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Marketing Analysis
For


The power to do more



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Principles of Marketing
Dr. Anshu Arora
July 19, 2011
GROUP 4
J. Alvarez
Reginald G. Walker, Jr.
B. Watts
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Tables of Contents
I. Executive Summary... 5
II. Situation Analysis.......... 5
a. Company Analysis ............ 5
i. Ethics......6
ii. Social Responsibility. 6
b. Customer Analysis .... 7
i. VALS model.. 7
ii. Product Market...8
iii. Segmentation and Targeting.. 8
c. Chart of 2011 State of the PC Market.... 8
III. Mission and Vision.................................................................................................... 9
IV. Competitive market analysis...................................................................................... 9
a. Internal market environment SWOT analysis and suggestions.................. 9
i. Strengths - S
ii. Weaknesses - W
iii. Opportunities - O
iv. Threats T
b. External market environment PEST analysis & Porters strategy............. 11-12
i. Political and legal environment - P
ii. Economic environment - E
iii. Social and Cultural environment - S
iv. Technological environment - T
V. Marketing Mix........................................................................................................... 12
a. Product .......................................................................................................... 12
b. Price............................................................................................................... 13
c. Place................................................................................................... 14
d. Promotion........................................................................................... 14
VI. How does Dell use each of the 4Ps in their marketing mix?........................ 15
a. Product............................................................................................... 15
b. Price................................................................................................... 16
c. Promotion........................................................................................... 16
d. Place................................................................................................... 16
VII. Target Market................................................................................................. 17
VIII. Dells B2B Business To Business.............................................................. 18
IX. Dells Current Empire in China & Globally.................................................. 20
X. Positioning..................................................................................................... 22
XI. Ansoffs Product Market Expansion Grid..................................................... 22
XII. Creative Strategies......................................................................................... 23
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XIII. Conclusion: Direction Dell Is Going and Should Go.................................... 25
XIV. References...................................................................................................... 26























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Executive Summary
Dell, Inc is probably best known for their individualized desktop and laptop computers. Founded
in 1984 by a college student with a passion for computers, Dell has grown to be one of the
leaders of the computer industry. Currently, they are second only to HP in global computer sales.
In 2008, Dell reevaluated their position and decided to pursue Enterprise, Public and Small and
Medium Businesses as well as their original target market. This refocusing will help Dell by
allowing them to grow beyond being just a specialized computer manufacturer.
Situation Analysis
As laptops have become more popular, the desire for desktop computers has
decreased. Although Dell has been successful with laptops for several years now,
it had come to the point of being a one-trick pony (Byrnes, 2006). In the last
few years, Michael Dell realized that Dell needed to expand in order to continue
to grow. Currently, Dell has branched out and is offering network servers, storage
systems, handheld computers and printers; in addition to customized desktop and
laptop computers. He discovered as a young boy that his time was best spent not
trying to be all things to all people. If he wanted to run a great business, he needed
to narrowly and specifically define who he wanted to spend his time and energy
on (Cage, n.d.). Dell still focuses on this today, to the benefit of their customers.
Company Analysis
Dell, Inc is a computer company founded by Michael S. Dell. His early
conceptualization that customer satisfaction should be the driving force of
his company determined the path that the company would take. He had
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visions that his company would one day be number one. Then it came
true.
However, happily ever after was not long lived. In 2003 2005 Dell was
aware of faulty capacitors on Taiwanese motherboards and did nothing to
fix the problem before releasing the computers (Pletz, 2004). Then, in
2010 it was announced that Dell and several senior executives had been
charged with Disclosure and Accounting Fraud (SEC, 2010). As of J uly
17, 2011 Dell has fallen to second place.
Ethics
Between 2002 and 2006 Michael Dell, Kevin Rollins and several
others allegedly participated in hiding payments received from Intel
(to not use AMD products and use Intel only). When Dell announced
in 2006 that it would be using AMD as a vendor, Intel quit paying
Dell. The loss was contributed to declining sales and underestimating
costs. Since the income had never been disclosed, either to
stockholders or the SEC, the loss of such magnitude (10% at the onset
of the payments and 38% at the cessation) was a major impact. In J uly
2010, the SEC charged Michael Dell, Kevin Rollins and several other
senior executives with Disclosure and Accounting Fraud (SEC, 2010).
Social Responsibility
In 2010, Dell was named by Newsweek as the Greenest Company in
America. Dell participates in four separate global certification
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programs administered by third-party verifications. These include
Energy Star (US), Electronic Product Environmental Assessment Tool
(US), Blue Angel (Germany) and TCO (Sweden). Dell currently uses
bamboo for packaging in one tablet, two smartphones and two laptop
models. By the end of 2011, two-thirds of all Dells portable devices
will ship in bamboo. Since it grows nearly 24 in a day, it can be
harvested in just 3 7 years; much faster than hardwoods. Bamboo is
also highly renewable (Dell, n.d.).
Customer Analysis

