Introduction
Dell inc. is a corporation that deals in and supplies information technology products and services. Their main products include personal computers; servers and other assorted computer hardware. They have been a major player in the industry for decades.
High definition TVs, printers, cameras and mobile music players are among new products at Dell inc. Dell inc. was largest seller of personal computers in the 1980s and 1990s and in 2009 was ranked third in computer sales with only Hewlett-Packard and Acer Inc doing better than Dell. Dell inc. was in 2006 ranked by Fortune magazine as one of the best companies in the United States.
Dell has also been recognized as one of the few companies that have done better than their main competitors in the industry for years (Economic Times, 2010).
Scope and brands
Dell inc. has a marketing strategy that entails marketing particular brands for specific market segments. It has different classes for these markets; Business/Corporate class, Home Office/Consumer class, Peripherals class and service and support brands are the main classes. The Business/Corporate class targets large clients like corporations. Long life cycles, reliability and serviceability are where most focus is laid upon in this package.
The products under this class include OptiPlex, Vostro Latitude, n Series, PowerEdge, PowerVault, PowerConnect and EqualLogic. OptiPlex handles desktop computers while Vostro is designed for small business computer solutions and mini computers. N series on the other hand are desk top and notebook computers delivered with Linux or freeDOS (Menchaca, 2008). Latitude covers business focused notebooks. PowerEdge are business servers and PowerConnect for network switches.
The Home Office/Consumer class targets the ordinary PC (personal computer) users. Good value, excellent performance and expandability are emphasized in this class to ensure customer loyalty. The brands in this class include Inspiron, Studio, Studio XPS, XPS, Alienware and Adamo.
Inspiron are budget PCs and mini computers, Studio brand is for mainstream PCs and portable computers, XPS are top notch desktop and mini computers, Studio XPS are PCs designed to meet top notch multimedia requirements, Alienware was dedicated to bringing the gaming experience to a whole new level by allowing excellent gaming options. Adamo on the other hand is a brand of laptops designed for the sophisticated class of clients as a luxury laptop computer.
The peripheral class includes the accessories department that produces USB drives, plasma TVs, and output display screens. Dell also has a brand of high end monitors under ultrashap.
Dell like any company has plenty of competition. Other major market players include HP, IBM, Apple, Samsung, Gateway, Acer, Sony and Toshiba. They compete mainly for the PC and server market. Dell has about 18 percent of the market share. Hewlett Packard on the other hand has 15 percent of the market.
In the year 2006 Hewlett Packard took the lead in the PC business from Dell. Dell grew by 3.6% in 2006 in while HP went by 15% during the 2006 period. Gartner and IDC in 2006 indicated that HP had exported a lot more units around the globe than Dell. In the fourth quarter of 2006, Gartner again estimated that Dell exports had gone down 8.9% while HP’s had grown by 39.9%. By the end of the year Dell’s market share was at 13.9 % in comparison to HPs 17.4 % (Bert & Seggewiss, 2008).
IDC reports indicated that Dell had gone down in terms of market share than all of its competitors. Its share of the server market had declined to 8.1 % from 9.5% the previous year.
Dell has made several acquisitions over the years in a bid to tap new markets and improve business. As of the year 2009, Dell had acquired in excess of 10 companies. ConvergeNet was the first company acquired by Dell. In 1999, Dell acquired Alienware which is a company that specializes in manufacturing desktop computers.
This was then absorbed into Dell’s department of high end product lines. Some new products introduced by Dell upon its acquisition of Alienwares were the introduction of a unit to produce CPUs for Dell. Previously, Dell’s CPUs had been obtained from Intel. Alienware is run by Dell but as an entirely separate entity (Lee, 2006). This is the strategy employed by Dell to prevent cross market products.
EqualLogic was acquired by Dell in 2008.This decision was arrived at to ensure that they remain competitive in the iSCSI storage market because this coupled with an efficient and already established manufacturing line brought down the cost of production (Gonsalves, 2007).Perot systems; a company that deals with application development, information technology solutions a business process outsourcing was also acquired by Dell further diversifying its services.
HP is clearly Dells most fierce competitor. It is a company that offers similar products including printers, scanners, digital cameras, calculators, PDAs, servers, workstation computers and computers. Hp became particularly competitive after its merger with PC giants Compaq. It now prides itself as a company that not only supplies software but also offers solutions in design and support of IT infrastructure.
IPG is part of HP and deals with imaging and printing. It is worth noting that it is the biggest player in printer related products and scanning devices in the world. IPG is unique because it not only offers solutions to corporation but also to individual consumers. This has earned the company a large and loyal client base all over the world. Inkjet and laser jet printers are some of the products associated with IPG. Multifunction machines that allow the user to print, photocopy and scan are also part of IPGs products.
In any industry there are barriers of entry. These barriers reduce the number of new companies joining the industry and ensure that the existing companies enjoy a good market share. Barriers could be circumstantial or sometimes calculated.
Government regulations, economic factors and market conditions are some of the things that form entry barriers. In the information technology field, the barriers that are most likely to bar new entrants include very tough competition from the industry giants who have been there for a long time.
These giants are also very rich corporations and a new entrant would be no match for them in terms of marketing budgets. Top brands also have the advantage of name recognition and customers are more likely to buy what they have heard about. It would be very difficult for a new PC company to produce equipment and try to sell is to clients who have been loyal to another brand. The pricing of the PC could also be a factor to consider because of the tight competition.
Personal computers and small components sell at very low price margins. A new entrant would have to have the capital and capacity at to produce the product in very large quantities and at a low cost in order for them to make enough profit to keep them afloat. The PC industry is probably one that experiences the most frequent and dramatic price fluctuations. Normally the prices go down and this would be devastating for a new entrant if they go down so rapidly upon the new company’s launch.
Conclusion
The success of Dell as a company can be attributed to consistency in the production of high quality products in every field. Dell has developed a brand name that is synonymous to good quality and has a large following of loyal customers.
Brand loyalty has been a key selling factor for Dell like most of its top competitors. The diversity in its products is also another good marketing strategy used by dell. USB drives, LCD TV sets, plasma TVs, projectors and monitors are some products produced by Dell in addition to its main products; computers and servers.
As discussed above, Dell targets specific markets for particular products. This in my opinion has helped them relate and interact better with their different markets making them a brand anyone would like to be associated to. The tight competition in the market has ensured innovation in every area both in terms of new features and cost reduction. Dell has come a long way as a top brand and with the recent acquisitions is bound to soar to great heights despite the fact that it lost its leadership in the server supply market.
References
Dell will offer U.S customers three different systems with Ubuntu 7.04 installed: the XPS 410n and Dimension E520n desktops and the Inspiron E1505n notebook. Economic Times. Retrieved from Worldwide PC shipments jump 15.8% in Q4: IDC (cmd). Web.
Gonsalves, A., (2007). Dell’s EqualLogic Buy Could Drive Down iSCSI Storage Prices. InformationWeek. United Business Media. Web.
Lee, L., (2006). Dell Goes High-end and Hip. BusinessWeek. McGraw-Hill. Web.
Menchaca, L., (2008). Dell Offers Three Consumer Systems With Ubuntu 7.04. Direct2Dell blog. Web.
Seggewiss, K., & Hill, B., (2008). The Dell dream dies. The Ottawa Citizen. Web.