The Dell Computer Corporation
Dell Corporation is one of the leading computer hardware companies. In its profile, the company has range of computer systems that are specifically designed to meet the need of its vast customers. The organization over the years has formed good relationship marketing with its customers; this has increased the organization’s goodwill and customers’ satisfaction. Customer relationship formed in the organization is one that encourages bonding for the organization with its customers and those workers in the organization. The Dell‘s product are specifically tailored to suit customer purchasing power and their taste, thus the organization of relationship build up for the organization is one that follows customer relationship bonding through effective HR practices. Thus, Dell organization practiced a flexible relationship with its customers and workers; this is done to make the organization carry out its strategic pattern of providing its products to suit the economical need and taste of its customers.
This marketing strategy of relationship marketing has aided Dell Inc in curving an edge over its competitors in the industry. Dell Incorporation designing product according to the status and taste of customers has made it gain competitive advantage against those rivals that store piles of already manufactured product. The corporate strategy of direct marketing and tailoring product to customer’s taste and status has really made the company gained market growth in the hardware industry.
HISTORICAL BACKGROND OF DELL CORPORATION
Dell Corporation began operation in 1884 with $1000 as a small one man business called PC’s limited. At this initial state, Michael Dell, the founder was in his room selling IBM-compactable products were built with stock modules. The company’s pattern of operation adopted from its inception is selling personal computers directly to the customers. In 1985, the organization produced its first own design computer, i.e. The named Turbo Personal Computer has 8 MHZ high Intel processor . The growth of PC’ Limited, made it to set up its United Kingdom operations in 1987, and 11 extra foreign outlets were established in the 4 subsequent years. Dell Corporation gained increased capital growth by $30m to $80m during its IPO in 1988.
The organization transformed into Dell Corporation from PC limited in that year. As the organization expanded it still maintained its configuration of computer to suit personal taste. And thus, engage in selling personal computers directly to the customers. This made it ignore its rival (Compaq) and went ahead to manufacture U.S. most Purchased computer systems. Dell Inc expansion operation in multimedia and home entertainment; including television, handhelds, and digital jukeboxes changed the company’s name from Dell Computer Corporation to Dell Inc in 2003. Dell was awarded top ratings by Human Rights Groups in 2004 in United States. In addition, the Fortune Magazine rated the company in February 2005 as the ‘Most Admired Companies’. Dell Corporation took over Alien ware Hardware Company (Lee 2006, Dell official web, 2009). In recent times, Dell Inc is considered the second largest computer manufacturer after Hewlett-Packed. According to Michael Dell, he stated that he wants to build a company that would assume the biggest in the world (Quoted in Bhoyrul & Hipwell, 2002, pg 2). The Dell promoter’s personal fortune has being on the increase where it turn in around $1 billion a month, and Michael Dell is seen to likely assume Bill Gates wealth status (ibid).
DELL CORPORATION DIRECT MARKETING STARTEGY
The product of Dell Inc is unique in the sense that they are configured and tailored to meet the need and status of the customer. The category of which each customer belongs is taken into cognizance when the organization’s products are being produced. For example, Dell has personal computer made for student. These computers are packaged in portable fashion; notebooks are design to meet the financial capability of an average student. In the organization’s website a cache conspicuously display words directing its student customers to order specially fashioned systems that are tailored to their status and need. This mode of production with consideration for the financial status of customer is a very vital way of creating a bond between the customer and the organization. As Stern (1997), argues that, “Bonding is popularly becoming a significant aspect of companies marketing strategy. In this case marketers tend to create long-term relationship and bond with their clients and customers in order to maintain their continuous patronage”. The need to retain old customers through bond formation is seen more cost effective than the cost for a continual prospecting for new customers.
