell Inc. today. Michael Dell started his business with a simple concept which is to build relationships directly with customers, but we’ll set forth this concept in a few moments. The first Dell subsidiary opened in Great Britain three years later and in 1988 Dell was listed on the Stock Exchange.
Dell designs, develops, manufactures,markets, sells, and supports a wide range of computer systems. Dell’s enterprise systems product offering includes servers, storage devices, workstations, and networking products. The company’s client systems product offerings include notebooks and desktop computer systems. Dell is well known for selling its products directly to large corporatives, government, healthcare, and education accounts, aswell as small-to-medium businesses and individual consumers. Dell operates principally in the United States, Europe, Middle East, Africa, and Asia Pacific-Japan, is publicly held, headquartered in Texas, and has over 65,000 employees around the globe.
2. Marketing strategy: direct business model.
▪ The direct business model
Dell’s core PC business was organized along the linesof a traditional value chain. Like most other PC companies, it concentrated on building and selling systems, relying on others to provide components, software and services. Unlike most others, however, it sold directly to the end user, thus cutting out the distributor and reseller as we can see it on the Figures 1 and 2.
Please look at these schemes.
Figure 1. Indirect PC value chain
[pic]Indeed, the traditional distribution system of the PC industry is an indirect model often referred to as “the channel”. The PC maker sells its products to distributors, who buy products from many manufacturers and then sell them to several retailers, resellers, system integrators, and others, who sell products and services to the final customer. This distribution system was an effective meansfor dispatching high volumes of PCs with a variety of configuration to reach a broad customer base.
Even with the best forecasting, the indirect model was plagued by the need to hold inventory at each step in the channel to fill orders. In the early 1990s, it was common for PC makers to have up to 90 days of inventory on hand and in the channel.
The high inventory costs and lack ofresponsiveness of the indirect channel meant that there was an opportunity for someone who could find a way to circumvent the channel.
The company that seized this opportunity was Dell, which pioneered a new business model based on selling PCs directly to the final customer, and building the PC only when an order was received, as we can see it on the second scheme.
Figure2. Dell’s direct distributionchannel.
▪ The e-business
Moreover, initially, Dell started selling computers by mail and phone orders until 1994 when he created a website to sell his computers.
Indeed, in its own business, Dell has extended the fundamental competitive advantages of the direct model by applying the efficiencies of the Internet. Dell led commercial migration to the Internet, launching...