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DELL: Potential for New Advertising Agency Executive Briefing Report

DELL: Potential for New Advertising Agency Executive Briefing Report.

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DELL: Potential for New Advertising Agency Executive Briefing Report

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  1. DELL: Potential for New Advertising Agency Executive Briefing Report Notice: This Executive Briefing Report presentation is compiled from the World Wide Web and other sources solely for internal use by the client for the specific and limited informational and research purpose described above. Crystalyse Services locates and organizes this information so that the client can directly access the sources and proceed with their own analysis and evaluation. Crystalyse Services does not espouse any opinion or make any recommendations as to the significance of the data provided or its use by the client nor makes any representation regarding the accuracy or completeness of the information selected.

  2. Table of Contents

  3. Overview • Dell, Inc., formerly known as Dell Computer Corporation, designs, develops, manufactures, markets, services and supports a range of computer systems, including enterprise systems (servers, storage and networking products and workstations), notebook computer systems, desktop computer systems and software and peripherals. • Became a Fortune 200 company in 14 years. • Second largest and fastest growing PC company in the world. • The world’s largest ‘Direct PC’ company. • Manufactures most of the products it sells. • Has six manufacturing locations worldwide to service its global customer base. The company is managed on a geographic basis: the Americas, Europe and Asia Pacific-Japan.  • Manufacturing process consists of assembly, functional testing and quality control. Testing and quality control processes are also applied to components, parts and subassemblies obtained from suppliers. Quality control is maintained through the testing of components, parts and subassemblies at various stages in the manufacturing process. • Is certified worldwide by the International Standards Organization to the requirements of ISO 9001: 2000. This includes the design, manufacture and service of computer products in all Dell regions. Source: Nexis - Datamonitor

  4. Dell’s Advertising: Key Facts • Agencies • Critical Mass Inc. - Calgary, AB, T2G OY4 Canada • DDB Chicago - 200 E Randolph St, Chicago, Illinois, 60601-6436 United States AD BUDGET Adv.Expenditures FY 2004: $473,000,000 • Vehicles Used • Business Publications • Consumer Magazines • Direct Mail to Business Establishments • Direct Mail to Consumers • Internet Adv. • Network Television Source:

  5. Scope for New Advertising Agency: Customer Service Troubles - 1 • Absence of middlemen, a key ingredient of Dell’s sales strategy, means that Dell takes all the kudos as well as the brickbats for its customer service standards. • John Dickinson, an industry veteran and columnist, in an open letter to M. Dell on Dec 23, 2003 complained about how service levels have deteriorated. His registration system broke down. It turned out that Dell’s database had no record of his computer's existence. None in Dell could figure out what to do to get his computer properly registered. • In early 2004, in two surveys that rate the satisfaction of PC buyers, Dell's scores declined. • The March issue of Consumer Reports, in a survey of 4100 consumers, gave Dell 62 points out of a possible 100 for its support on desktop PCs. In June 2003, Dell had scored 64. The slippage has been steady over the last 3 years. Dell had a score of 74 in Dec 2001. • In another survey done by Technology Business Research (TBR), in the fourth quarter of 2003, Dell’s satisfaction rating among corporate buyers slipped to 80.98, down from 83.4 in the third quarter of 2003. TBR's survey polls buyers on eight aspects of support, including their overall satisfaction with a company's support service. However, in TBR’s third quarter report for 2004, Dell scored 83.61, marginally up from 82.27 in the second quarter. • Dell’s image’s deterioration was exacerbated by occurrences such as computer worms and shortages of replacement parts. • Dell was forced to relocate some part of its support service center in India back to the US after escalations in complaints. Calls from US purchasers of Dell's OptiPlex desktop and Latitude notebook personal computers will be handled from existing facilities in the United States brand PCs. Some experts argue: why should Dell seek to cut costs of support service when it is making handsome profits? Source: Nexis search, cnet.com, news.com

