New Horizons Case Review
Team name: Dry Ice Yan Huang(yh553), Jiani Liu(jl2982), YunWen Huang(yh555), Liufang Xiang(lx79) Instructor: Saisandeep Satyavolu 1
NCC 5530 Marketing Management
1. Major Issue The key elements lead Dell to success (1) ”Direct Model” “Direct Model" spending time with customers to figure out exactly what they want before manufacturing the product and customizing the orders. Listening to the customer ahead of time takes the guesswork and wasted resources out of the equation altogether. “Direct Model” ensure Dell could offer customers better quality at a lower price by eliminating the middleman and selling to the end users directly. From Exhibition 1, it is clearly to notice that channel costs only 2% amount of the product revenue under the direct model compared to the indirect sales which consumes 13.5%15.5% of its revenue. In addition to the customer, since every Dell system was built to customize the order, end users can get exactly what they asked for. According to the Computerworld’s 1998 survey, Dell was ranked as the first place in user satisfaction for the reason of “other traditional systems’ vendors still depend too heavily on resellers, which prevents them from quickly reacting to customer’s needs, because resellers may put their own interests first.”
(2) Proper segmentation targeted From Exhibition 2, we can see that the customer segments of Dell can be classified as “transactional” or “relationship.” Transactional customers are individuals or businesses who make transactionbytransaction buying decisions, they focus on economics of the purchase, and concern about the performance, specifications, features, reviews and awards. Compared with firsttime buyers, they are more familiar with computer. Dell targets on this segmentation since they can judge themselves, 2
NCC 5530 Marketing Management
no need of advice from salesmen. Relationship customers, in contrast, concern most about the system’s “Total Cost of Ownership” over the life cycle of its use, while price concern comes the second. These customers focus on attributes such as service, reliability, vendor reputation and product standardization. Dell’s direct model could satisfy customers in this segment better than other competitors, because Dell could offer service to the customers directly, and customize the service. In the year of 2002, Dell’s position was changed from a pioneer to a leader in the area of customerdirect and build to order computer system. From Exhibition 3, it is clearly that Dell has a huge increase while HP suffered a dramatic decrease.
2. Strategic Alternatives: In the Dell case, the author described several strategic opportunities for Dell’s growth in the future, which include product growth, service portfolio growth and international market growth. Product growth mainly referred to the sales based on personal computers, workstations, servers and online storages. Service portfolio included technical consulting and software migration as well as installation and break/fix services. International market referred to the revenue outside the U.S. market, which basically includes three regions: Americas International(Canada, Mexico, South and Central America), EMEA (Europe, Middle East and Africa), and APCC/Japen (covering Asia Pacific, China, Australia). Below, we offer three different strategic options based on the background information we have.
Option 3 Not entering the external storage
Description of strategic Enter growing external Enter the growing option storage markets; external storage
NCC 5530 Marketing Management...