This would inv olve very extensive R&D based on market research. As seen in America, there has been a pressure on sales on account of new products introduced by Apple, Dell should embark on this strategy to hold on to its existing client base. This can be done through new product development. Market penetration with new product development – They can focus on increasing their market penetration specifically in existing markets where they have lost ou t to others. We will look at some of the strategic options Dell has based on the various strategic models: The problem was even graver than it looked owing to the fact that the consumer preference was no shifting from desktops to laptops.
This was another challenged posed by HP.Ĭompiling laptops was more labor intensive and Dell was finding it difficult to manufacture at competitive prices. HP also had one of the largest networks of distributors and the merger of Compaq gave it a further boost. “Dell historically has skipped resellers, while H-P has done an excellent job with it” (iht.com). Thus, its position became much stronger for Dell to compe te. With the entry of the new CEO, Mark Hurd, HP started consolidating and its revenues started improving. Its market share was 5.3% at that time, making it a challenge for Dell to overtake it. The acquisition of EDS by HP made its position 2 nd after IBM in terms of sales and world market share. They were at $21.6 billion in 2006 and $19.6 billion in 2008. The company’s revenues from their core product, PC, were decreasing. Losses on account of unfavorable hedging position.
#Dell marketing strategy 2016 Pc#
The strategy of Compaq to keep PC prices low by diverting its huge profits from server market into its PC segment. HP started giving better features at lower cost and Apple had introduced ipod model and new iPhone which diverted consumer’s focus on these new products. This was because this strategy relied heavily on internet order booking which did not appeal to the customers there.Ĭompetition from HP and Apple ate into the sales of Dell both in America and outside. These are discussed below:ĭell’s direct to customer sales strategy did not give the advantage in certain countries like China and Japan. Problem Diagnosisĭell faced problems on certain aspects. The marketing staff ensured real time data communication about the customer’s needs which helped the suppliers in providing only the relevant parts and thus reducing the inventory stocking of redundant parts.
Another differentiating factor of Dell in the first three steps of the value chain was the close communication between the supplier of parts, the assembly line of the company and their marketing staff. This helped them eliminate one step as seen in the value chain diagram. However, Dell focused on building brand image and directly targeted the end user rather than the reseller. The resellers again resorted to marketing activities to reach the final customer. What differentiated Dell from other PC vendors in the value chain was the fact that other vendors concentrated on establishing their brand image and with the help of this image set a network of resellers. The value chain model of Dell is the differentiating factor from the other vendors.
#Dell marketing strategy 2016 software#
However, for an individual user it becomes easier and less expensive to switch to a local part or software as branded produ cts turn to be much more expensive.
Threat of substitution is high in this indust ry and cost of changing to a different brand can at times also be high especially for big corporations due to the size of operation. From the supplier power point of view, though there are a number of local suppliers available in the market, the cost of changing suppliers becomes high because these suppliers are a part of value chain and require understanding of the processes. This is because of the amount of investments required in technology and know-how. Cost of leaving the market if a product does not perform is very high. Hence, to keep a brand loyal customer segment it becomes al l the more important to provide product differentiation. With the speed at which products are churned out in this industry the consumers tend to shift loyalties fast. Customer loyalty is not very high h ere especially if the competitor provides similar services at the same or lower costs. They also provide low cost substitutes to the consumers. Also the threat of new entrants is high in this industry especially the local white-box manufacturers. Thus the threat from substitutes availability is high. This results in easy availability of substitutes to the cust omer. Referring to Porter’s five force model (as explained in the appendix) we can see that any organization in computer industry is highly susceptible to quick pace of technological changes.
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