VALS Model
By employing the VALS model, Dell seeks to capture the attention of
Thinkers, Believers, and Achievers. Thinkers look for products that
are well-designed, long-lasting and price-worthy. Believers choose
products that they already know. They are typically loyal customers
and prefer brands made in the USA. Achievers prefer prominent,
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established products that show their colleagues that they are successful
(Strategic Business Insights, 2011).
Product Market
Dells product market is individuals, as well as enterprise, public, and
small and medium businesses, who have a need for customized
desktop or laptop computers, network servers, storage systems,
handheld computers or printers.
Segmentation and Targeting
Realigning is nothing new to Dell (Tyson, 2008). In 2008, Dell
announced a global segmentation strategy that would focus on
enterprises, public, and small and medium businesses (Dell, 2008).
This means that they would have to create marketing strategies that
they could simply split into the two separate sides: the initial target
market and their refocused market.


(Toor, 2004)


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Vision & Mission
Many business analysts have suggested that one of Dell's secrets to success has been his ability
to remain focused on his winning business model: sell directly to consumers, keep prices low and
quality high, and offer solid technological support to customers. Dell declared: "We run the
business together, and we're going to continue (Prietz, 2004)."

Competitive Marketing Analysis
Internal Market Environment SWOT Analysis and Suggestions
Michael Dell borrowed $1,000 from his parents to start a computer accessories
business. He began by selling kits to help customers upgrade their personal
computers, establishing a business model his company, Dell, Inc., still follows
today: sell directly to consumers, eliminating the middle step of a retail store or a
distributor, and hold on to far more of the profits. He has been praised as a
visionary and an innovator, but he has also earned admiration for being a stable,
consistent leader. While he displayed intelligence and ingenuity from an early
age, he had little interest in school. At the age of eight, he sent away for
information on taking a high school equivalency exam, which, if he passed, would
make him a high school graduate without having to endure the remaining years of
school (Kotelnikov, 2010). A hard worker, Dell landed a job washing dishes at a
Chinese restaurant at the age 12 so that he could put away money for his stamp
collection (Parks & Burrows, 2004). While in high school, Dell took a job
delivering newspapers for the Houston Post. His aggressive selling strategies
which included obtaining mailing lists of newly married people, offering them
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free trial subscriptions, and then following up with phone callsresulted in
earnings of $18,000 (Biography.com, 2011). Within thirty-six hours of a customer
ordering a PC by phone or through the company's Web site, a custom-built Dell
computer is shipped. To keep its costs down, the company maintains an extremely
low inventory of computer parts, at any given time housing only enough
components to fulfill a few days' worth of orders. This strategy not only reduces
the need for warehouse space but also ensures that, in the rapidly changing
computer industry, Dell always has in stock the newest parts its suppliers offer.
The numbers proved staggering. In 1984, Dell's first full year in business, he had
$6 million in sales. By 2000, Dell was a billionaire and his company had offices
in 34 countries and employee count of more than 35,000. The following year, Dell
Computer surpassed Compaq Computer as the world's largest PC maker.
Introvert! Rather than having customers bring broken-down computers to
a store for repair, Dell Computer would pay house calls to service its customers'
PCs (Bhasin, 2010). The company scrapped plans for a new laptop computer
when it realized the product was outmatched by its competitors. An attempt to sell
Dell computers through retail outlets like Best Buy and Wal-Mart had failed.
Recognizing that his company needed to be overhauled, Dell brought in several
new high-level managers with years of experience in high-tech industries
(Cantrell, 2006). In recent years, however, not everything has gone right for
Michael Dell or his company (Bhasin, 2010). Poorly built computers resulted in
the company taking a $300 million charge to fix the faulty machines, a huge issue
for the company that resulted in Dell losing its top perch atop the industry. In an
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effort to correct things, Dell returned in 2007 as CEO, but the results have been
mixed.
External Market Environment PEST Analysis & Porter Strategy
In examining the personal computer, or PC, industry, he noticed an opportunity to
sell PCs for less, as he explained to Richard Murphy of Success magazine: "I saw
that you'd buy a PC for about $3,000, and inside that PC was about $600 worth of
parts (Biography.com, 2011). Dell realized that he could assemble computer parts,
skip the step of selling to a dealer, and go directly to the consumer. That way the
consumer could buy the product for less, and Dell held on to every penny of the
profits (Parks & Burrows, 2004). Dell thus combined his knowledge of computers
with his well-developed business sense and began his own business, assembling
upgrade kits for personal computers. Many of the day-to-day responsibilities were
delegated to these trusted executives, leaving Dell to concentrate on the
company's overall vision and strategy (Kotelnikov, 2010).
That way the consumer could buy the product for less and Dell held on to
every penny of the profits. Dell thus combined his knowledge of computers with
his well-developed business sense and began his own business, assembling
upgrade kits for personal computers. The company began producing the Turbo
PC, its first computer made entirely from scratch, rather than a customized
version of another company's machine (threat or opportunity). With the release of
the IBM PCthe computer credited with popularizing the phrase "personal
computer"in August of 1981, the PC came to be seen as a vital business tool
and a machine that could be useful to general consumers as well. The IBM PC
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was designed with an open architecture, meaning that similar computers built by
other companies could use IBM software (Bhasin, 2010). Microsoft, first with the
development of MS-DOS and later with Windows, became the primary developer
of operating systemsthe programs that run every other program on a
computerfor IBM-type PCs. Poor products continued to plague the company,
and despite Dell Computer's efforts to play down the issue, documents later
revealed that employees were well aware of the issues affecting millions of its
computers (Bhasin, 2010). In J uly 2010, Michael Dell made headlines when he
agreed to pay more than $100 million in penalties in order to settle charges of
accounting fraud that had been filed by the Security and Exchange Commission
(Parks & Burrows, 2004).
Dell is one of the leading consumer durables brand. The marketing mix of Dell talks about the
way in which Dell has improvised and managed to gain a competitive position in their respective
market (Bhasin, H).