Apart from the producing products to suit customer, the Dell Inc has further utilized its culture of selling directly to customer to tighten the bond between the organization and the customers. Personal selling is a very vital tool for relationship marketing. “Direct personal sales are known to have influenced customers’ preferences through factors like customer’s characteristics and their salesman displays, pairing dynamics, and situational influences. These echo the customers’ consideration of the costs/ benefits of transacting, enduring, or backing out of the relationship” (ibid).
The advantage of personal selling to advertisement in relationship marketing is that personal selling happen during actual transaction between buyers and sellers; while advertisement takes place in media; an imitation of relationship in terms of communication. The option of direct personal selling has been the culture of the Dell Inc, even right from its inception as PC’ Limited. This is vividly display in the organization’s official website. Customers are asked to make their orders directly, and shipment of this would be made directly to them, sometimes on a free cost basis. This strategy of relationship marketing adopted by the Dell Inc has greatly built the cordial relationship between the organizations and their customers in world wide. This also has led to the steady advancement of the organization from its humble beginning to the enviable state it is presently in. According to Karp (1998), “Dell’s success comes from the corporation sales of direct computer to customers and manufacturing each at a time when ordered. This has led to the corporation’s rise in its financial revenue for 1998, which stood at $12.3 billion, representing a 59 percent increase over 1997 fiscal revenue. The company’s turnover now stands at $ 5million each day for direct sales via the company’s site for computer goods”.
Also, dell Corporation has assembly plant in Europe and Ireland. This policy of manufacturing product tailored to customers’ demands than stocking piles of products is also a way of bringing the organization close to the people, for it to effectively carry out the organization policy for direct sales. This still goes on to tighten the bond between the customer and the organization, in the different countries it operates. As a way to compete favorabl in the global arena, the idea of bringing the product closer to the people is an ideal one. According to Hoffman & Preble (2003), firms accrue increased advantage by maintaining mobility in their franchised activities by ensuring customers have access to their product when they desire them and where they want them. Dell Inc also utilizes other marketing strategies which have strengthens its relationship marketing with customers. This also has led to the lowering of prices for the company’s products at all times of the year, also leading to rebate in hardware products and giving free shipment, which is targeted to make them patronage the company’s products at all time.
The competitive advantage theory of Michael Porter can be analyzed here. In this case it is seen that Dell Inc have a strategy of lowering cost as a way of having advantage of its competitors, thus has not affected the quality of product the organization produce to its customers. Hence, it contradicts the competitive advantage theory of Porter, which argues that an organization cannot have competitive advantage by lowering cost and engaging in product differentiation. He strongly argued that the danger is that a firm may be caught in the middle and lose to those firms that do specialize (Flynn & Flynn 1996, Porter 1985). Dell Inc corporate position has goes a long way in supporting the argument of critics to the theory, especially those who argue that it is possible to combine both strategies and have competitive advantages in both. As a way ensure low price, Dell Corporation has continue the acceptance of payment for its product from the web and through phone in transactions for its customers across the globe including India. Dell Inc also has, as a way of providing beneficial services to college student, engaged in the provision of digital musical entertainment to students of tertiary institutions, where subscriptions through stronger bandwidth components for their interest servers (Haberkorn, 2005).
USING RELATIONSHIP MARKETING THEORIES TO ANALYSE DELL INC MARKETING STRATEGY
Looking at the 5 Cs of relationship services marketing, which include communication, caring, commitment, comfort and conflict resolution, how do these apply to Dell Inc relationship marketing? The adopted strategy in Dell Inc for its relationship marketing is one that has shown adequate communication through the provision of different websites with interface tools that encourage Customers to Business (C2B) communication, Business to Customer (B2C), and Business to Business (B2B) interactions. Also, forum for chatting is provided in its official website to encourage customer to customer (C2C) communication. The Dell official websites have provided bases for the self disclosure of the organization on its operation, and a way of building a tight customer relationship to the organization.
