DELL Report Edited

7/27/2019 DELL Report Edited

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Report

On

Marketing Strategies of DELL Laptops

Under Guidance

Of

Dr. Mohan B Rao

Submitted By

Nikita Kothari M-12-27

Joginder S Chandnani M-12-06

Nimish Deshmukh M-12-12

Saurabh Sarode M-12-51


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Table of Content

Sr No. Topic

1 Introduction to Industry

2 Key Players3 Pricing

4 Marketing Strategies

5

6

7


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Introduction to Industry

Laptops were originally considered to be "a small niche market" and were thought suitable

mostly for "specialized field applications" such as "the military, the Internal Revenue Service,

accountants and sales representatives". But today, there are already more laptops than desktops

in businesses, and laptops are becoming obligatory for student use and more popular for general

use.

According to the latestreportby International Data Corporation(IDC),the PC market in India

registered a record growth in the second quarter with an overall PC shipment of 3.53 million

unitsa quarter-on-quarter increase of about 30.2 percent. However, the report also suggests

that India has witnessed a noticeable surge in only a few states.

The IDC report on Indian states shows that while theworldwide PC market has been witnessing

afall in shipmentsand sales, the PC market in India saw a year-on-year growth of 24 percent.However, this is only due to the currently running special projects in states like UP, Rajasthan,

and Tamil Nadu that have accounted for close to one third of the total PC market size in the last

quarter. In terms of the consumer market, there is only a marginal growth.

The report also suggests that PC sales in the initial part of the quarter were partially affected due

to the popularity of gadgets underbuy-back scheme and other discounted offers,which had

resulted in slow PC sales.The researchers say that factors like state government-led special

projects and new academic sessions-based campaigns for students have led to a subsequent surge

in the PC market, but it is only momentary.

According to Kiran Kumar, research manager, IDC, State-led manifesto driven spending on

notebooks steered commercial investments in the India PC market in Q2 2013. However, the

organic demand for PCs in India outside special projects has weakened, which remains a cause

of concern for PC vendors. Further, the Rupee slide derailed enterprise spending, as the

investment decisions remained seemingly delayed across most of the verticals.

As far as vendors are concerned, HP led across all segments in commercial and consumer PC

business in India, and accounted for 34.1 percent of market share in the quarter. Dell took the

second position with 11 percent of market share in the quarter. The company mainly benefited by

its entry-level PCs, efforts in increasing retail visibility, effective channel positioning and

marketing campaigns.

Acer follows at third with a market share of 10.4 percent, which is mainly driven by its presence

in government and education projects across the country.
http://www.idc.com/getdoc.jsp?containerId=prIN24282513http://www.bgr.in/news/worldwide-sales-of-smartphone-surpass-feature-phones-for-the-first-time/http://www.bgr.in/news/pc-market-takes-record-plunge-window-8-failed-to-improve-situation-as-smartphones-and-tablets-take-over/http://www.bgr.in/news/tablets-shipments-surge-by-78-4-percent-in-2012-pcs-shipments-continue-to-decline-report/http://www.bgr.in/?s=buyback+offerhttp://www.bgr.in/news/total-tablet-shipments-likely-to-surpass-portable-pcs-in-2013-idc-report/http://www.bgr.in/news/total-tablet-shipments-likely-to-surpass-portable-pcs-in-2013-idc-report/http://www.bgr.in/news/total-tablet-shipments-likely-to-surpass-portable-pcs-in-2013-idc-report/http://www.bgr.in/news/total-tablet-shipments-likely-to-surpass-portable-pcs-in-2013-idc-report/http://www.bgr.in/?s=buyback+offerhttp://www.bgr.in/news/tablets-shipments-surge-by-78-4-percent-in-2012-pcs-shipments-continue-to-decline-report/http://www.bgr.in/news/pc-market-takes-record-plunge-window-8-failed-to-improve-situation-as-smartphones-and-tablets-take-over/http://www.bgr.in/news/worldwide-sales-of-smartphone-surpass-feature-phones-for-the-first-time/http://www.idc.com/getdoc.jsp?containerId=prIN24282513


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KEY SUCCESS FACTORS:

Indian Laptop market in now in sync with global market. It was in 2005 that sales oflaptops surpassed the sales of desktop computers for the first time in India.

The Laptop market is growing at a fast rate because of change in work life of consumers.

As the need for "anytime anywhere" access to information is increasing, the sales ofLaptops are also increasing.

Other factors that are responsible for the hike in sales figure are reduction in prices andaffordability. Laptops are now sold at approximately half the price at which they weresold two years ago. Laptops prices are now almost at par with the desktop computerprices.

The third most important factor is duty free import of Laptops as a personal baggage thathas helped a lot in increasing the penetration level of the product among the consumerpopulation.

Awareness about laptops has also increased over the years.

Given the choice of portability, flexibility and ease of use and narrowing of price-performancegap that once existed between portables and desktops, consumers are almost overwhelmingly

inclined to buy notebook PCs.

Dell retained the top slot with a market share of 27 per cent, while HP occupied the second

position with 20 per cent and Sony third with 15 per cent.