  6. Scope for New Advertising Agency: Customer Service Troubles - 2 • Dell's goal is to solve each problem within a 12-hour period. Right now it meets that goal only about 96% of the time, globally, for its server and storage products. • Dell could face more problems with customer service in future. Its focus on growth naturally means that it will attract more consumers who are less skilled in operating PCs and thus need more assistance. “As the proportion of the consumers in the mix rises, there is going to be an increase in complaints, even if Dell isn't doing anything differently," says Roger Kay, an analyst at IDC. That's because increasing market share requires a "devil's bargain”. Dell has to support inexperienced buyers in order to get their business. • Apart from increasing the size of its support service staff, Dell has shifted its priorities to resolving problems on the first call. The company is also examining how its customer care organization can resolve order-related problems more quickly. • Some customers have said that while dealing with Dell’s support staff, they felt they were being talked down to, as if they have never experienced technology. They compared this to rival HP’s friendly neighborhood personnel for support service. • Dell plans to offer a free security software bundle that will combine a firewall, antivirus and antispyware software. Spyware problems account for 20% of the company's support calls now. And each spyware call takes about 20 minutes on an average. Given the ‘no charge’ nature of this segment, Dell will have to seek ways to limit the pressure of spyware issues on support staff’s time. • Experts feel that Dell's rapid unit shipment growth in recent years and the resulting rapid influx of new business customers, are the root cause of its customer relations problems. Source: Nexis search, cnet.com, news.com, asia.cnet.com

  7. Scope for New Advertising Agency: New Product Lines - 1 • Printers: • Currently, Dell is in Phase 2. Phase 1 of rolling out the product has already happened. • In Phase 2, Dell aims to boost printer sales significantly by expanding the number of models it offers and the numbers of countries in which it markets. Dell will take most of the profits it makes on printers and reinvest them in the business by offering lower prices or bundling printers with its PCs, all with the idea of pumping up unit shipments. • Phase 3 will arrive once Dell builds a large customer base, which would increase its sales of supplies such as ink, toner and paper. • According to Tim Peters, head of printing and imaging, the company is also nearly ready to enter the Chinese market. • In Nov 2004, Dell launched Wireless Printer Adapter 3300 that allows users to print, scan or fax without being connected to their printers. The computer needs a wireless card and must be connected to a wireless network. • TVs: • The main customer for Dell TVs may be consumers, but Dell sees a potential among its business customers as well. A number of hotels, financial institutions, restaurant chains and retailers are known to have expressed interest in Dell TVs. • Business customers with chains of outlets (like McDonald’s) could offer huge business. • Dell recently announced plans to add two new 42-inch plasma-screen TV models to its TV line up. It is likely to add a few more TV models over time. • Dell’s high-definition plasma TV will sell for US$3,499, a relatively modest price that Dell believes will help boost demand. Source: Nexis search, cnet.com, news.com, asia.cnet.com

  8. Scope for New Advertising Agency: New Product Lines - 2 • Smart Phones: • Smart phones, which combine the attributes of a cellular phone and a PDA like Dell's Axim, represent a potential opportunity for Dell, executives say. But Dell will carefully examine what it can do to differentiate its products from those of incumbents such as Nokia. • Media Center PCs: • In Oct 2004, Dell rolled out a new line of Media Center desktops, wrapped around Microsoft's Windows XP Media Center 2005 operating system. The PCs will function more like entertainment devices that can record, show TV programs, and play DVD movies or music CDs. • It follows a ‘good, better, best’ model strategy to sell Media Center PCs. Basic utilities come with the cheap ‘good’ bundle. It won't include a remote control or tuner for watching and recording television, as in full-fledged Media Center PCs. However, it will let people view photos, home videos and other media content using the Media Center interface, designed for viewing while sitting back in a couch or chair. The upgrade from a traditional Windows operating system costs only $ 39. • The ‘best’ offers the entire package for a higher price. The aim is to offer the product across price segments. Source: Nexis search, cnet.com, news.com, asia.cnet.com

