Accurate, Convenient & Efficient

How Dell Company succeeds?

To: Mr. Chen

From: Kyle Qin, Grace Yang, Phillip Xu, Joy Wang, Ally Li (114991)

Date: 16/12/01

Accurate, Convenient &

Efficient

Introduction Kyle Qin (NO.28)…….……………...…….…P1

The origin of Dell

Latest innovation

Latest performing

Terms of service Grace Yang (NO.3)..……………..………P2

Online services

Offline services

Dell Company Website Design Phillip Xu (NO.36)……….P3

Reason for Dell Website Design

The Special Functions Dell Website

Payment System of Dell Website

Recommendations for Dell Website Design

Discussion of E-marketing Strategies Joy Wang (NO.18)...P4

Advantages of Dell’s E-marketing Strategies

Disadvantages of Dell’s E-marketing Strategies

V. Recommendation and Outlook Ally Li (NO.16).………..P5

Recommendations for Dell

Outlook

From: Ally Li, Phillip Xu, Kyle Qin, Grace Yang, Joy Wang

To: Mr. Chen

I. Introduction

The Origin of Dell

Michael Dell, an 18-year-old freshman at the University of Texas as Austin, founded the company in 1984 with $1,000, and then an unprecedented idea in the computer industry has been adopted: Bypass the middleman who adds little value to the products, and sell custom-built computer systems directly to end-users. By using this innovative direct-marketing approach and by pioneering the industry's first service and support programs, Dell has established itself as the No. 1 vendor of computer systems worldwide and is a premier provider of products and services required for customers to build their information-technology and Internet infrastructures. In 17 years, the company's sales have grown from $6 million to $31.8 billion ⁽¹⁾ for the past four quarters. Since its first international subsidiary opened in the United Kingdom in 1987, Dell has opened sales offices worldwide and its approximately 34.400 employees ⁽²⁾ serve customers around the world.

Latest Innovation

The latest global innovation to come from Dell is its leadership on the Web. Dell is acknowledged as the largest online commercial seller of computer systems. The company is also redefining the role of the Web in delivering faster, better and more convenient service to customers.

Latest performing

The company's corporate customers include most of the companies in the Fortune 500 list of the largest American companies. With the addition of Dell to this list in 1992, Mr. Dell became the youngest CEO of a company ever to earn a ranking on the Fortune 500^®. Dell ranks No. 48 on the Fortune 500 ⁽³⁾, No. 122 on the Fortune Global 500 and No. 7 ⁽⁴⁾ on the Fortune Global "most admired" lists of companies. In 1998, Business Week magazine named Dell as the "Best Performing Information Technology Company" in the world. Dell was also the top-performing stock among the Standard & Poor's 500 and Nasdaq 100 in 1996 and 1997 ⁽⁵⁾, and represented the top-performing U.S. stock on the Dow Jones World Stock Index. The value of Dell's stock has risen nearly 50,000 percent over the past decade, and in 2001 ⁽⁶⁾, The Wall Street Journal named Dell No. 1 in total return to investors over the past three, five and ten years.

II. Terms of service

In Dell Company, terms of service play an important role, which can be divided into two parts: Online and Offline service.

Online services

1. Website Order

Many at Dell were excited by the online prospects, believing that the Net was a natural extension of Dell’s direct business model-“the ultimate direct medium for the next generation of the direct model that Dell had pioneered.” Finally, Dell Website order on net is successful.

2. Downloads

Dell’s Website is one-stop shopping service of thousands of software products. Consumers can easily log on to the Internet and download diversified software and upgrade their computer applications.

3. Technical support ⁽⁷⁾

On the technical support side, there are many opportunities to reduce talk time by electronically uploading system information to Dell’s technical support team before the start of the service call. Additionally, if customers had a technical support question, they could reference Dell’s technical support manual, the same one used by Dell’s telephone-based service reps.

4. Customer guidance

Dell Website also offers hints and tips to teach computer learners how to install operating systems like windows 98, windows ME; how to format hard disk; and how to set up VGAdrivers, sound drivers and LAN drivers under different operating systems.

Offline services

1. Telephone support

Dell Company adopts telephone support as a way to improve their after-sales service. Consumers could call the free hotline if the products they have bought are defective and dissatisfied. As a result, some professional technicians are appointed to help these customers fix and replace (if necessary) the defective products.