In the acquaintance stage this is when customers’ attention is attracted to the organization. The first impression really matters. For Dell Inc, the impression display is that of great concern and the desire to meet the customer’s needs, putting into consideration the customers’ status, taste, and financial capability. This is achieved through direct personal selling, lowering of prices and configuration its products. Dell reliable and guaranteed systems have made precise house hold name, where durability and is assured to customers. Buildup stage is a transition from the acquaintance stage. In this stage, samplings are taken from partners. It involves a high consumer’s tension level where result of uncertainty would not necessarily mash their expectations (Stern, 1997).
The Buildup stage in Dell’s relationship marketing has to do with its ability to win the trust of its customers through the diverse products it introduces to the market at affordable prices. And through direct personal selling the relationship has been tightened and built up into a stage where the organization’s customers are committed and trust the organization’s products.
The Continuation stage is a transition from the Buildup stage to where there is deepened commitment to the relationship. In this stage there is the existence of cognizance and predictive emotive tension (Stern 1997). Through an historical commitment to quality services, building a good relationship with customers via direct personal selling, and meeting the demands of customers, the Dell Inc has succeeded in winning its customers commitment, making them to continue doing business with the organization. Also, this has resulted in making the organization a household name in the computer manufacturing industry, and other services that has to do with server provisions and multimedia gargets production. Presently, it would not be wrong to say in the relationship marketing g of Dell Inc, it has assumed this stage of Continuation; where its customers are familiar, committed, and emotionally tied to the organization’s services and products. For this stage “organization’s advertising strategy is targeted at keeping customer satisfied, a tactic for achieving this aimed at pinpointing the company’s profile for customer’s devotion (Stern, 1997).
The last stage in the relationship cycle, the Dissolution stage is broken apart, and there are experienced modification in partnership pairing, and their dynamics including situational stress patterns (ibid). The dissolution stage is one where relationships that exist between firms and their customers are terminated. For Dell Inc, it has not yet assumed this stage in its relationship marketing.
HOW E-MARKETING HAS FOSTERED DELL INC MARKETING STRATEGY
Dell Inc has over the years raised it sales on its products through direct sales via its e-marketing services. The organization has increased it sales in computer goods with sales of $5 million each day (Karp, 1998); this is achieved through a wide based communication with customers, with increased transfer of components for computer servers and storages (Birmingham Post, 2002) . Dell Inc numerous websites has greatly helped in its relationship marketing. Dell Inc through the utilization of e-solution from Annuncio software, it has been able to improve its communication and electronic marketing with its many customers and business partners. According to Dells Senior Manager, Lloyd, stated that the Annuncio was the most favorable solutions for the company’s business. This assists it in getting improved communication with customers (Nester & Vyridi, 2001). Dell is using the most sophisticated e-marketing organization services in the running of its e-marketing program. Dell official websites are designed in a way that customers visiting the sites have ease in surfing round them to look for the information they desire. The different icons are structured and displayed to made search for information on the company’s products and other information about the organization easy; Dell’s several products which are alternated within seconds with another advertised product. Dell official websites are configured with interface such as C2B, B2C, and B2B. According to Palgarve.com (2006), “By 1995, Dell Corporation and other companies such as Cisco and Amazon had started implementing B2C and B2B interface”. The Customer to Business (C2B) in Dell websites gives customer an opportunity to chat live with officials of Dell Inc. also, instant messaging and sending of emails to the sites are allowed in the websites.
Dell Corporation through a well structured market strategy, where focused marketing strategy is implemented according to individual customer’s need has being able to build a good relationship marketing. This strategy has gone a long way in rendering the company’s customer’s to the organization. Hence, increased corporate goodwill is formed. This strategy put those competitors of Dell that store products that are not specifically designed according to customers need and financial status. For hardware users as different taste and status, so are the need for a tailored hardware system goes to make them satisfy, continue their patronage in company that can provide tailored services to them. This Dell Inc has fulfilled in its marketing strategy, which has made the organization curve a niche over its rival and gain high market growth.
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