  9. Scope for New Advertising Agency: New Product Lines - 3 • Others: • Dell recently introduced Inspiron 9200, a new notebook for consumers that offers a 17-inch display, with a list price that starts at US$1,699. Dell aims to attract buyers interested in using a notebook to watch movies or to manipulate multimedia files. The machine also comes with Wi-Fi, allowing it to connect to home networks and share files. • Dell wants to provide its consumers with a menu of in-home services. It plans to offer to do jobs such as installing home networks for consumers in conjunction with a new suite of services that will allow customers to pay a set price for a certain job. Under the program, a Dell representative will pull up in the van and take care of the problem. • Dell also offers discretionary services - professional consulting, SAN (storage area network) design and deployment, application development, managed services. It's about a $2.6 billion business and growing at roughly double the rate of Dell’s product business. • Dell is also eyeing a movie download service. It has been exploring partnerships that would offer its customers access to movie downloads, similar to how it provides music downloads through a partnership. • Dell recently launched the Axim X50 handheld and refreshed its Dell DJ music line with two models, including the miniature Pocket DJ 5. The DJ 5, about the size of a deck of cards, will sell for US$199 and come with 5GB of storage. • What Dell will not get into: • Utility computing. While other competitors are embracing the trend, Dell has decided not to. • Dell is not interested in lower-priced standalone devices like DVD players. • Digital cameras. While Dell will have alliances to bundle digital cameras with its products, it will not go into it alone. Source: Nexis search, cnet.com, news.com, asia.cnet.com

  10. Scope for New Advertising Agency: Geographies • In China, already the world’s second-largest market, Dell is the largest non-domestic company, after Legend. • In September 2004, Dell opened a command center to offer improved services to its business customers in China. The new facility, located at Xiamen, is the second Enterprise Command Center (ECC) that Dell has set up besides the one at Round Rock, Texas. The centers provide around-the-clock spares and service support to server and storage customers. • More centers will be opened in Europe and Japan. The European center will be at Limearick, Ireland; the location of the Japanese center is yet to be announced. • One more ECC is slated to be established in the Asia-Pacific region in early 2005. • The idea behind the ECCs across geographies is to help Dell take better and quicker care of problems for its high-value customers. Its American ECC has seen a 25% improvement in resolving initial customer problems since it was set up in November 2003. • In Japan, with 50% of consumers using their PC as a television, Dell’s TV and Media Center software could have a big market potential. • Printers and enhanced services are showing particularly strong growth in Europe, Middle East and Africa region. These services include backup services, Windows migration services Active Directory services and the like. In the third quarter of 2004, Dell saw a 72% growth in this segment in EMEA region. Taken together with the core PC, server and laptop segments, maintaining the absolute, year-on-year revenue growth rate in EMEA is likely to get harder because it will be growing from a larger base. • A more immediate concern: In EMEA, in the third quarter of 2004, Dell’s PC shipments’ growth was below Gartner's expectations. Gartner expected a 14% growth. Dell clocked 12.6% translating to 14.3 million units. Source: Nexis search, cnet.com, news.com, asia.cnet.com

  11. Scope for a New Advertising Agency: Dell’s concerns • Dell is accused of neglecting independent research. As of August 2003, in 19 years, Dell had only been awarded 867 patents -- less than the total many of its closest competitors receive in a year. In response, Dell says it doesn't need to take that route. Since it relies on standardized components, it doesn't need to spend money on research and development. Dell also claims that it manages higher return on R&D than any rival, about 5 times the profit for every R&D dollar spent. • According to a HP representative, despite the hype surrounding cost-efficient direct selling strategy, PCs from Dell cost more than those from HP - sometimes as much as $ 250 or more for equally configured machines. • In UK, in June 2004, Dell was ordered to change its advertising following an objection to an Internet promotion and three national press advertisements for its computer systems. Retail chain DSG Retail Ltd challenged the availability of a free gift that was promoted on Dell's web site, and whether the free upgrades and savings advertised in the press were only available online as the ads implied. The UK's Advertising Standards Authority upheld both complaints after Dell acknowledged that the free gift was not available with the Dimension 2400 system and that in some cases telephone customers also received the upgrades and savings offered only for online customers. • Peter Shankman, president-CEO of marketing agency the Geek Factory, sees “inconsistency” in Dell's approach to branding over the last several years. Steven, the Dell Dude, did well, till Dell was told that it was pushing away adults. So Dell turned its efforts to small businesses and succeeded again until someone suggested Dell was losing kids and college students. Now Dell is trying to balance both. • Dell comes a relatively lowly 25th in terms of brand value. Its closes competitors in the PC market fare much better. IBM is third with a brand value of $ 53.7 bn. HP comes at 12th position with a value pegged at $ 21 bn. Dell comes 25th with $ 11.5 bn. • Dell has consistently lost market share in the fourth quarter over past years due to lower levels of sales outside the consumer market. Source: Nexis search, Factiva, cnet.com, news.com, asia.cnet.com http://www.businessweek.com/magazine/content/04_51/b3913048_mz011.htm

