Distribution Channel of DellExecutive SummaryThe initial success of Dell was due to its early use of the internet. Dell's direct sales strategy had attracted the customers and paid off in a short term. In addition, the use of internet created a significant competitive advantage for Dell while its competitors didn't believe that the online operations are very difficult to conduct in B2B market. Dell uses the direct model to easily allow the customization of computers for consumers, and how the direct model allows Dell to operate with very little inventory through the use of a just-in-time inventory system.
The second section of the case study focuses on how emerging economies differ in terms of direct and indirect distribution channels with respect to USA. In terms of extending its products to emerging economies, Dell believes that its direct model is adequate to work in any country. However, some cultural issues need to be assessed prior to implementing its channel model. In terms of indirect distributors, the Indian personal computer (PC) market has revamped its channel relationships to focus on national and regional wholesalers and reducing its use of local wholesalers.
The Indian PC wholesalers erred in assuming that distribution to rural parts of the country would succeed. They did not consider the other parts of the marketing mix in their distribution strategy; for example, having a product available in a market will only translate to sales if the customer knows it is there. Lastly, the case study analyzes the differences in PC prices across countries and explains the variances in these prices. Distribution Channel of DellIntroductionChannels of distribution represent the "place" component of the marketing mix.
Place is a critical element because it is the ultimate goal of a business transaction, the consumer receives the product and the manufacturer receives revenue. This report focuses on how the manufacturer delivers its product to the consumer. Part one of the report will give an explanation of the major concepts related to distribution channels. For the second part of the report we will conduct a case study which relates the concepts learned in the first part of the report to Dell Inc. The case study will look at indirect and direct distribution channels in Dell Computers.
(Pelton, et. al. 2002, 189-94)Dell’s Online Success inevitably resulted in a complete alteration of their business strategy, which focused on making every decision customer-driven, while increasing efficiency across the company. With the formation of the Dell Direct Model, which focused on made-to-order products, a low cost distribution system, rapid lead times, and the maintenance of customer relationships, this new concept needed strong sales and marketing opportunities, as a customer could get a made-to-order computer shipped to their home in about 36 hours, which was a model time within the computer industry at the time.
With the Internet craze of the 1990’s, the Internet presented the ease of a new information channel, which was the perfect mode of extension for the new Dell Direct Model into customer’s homes. (Lapide, Larry, 2005, 16-19)