2. Reparation ⁽⁸⁾

Reparation can be divided into reparation on the spot and doortoservice. Customers can get reparation on the spot service as soon as they get the products from Dell Company. In terms of efficiency, a suite of service engineers are authorized to serve the customers door to door by offering computers’ breakdown maintenance.

III. Dell Company Website Design

Reason for Dell Website Design

Up till now, Dell has grown up as a giant of PC Industry on account of its “Direct Model” sale. As we know, the network sale is famous for accuracy, convenience, and high-efficiency, so Dell catches up this chance to develop the Website Design after it realizes that a sophisticated Website would appeal to more customers and lead to a huge profit.

The Special Functions of Dell Website

The product lines with additional services attachment, such as driver support, software update, and maintenance help are listed on Dell’s Website. Beyond that, customers can order the products in on-line virtual shop so that this efficient measure would reduce Dell’s sales cost; simultaneously, customers can benefit lots from it. Furthermore, in order to get more details of Dell’s products, consumers can also register as members of Dell’s club. By the way, the website regularly offers job applications to all kinds of qualified job candidates As a result, this Website is considered as a major platform for Dell to do its on line business transaction economically.

Payment System of Dell Website

Excellent payment system of Dell Website represents the purpose of service: accuracy, convenience, and high-efficiency. According to the special functions of dell website, a firm relationship with many banks all over the world has been built up so that customers would no longer face the problem related to whether it is acceptable of using cash payments or credit card payments. Meanwhile, if only customers take a call or click the buttons of keyboard at home, it is guaranteed that the products or service they have ordered will be delivered in a week. Therefore, Dell has achieved the level of E-cash payments or E-payments, which is known as another competitive edge in IT field.

Recommendations for Dell Website Design

Today Dell Website helps Dell Company get such a big achievement, but it is suggested that dell’s Website still needs to be improved:

l Additional and free applications like Dell media player, Dell Explorer, Dell Drawing Pad etc. might be developed for aggregate demand, Though this small and free software is no capable of competing with those famous ones like Microsoft and Apple, all people love to download for curiousness and try to compare with other applications. Therefore, more customers will prefer visiting Dell’s Website.

l Due to the self-interest of individuals, Dell could also design the “Dell Assistant” as Ms “Office Assistant”, which is used to direct customers by searching or looking for the information they need effectively. (WYSIWYG)

l In order to draw more customers’ attention, a new sector could be added on its Website --- Bulletin Broad Systems (BBS) that provides customers with room to discuss with Dell particular technicians about some IT issues they meet so that more traffic could be brought into Dell’s Website.

Network sales mode of Dell should be changed from virtual shop to World Avenue as IBM, meaning that customers could not only get products and services from Dell, but also enjoy another cooperators’ treatment. For instance, many cooperators are allowed to promote their Products on Dell Website, as well as advertise.

IV. Discussion of E-marketing Strategies

With overall 17 year-old histories, Dell, growing from a tiny workshop to the world’s leading direct computer System Company, has got runaway success, which are forcing many of the world’s major PC companies to rethink how they do business. It is recognized that Dell’s positive suites of E-marketing strategies play a key role.

Advantages of Dell’s E-marketing Strategies

Dell has mastered blending all its elements (product, place, promotion, and price) in the marketing mix on the Internet to promote and offer products consumers want through a convenient distribution channel at affordable prices.

1.Product strategies on the web ⁽⁹⁾

l Dell designs, develops, manufactures markets, services and supports a full range of personal computer systems ranging from notebooks to workstations. Each and every system it delivers is custom-built to a customer’s unique requirements.

l Dell’s business model is associated with a just-in-time basis that requires the company to only hold four days of component inventory, which allows Dell to provide customers with latest relevant technologies at competitive price.

2.On-line distribution channels

Internet-based businesses often use different distribution channels than conventional business, so does Dell. It has already considered that Dell’s flexible and effective supply chain attributes to the surpassing development.

Exhibit 4.1.

As exhibit 4.1 shown above, it is obvious that the omission of the middlemen (sales agencies) enables Dell to decline its industries margins, as well as shorten the time for launching their products. Comparing with other computer company like IBM, Legend and so forth, which sell their computers through sales agencies, Dell is more efficient on its “Direct Model”.