  12. Scope for a New Advertising Agency: Chip, Servers and Laptops • According to analysts, one of the chief questions in the PC market for the next couple of years will be whether Dell will incorporate Opteron or Athlon chips from Advanced Micro Devices (AMD) into its systems. AMD is gaining customers in the corporate world--20 of the Fortune 100 have installed Opteron servers. Intel's release of chips that can provide a similar 32-bit/64-bit functionality--one of the key factors of Opteron's popularity--has likely tabled the issue for now. Whichever way Dell goes, it may have to announce its enhanced prowess effectively through advertisements. • Although Dell sells directly to customers, retail market data offers some indication of how consumers are reacting to its new 17-inch notebooks. The average price of about $ 2000 has limited sales to 6% of total US retail notebook sales in the past 15 months, according to data from market researcher NPD. The average selling price for all notebooks sold at retail stores is much lower, hovering around $ 1350 during the last few months.The price differential is substantial and if it is not narrowed, it may need advertisement support to sustain growth. • Dell has entered the blade server segment with its PowerEdge 1855. But it is not the most dense of the blade servers available on the market. While blade servers are by no means a high volume part of the server market, they are an important sector for the high performance computing market (where density and management are increasingly important) and for the more sophisticated data centers who are struggling with server sprawl and are trying to consolidate their machines down to the fewest number of CPUs. With up to 60 blades per standard 42U rack, Dell says that the PowerEdge 1855s will save customers as much as 25% on blades compared to buying a similar number of 1U, two-way Xeon servers. Dell also says that the blades can cut down on power consumption compared to an equal number of Xeon processors in regular servers by 13%. Source: Nexis search, Factiva, cnet.com, news.com, asia.cnet.com

  13. Scope for New Advertising Agency: Emerging Competition Concerns • In the past couple of years, the increasing sophistication of search technology and comparison-shopping sites have allowed online businesses cheaply and effectively to market their products to millions of potential customers. Dell has thrived on this strategy so far. Now, this strategy could be under attack from both growing internet usage, search options and smaller players. • Lenovo’s purchase of IBM's PC division, expected to be completed during the second quarter of 2005 poses both a threat and an opportunity to Dell. IBM has taken measures to ensure that the transition is as painless as possible Several customers have said they expect no reason to change brands. But the deal could still help Dell or HP gain if Lenovo and IBM drop the ball during the hand-over. • Dell’s competitive edge of direct selling appears to be getting blunted. Dell’s direct selling, online-dependent selling strategy can be easily emulated. Lenovo has restructured its sales divisions and begun direct sales to large companies and institutions in February 2004 to blunt Dell’s competitive edge. In consumer electronics area, where Dell is taking on the likes of Sony and Samsung, rivals have adopted Dell’s online sale strategy. • In Music, Applemanages to stay ahead of Dell. In Oct 2004, Apple Computer's iTunes Music Store sold its 150 millionth song. Dell introduced a $200 Pocket DJ digital music player that stores about 2,500 songs on a 5GB hard drive. But Apple's iPod Mini line which costs $250 and has 4GB of storage is ahead in the race. • Dell’s revealed reluctance to go whole hog on consumer electronics because, taken all together, the business generates only about 15%, could hamper growth in the segment. Source: Nexis search, cnet.com, news.com, asia.cnet.com

