NCC 5530 Marketing Management
Team name: Dry Ice Yan Huang(yh553), Jiani Liu(jl2982), YunWen Huang(yh555),
Liufang Xiang(lx79)
Instructor: Saisandeep Satyavolu
Dell New Horizons
Case Review
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1. Major IssuTh ky lmnts lad Dll to succss (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 canget
exactlywhattheyaskedfor.AccordingtotheComputerworld’s1998survey,Dellwasranked 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 targetedFrom 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,
NCC 5530 Marketing Management
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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. Stratgic Altrnativs:
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,