Environmental Analysis using Porters 5force model

Threat of new entrants:Due to aggressive pricing and reducing profit margin, there is a high

barrier of entry for new players in the market. Big companies can invest more in the R&Dfacility. So the product improvement can be done by them easily. This also creates a barrier for

the new entrants. Due to standardization in the laptops used, the switching costs are low.

Competition is driven both on pricing and product differentiation. Companies like DELL have

more emphasis on pricing whereas APPLE is more interested in product differentiation. But both

this aspects need good capital investments.All this aspects make the threat for small new entrants

low for this industry.

Bargain power of supplier: There are mainly two types of supplier for a laptop industry. One is

hardware supplier and another is software supplier.

In hardware domain Intel and AMD are the two major microprocessor supplier. So they have

some amount of bargain power over the PC companies. For hardware, there are many suppliers

like samsung, western digital, seagate etc. For motherboard, Intel, MSI, ASUSTek are the major

suppliers. All these companies have limited bargaining power because of their lack of branding


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on the finished product. Manufacturers have different supplier for the same component. So, if the

prices are not competitive the risk of a supplier to lose to its rivals is very high. All these aspects

make the bargaining power low for hardware supplier.

In the software side, Microsoft dominates the market with its operating system. Though Linux

also has operating system, Google come with the new operating system, they are not able to

capture large market share. So in the software side the bargaining power of supplier is relatively

higher.

Bargain power of buyer: Consumer preference for mobility and wireless connectivity at low

cost resulted in the growth of the laptop market compared to desktops. In addition, continued

demand for cheaper costs lead to aggressive pricing as well as the creation of new categories

such as netbooks. The power of customers is reflected in the change in buying behavior . As

many big companies are now present in this market, the switching cost for buyer is very low. All

this things make the bargain power of the buyer high.The high bargain power of buyers &

changing customers buying behaviour in developing markets influenced Dells decision to sellthrough retail stores as well.

Threat of New Entry: Due to aggressive pricing and reducing profit margins, there is a high

barrier to entry for new companies. Since large companies are able to invest more in R&D and

more easily hire top management talent, there is greater possibility for more innovation in the

products. This further increases the barrier to entry for smaller companies. However, ASUSTeks

introduction of netbooks in late 2007 is an example of identifying consumer demand that was not

recognized by any of the top industry players and becoming a new competitor.

Threat of Substitutes:The laptop industry faces a significant threat from new trends such ascloud computing, which potentially will reduce the need for high computing power in portable

laptops. Moreover, advances in computing power and as well as communication technologies

(3G, WiMax, etc.) have enabled devices such as smartphones (iPhone, Blackberry, etc.) to

compete with laptops by providing similar capabilities. For instance, iPhone apps reduce the

need for laptops by providing similar functionality.

So we can say that for this industry, at this point of time, the threat of substitute is moderate.


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Key players in the Indian Industry today

Hewlett-Packard Company

Hewlett-Packard Company commonly referred to as HP, is a technology corporation

headquartered in Palo Alto, California, United States; with offices at the old Compaq Campus inHouston, Texas. HP is the largest technology company in the world and operates in nearly every

country. HP specializes in developing and manufacturing computing, storage, and networking

hardware, software and services. Major product lines include personal computing devices,

enterprise servers, related storage devices, as well as a diverse range of printers and other

imaging products. Today HP serves more than one billion customers in more than 170 countries

on six continents. When HP merged with Compaq in 2002, it took over Compaq's existing

naming rights agreement. As a result, HP sells both HP and Compaq-branded machines.

Segments of HP:

Students

Travelers

Home and Family

Entertainment

Technology and Style

Models of HP: Mini, Compaq Presario, HP pavilion, Special Edition

HP support:

HP has a support section on its website, www.welcome.hp.com. The site offers solutions to

FAQs. However, the site is not ever user-friendly and navigation can be a bit difficult for the

uninitiated. The site offers consumer and business support forums. It also offers an online

support call and diagnostic. There is an option to automatically check if the drivers are in need of

an update. The site offers help categorically apart from some tips and tricks posted by users on a

forum.

DELL I ndia L td.

Dell, one of the most recalled names when it comes to buying a laptop is undoubtedly retained asthe favorite computing partner for users of all generations spanning various regions around theworld. A perfect blend of efficiency, performance, elegance, customer service and more makes itthe right choice for those thousands of prospective buyers of laptops or notebooks around theworld. And now the gigantic notebook maker has spread its wings further with its Laptops nowavailable in one of the world's most potential economy, India. With multifold increase in the ITconscious folks in the country over the years and a mammoth amount of laptop Buyers around


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the country at any given point make it "not so bad" decision from Dell. The Dell distribution inIndia however remains different from that of the other countries. With not so many peopleinclined onto the online purchase, Dell has adopted a proper channel partner that distributes theDell Products in the same old fashion that the folks in India are glued to. A treat to the all thoseusers which have been longing to bag one from the vast range of Laptops from the brand, it won't

be long before the brand would pose a strong competition for already prominent brand in thecountry. Dell has most of its series available in India through its online channel or Localresellers.

Dell laptops come in several types meant for the various types of users. Dells range of laptopsmeant for the business class includes Optilex, Latitude and Precision which is meant for suchfeatures like reliability, serviceability and long life cycles. The home and consumer class oflaptops introduced by Dell includes Inspiron and xpx brands. These laptops emphasize onexpandability and performance. High performance, lightweight and highly technology orientedadd more value to dell laptop. You can enjoy traveling with your dell laptop in India or globallydue to its lightweight nature and manufacturing compatibility for traveling.