Marketing Mix
Product:
Dell believes that, Marketing is not about providing products or services it is essentially
about providing changing benefits to the changing needs and demands of the customer.
Dell provides a wide variety of both business class and home/consumer class products and
services.
Dell designs, develops, manufactures, markets, sells, and supports a wide range of
products that in many cases are customized to individual customer requirements.
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A few examples of products for individual and professional customers are Dell Precision
workstations, OptiPlex desktops, Dimension desktops, and Inspiron and Latitude
notebooks.
The bulk of Dells products are:
o Desktops
o Servers
o Notebooks
o Netbooks
o Peripheral (components)
o Printers
o Television
o Scanners
o Storage
Price:
Pricing strategies usually change as the product passes through its life cycle, because there
is constrains on the companys freedom to price a product at different stage.
The main objective of Dell is to produce the low price and profitable PC for the customers.
For the above reason Dells product pricing reflects the affordability of the local
consumers.
Because Dell products are so customizable, the price is largely dependent on the options
and services added to the product.
Dell is undercutting competitors in price to rapidly gain market share.
For the most part, Dells prices (and incentives that come with the product) are:
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o Cost Effective Custom
o Configurated System
o Product Services
o Easy-to-buy
o Warranties
Place:
Place is also known as channel, distribution, or intermediary. It is the mechanism through
which goods and/or services are moved from the manufacturer / service provider to the
user or consumer.
Dell has been able to affect the location strategy aspect of its marketing campaign.
As Dells products are always available at the nearest dealers customers develop trust for
the local Dell thereby achieving the objective of gaining their trust in Dell products and
services, and forming a large and diversified consumer base.
The location of Dells product can be purchased in many locations (along with the primary
strategy):
o Global Strategy
o Dell Worldwide
o Dell Americas
o Dell Asia Pacific
o Dell Euro, Middle East and Africa
Promotion:
Another one of the 4 Ps is promotion. This includes all the tools available to the marketer
for marketing communication.
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Dell in the past have not concentrated on extensive marketing campaigns but these
revolutionaries in 1999 when Dell changed its tactics by engaging in extensive marketing
campaigns.
Dell markets its products primarily by advertising on television and the Internet,
advertising in a variety of print media, and mailing or emailing a broad range of direct
marketing publications, such as promotional materials, catalogs, and customer newsletters.
Dell has recently started promoting its products through retailers like Best Buy, Staples,
Wal-Mart, GOME, and Carrefour (Bhasin, 2010).
Dell has various promotion operations and strategies that put them in the minds of clients,
consumers, customers, businesses and governments:
o Advertisements
Television (Commercials)
Magazines (Ads)
Catalogs (Ads)
Newspaper (Ads)
Internet (Ads and Commercials)
o Sales Promotions (Scribd Inc., 2011)
E.g.: Dell is now selling (exclusively for students) any Dell personalized
laptop of the students choice with Microsofts Xbox 360 for only $699.
How Does Dell Use Each Of These In Their Marketing Mix?
Product Dell has had to change what their product mix includes. Since customers and
consumers are no longer as interested in buying a customized desktop, Dell has to look at
alternative ways to keep their target customer buying their products.
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Price Dell had to consider what other companies were selling their products for. They
tried to sell a low-cost desktop at Walmart but because Dell was known for custom-
ordered computers and Walmart had an image for lower quality; Dells desktops offered
at Walmart were seen as having lower quality and were not the success Dell was hoping
for.
Promotion Dell mainly uses television commercials, internet advertising, direct-mail
advertisements and product placement.
Place Dell has basically eliminated the channels of distribution since the customer is
ordering directly from them. Once the order is entered, within 36 hours, the order is filled
and shipped. Utilizing J IT ordering, not only do they not have to keep warehouses full of
parts and supplies, but they are able to offer the latest in technological advances as well.
(Typepad Blog)




