Marketing Model of Dell Computers
The early years of the height of the success of Dell computers was a unique era of a marketing model that remained unique to Dell for many years. Learn more in a custom research paper on the marketing model of Dell Computers by Paper Masters.
The marketing model employed by Dell Computers is not totally dependent on electronic marketing means. To reach key customers, the firm uses in-person meetings and telephone solicitation. The majority of its orders, however, come through its Internet purchasing options. Currently about 50% of sales and technical support activities occur on-line along with 76% of order-status transactions. The firm intends to increase the range and scope of its Internet interactions with customers in the future through an aggressive marketing strategy. Product service and customer service is conducted through the Internet. Unlike one of Dell’s direct market competitors, Gateway, Dell has no plans in the future to open any brick and mortar locations or sell its computers through any channel other than direct marketing.
Although sales and net revenue grew in the past two years, the competitive nature of the market has reduced profitability. Average revenue per unit sold decreased in both fiscal year 2000 and 1999 by 8% and 10% respectively. For 2000, most of this decrease is attributable to Dell’s pricing strategy, which is designed to increase market share as through aggressive pricing practices. The decrease in 1999 net revenue is primarily attributable to component price reductions that affected all computer manufacturers. Nevertheless, in the history of Dell, not only remains the second largest computer manufacturer worldwide, but Dell's profitability is in the lead as determined by gross margin, return on equity, and return on assets. The firm is currently ranked as the leading supplier of PCs to the American market.
One of the most successful strategies that Dell has implemented is in its methods of distribution.
- One of the primary channels for distributing its computer products is through telemarketing to end users who can design and purchase computer systems made to their specifications.
- Dell’s direct business model eliminates the middle man from the sales process, which allows both the company and the consumer to capitalize on the savings of eliminating the middle man’s margin.
- In conjunction with its direct sales strategy, the company has whittled its inventory down to five days, which eliminates waste and allows the company to respond to price fluctuations for computer components much more quickly.
Dell faces unique challenges in promotion because it deals solely with the consumer, thus eliminating the middle man and ultimately one of the most basic avenues of promotion, the retail store. Although Dell does much of its promotion in industry and trade magazines as well as through its official web site, its primary and most successful method of promotion is through television advertising. Dell has initiated one of its most successful promotional television advertising campaigns with the introduction of the Company’s youthful representative “Steven”. Showcased in several televised advertising spots, Steven spans the gap between the consumer and the Company, a strategic advertising move that addresses the fact that Dell does not sell from the traditional brick-and-mortar retail store.