Adding color to the scenario Dell laptop never lags behind; it is available for all generation.From businessperson, who needs more technological Dell laptop to gamers out there, with fasterprocessor, big screens and high end graphics to students going to school, offering themlightweight dell laptop in India and globally. Dell India makes sure that the laptop/notebook issuitable for the buying generation and should fulfill the market demand.

Models of Dell: Vestro Series, latitude series, XPS series, Inspiron series, Studio series,

Dell Support:

Dell has a website,www.support.dell.com , which offers solutions to a whole host of common as

well as not-so-common problems. Its solution database is exhaustive. Moreover, the problems

are categorized by topics, making things easier for the customer. The site offers technical support

in a language that is comprehensible even to customers who are not technically literate. The site

also offers options to download and install drivers. It also offers an update to check on the status

of the order placed, or if you have received the order but have a problem with it. Also, there is a

Chat with Technical Support which allows users to have a direct online chat with Dells

technical support staff and solve the problems. There is another option as Dell Forums which

allows users to chat and interact with other Dell users.

Acer Incorporated

Acer Incorporated is a Taiwan-based multinational electronics manufacturer. Its product lineup

includesdesktops andlaptops,as well as personal digital assistants (PDAs),serversand storage,

displays, peripherals, and e-business services for business, government, education, and home

users. Acer's subsidiary in India is Acer India (Pvt) Limited, and was incorporated as a wholly

owned subsidiary of Acer Computer International, Ltd. in 1999. It is a notable vendor in key
http://www.support.dell.com/http://en.wikipedia.org/wiki/Desktop_computerhttp://en.wikipedia.org/wiki/Laptophttp://en.wikipedia.org/wiki/Server_(computing)http://en.wikipedia.org/wiki/Server_(computing)http://en.wikipedia.org/wiki/Laptophttp://en.wikipedia.org/wiki/Desktop_computerhttp://www.support.dell.com/


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segments such as education, desktop computers and low profile notebooks for education

purposes. Its headquarters are in Bangalore, India.

Models:Travelmate series, Tablet Pc series, Aspire series, Ferrari series

Acer Support:

On Acers Indian website,www.acer.co.in,Acer has clearly mentioned their support and service

policies. It lists various Toll free numbers for customer care. There is the facility to download

drivers according to the model owned. But the biggest drawback is that it does not offer any

technical help online. It does not even have a getting started guide or a list of Freque ntly Asked

Questions and their answers. Common software related problems can be easily resolved by the

user if they follow a step-by-step detailed procedure. But Acer does not seem to realize this.

Lenovo Group L imi ted

Lenovo Group Limited is amultinational computer technology corporation that develops,manufactures and desktops andnotebook PCs,workstations,servers, storage

drives,IT management software, and related services.

3000 family notebooks:3000 lenovo laptops/notebook in India offers innovativenotebooks for your worry free access. Compiled with latest technology theselaptops/notebooks are suitable for small business houses and usage at home. All thefeatures you need are integrated in the laptop and the best services and support isprovided by lenovo India. Three series are available in 3000 family of lenovolaptops/notebook in India. C, V and N series of laptops to give you the best optionaccording to your needs.

ThinkPad notebooks:These are the more technology oriented and true value for yourmoney. Design wise these are perfect. Security is the added advantage of these lenovolaptops/notebook. Built to serve more speed and functionalities these can be used foreveryday computing, premium performance, thinnest and lightest and convertible tablets.All these are most reliable notebooks/laptops to server your daily needs.

Toshiba Corporation

Toshiba Corporation is a Japanesemultinationalconglomerate corporation, headquartered

inTokyo,Japan.The company's main business is in infrastructure, consumer products, electronic

devices and components.

Basic Laptops:Basic laptops offered by Toshiba India are designed to meet your generalneeds. These can be used at home, office or any other business purpose. Basiclaptops/notebook in India offered by Toshiba is powerful and configuration wise itsappropriate to serve your needs. Toshiba India takes care of the basic configuration ofthis laptops/notebook to make it appropriate for all generations. Satellite and tecra are thetwo laptop/notebook family offered by Toshiba which belongs to Basic laptop.
http://www.acer.co.in/http://www.acer.co.in/http://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Desktop_computerhttp://en.wikipedia.org/wiki/Laptop_computerhttp://en.wikipedia.org/wiki/Workstationshttp://en.wikipedia.org/wiki/Server_(computing)http://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Conglomerate_(company)http://en.wikipedia.org/wiki/Tokyohttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Tokyohttp://en.wikipedia.org/wiki/Conglomerate_(company)http://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/Server_(computing)http://en.wikipedia.org/wiki/Workstationshttp://en.wikipedia.org/wiki/Laptop_computerhttp://en.wikipedia.org/wiki/Desktop_computerhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://www.acer.co.in/


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Thin and Light Laptops:Thin and light laptops offered by Toshiba India are best suitedfor the travelingpersonnels. The lightweight and thin Toshibalaptops in India makes youfeel proud by their sound features. Easy to carry and available in wonderful colors.Satellite and tecra are the two laptop/notebook offered by Toshiba India which can solveyour weight problem.