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Target Market
The target market in Dell focuses solely and wholly on supplying individual users, with lower
budgets, with the best possible service at a reasonable price because of their appreciation for
technology and the loyal that low-budget customers sustain; unlike executives and managers
with no budget limitations whom are, for the most part, experiencers, who will always go with
the more expensive product(s) and service(s) because their respective incomes allow them to do
so. Dells primary target focal point is lower-middle class individuals because they realize the
change in economy from high to low and see the economy as a weakest toward these particular
consumers who are less fortunate than the average rich person. Dell knows that money doesnt
grow on trees and that most consumers are holding on to their money until to right, affordable
product comes about that captivates their attention and fascinate their mind.
As was stated earlier, Dell partnered up with Microsoft to create this astonishing bundle
offer for upcoming and current college students: any Dell personalized PC and a 4GB Xbox 360
for only $699. When a student or students parent views this advertisement, it will fascinate them
and cause them to purchase this product because most notable brand PCs are more expensive
than $699 alone but Dells PC comes with a notebook and a game which students would love to
have because they wouldnt have to buy both separately at a greater price; they could just buy
both collectively at a more affordable price and they can also customized their computer alone
with this outstanding deal which most students will enjoy. Not only does Dell seek B2C, they
also seek tremendously in B2B by supplying small and large businesses, schools of all levels,
and communities with its product and services at a better, reasonable price for its many loyal
clients and Dell thrives on loyalty because with loyal clients and customers, it means that they
will be back to purchase product specifically from Dell Inc. and no place else!
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B2B Business To Business
Dell is a breakthrough opportunist in the field of electronic commerce (E-Commerce), leading
the industry as one of the first companies to allow its customers to custom configure and
purchase computers exclusively online which is a fabulous convenient factor for users of Dell.
Dell even, as of late, extends this functionality to local and global organization's Enterprise
Resource Planning (ERP) system for true, defined B2B commerce. The goal for today's
corporate environments, businesses, government agencies, educational institutions and
healthcare organizations is clear - drive down the fee of procurement. With purchase orders
costing as much as $150 or more to generate and process, Dell gives businesses and purchasers
the very better solution (Dell, 2011).
Dell delivers business to business (B2B) transactions that allow for organizations to
lower their procurement costs. With a B2B solution, they can now shop online exclusively and
conveniently from within their own Enterprise Resource Planning (ERP) "procurement"
application and they can even return the contents of their shopping session back to their ERP
system electronically. They are no longer required to enter duplicate information in order to
purchase a specific product or service. Now, the electronic requisition can now be routed through
their standard ERP workflow where it can be approved electronically. Once this electronic
requisition is approved, it can become an electronic purchase order and be transmitted instantly
and swiftly to Dell, Inc. These orders flow directly into Dell's manufacturing system where their
orders are built immediately the way that they were sent, saving the client time, hours or days in
processing time. This brings businesses around the world the latest technology at the quickest
pace, quicker and more affordable then the competitors.
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Dell defines B2B Integration as server-to-server communication over the Internet
integrating both systems and business processes to dramatically transform the way business is
conducted with our partners, suppliers, and customers. By electronically integrating these
processes, we not only benefit in process efficiency and information accuracy, we also increase
our ability to respond and interact with each member of a business relationship, building an
interpersonal rapport and most importantly, loyalty and fidelity for one another.
Dell's has two objectives with its B2B integration initiative:
1. To quickly integrate with customers who are capable today
2. To help customers build a B2B solution for rapid deployment and connectivity