  14. Michael (Mike) George - CMO: Important Quotes - 1 • Mike George is an ex-McKinsey consultant. Joined Dell four years ago. • Ken Rollins and Michael Dell, the two CEOs work closely with him on major initiatives to ensure the integrity of the brand -- for example, its ability to tap into consumer emotions. The following quotes were attributed to him in 2004. • On peripherals built around PC: “We are really focused on the top three or four usage models around the PC, trying to make sure we have--either through Dell directly or through our partners--the right products and services”. • On Dell decides what to get into: “We look at every category in the digital home and ask a series of questions. Can we add a lot of value to that marketplace, or do we think there is a big price umbrella to go after? Or do we think we've got some unique supply partnerships or advantages in the market? We rank order the priorities.” • On why Dell goes for partnerships in some peripherals and not in others: “We also sell a lot of digital cameras. That business has really grown. Today, that is all through partners like Canon and Kodak. I don't anticipate at this point a change because I think those companies have great camera lineups.” • On TVs: “The reason I put the focus on big-screen digital TVs is, that's where they're getting all of their gross margins. That spells opportunity. Our plasma launch was a great example. We came in with an absolutely awesome quality 42-inch plasma TV for US$3,499. Sony's product is US$7,999, and the other guys are in the US$5,000 to US$6,000 range.” • On brand strategy: “The vast majority of customers that spend more than US$2,000 on a PC come to Dell. I don't think you'll see us pushing any radical new solution. It's not how we think our brand adds value to customers. We will stay away from most first-generation usage ideas because it's highly unpredictable what will happen. If the usage model isn't exactly right, it will end up in someone's closet, and people would say, "Why the hell did I spend 1,000 bucks?" ” • On Dell entering videos: “We're not ready to announce anything yet, but we are kind of talking to a bunch of folks, and I think we will have some video partnerships in the near to medium time frame.” • On the ad focus in 2004: “This year we focused on giving all Dell ads-Web, TV, print and catalog-a uniform look and feel to drive the Dell brand across all areas of our business. Whether we're talking corporate systems and servers or consumer products, Dell's approach is simple: Everything begins and ends with the customer.'‘ Source: Nexis search, cnet.com, news.com

  15. Michael (Mike) George - CMO: Important Quotes - 2 • Reacting to Sony and Samsung adopting the Dell strategy of selling over Internet: “But they haven't faced the years of competition in the PC market. PC makers have learned to interact with customers on a personal basis and establish strong customer service support for questions. The great advantage we have is that we don't have to deal with the retail channel, so we are not busy trying to satisfying them”. • On marketing campaign types in 2003:”Over the last year, we launched two different marketing campaigns: one focused on enterprise server and storage products and the other on our growing line of consumer products.” • On Dell not having a track record of designing a lot of products for the home and making emotional connection with consumers: “We are not overly concerned. We think this market will mature like most other markets are maturing….I honestly think that 10 years ago, when you were looking at buying a US$3,000 to US$4,000 PC, some people said direct sales wouldn't work. We've seen a high level of interest in our products”. • On consolidation and price declines in consumer electronics: “We will absolutely see it in this market. This is the only prediction I'll make today. A margin decline is a good thing because we have structurally the lowest costs”. • On Dell’s overall strategy: “I would view (our strategy as, first and foremost, win the business customer, and win the enterprise customer. Second is, win the consumer of PCs. Third would be to win the consumer with consumer electronics. In some of our more mature international markets with the most developed consumer businesses--like the United Kingdom, Japan, Canada and Australia--we definitely see a big opportunity in those markets for consumer electronics.” • On music: “Music players are not in the Dell scale. They're not a particularly large market. They are huge for smaller companies, but for us, they will never be a large market”. • On share of new and existing customers for Dell’s new products: “We have recently measured a few of our newer categories, like music players and TVs--and 52% are going to NEW customers. While it's too early for this to be really definitive data, it appears that those customers have a disproportionately high likelihood of then coming back to us and buying the PC. It's given us more confidence to be bolder in how we talk (in advertising) about our electronics”. • On ad inserts: “One of our most important advertising vehicles is the Sunday newspaper insert. By putting a TV on the cover of a Sunday insert, we sell more PCs than when we have with a PC on the cover”. • On price being Dell’s main asset: “Dell's great secret and success in the PC market is that we have a fairly low market share among value-price PCs and an absolutely dominant market share among high-end PCs”. Source: Nexis search, cnet.com, news.com

