Dell – New Horizons




I Introduction and scope of work............................................................................................. 3


I.1 Introduction................................................................................................................... 3


I.2 Scope of Work.............................................................................................................. 3


II Marketing mix....................................................................................................................... 4


II.1 Product policy............................................................................................................... 4


II.1.1 Innovation management.......................................................................................... 5


II.1.2 Management of already established products........................................................... 6


II.1.3 Brand management............................................................................................... 6


II.2 Price policy................................................................................................................... 6


II.2.1 Pricedetermination for new products........................................................................ 7


II.2.2 Price determination for the product program............................................................. 7


II.2.3 Price differentiation................................................................................................ 8


II.2.4 Creation of discount systems................................................................................. 8


II.2.5 Changes in prices of products................................................................................. 8


II.2.6 Implementation of prices........................................................................................ 8


II.3 Communication policy.................................................................................................... 9


II.3.1 Budgeting............................................................................................................. 9


II.3.2 Communication Instruments................................................................................. 10


II.4 Distribution policy........................................................................................................ 10


II.4.1 Formation of the distribution\'s system.................................................................... 11


II.4.2 Formation of the sale’s activities........................................................................... 11


III Distribution Channels.......................................................................................................... 12


III.1 Distribution Planning.................................................................................................... 12


III.1.1 Definition of Distribution Channel.......................................................................... 12


III.1.2 Channel Decisions.............................................................................................. 12


III.1.3 Channel Members and Levels............................................................................... 13


III.2 Systems of Distribution................................................................................................ 13


III.2.1 The traditional Retail Model.................................................................................. 13


III.2.2 Retail Functions in Distribution............................................................................. 14


III.2.3 Direct Distribution............................................................................................... 15


III.2.3.1 Definition of E-Business and E-Commerce.................................................... 15


III.2.3.2 Disintermediation and Reintermediation by E-Tailing...................................... 16


III.2.3.3 The value of direct distribution for the customer............................................. 16


III.2.3.4 The value of direct distribution for companies................................................. 17


IV Dell and its direct model..................................................................................................... 18


IV.1 Marketing policies of Dell.............................................................................................. 18


IV.1.1 Communication policy of Dell............................................................................... 18


IV.1.1.1 Personal selling ............................................................................... 19


IV.1.1.2 Advertising ...................................................................................... 19


IV.1.2 Product policy of Dell.......................................................................................... 19


IV.1.2.1 Product cycles ................................................................................ 19


IV.1.2.2 Differentiation strategy................................................................................ 20


IV.1.3 Distribution policy of Dell – The direct model.......................................................... 20


IV.1.4 Price Policy........................................................................................................ 22


IV.2 Objectives and the success of Dells strategy.................................................................. 23


IV.2.1 SWOT Analysis.................................................................................................. 23


IV.2.2 Actual position and future aspects of Dell Computer Corporation............................. 24


V Recommendation and conclusion....................................................................................... 25


VI Literature............................................................................................................................. 26

I Introduction and scope of workI.1 Introduction
Dell entered the 21st century as the most successful company in the PC industry. Founded in 1984, the company had achieved phenomenal records in sales and profit growth. Engine of this success is Dell’s Direct Model, which primary contains low costs for the manufacture and a direct customer relationship.


Especially the computer business is characterised by the neck-breaking speed of new product development. As soon as a new technology emerges, it is immediately adopted in new products. IBM and also Compaq, for example, misjudged the market in 1994 and suffered a high loss in PC sales. Michael Dell on the other hand understood always to react currently to changed requests of the market and so he realised quickly that the retail channel didn’t fit to his philosophy.


The answer was the “Direct model”, easy to describe, but difficult to duplicate. As orders come into the factory via website or call centres, the company relays to its suppliers details of which components it needs and when. All these hardware then rollup in vans to big bays at the back of the building and roll out again as complete computers just a few hours later. Because Dell\'s suppliers have real-time access to its orders via its corporate extranet, they can plan their production and delivery to ensure that there are always just enough of the right parts to keep the production line moving smoothly.


Goal of this assignment is on one hand to introduce the different marketing instruments, whereby the focal point is on the formation of the Distribution system. On the other hand it will be shown Dell’s special handling with these tools and the reasons for the success of the world\'s largest PC manufacturer.

I.2 Scope of Work
This case study “Dell – New Horizons” is divided into five chapters.


A short summary and the scope of work give an introduction about the content and the division of each chapter of this assignment.


Chapter II describes the main basics of the marketing mix, which consists of the four marketing instruments. These are the product policy, the distribution policy, the communication and the pricing policy. The part of the product policy describes the duties concerning the innovation management, the management of established products and the brand management in regard to the decisions referring the formation of present and future products. The second part gives an overview of the price policy and its influence on the price determination and the price differentiation. The communication policy includes all the communication instruments, which can be taken into consideration for the enterprise to decide in which way they want to communicate with the customer. At the end of chapter two the last marketing instrument the distribution policy with its formation of the distribution system and its sales activities is presented.


Chapter three gives an overview of the different distribution channels and the