3. On-line Promotion

Promotion on the Internet differs from conventional channels in the basic way of broadcast and print media. As a computer corporation, Dell mainly adopts two promotional means as shown below:

l Among an extensive range of value-added on-site services, Dell provides installation support and system management, and guides customers through technology transitions.

l Dell also ranks search engine registration to improve the likelihood that its site will be found when conducting key word searches through the top-on-line search engines like Hotbot, Yahoo, Altavista and so forth.

4. Pricing on the Internet

The competitive price on its products are caused by:

l No sales agencies

l On-site technical service support representing considerable saving on the telephone

l The advantage of local delivery and just-in-time manufacturing process.

Disadvantages of Dell’s E-marketing Strategies

There is no rose without thorn, the most precision tactic is certain to have its downside, so is Dell’s.

l China has a traditional country distribution channel: RETAIL, within conventional stores. It has been worried about whether China’s computer buyers will accept the unique and distinctive “Dell Direct Model”, based on the virtual community.

l Indeed, Dell Computer Corporation focuses its target on those segmentations as enterprises, government and education rather than individual buyers.

l Dell’s products are not as diversified as other computer companies’, which only sells desktop, notebook, laptop computers and workstations. Citing Hewlett Packard as an example, the merger with Compaq has not only brought a wide range of product line to this company, but also appealed to the increasing populations of customers.

In conclusion, Dell’s unparalleled success results from its efficient and effective E-marketing strategies; some shortcomings are still involved in it, though.

VI. Recommendation and Outlook

Recommendations for Dell

In order to solve disadvantages of Dell’s E-marketing strategies, it is insisted that three main suggestions need to be taken into account.

l More chances could be grasped for Dell to communicate with its Chinese customers (e.g. Marketing Research) in order to let them accept “Dell’s Direct Model” gradually.

l Creating diversified products and providing the useful on-line service (e.g. develop the broadband) could draw more customers’ attention.

l It is a good idea for Dell to cooperate with other strong software computer companies so as to expend and increase the basic installation technology or operational management systems. (Portal Software Company and IBM are two good candidates)

Outlook

1. Optimistic future

1) According to the current performance of Dell, it is predicted that the future of Dell would be optimistic.

l Quantity of Transportation is one of the major performances in the recent years.

Figure 5.1. ⁽¹⁰⁾

From Figure 5.1 shown above, it is clear that the quantity of transportation had a slight increase by 6% from 1998 to 2000; however, there was a rapid rise by 6% within one year (from 2000 to 2001). Thus, there is no doubt that the sales volume of Dell would maintain an increasing trend in the following three years.

2. Problems of external competition.

l Dell is the initiator who has created and implemented “Dell’s Direct Model” at first so that the incremental proportion of counterparts follows Dell’s footprint; that is, they adopt “Direct Model technique” as well. As a result, the increasing percentage of market share is being occupied, meaning that the competitive edge of Dell-- “Dell’s Direct Model” is being weakened bit by bit.

l During these years, the PC market is struggling within the hyper-competitive IT industry, especially after terrorist affair happened in America on Sep 11^th, 2001, which has brought turbulent and uncertain environment. Therefore, The fluctuation of the price is deemed ineluctable, that is to say it might affect the total revenue of Dell’s products.

Anyhow, it is believed that Dell with its creativity and persistence will become invincible in this information arena.

References

(1) http://www.ap.dell.com/ap/ap/en/gen/local/overview_003.htm (in English)

(2) http://www.ap.dell.com/ap/ap/en/gen/local/overview_000.htm (in English)

(3) (4) (5) (6)

http://www.ap.dell.com/ap/ap/en/gen/corporate/press/pressoffice_ap_2001-11-21-sg-000.htm

(In English)

(7) http://support.ap.dell.com/ap/en/home.asp (in English)

(8) http://www.dell.com/ap/cn/en/gen/local/legal_terms.htp (in Chinese)

(9) http://www.ap.dell.com/ap/ap/en/gen/local/overview_000.htm (in English)

(10) Xu Ning, Research for Dell’s Direct Model, BMT marketing DB (2001)(in Chinese)