High Performance Laptops:High performance laptops in India offered by ToshibaIndia are best suited for gamers and engineers who need more processing speed toperform their daily work. These Toshiba laptops/notebook are very powerful and highspeed. Portege, Satellite and tecra are the three laptop/notebook offered by ToshibaIndia which are high performance laptops/notebook.

Qosimois the newer brand of Toshiba laptops/notebook in India. Integrated with all latest

technology it provides you all the functionalities and features to serve your purpose. In addition

these Toshiba India laptops are ultra portable, lightweight, supporting gaming and multimedia

features to the fullest.


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Pricing of laptops in India

The comfort level of consumers in India starts from 30,000 Rs.

Starting range of laptops:

1. HPRs 350002. DellRs 320003. AcerRs 24000

DELL

Dell Laptops for Home Users:

Dell Inspiron 14 Price39,500/- to Dell Inspiron 15 Price36,900/-

Dell Studio 15 Price40,900/- to Dell Studio XPS 16 Price67,900/-

Dell Laptops For Small Businesses:Dell Vostro A84031,500/- to Dell Vostro A84029,000/-

Dell laptops for performance demanding applications:

Dell Latitude 210026,750/- to Dell Latitude E540063,800/-

ACER

For Home users:

Acer Aspire 531522999/- to Acer Aspire 8920G80999/-

For Travelers:

Acer TravelMate 472045999/- to Acer TravelMate 572050999/-

For niche users:

Acer Ferrari 110080399/-

HP

For professionals:

HP Pavilion DV9502AU Price39,000/- to HP Pavilion DV9731TX Price67,500/-

For businesses:

HP 530 Business Laptop Price27500/- to HP 520 Business Laptop Price28500/-

SONY VIAO

The pricing for Vaio notebooks including the X series featuring Kareena Kapoor as its brand

ambassadors starts from Rs 64,990 Sony W series Net books are priced at Rs 27,490 and the

pricing of Vaio CW series ranges from Rs 52,490 to 57,990.


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Marketing Strategies:SWOT Analysis:

Strength:

1. Brand name.Dell has a very strong brand reputation for quality products. Its brand is valuedat $ 7.5 billion.

2. Product customization.Dell allows its customers to customize their laptops. Such services

were not originally found within any other major computer retailer (and currently only Sony

and Toshiba allow that), but add great value to the customers and provides Dell with a

competitive advantage.

3. Environmental record. Dell is engaged in many green initiatives and has received many

rewards for being an eco-friendly business. This is a benefit when working with public and

government agencies.

4. Competency in mergers and acquisitions.Over the last five years Dell has spent $13 billion

for successful mergers and acquisitions, which brought patents, new capabilities, assets andskills to the business.

5. Direct selling business model.Dell doesnt sell its products through big-box retail outlets but

instead sells directly to consumers and enterprises, keeping their already thin profit margin to

themselves.

Weakness:

1. Commodity products.The large stream of Dells revenues comes from computer, especially

laptop, sales, which is a commoditized product. Computer hardware (commodity) products

are sold with a very low profit margin.

2. Poor customer services.Once praised, Dells customer services deteriorated due to

outsourcing its call centers offshore. Dell invested a large sum of money in fixing this, but

hasnt yet regained its previous reputation for customer services.

3. Low investments in R&D.The company spends a much lower percentage of its income on

R&D that its main competitors and thus, missed an opportunity to develop strong products for

smartphones and tablet markets as well as to learn new skill and capabilities.

4. Weak patent portfolio.Due to low spending on R&D Dell hasnt acquired a strong portfolio

of patents and is now finds it hard to compete in lucrative smartphones and tablets market.

5. Too few retail locations.Selling products online saves money and allows for product

customization but provides less visibility for the products. The consumer finds it hard to trust

the products if it cant hold it first in his hands.

6. Low differentiation.Low price was once Dells competitive advantage but the company is

no longer able to provide competitive prices. Apart from the price, Dells products are little

differentiated from competitors products and are in competitive disadvantage if the price

offered by competitor is lower.


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Opportunities:

1. Expand services and enterprise solutions divisions.Dell provides various services (cloud,

security and infrastructure) and enterprise solutions (servers, networking and storage), which

are the most profitable Dells business at the moment. Dell business should focus on growing

these divisions as they promise better growth opportunities and higher profit margins.2. Obtain more patents through acquisitions.If Dell wants to diversify, it needs new

technology patents and new ideas. Dell hasnt properly established its R&D facilities to

discover new technologies and patents, so the only feasible way to obtain patents and

technologies is to acquire other companies.

3. Strengthen their presence in emerging markets.Emerging economies are the fastest

growing markets for laptops, tablets and other electronic devices. Dell has a good presence in

these markets but should strengthen its position as the company experiences declining market

share.

4. Tablet market growth.Tablet market is expected to grow in double digits for the next few

years and the company has a great opportunity to release new tablet models and benefit fromthe market growth.

Threats:

1. Growing demand for smartphones and tablets.With a lower price and strongly improved

capabilities, consumers often choose tablets and smartphones over laptops. The growing

demand for the previous devices takes a share out of laptops, the main stream of revenue for

Dell.