  16. Effectiveness of Advertisements • Total budget for advertisements in 2004 was pegged at $ 473 mn. Dell spent $ 116.7 mn in direct response ads alone in 2003. • According to a Nielson survey in Sep 2004, based on data from AdRelevance, Dell ranks second in terms of impressions (1614351 impressions). • According to a Reputation Quotient Survey conducted in the US, only Coca-Cola Co. and Dell Inc. were the only “two” big firms in the top 10 companies with the most memorable campaigns and the greatest sincerity in their corporate communications. • Dell markets via TV, e-mail, online and print. In 2004, it began regularly using free-standing inserts (FSIs) and radio. The radio ads drive traffic to an easy-to-remember URL and according to the company spokesman, the results have exceeded goals. • Dell discovered that banner ads were actually cannibalizing business. So it pulled back investments there. • Dell's television commercials ranked seventh in a survey of Singapore television viewers' ad recall levels by market research firm Asia Market Intelligence released in November 2003. • Memorable television commercials have contributed to Dell's increasing consumer market share in the US, which has grown from 16% in 2001 to 23% in 2003. • Steven, the “dude” in Dell commercials had become so popular in the US that he has spawned his own website and even a line of "Dudewear" clothing and accessories. He was later found to be involved in a Marijuana incident but by then, Dell had moved to different advertisement themes to lure business users and adults. • Dell follows local ethos and considerations while chalking out advertisement strategy for specific regions. For example, in Asia Pacific it had not used Steve the Dude. Source: Nexis search, cnet.com, news.com, asia.cnet.com

  17. PC Segment Competition Update US Market PC Sales Third Quarter 2004 Worldwide PC Sales - Third Quarter 2004 Source: Gartner Source: Gartner Asia Pacific PC Market in Third Quarter 2004 Dell grew by 38.8% in Asia Pacific Market in the 3rd Qtr 2004 Source: Gartner

  18. Server, PDA Segments: Competition Update Worldwide Server Market in 3rd Quarter 2004 Comment: Given the growth rates, Dell is likely to overtake Sun Microsystems in the fourth quarter of 2004. Dell has been steadily expanding its share of the server market, with emphasis on "industry standard components" Source: Gartner PDA Market Growth in 3rd Quarter 2004 Dell’s PDA shipments grew by 44% during the qtr Source: Gartner Source: Nexis Factiva

  19. Organization Structure Dell, Inc. – Operations Areas Products for Home & Home Office Products for Small Businesses Products for Medium & Large Businesses Products for Govt. Education & Healthcare Customer Service & Support • Low-end products for the entire family. • Desktops • Notebooks • Printers • Electronics & Accessories • Handheld (PDA) • Monitors • LCD TV • Technology solution for businesses from 1 to 200 employees. • Desktops • Notebooks • Workstations • Printers • Servers • Software • Scalable enterprise solutions for businesses over 200 employees. • Servers • Storage • Networking tools • Desktops • Notebooks • Workstations • Printers • Software • Service & Training • Special purchase programs and contracts for organizations. Includes • State & Local Govts. • Federal Govt. • K-12 Education • Higher Education • Healthcare • Solves problem by using following online tools: • Online Support • Troubleshooting • Service & Warranties • Downloads • Software & Peripherals • Upgrades • User Guides Sources: Dell.com

  20. SWOT Analysis • STRENGTHS • Number one direct sale computer vendor • Strong in enterprise storage and server markets • Low cost operating model • Profitable  • WEAKNESSES • Low R&D spending • Weak services position • Small inventories  • OPPORTUNITIES • Target low end and mid range segments • New markets • International expansion • Cyclical demand • PC upgrades/replacement demand  • THREATS • Strong competition • Interest and foreign currency exchange rates • Slow growth in PC market and IT spending environment  Source: Nexis – Datamonitor

  21. Management Profile Source: Nexis – Standard Directory of Advertisers

  22. Management Profile Source: Nexis – Standard Directory of Advertisers

  23. Financials Source: Annual Report 2004

  24. Financials – 2 Source: Annual Report 2004

  25. Financials – 3 Region-wise Sales Summary FY 2003-2004 Region-wise Contribution FY 2003-2004 Source: Hoovers.com

  26. Financials – 4 Product wise Sales Summary FY 2003-2004 Product wise Contribution FY 2003-2004 Source: Hoovers.com

  27. Financials – 5 Sales Trend from Jan’ 95 to Jan’ 04 Source: Hoovers.com

  28. Financials – 6 Source: http://www1.us.dell.com/content/topics/global.aspx/corp/background/en/facts?c=us&l=en&s=corp&~section=002

