Dell Direct and Not-so-Direct
Week Six Case Analysis: Dell Direct and Not-So-Direct
MRKT 5000 Online Course
Julia Huelsmann
Dell Direct and Not-So-Direct
Case Summary:
When the Texas-based Dell computer company started in 1984, its creator Michael Dell was interested in having a completely different distribution approach from his competitors. In order to keep costs low, minimize inventory costs and cater to customer needs, Dell sold directly to customers. By 1997, Dell’s distribution model was working extremely well for the company and brining in $1 million a day in sales. Based on the model and the success of direct distribution for consumers, Dell expanded its target audience to large companies, small businesses and government agencies. Dell’s competitors were interested in the same markets, but unlike Dell used both direct and indirect distribution methods.
In 1990s Dell tried the option of retail distribution. It tried selling Dell PCs through a number of large U.S. retail chains, but did not realize the profits it was expecting. The company also tried using branded kiosks to communicate with consumers in order to answer questions, resolve issues and place orders. Neither of the trials was very profitable for Dell, so very quickly after initial implementation both experiments didn’t last long. In 2007, Dell realized that consumers outside of US were not as interested in purchasing PCs from the internet. Dell ended up selling its products both through US and through international big chain stores. By 2010, these experiments showed enough profit to make Dell start entertaining other retailing opportunities.
In addition to beefing up its retailing strategy, Dell also is a pioneer in the use of social media for marketing and makes a significant profit from posts on Facebook and Twitter. In addition, Dell continues to use its tried direct distribution strategy at the very core of its business.
Key Marketing Issues * Speed of innovation – The reality of the
MRKT 5000 Online Course
Julia Huelsmann
Dell Direct and Not-So-Direct
Case Summary:
When the Texas-based Dell computer company started in 1984, its creator Michael Dell was interested in having a completely different distribution approach from his competitors. In order to keep costs low, minimize inventory costs and cater to customer needs, Dell sold directly to customers. By 1997, Dell’s distribution model was working extremely well for the company and brining in $1 million a day in sales. Based on the model and the success of direct distribution for consumers, Dell expanded its target audience to large companies, small businesses and government agencies. Dell’s competitors were interested in the same markets, but unlike Dell used both direct and indirect distribution methods.
In 1990s Dell tried the option of retail distribution. It tried selling Dell PCs through a number of large U.S. retail chains, but did not realize the profits it was expecting. The company also tried using branded kiosks to communicate with consumers in order to answer questions, resolve issues and place orders. Neither of the trials was very profitable for Dell, so very quickly after initial implementation both experiments didn’t last long. In 2007, Dell realized that consumers outside of US were not as interested in purchasing PCs from the internet. Dell ended up selling its products both through US and through international big chain stores. By 2010, these experiments showed enough profit to make Dell start entertaining other retailing opportunities.
In addition to beefing up its retailing strategy, Dell also is a pioneer in the use of social media for marketing and makes a significant profit from posts on Facebook and Twitter. In addition, Dell continues to use its tried direct distribution strategy at the very core of its business.
Key Marketing Issues * Speed of innovation – The reality of the
Cited: “Dell Marketing Strategies?“, http://www.entrepreneurslife.com/thoughts/entry/dell-marketing-strategies/ Jessica Davis, “Dell to Distribute PCs through Ingram Micro, Tech Data”, http://www.channelinsider.com/c/a/Dell/Dell-to-Distribute-PCs-through-Ingram-Micro-Tech-Data-558334/ Andrew Shedden, ‘”Channel Conflict – How to Reduce The Static”, http://broadfieldconsulting.com/channel-conflict-creates-lot-static/