2. Profit margin decline on hardware products.Dells main income is from selling hardware

products, which prices will increase in the future due to rising raw material prices. This willadd to costs for Dell and will further cut the profit margin.

3. Slowing growth rate of the laptops market.Growth rate of the computer market is slowing

down and in the near future the markets will become saturated. It will prove hard for Dell to

compete in such market or at least fight back the lost market share.

4. Intense competition.The company faces intense competition in all its business segments. It

competes in terms of price, quality, brand, technology, reputation, distribution and range of

products, with Acer, Apple, HP, IBM, Lenovo and Toshiba


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Strategies in India

Dells Entry in India

In the U.S., Dell originally became a market leader through its online and direct made-to-order

sales model. When the computer maker decided to enter India, however, it needed a change of

strategy.

In the B.D. era -- Before Dell -- India's computer market was ruled by Hewlett-Packard (HPQ)

and Chinese computer maker Lenovo (LNVGY). HP had arrived in 1989, when its only

competition was IBM -- a business that was later acquired by Lenovo. It quickly established

itself as the market leader by focusing on price and after-sales service, and its 2001 merger with

Compaq added to its product range. Both HP and Lenovo had factories in India, and their

products were available off the shelf through a vast retail network. More importantly, because

dealers had huge inventory (the companies supplied machines whether there was demand or not),they offered customers hefty discounts. Sales rose.

To buy a Dell in those days, Indian customers had to wait up to a month for delivery while the

computers were manufactured in Dell's factory in Penang, Malaysia. Little wonder, then, that

Dell sold just 79,244 laptops and desktops in India in 2007, its first year of full-fledged Indian

operations. In that same year, HP sold 1 million to Indian consumers.

Yet today, Dell has surpassed all the others, selling over 1.1 million desktops, laptops and

notebook computers in India in 2010, compared to HP's 1 million and Lenovo's 600,000.

According to the International Data Corporation, in the third quarter of 2010, Dell (DELL)led inIndia with a 15.3% overall market share, ahead of HP with 14.7%.

While Dell's India revenue of more than $1 billion is less than 2% of the company's global sales,

India is emerging as the fastest-growing market for the company. In the third quarter of 2010,

India reported year-on-year growth of 55% -- the highest for any Dell market.

How Dell did it

The first step was to set up a factory in India.Manufacturing locally cut delivery time by almost

50% and improved profitability. It also reduced waiting time to less than eight days.

Dell also changed the way it sold computers. While buying online remained an option, the

company set up exclusive outlets across the country, la Apple (AAPL)-- the first time it has

experimented with the retail model -- and hired a battery of sales affiliates. Dell ensured that

these affiliates, or channel partners, were given incentives to sell. The company also made

virtually no investment in warehousing and delivering products right to customers' doors upon
http://money.cnn.com/quote/quote.html?symb=HPQhttp://money.cnn.com/quote/quote.html?symb=LNVGYhttp://money.cnn.com/quote/quote.html?symb=DELLhttp://money.cnn.com/quote/quote.html?symb=AAPLhttp://money.cnn.com/quote/quote.html?symb=AAPLhttp://money.cnn.com/quote/quote.html?symb=DELLhttp://money.cnn.com/quote/quote.html?symb=LNVGYhttp://money.cnn.com/quote/quote.html?symb=HPQ


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demand. Once customers could touch and feel the product, it was easier for Dell to convince

them to buy. And buy they did.

This wasn't technically Dell's first foray into the country. Dell had quietly entered India back in

2000, focusing on large enterprise and government business. By 2007, Dell's business was worth

$250 million in this segment. It also cashed in on the outsourcing wave, and had set up four

customer care and tech support centers in India for its global customers. But, of course, Dell

wanted a slice of the increasingly lucrative personal computers space.

ManufacturingThe first Dell Made in India desktop

The Chennai operation reaffirms the strategic importance of India to Dell, providing significant

impetus to our growth plans and prospects here, where we are already among the fastest

growing computer systems suppliers.- R Anandan, VP & GM, Dell India

In July 2007, Dell began production at its new manufacturing facility in Chennai (Dells third

manufacturing location in Asia-Pacific and Japan region and eighth overall). The Sriperumbudur

plant (50-acre site with a planned five-year investment of about US$ 30 million) was chosen for

manufacturing in September 2006. The planned initial capacity was around 400,000 desktop

computers per year. The company has doubled its production capacity since then from 400,000

in 2007 to the 1 million units in June 2008. Infosys, one of Dells largest custo mers in the

country, was presented with the first Made in India desktop computer system.

Dells Market Share in India

India is the fastest growing market for Dell worldwide and laptops have emerged as the fastest

growing form factor. Rajiv Ahuja, Director Communications of Dell APACS

Dell India, that runs largest operation outside the US, expects consumer spending to push it

notch double digit growth in sales volume in thelaptop market in the next financial year. The

company recorded a flat growth in the segment in the period from February 2012 to January

2013 against the industry growth of 7-8% in the domestic market. With no laptops to offer in the

affordable category, Dell lost on the volume market offered by various state governments that

are offering free laptops to the students. Dell sold around one million laptops in market of six

million in the last financial year.The company sustained its 15%market share in the domesticmarket even though company faced challenging times due to budget cuts by government and

slump in consumer spending.
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Dells Retail strategy and Direct-only model

Dells innovative direct- sales model with good sales growth had been successful until the mid-

2000s when the companys profits and share prices began dropping considerably. Dell was

selling PCs directly to customers by phone and online. On May 24, 2007, Dell disclosed its plans

to sell PCs in the US, Canada, and Puerto Rico through Wal-Mart and Sams Club retail stores.