  29. Desktop Range INCREASING IMAGE STABILITY INCREASING TECHNOLOGY REFRESH • Dimension • Focused for personal and small office use • Short product, peripheral, and OS lifecycles driven by rapid advancement of consumer market • Limited support for network peripherals • Precision • Ultimate performance and scalability for workstation class applications • Performance • Scalability • Optimized Solutions • Application Focus • OptiPlex • Stable PCs for your connected environment • Easy To Transition To New Technologies • Maximized Uptime • Easy to Manage • Broad portfolio meets wide range of customer needs Source: www.its.uq.edu.au/itlo/dell.ppt

  30. Desktop Range – 2 Source: http://www1.us.dell.com/content/products/category.aspx/desktops?c=us&cs=19&l=en&s=dhs

  31. Desktop Range – 3 Precision Optiplex Source: http://www1.us.dell.com/content/products/category.aspx/desktops?c=us&cs=19&l=en&s=dhs

  32. Notebook Range Source: http://www1.us.dell.com/content/products/category.aspx/notebooks?c=us&cs=19&l=en&s=dhs

  33. Services The company’s services are grouped under four titles: • Dell Managed Services: • IT management services • Planning, deployment, maintenance, asset management, on-site field services and other related services • Dell Professional Services • Design, development and implementation of end-to-end technology solutions  • Deployment Services • Factory integration services • Custom asset management and recovery services • Custom delivery services • Installation services • Managed deployment services • Image management services  Source: Nexis – Datamonitor

  34. Goals • Most efficient path to the customer • Single point of accountability • Build-to-order • Low-cost leader • Standards-based technology • Establish relationships with leading technology providers in education. • Provide the best teaching and learning computing solutions tailored to needs. Source: www.homepages.wmich.edu/~c1yon/dellpresentationfinal%5B1%5D.ppt, www.qeddata.com/Presentations/bruett_02.ppt

  35. Business Model • Business to Business (B2B) • Business to Consumer (B2C) • Demand-pull company • Pure play internet company Source: http://www.ism.ws/ConfPastAndOnlineDaily/Files/Nov03/TBGray.pdf

  36. Online Market Segmentation Dell Homepage Home & Home Office Small Business Medium & Large Business Govt. Education & Healthcare Customer Service & Support Personal / End Users Products & Services Products Products & Services Government Special Offers Dell Deals Home & Home Office Business Solution Centre Federal New at Dell Shopping Alternatives Featured Solutions State & Local Small Business Education Business Technology Solutions Shopping Alternatives Solution categories IT Professionals K-12 Medium & Large Business Service & Support Service & Support Support & Information Business Affiliates Programs Purchase Information Government Higher Education Consumers’ options when they go to www.dell.com. Health Care Education Partners and Programs Health Care Source: www.its.uq.edu.au/itlo/dell.ppt

  37. Principles of SCM@DELL • Buy to Plan – Build to Order • Forecast = Buy = Sell • Reality based conversations: “Be Direct” • Relentless Demand: Supply Balancing • Synchronization between manufacturing and sales • Meaningful collaboration across the supply chain Source: http://www.ism.ws/ConfPastAndOnlineDaily/Files/Nov03/TBGray.pdf

  38. Business Strategy • Dell has announced a comprehensive business strategy to capture a larger portion of the B2B (Business to Business) internet-related market. • Web Related Capabilities: Dell’s advantage is based on direct relationships, low cost, speed to market and e-commerce expertise as much as it is on Internet hardware, appliances and customers services and support. Included in this strategy is "Service Provider Direct," a three tiered package of • Service • Support and • Co-marketing programs for ISPs, ASPs and Web hosting companies. • Infrastructure Computing: Dell has introduced its Power Application appliance servers designed for specific Internet infrastructure tasks such as Web serving, caching and load balancing. This will provide customers will a full range of server and storage solutions for building their Internet infrastructure. • Expert Services: A new offering that will help businesses take advantage of the power of the Internet. • Universal Access: Universal Internet access through a combination of leading-edge devices, connectivity offerings and access choices, encompassing narrow band services, broadband offerings and wireless products and services. • Dell Ventures: Through strategic links to companies with technologies, products and services that create breakthroughs related to the Internet, Dell will provide equity investments and incubation services for selected early-stage private companies to accelerate development Source: http://www.internetnews.com/xSP/article.php/3411_336641