Dell has built a solution that extends its existing Internet infrastructure and E-Commerce
capability to easily integrate with any customer who supports open, industry document standards
of XML (such as cXML based on Ariba, xCBL based on Commerce One) and EDI. This allows
Dell to provide the same customized catalog most customers use today with Premier Pages, and
integrate this dynamic commerce functionality into their internal procurement systems.
If a customer is not currently capable of integrating their procurement systems and processes
with their suppliers, Dell can provide the necessary hardware, software, and consultation to help
build and deploy a solution that not only connects the customer to Dell, but one that can too
connect to even other suppliers or customers.
The benefits of Dells B2B amalgamation:
Better align Dell with customer procurement processes
Ease the purchasing process and reduce errors by eliminating duplicate data entry
Reduce costs for clients by eliminating paper purchase order/fax processes
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Reduce customer cycle times for ordering approval and payment
Process controls for shoppers versus buyers (Dell, 2011)
Dells Current Empire in China & Globally
According to CNN (2011), in the U.S., Dell is ranked number 41 among the top 500 selling
companies in America. Traditionally, Dell has beaten their competitors by offering hardware
consumers could completely customize to their needs and even wants. But now Dell is mass-
producing hardware so it can match their rivals, that are on the rise and even passing them, with
the benefits of affordable and reasonable prices. Dell is an American-owned company but they
are looking to become a larger presence in emerging markets across the world. Dell has become
the leading laptop seller in India, a big growth market even if it accounts for less than 2% of the
company's global sales. Like other techs, Dell also is expanding its cloud and customer support
services, along with B2B integrations. Dell is currently scheduled to shell out $1 billion over the
next two years on 10 data centers. Similarly, since Dell has been big on expansion, it has focused
eagerly on larger populated climates like China.
The reasoning for Dells expansion to China was because of Chinas need for affordable
personal notebooks and, the obvious, the huge market that China hold with over a billion citizens
and for Dell that means over a billion people can have a Dell PC and profitable, profitable, and
more profitable because of such a large population and many open opportunities to be successful
as a company. J ust earlier this year, Dell was battling back and forth, tooth and nail with
Taiwanese owned Acer for the number two position as Chinas top tier companies. On February
25
th
of this year (Physorg, 2011), Dell's market share in China was said to have, which has an
online population of 457 million, fell to 7.5 percent in the fourth quarter of 2010 from 10 percent
in the three months to September. Taiwan's Acer had overtaken Dell to take prominent second
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place position in the Chinese market, while Chinese computer maker Lenovo remained the top
vendor with a 32.2 percent share. However, on J uly 14 of this same year (The Economic Times,
2011), Dell passed Acer, not only as the second-leading in Chinas market but also in the
worldwide PC market wholly. Dell currently occupies the second place in the worldwide
personal computer (PC) market in the second quarter of 2011, the first time since the fourth
quarter of 2008, boosted by sales in the Asia-Pacific region.
Dell did very well in the Asia and Pacific region, where it has invested heavily lately. This is a
testament on how diligently and hard Dell has worked to expand its product and services to
become more global; this astounding statistic shows that they are doing just that. Dells
aspiration, motivation and innovation definitely boosted their products and services and caused
many people from around the world to want a Dell.
However, HP continues to be the worldwide leader, accounting for 17.5 per cent of
worldwide PC shipments in the second quarter of 2011. Further, Lenovo achieved strong growth
in Asia and the Pacific region, the US and Latin America, placing it at the third slot for both
desktop and mobile PCs. Meanwhile, worldwide PC shipments surpassed 85.2 million units in
the second quarter of 2011, a 2.3 per cent increase from the same period this time last year. On
the other hand, Acer dropped from second place to fourth spot in the worldwide PC market in the
second quarter of 2011. All in all, China's constant growth was attributed to the release of
constant demand for consumer PCs especially Dells from the facts just stated (The Economic
Times, 2011).