This announcement came soon after Michael Dell returned as CEO replacing Rollins.

In India, as part of the retail initiative, Dell tied up with Tata Croma (the Tata-owned electronics

retail chain) in July 2008 and with select Staples stores. By the end of 2008, Dell planned to

increase its presence to100 Indian cities by increasing its channel partners. In October 2008, Dell

announced the opening of the first Dell exclusive stores in India at New Delhi and Coimbatore.

Dell also tied up with 600 systems integrators all over the country who could take orders on its

behalf.

Dells Approach to Supply Chain Management

Imagine a situation where customer demand played a vital role in a companys inventory levels.

Now, most of you would assume that this is always the case. Unfortunately, its not quite that

simple. In most cases, companies push finished product to customers through an aggressive sales

and marketing strategy. However, were discussing a situation where a company combines this

aforementioned strategy with one where customers determine what that finished product

becomes. Ultimately, its about assembling most of the product, waiting for a customer order and

then finishing that product to meet the customers specific requirements. This means the

companys financing costs of inventory would reduce, as would its incidences of inventoryobsolescence and damage. Instead of focusing solely on pushing inventory at customers, the

company would also adopt a strategy predication on customer demand to pull its finished

products. This is the basic premise behind Dells push-pull supply chain approach and the

most important reason so many companies have tried to emulate Dells success. However, can it

work for small to medium sized enterprises?


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Before going into the pros and cons of Dells approach, its probably ideal to review how it

differentiates from Just in Time, or more commonly referred to as simply, JIT. When thinking of

JIT, think of manufacturers who make product from a fixed bill of materials. These

manufacturers rely upon constant demand from customers. They typically maintain a small

product line, but have tremendous purchasing power spread across that line. They use their

volumes and purchasing power to drive down costs and dictate service terms with vendors.

Automotive manufacturers were the earliest adopters of JIT. After the Second World War,

Japanese businesses couldnt afford to retain high inventory levels. Instead, they relied upon a

strategy that purchased exactly the amount of material and parts needed to fulfill orders. In

essence, they would time their purchases of material and parts to coincide with customer

demand. This reduced their financing costs on inventory and ensured they encountered minimal

issues with damage. So how does Dells approach differ from JIT?

Understanding Dells strategy

Dells strategy differs from JIT because the company relies upon a strategy of manufacturing a

portion of their computer, and then waiting for customer demand in order to complete the

computer. In this case, they assemble most of the product, wait for a customer order and then

finish the remaining portion. This reduces their lead times, while still allowing them to provide a

customized product. In essence, they push their products to customers with an aggressive sales

and marketing campaign. Next, they rely upon customer demand to pull those products. This is

the basic principle behind Dells push-pull strategy. It differs from JIT in that it doesnt rely

upon a finished product that is then sold to customers. Instead, Dell assembles the majority of the

computer, waits for a customer order and then completes the rest.

Dells Marketing Strategy in India

Dell is targeting the small and medium businesses (SMB) in smaller towns in India as its main

driver for growth as the company believes this market sector is growing rapidly and is not

exposed to global shocks making it a much more stable market. Dell India is focusing on

simplification of the business processes (basic areas to improve cost efficiencies) as part of its

new rollout plan. It has even tied up with Tally to offer accounting solutions online. For an initial

period, customers get a Tally subscription free along with select Dell Vostro systems. Dell has

also increased its SMB team to 200 and expanded its presence to about 600 tier-II and tier-III

cities. Dell will also introduce a portal titled Dell 360(with discussion forums) where SMBs

can educate themselves on benefits of IT to their businesses.


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Dellsadvertising Campaign for SMBs

First launched in India, Dells new advertising campaign is titled Take Your Own Path.

The campaign targets Indian SMBs with a new range of laptops.

Testimonial Advertising instead of Transactional

In December 2007, Dell partnered with WPP (after withdrawing its advertising responsibilities

from over 800 different agencies worldwide) which launched its own specialist unit Enfatico

with Dell as its only customer. Enfaticos first international campaign for Dell targeted SMBs

featured successful Indian faces (like P RajendranNIITs co-founder and COO, Raman Roy

CEO of Quattro among others with their testimonials) and aimed at establishing an emotional

connect with brand Dell.

Targeting SMBs

To address the SMB market in India, Dell developed a Direct-to-Dealers strategy. It is a two

pronged strategy where Dell deals directly with end-tier of channel partners for Tier 2 and 3

cities bypassing the distributors. However, for the Tier 1 cities, Dell follows the traditional route

of selling through distributors. Dell itself does not stock and sell with channel partners but sells

on a back-to-back basis. Targeting low-end products for SMBs, Dell is also using the retail

channel to sell Vostros, a PC specially created for SMBs. This is key since traditionally vendors

have shied away from selling commercial SKUs through predominantly consumer channels.