  39. Competitors • HP • NEC • Toshiba • Fujitsu and • IBM (now Lenovo). Source: Nexis - Datamonitor

  40. Value Proposition Shopping & Buying Service & Support Loyalty/ Relationship Product Services Price Direct Model Dell Configuration & Shopping Order Status Premier Services Electronic Orders Trouble- shooting Personalised Experience Value-added Services Marketing: Internet Strategy Integrated Customer Experience Source: http://www.ucisa.ac.uk/groups/cisg/ppt/MISG00-04.ppt

  41. Market Places Other Back Office Systems i.e. Asset Mgmt or Help Desk Integration Marketing: Online Integration Strategy Customer Dell ERP XML webMethods B2B for Partners webMethods B2B “upgrade” from Dell webMethods B2B Dell Store Source: http://www.ucisa.ac.uk/groups/cisg/ppt/MISG00-04.ppt

  42. Marketing Strategy • A kiosk-concept programme in the US with 21 outlets set up in various shopping malls. This concept debuted in Asia with Dell setting up a kiosk in Singapore's Suntec City Shopping Mall. Since its pilot, the original 21 kiosks in the programme have expanded to 71. • Dell's kiosk programme in Asia has been more tentative. Singapore's single kiosk is "part of a three-month feasibility test in Asia-Pacific". Jim Skelding, Dell's general manager of home office and small business products, tells The Edge Singapore: "The kiosk concept in Singapore right now is an experiment, as well as to meet the festive shopping season. Company wants to see what the take-up rate is like, and then decide if it makes sense in our marketing plans." Penang-based Skelding oversees Singapore, Malaysia, and Thailand. • In kiosks, Dell showcases a range of consumer notebooks, desktops and other computer peripherals including printers. Skelding doesn't consider the kiosk concept a diversion from Dell's philosophy of direct sales over retail outlets. "Everything Dell do stands behind their direct-selling model," he says. • Kiosks had worked well in markets where: • Dell has reasonably low brand recognition • Dell has stopped expanding its market share • Placing a kiosk in one location has hit a large portion of the population • Online purchasing habits are not very strong Source: Nexis – The Edge

  43. Internet Advertisements Dell rely heavily on their Internet Advertisements. Source:

  44. Internet Advertisements Source:

  45. Internet Advertisements Source:

  46. User Segment Source: www.elab.vanderbilt.edu/.../novak/online_cb2001/Midterm%20Presentations/section%201%20group%201%20dell.ppt

  47. Globally Integrated Communication Advertising Sales Promotion Global Marketing Communication Direct Selling Public Relations Personal Selling

  48. Management Secrets • Leave Ego at the Door: Dell favors “two-in-a-box” management in which two executives share responsibility for product, a region, or a company function. • Dell management believes that collective knowledge is created by working in teams.One has to be trained to understand the importance of team dynamics and participate in productive dialogues and discussion. ‘ I am important’, or ‘ I am an expert’ attitude’ leads to one’s ego preventing team learning and knowledge creation. • No Excuses: This is about taking responsibility and being accountable for one’s actions. Employees are encouraged to admit their weaknesses and take actions to minimize or eliminate them. There should be no ‘ them syndrome’. • No Easy Targets: Employees must contribute to profit and growth. In practice this means incorporating stretch objectives in appraisal plans. S.M.A.R.T objectives in this case should be translated as Specific and Stretch; Measurable and Meaningful; Attainable and Aligned; Realistic and Time and Target-related. • No Victory Laps. The founder’s mantra: “Celebrate for a nanosecond, then move on.” A number of organizations, after winning quality awards or ‘Best Company to Work For’ awards, drift into complacency. Achievements should be followed by further achievements and this in practice necessitates implementation of continuous improvement principle. • Worry about Saving Money, Not Saving Face: Employees should be trained to “pull the plug on disappointing new ventures”. This requires a business mindset and tolerant culture. • Dell’s management principles are reflection of the five disciplines of the Learning Organization presented by Peter Senge in The Fifth Discipline (1990). These five disciplines are Personal Mastery (individual growth and learning), Mental Models (attitude and behavior), Shared Vision (direct and honest communication) Team Learning (creating synergy within teams) and System Thinking (seeing the big picture – organizational core competence). Source: Nexis – Business Week

  49. Some Marketing Questions that Keep Dell Awake at Night

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