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Positioning

Positioning is pretty much how the customers view your product as. Customers, businesses,
governments and clients around the world view Dells products and services as innovative and
affordable, meaning you can be creative upon purchasing a Dell product and it will be very
affordable.
Ansoffs Product Market Expansion Grid



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Creative Strategies



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Conclusion: Direction Dell Is Going and Should Go
In 2005, Dell had marketing cap of $100 billion, more than Apple and Hewlett-Packard (HP)
combined. However, Dell has falling on hard times with the evolution and financial downfalls of
the current economy. In 2009, Dell was valued at about $30 billion, less than a third of what
Apple and HP are worth (Edwards, 2009). Nonetheless, Dell has since made an outstanding
effort to conquer the world, per s; as of right now, Dell is ranked number two in the entire
world in the market of PCs around the world behind HP, as was stated earlier. Dell, since that
time, has completed its largest acquisition ever with tech services provider, Perot Systems for
$3.9 billion (Edwards, 2009), showing customers that they were looking to bring Dell back to
their amazing status...on top of the world of technology.
Mr. Michael Dell is looking to make more deals and acquisition in the future to stay
competitive and to stay in the minds of businesses, customers, and clients around the globe. Dell
is looking to makeover extremely since its down time a few years ago which Mr. Dell once
guaranteed not to do but when your back is against the wall, you have to find ways to get off of
that wall successfully without significant harm done. Dell wants to move beyond just PCs
(Edwards, 2009), which is great and the growth would publicize their name and growth more;
however, Dell should maintain their primary focus on what they built the company on...the
company that was once the very best around. Dell should not sway away from what they are
good at and lose their identity because Dell is highly ranked in the most populated country in the
world and highly ranked in the whole entire world so as the old folks say...if it aint broke, dont
fix it. Dell should stick to creating and manufacturing personalized computers while expanding
their horizon and acquiring different business so they can still be the Dell that the world has
come to love and enjoy!
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