Needless to say, Dell has recognized that the small businesses, especially less than 20 employee

size companies use retail channel for their PC purchases. For its lower mid-market customers,Dell is encouraging its channel partners to sell on a solution based approach.

New strategies always tend to bring teething problems. With limited experience in dealing

directly with the VAR/Dealer channels, signs of frustration are becoming visible, not yet within

Dell but among the channels. Account managers are pushing channels to pick-up vendor

mandatory stocks even if the inventory is not sold out. At the same time, channels mention that

Dell does not provide any price protection nor does it yet understand the buying cycles in India

which is different than many of the mature markets. In lieu of price protection, Dell has

designed a rebate program for its channel partners and empowers them with white papers and

training programs to help them achieve better profitability.Even if channels show some negativesentiments, there may be positives to Dells Partner Direct program, such as provisioning of

single point of contact for SMBs to reach channel partners.


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Targeting the SMB Market of Tomorrow

Dell is trying to not only target todays SMB but also keep in sight the Future SMB. Besides a

distribution channel strategy, Dell is trying to focus on Cloud and Mobility for the SMB market.

This itself is a great strategy but is yet lacking on execution. Vendors such as HP may have a

much better chance of executing on the Cloud and Mobility front. Both these solution areas

require extensive and experienced channel partners. Dell is in the early stages of partner

development and majority of them are focused on basic building block products such as PCs and

Servers. HP on the other hand has the capability to analyze its partner network and segregate

them by expertise levels, creating partnerships among them to design a coherent and executable

Cloud and Mobility strategy. On the flipside, since Dells channel ecosystem is relatively new, it

has a rare opportunity to build a long-term program based on learningsfrom its own missteps

and partner feedback.

Although Cloud Computing in India is on the rise, there is more hype than substance, and thereare more free services being used than paid. With a limited bandwidth and internet speeds, it may

not be long before cloud services get delivered over wireless. Because of a heavy adoption of

Smart phones and other mobile devices, the march towards mobility in India cannot be stopped.

However, SMBs mostly want integrated solutions to limit complexity and therefore seek channel

partners that are capable of delivering cloud and mobility solutions integrated. Unfortunately,

very few channel partners currently do so especially for Dell. Those that do are financially out

of reach of a typical SMB customer. And this is making SMBs unsure of overall benefits of

Cloud and Mobility and desire to spend. Dell has to identify channel partners that could be

ramped up and focused on delivering Cloud based solutions that have higher relevancy to SMBs.

Strategiesfor Mumbai

Dell is all set to reach buyers at every nook and corner of India with its multi-

channel marketing strategy. The company is still clinging to its original marketing methodology

of catering to customers directly from the company. However, it has adopted a strategy of

creating as many channels as possible to reach purchasers - not only in metros but also in all

remote places.The company has planned for uniform pricing of products all over the country,

with full opportunity for product customization, on-site service even at remotest regions,

warranty programmes spanning several time frames, and toward passing on the (central) tax

benefits to the customers.


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1. Dell Adopts Multi-channel Marketing Strategy

Dell is all set to reach buyers at every nook and corner of India with its multi-

channel marketing strategy. The company is still clinging to its original marketing

methodology of catering to customers directly from the company. However, it has

adopted a strategy of creating as many channels as possible to reach purchasers -not only in metros but also in all remote places.The company has planned for

uniform pricing of products all over the country, with full opportunity for product

customization, on-site service even at remotest regions, warranty programmes

spanning several time frames, and toward passing on the (central) tax benefits to

the customers.

2. Direct-plus strategy

The Direct-plus plan is being implemented in multiple ways. In March-end this

year, Dell set up its shop-in-shop in Tata Croma, Malad, Mumbai. The companywill shortly establish more such outlets in other Croma branches nationally. Any

buyer can walk in to the Tata Croma outlet, he/she can see the whole brand of

products displayed there, compare and select a Dell model with preferred color,

weight, memory size etc., based on his/her budget. The Dell-trained sales

representatives are there to understand the customers need, and guide him/her to

the right purchase decision.In the case of Tata Croma, what they have done is -

the shop-in-shop is manned by Dell. If you go to that outlet you do not get a

Croma Bill. Customer will get a Dell invoice. It is purely a display and a sales

point.

3. Sales-affiliate programme

Dell has planned to appoint its affiliates out of large cities, especially, in the

towns where the population is only 50,000 to 1 lakh. The Sales-affiliate

programme empowers SIs, resellers and shop owners across the country to offer

Dell products to their customers - without having to make huge investment, to

take risk of price drop, to bother about the volume-based incentive, to worry that

there is a next-door shopkeeper who will give a better discount.

4. The win-win situation.

All the Dells programmes are based on flat incentive or margin structure. The

sales-affiliates need not even directly handle the products.They just need to advise

customers on the right products, and simply place the order online.

This system also brings huge benefit to the customers. They get the freshest

technology, pay less for lower supply chain cost, get tax benefit and deal directly

with the manufacturer.


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Product, Segmentation & Targeting

ConsumerTarget: Household Customer

Laptops & Ultra-books

Desktops & All-in-Ones

Electronics & Accessories Printers, Monitors etc

New Touch PCs & Tablets.

