Started famously in Austin in a University of Texas dorm room, Dell computer now has 24...

  

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Started famously in Austin in a University of Texas dorm room, Dell computer now has 24 facilities in and around Austin and employs over 18,000 workers. Dell's annual sales exceed $30 billion, ranking the firm in the Fortune 500 list, ahead of familiar names like Walt Disney, Johnson & Johnson, and Du Pont. Expert suggest that Dell's success rests on the firm's superb execution of its direct sales model. Here are the basic tenets of the model. Dell works closely with its suppliers, holds minimal inventory and keeps a tight grasp on costs. Triggered by a phone or Internet order, Dell machines are made to order and delivered directly to the customer. No retailer or distributor intervenes. The customer gets the exact computer desired and normally pays a lower price than what competitors would charge. Dell gets paid by the customer when the order is processed - weeks before it pays suppliers'. As an economic slowdown began in early 2000, Dell decided to cut prices in order to gain market share. Kevin Rollins, the chief operating officer at Dell, noted, "It was advantageous for us, actually, because in periods of slow demand, component prices drop, and unlike our competition, we can pass those savings on immediately to customers. The strategy worked. Hewlett-Packard, Compaq, and Gateway all lost market share as Dell's share of the US market climbed to 31 percent by the fall of 2001. Such stiff competition forces industry consolidation, as the Hewlett- Packard/Compaq merger illustrates. Started famously in Austin in a University of Texas dorm room, Dell computer now has 24 facilities in and around Austin and employs over 18,000 workers. Dell's annual sales exceed $30 billion, ranking the firm in the Fortune 500 list, ahead of familiar names like Walt Disney, Johnson & Johnson, and Du Pont. Expert suggest that Dell's success rests on the firm's superb execution of its direct sales model. Here are the basic tenets of the model. Dell works closely with its suppliers, holds minimal inventory and keeps a tight grasp on costs. Triggered by a phone or Internet order, Dell machines are made to order and delivered directly to the customer. No retailer or distributor intervenes. The customer gets the exact computer desired and normally pays a lower price than what competitors would charge. Dell gets paid by the customer when the order is processed - weeks before it pays suppliers'. As an economic slowdown began in early 2000, Dell decided to cut prices in order to gain market share. Kevin Rollins, the chief operating officer at Dell, noted, "It was advantageous for us, actually, because in periods of slow demand, component prices drop, and unlike our competition, we can pass those savings on immediately to customers. The strategy worked. Hewlett-Packard, Compaq, and Gateway all lost market share as Dell's share of the US market climbed to 31 percent by the fall of 2001. Such stiff competition forces industry consolidation, as the Hewlett- Packard/Compaq merger illustrates.

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1 The marketing strategy for reaching final customers or households in the consumer market would differ from the strategy for corporate buyers in several ways a Targeting When targeting the consumer m... View the full answer