Dell-Case Study Ppt

High Technology MarketingScott Smith

Concept Summary ofDirect From DELL

Strategies That Revolutionized an Industry

By Michael Dell


Timeline

1980 Purchased first computer and takes it apart1983 Wanted to beat IBM, Sells upgraded PCs out of UT

Dorm Room1984 Registers Dell Computer Corporation DBA PC’s Limited

Sells Direct to end users1986 12 mhz 285 based system. 30 day money back guarantee1987 International subsidiary in UK1988 Initial IPO $30 million1989 Accumulates excess inventory1990 First to sell through retail CompUSA, Best Buy, WalMart1991 Converts entire line to 486… high technology priority1993 $2 Billion in sales


Timeline

1994 Launches Latitude Notebook Setting new records on battery life.

1996 Introduces PowerEdge servers for small and mediumserver markets

1998 Solidifies internet market. $12 million per day from customers. Sets up supplier network.

Dell’s Entrepreneurial Spirit


Dell’s Stamps: Eliminate the MiddlemanLook for a Commercial OpportunityThe power of catalog advertising

Newspaper SubscriptionsIdentify Segments of High Demand and High Revenue: People who just moved or just married Generate the Lists and Target them

Turn Fascination to Hobby and to Business

Dell Computer


Goal: Build a Better Computer than IBMDriving Passion: How can we make the process

of buying a computer better?Sell DirectEliminate Reseller MarkupPass Savings to the Customer

For Dell, the timing was right: the beginning of a new consumer industry: Continued high growth and limited supply

Strategic Questions


Where are we today?What do we think it will become?Where do we want it to go?What opportunities can take us there?How can we take advantage of them?

Then make a wish list...

Customer Lessons Learned


Form a direct model that specializes on market segments or customer types.

Know EXACTLY what the customer wants and then provide it.

Price is not a sustainable competitive advantage.

Sustain loyalty through customers and employeesResponse TimeQuality ProductsValuable FeaturesMake the Experiencing of Products EASY

Key Actions


30 Day Guarantee (Industry’s First)Performance Leader (Competitive

Reviews)Award Winner for Quality, Support,

ServiceBest Value Awards, Highest

Performance Awards

Market Lessons Learned


You must target large companies to grow

Provide the Best Support Engage in Global Expansion Features must compel the

customer to buy Inventory flow speed is the

key to survival Identify problems early and

then fix them Involve your customers early

in development

Gradual improvements reduce risk and allow you to take advantage of technology

It is hard to notice how fast or slow you are growing

Read the market and then try to understand what it means

Understand the economies of each segment: Product, Use, Geography, Customer, etc.

Measure everything to build improvement. Facts are your friend.

Analysis is Key


There is no system that does not produce enough data to diagnose its own inefficiencies.

Define Your Goals: Market Penetration, Growth Rate, Profitability, Sales Force Productivity, Service Level Performance

Analyze Goal Progress by Product, Customer, Geographic Area

Compare Sales with Total Market Sales, Examine Share, Growth and then understand what is driving us, how to do more, and where next?

Eliminate Resellers Eliminate Channel Inefficiencies Speed the manufacturing process Add Velocity less time in channel

steps Squeeze investment and

inventory out of the channel: 1993 $ 2.9B sales, $220m Inventory1998 $12.3B Sales, $230M Inventory


Dell Market StructureChanges Over Time

Managerial Lessons Learned


Hire people for potential to grow and develop: Self Reliant, Results Oriented, Driven to Lead.

Recruit for succession (Train them to replace you)Stress Achieving Goals.Accountability for Results 360 degree reviews.Responsibility to one anotherDo Not Hoard Power Implement through Dual Reporting:

By Function, Market, ProductMake successes a win for the entire company

through communications

Key Recruiting Issues


Can they think in economic terms?What is their definition of success?How do they relate to people?Do they understand the strategy of the

business they are involved in?Do they understand our business?

Talking to Employees


What are customers telling you? How do you think the company’s products

are doing? What are our biggest challenges? What are the biggest threats to our success? How can the company support you better? Keys:

Mobilize people around a common goal, hire ahead of the game, cultivate a commitment to personal growth, get them involved.

Train Employees to be Owners


Look at goals, make them clear to everyone.

Study the obvious for non-obvious solutionsAsk customers how they would have it solved.

Make failures with learning acceptableConstantly question even good stuff. No

cover up.Treat employees as owners.

Dell Market Coups


12 Mhz 80286 Computer doubles IBM’s 6 Mhz speed.Analysis: Technology enthusiast market wanted speed most of all.

Laptops:Lithium Ion doubles battery lifeAnalysis: Laptop owners want long life batteries. Dell Tied up whole channel by contracting SONY to manufacture. Dell Introduced, chartered plane for reporters and analysts, gave them a laptop and flew to Los Angles… 4 1/2 yours later, they still had power. Great PR

Low and Medium Size Server Market Analysis 1: Servers have higher marginsAnalysis 2: Competitors were treating servers as a cash cow for feeding the PC market. Dell entered market at about 20% lower price and told customers “even if you don’t buy from Dell, ask your vendor to match Dell’s price.” Server Dropped 17 percent in one year and reduced the size of the cash cow for competitors.

Enter the Web


Increases Speed to MarketSpeeds Information FlowEnables Superior Customer Service.Provides a High Quality ProductGives Customers Direct Access to

Custom Made Systems for High Performance

Provides the Latest Technology relevant to that customer.

Enter the Web


Dell Premier Pages:Technical SupportDiagnostic databasesOn-Line OrderingSpecial Pricing

Key: Shrink time and required resources to meet customer needs.

Market Strategy


It is better to be first at the risk of being wrong than it is to be 100% perfect two years too late.

If customer demand changes, ask WHY?… Challenge them to understand why?(understand the underlying economics from the standpoint of capital, supply chain, technology, market trends).

Don’t perfume the pig: Don’t make something appear better than it is.

If you accept status quo as good enough, you are managing in the rear view mirror.

If we have a problem we have to fix it. We know if we don’t, someone else will.

Elevate a win to company wide accomplishment

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Dell-Case Study Ppt