Read the case study and answer the following question

3.What recommendations would you make to senior marketing executives going forward?

4.What should senior marketing executive be sure to do with its marketing ?

MARKETING SPOTLIGHT DELL "We have a tremendously clear business model," says Michael Dell. There's no confusion about what the value proposition is what the company offers, and why it's great for customers. Dell is now the number one computer systems company Dell is extremely responsive. Buyers go on Dell's Web site and design their own computers. They give their payment authorization, which means that Dell receives the money in advance and can use the funds to pay for the supplies needed to build the computer. Because its computers are built-to-order, Deli carries an industry-leading four days of inventory. It takes delivery of compo- nents just minutes before they are needed. At its Austin, Texas, factories, a Dell System can in some cases be built, have the software installed, be tested, and be packed in eight hours. Dell's costs are lower, allowing it to price its comput- ers lower than competitors' prices if it wishes Yet speed is only one part of the Dell equation Service is the other. In fact, it was through veering away from its successful business model that Dell dis- covered the importance of customer service. In 1993, the company began try ing to sell to retailers, mainly because everyone else was. Customers were dis- gruntled because of poor retail service. Dell ultimately abandoned the retail channel Most important, Michael Dell decided that there would be more things we'd have to do besides build a PC. He knew his company had two kinds of cus- tomers, corporate and consumer. Whereas the consumer would buy mainly because of price, the corporate buyer needed a carefully developed relation ship. Like most successful companies, Dell put the most resources into building relationships with its most profitable customers. Corporate customers make up about 80 percent of Dell's business, and the company manages its corporate accounts with a top-notch sales team. Dell also installs custom software and keeps track of business customers' inventory for them. Through the use of Premier Dell.com, customized customer Web pages at the Dell site, the company has created a 24-hour order-entry system. Big cus- tomers can click on the site to see all kinds of information about their preferences and needs. The site can be accessed worldwide by any company subsidiary, and employees, not just purchasing agents, can use the Premier Delt.com to pur chase computers according to an automated policy, it's the ultimate network." Michael Dell says, "and a fabulous way for us to interact with our customers." The normal practice of companies is to "build-to-stock. This is a guessing game that companies often fose by building too much or too little. In the auto CREATING CUSTOMER VALUE, SATISFACTION, AND LOYALTY CHAPTER 5 169 industry, cars will st unsold in dealers' lots for 60 days, tying up working capi- tal. Why have auto and other companies not moved from the inefficient build- to-stock model of production to Dell's build-to-order" model? Auto manufac- turers have invited Michael Dell to speak to them on several occasions. The consensus seems to be that Dell works with 50 main suppliers to put together a $1,000 PC, but a car manufacturer may have to work with 900 suppliers to put together a $20,000 car. In addition to the technical challenge, the auto industry faces dealer and legislative hurdles 3. What recommendations would you make to senior marketing executives going forward? What should they be sure to do with its marketing? Sources: Michele Marchetti, "Dell Computer." Sales & Marketing Management (October 1997):50-53. Evan Ramstad, "Del Fights PC Wars by Emphasizing Customer Service Focus Wins Big Clients and Gives IBM and Compaga Run for Their Money." Wall Street Journal, August 15, 1997. D. 84. Saroja Girishankar, Dell's Site Has Business in Crosshairs." Internetweek April 13, 1998, p. 1: The Internetweek Interview---Michael Dell Chairman and CEO Dell Computer, Internettek. April 13, 1998, p. 8: Date Buss *Custom Cars Stuck in Gridlock. The Industry Standard October 23, 2000, pp. 90-97; "A Revolution of One. The Economist April 14, 2001: Betsy Morris, Can Michael Dell Escape the Box Fortune, October 16, 2000, Gary McWilliams, "Dell Computer Has a Midide Crisis," Wall Street Journal, August 31, 2000: "Dell Increases Its Market Share as PC Sales Slow" New York Times January 22, 2001. Leah Beth Ward, Dell Sales Overtake Compan." Dallas Moming News, January 24, 2000 Discussion Questions