Dell - Direct Marketing

Topics: Customer service, Marketing, Risk Pages: 6 (2206 words) Published: August 4, 2009
The desire to unseat its closest rival Hewlett-Packard in market share war in Australia has driven Dell dramatic change in the service strategy. Dell was successful by selling machines directly to customers – mostly business – by phone or over the internet. However, some analysts believed that its new strategy of selling through retailer is an uphill struggle (Koenig, 2008). As Barry Jaruzelski, a partner at the consulting firm Booz & Company said: “Now that so much of the market is consumers, they have been forced into places that traditionally they didn’t want to go, which is retail” (Koenig, 2008). Twice in this year has Dell stepped out of its direct business model. The first one is when Dell sealed with Officework and partnership with gizmo marked the second time. In the article named “Dell signs on gizmo to lend a helping hand,” Mitchell (2008) mentions about how the strategy of alliance with Gizmo, an Australian service oriented company, benefits both sides and their customers. Three main points can be drawn from the article: •The availability and guarantee quality of the current service offered by Dell, i.e. the vendor’s on-site, next business day warranty service. •The different levels of support creating an integrated service which offer their customer best-in-class services. •The continuing evolution of Dell to expand the market share in Australia. In the perspective of service marketing, what concepts can be connected with this event? In term of satisfying consumer, which theory can be used to explain the better service for Dell from this combination? And in the light of the resource based view theory, can Dell “steal the crown from HP” by playing in the ground that is not its core competence? The answers for those questions will be gradually opened during the discussion in the next two parts.

In order to reach a deeper understand of reasons behind the article, this section will go a little further, analysing Dell’s strengths and weaknesses based on concepts of services marketing. The purpose of this is to look beyond the fact to answer for the question why Dell, a well-known company for direct sales and internet commerce, has been moving to retail model which is not its core competitive advantage in foreign market, i.e. Australia. Therefore, two main theories supporting the argument will firstly be mentioned. They will then be used as a tool for discussion in the real case. Two marketing services concepts:

Perceived risk:
Perceived risk has long been identified as a significant factor in consumer decision making conducted by Guseman (1981) and Kaplan et al. (1974) (as cited in Bennett et al., 2003), and it becomes more complicated for services on the web. Much marketing activity, in fact, is designed to reduce perceived consumer risk. That is why it is crucial to mention about this concept. The extent of the perceived risk is generally determined by a combination of two factors expected consequences and the level of probability of such an outcome occurring (McColl-Kennedy, 2003). Penetrating the dark recesses of the customer’s mind is not an easy task (Kotler, Brown, Adam, Burton, Armstrong, 2007). This is because customer’s perceived risk is an amalgamation of all the possible types of risk with different level of importance. Basically, they can be divided into seven categories comprising financial, functional, physical, psychological, sensory, social, and temporal risk – supposed by McColl-Kennedy (2003). In order to reduce the perceived level of risk, customers usually search for further information by obtaining from family, friends, experts, or from the Internet. Other options can be seek guarantees or warranties, rely on price as a surrogate for quality, evaluate the reputation and image of the company, use an initial trial to evaluate the service, consider tangible cues as guide to service quality. As the result, company can impact on the probability of...

References: Dell signs on gizmo to lend a helping hand. (2008, August 01). Australian IT news. Retrieved August 10, 2008, from,,24111419-15306,00.html
Dell profit, sales jump in Q1. (2008, May 30). Australian IT news. Retrieved August 10, 2008, from,,23782313-15306,00.html
Officeworks to sell Dell PCs. (2008, May 01). Australian IT news. Retrieved August 10, 2008, from,,23626962-15306,00.html
Dell seals Aussie retail partner. (2008, April 30). Australian IT news. Retrieved August 10, 2008, from,,23622041-15306,00.html
Kotler, P., Brown, L., Adam, S., Burton, S., Armstrong, G. (2002). Marketing (7th ed.). Australia: Pearson.
McColl-Kennedy, J.R. (Ed), 2003, Services marketing: A managerial approach. QLD: John Wiley & Sons.
Refining and extending the business model with information technology: Dell computer corporation. (1999, May 19). Australian IT news. Retrieved August 10, 2008, from
Zaharove-Reutt, A. (2008, July 31). iTWire Discussion. Retrieved August 11, 2008, from file:///N:/Documents/Semester%203/SERVICES%20MARKETING/viewtopic.php.htm
Zeithmal, V., Bitner, M. & Gemler, D. (2006). Services marketing: Integrating customer focus across the firm (4th ed.). New York: McGraw-Hill.
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