Small & Medium Business

DELL Precision Workstations and mobile Workstation

Vostro and Latitude line of Notebooks and Net-books

Servers, Storage and Networking Equipment

Services e.g. IT Consulting, Data Protection

Large EnterprisesTarget : Large Co-operations

Blade Server Solution, Server Consolidation, Client Migration solution, Virtual Clients

RISK Migration, Storage consolidation, Cloud Computing, Mobility Solutions

Business Consulting

Public SectorTarget: Government, Schools

Digital Forensics, e-Government, Data Center Efficiency

Civilian and Defense Agencies, Intelligence Security, Federal health, Consulting and

Deployment Services Professional Learning, Connected Classroom, Private Cloud Computing, Wireless

Classroom

Learning Management systems.

Intangible ProductsTarget: All four Segment

Warranties

Repair Services

Software Services.


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GE MATRIX

The 9 cells of ge matrix are grouped on the basis of low to high industry attractiveness

and week to strong business strength and competitive position. There are 3 zones

indicating 3 different combinations.

1 GO AHEAD

Under these phase the signal is to proceed and take decisions such as Dell has become

universally acceptable and now it should go ahead and take up more marketing

development and expansion .

2 wait and watch

These is the 2nd

zone of ge matrix, this indicates hold and maintain current strategy.

3STOP

Coming to the 3rd

zone it gives signal to stop under the product of Dell Corporation

Thus to conclude with ge matrix it allows the user to select whatever criteria they feel are

more appropriate to their business situations.


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Dell Corporation possess highest attraction through its highly innovative and technical

products of mobile and computers and stands first in the Ranking of Revenue and hence

placed in the category as shown in the above table.


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BCG MATRIX MODEL

The third-party products are new emergence for Dell. For example, Dell enter market

with new products such as printer, CD-player, storage, digital camera, which are new for

Dell. Therefore, Dell is not sure for their potential road for the future(put in question

mark position).

Services were introduced last year with more power, and now in a growing road to starposition.

Networking and P Portable Computers have been achieving significant growth in past

years(put in star position).

Desktop Computers and Enterprise Systems are the main products for Dell bringing a

huge amount of profits in years(put in cow position).

GRAND/CORPORATE LEVEL STRATEGIES


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Grand strategies adopted by Dell corporation are explained below with the help of the

above table.

Dell adopts the combination of two strategies that is the 1,2; (Stability Strategy andGrowth Strategy)

In the stability strategy Dell adopts the Sustainable growth Strategy wherby the company

wants to get a consistent profit through its products irrespective of any new entrance of

companies, Competiton, Technologyetc.

Stability Strategy

Modest Growth

No change

Sustainable Growth

Profit Strategy

Pause Strategy

Growth Expansion

INTERNALGROWTH

IntensificationStrategy

Market Penetration

Market Development

Product Development

DiversificationStrategy

VErticalIntegrationForward integration

Backward Integration

HORIZONTALDIVERSIFICATION

CONGLOMERATE

Integration

Concentric Integration

EXTERNALGROWTH

Merger

Acquisition

Amalgamation

Joint Venture

Retreat Strategy

Turnaround

Divestment

Liquidation

Disinvestment

Combination

Strategy

1,2

2,3

1,3

1,2 & 3


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And in the second strategy Dell adopts the Product Development Strategy which fall

under Intensification Strategy. This Strategy is concerned with the Internal Growth of the

Company.

As the Company has a very good strenght in case of market attraction through its

innovative and user friendly products and with a great business strenght, the company

prefer to enter into more products in the same field.

New Products that are introduced by Dell are provided briefly in Chpt-1. Example, dell

has come up with some new softwares, started producing new electronic products like

Mobiles, High tech Laptops. And hence the dell Corporation adopts the combined

Strategy of Stability and growth.

Recommendations for Strategies:

Dell should focus more on enterprise solution business i.e offering completesoftware solutions rather than focusing only on hardware part as the margins fromthe software sales are much higher than the margins obtained from sellinghardware component only. It needs to become an end to end IT solutions provider.

Dells multi-channel strategy is working well for Dell and they should continuedoing that as in India most of the computers are brought from local retailers andservice integrators ( SIs) and they have advantages of geographical reach, post saleproblem fixing at the doorstep, better service and price because of the existingcustomers influence.

The entire Dell team has to work hard to get its messaging and capabilities heard by

Indian businesses because Dells end-to-end solutions story has not yet reached the

crescendo it deserves.

SMBs are the fastest growing IT segment in India. Dell should continue to develop and

modify its mid-market design point strategy that serves the SMB customers well. By the

looks of it Dell is getting consumed by its enterprise strategy leaving little time for the

SMBs

Although planning to introduce tablets and smartphones (in an already one-sided market),

it should rapidly formulate and articulate its mobile strategy, a segment that is growing

faster in countries like India than most mature markets.

Build variety of competencies ( build core competencies into diverse product lines)


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Should look for Alliance-mergers and acquisitions that would bring synergic benefits for

the company

Reduce the attrition rate by Converting visitors into customers(people who visit the Dell

site)

Focus on developing nations

Physical presence of Service centers would add value to their customer service Invest more in Research and Development.

Reduce errors in Dells direct Internet ordering system and create a Clearance area on

its website

Enhance customer support services

Increase Company recognition through a national advertising campaign.

Documents

DELL Report Edited