Dell - Customer Service Advantage

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Dell – Customer service as a source to competitive advantage


Michael Dell established Dell Computer Corporation in 1984 in Austin, TX with the capital of $1,000, during the time he was Attending University of Texas. He had a vision that he could do great things by upgrading PCs and sell them. While upgrading and selling PCs, he found out that traditional manufacturer-retailer chain is not as productive as it should be. Therefore he started to think of finding ways to sell to the end users directly. By doing so, decreasing the costs on the supply chain and more important servicing the customer with those saved dollars would be a great solution in order to increase customer satisfaction and loyalty. He was right to do what he believed in as an entrepreneur and now he has a reputable company not only in terms of the sales but also building great customer relationships.

Direct marketers are in an environment, which changes so quickly and only way to survive is keeping track with customers’ preferences and trying every possible method to build strong, long-term relationship with customers in order to increase customer satisfaction, customer loyalty and customer profitability in cost effective way. In Dell Corporation, success is coming from proper research, positioning and the most important segmentation. Successful segmentation work gives Dell an opportunity to adjust its approach to each customer in each segment to build and improve customer relationships. That is customer relationship management and that is competitive advantage of Dell Computers. That is not an inside out company but outside in. Since what he is doing is a perfect example of direct marketing, I have enjoyed making research and preparing this project.

Dell computers:

The Company was founded in 1984 by Michael Dell on a simple concept: by selling personal computer systems directly to customers, the Company could best understand their needs, and efficiently provide the most effective computing solutions to meet those needs. Dell Corporation is based in Austin, TX. They have 40,000 regular employees (Approximately 27,000 in the U.S., and approximately 13,000 in other countries) Currently Corporate customers make up about 80% of Dell’s business. Dell’s direct relationship marketing eliminate 25% to 45% dealer mark-up.

Dell Computer Corporation designs, develops, manufactures, markets, services and supports a wide range of computer systems, including desktop computer systems, notebook computers and enterprise systems (includes servers, workstations and storage products), and also markets software, peripherals and service and support programs. The Company is managed on a geographic basis. The three geographic segments are the Americas, Europe, and Asia-Pacific and Japan. Dell Computer Corporation Organization (4)

Segmentation and Dell Computers:

Segmentation is the backbone of the Dell Computers operations. Based on segmentation, company takes its positioning and modifies its offerings for each segment’s customers. Michael Dell says, “An Important element of virtual integration with customers is segmentation. The finer the segmentation, the better able Dell is to forecast what customers are going to need and when. Then coordination of flow of strategic information comes to stage all the way back to suppliers, effectively substituting information for inventory” Dell's Market Segmentation.

Business Strategy:

The Company’s business strategy is based on its direct business model. The Company’s business model seeks to deliver a superior customer experience through direct, comprehensive customer relationships, cooperative research and development with technology partners, computer systems custom-built to customer specifications and service and support programs tailored to customer needs.

Dell Direct Model:

The direct model is based on the principle that delivering custom-built computer systems is the best...
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