Marketing Strategies of Dell Computers and HPQ Company - Essay Example

E-Business Strategy, Application and Implementation Executive Summary This paper intends to display a comparison of the past and present marketing strategies and analysis that covers Dell Computers and HPQ Company. This also presents several recommendations to “counteract” on the measures taken by its rivals. Dell Computers and HPQ Company seem to have combined their business models. From Dell Computer’s direct selling they have moved to the retail store approach. While, on the other hand, HPQ Company is moving towards improving their e-commerce. When Dell Computers have initiated their e-business approach, they constructed an excellent tool of sales and technical support, while HP is now on the process of developing a very efficient tool to accommodate the consumers’ needs. Dell needs their e-business style should also be the integrated with a “personal touch” that would be able to create a more special treatment to all customers. One would be the accessibilities of the company, aside from advertising the products, companies should be able to advertise where they can ask for help. Two, the speed of the relief sought. There should be a fast action to solve the problem. Three, the company should be able to avoid the problems that has already occurred so that the negative feedbacks will not be repeated and retained in the mind of the consumers. Four, the security of the logistics used. Another recommendation involves innovation of their products. Introduction In order address the threat of other competitors this study was done to re-examine the Dell’s strategy, business model as well as value system compared with its main competitors and determine an appropriate response to regain its competitive advantage and in addition to that, to counteract the threat of its main rival. This study aims to: 1) Critically review how Dell has used Internet technology to achieve competitive advantage; 2) Critically appraise the business models deployed by both Dell and HP. In addition provide a brief review of the legal factors that companies should consider before exploiting new markets; 3) Critically review Dell’s marketing and CRM strategy; 4) Review the emergence of Dell and HP as virtual organisations and how their businesses have continued to evolve; 5) Assess how businesses such as Dell can create economic value (the gap between price and cost) by exploiting opportunities within the ‘value system’ and the supply chain; 6) Critically review Dell’s current performance and assess whether a proactive management style could have mitigated any problems identified; 7) Synthesise the findings to provide an analysis of the key e-business elements, which can continue to provide competitive advantage to Dell and how Dell can counteract the threat of its main rival. Review of how Dell has used Internet technology to achieve competitive advantage. Dell Computers first emerged as a personal business from Michael Dell, who assembles and directly sells computers. This was first done through the phone. By 1996, Dell was using the Internet to “sell” their computers; they were able to increase sales without increasing their staff or even building more structures. Dell was able to adapt the technology that would enable consumers to act on their own; they gave the consumers the power to order on their own using the Internet, as well as an order-entry system over the phone. At the same time, the company used the technology to provide ample technical support to their end-users. Whether sales, technical support or other concerns, Dell has utilized the Internet well. The company was able to be the first to discover and use the technology efficiently. Dell also efficiently lowered their phone bills, in almost a year the company has an incoming computer sales of $1 million, thus a very productive and efficient step towards success. In 1999, Dell Computers have already reached being second to Compaq Computer Corp. Dell Computers also employed the PC price war, cutting through their inventory but the company was able to yield a large gain through this. And by the second quarter of 2001, April to be exact, Dell has reached the top spot in computer sales. On a May 14, 2001 issue of BusinessWeek Online, it applauded the innovative and early use of the technology "Michael Dell was e-business before e-business was cool. During the boom in technology spending, he used the Internet to reach out to customers and sell $50 million worth of computers a day (“Dell Computer Corp-Impact of the Internet,” 2008)." Consequently, 2001 is also the year when Hewlett – Packard and Compaq had its controversial merger. Brief Review of the Legal Factors Companies Should Consider before Exploiting New Markets This move by both companies has gained positive and negative reviews by analysts. Some drove in and stated that the merger would only bring extra hardware packages for HP, which it is not going to be beneficial. According to Bob Djurdjevic, president of Annex Research, the merger is not producing a very responsive outcome as seen in both companies’ stock exchange profile (Burton, Graeme, 2001). In order to distinguish important steps to be taken by Dell Computers, there is a need to review on the past marketing strategies and the present approach undertaken by the company and one of its toughest competitors. The paper observes strengths and the weaknesses of both approaches. This would also recommend a few points on how to improve these approaches. Dell Computers has focused on an excellent customer service right from the very start. They have considered several matters like response times on the telephone, quality of products, valuable features, or the ease of experience in using the product. According to Michael Dell, they are able to identify where their strengths lies, hence the company does not push towards innovative technology. The company focuses more on their strength, which falls on their logistics and marketing strategy. They have the advantage of knowing what the customers really want and how they would be using these computers. In the book by Jason Jennings and Laurence Haughton, “It's not the BIG and eats the SMALL... it's the FAST that eats the SLOW” (2002), the ability to anticipate the customers’ wants that sets a company apart from others (Haughton, L. and Jennings, J., 2002). Dell should also be able to address the current criticisms to it, including that on the bookkeeping issue. HP on the other hand, had a different approach on putting up their business. The business is relatively old which sprung from the innovativeness and grew from there. HP already possesses a long time line, wherein the most recent highlight is the merger with Compaq. Unlike Dell that depends mainly on their desktop and corporate markets for sales, HP is dependent on other areas, which includes emerging markets, the consumer area, and laptops. HP has focused on providing a wider array of products which targets more offices, small business and even home printings for photos. And with the current move of having Compaq as the “simplicity” approach, the company would be able to attract those who are in the entry level for computers. Dell’s Marketing and CRM Strategy Dell’ marketing strategy is now being put to the test. After the report on the lower than expected earnings of the third quarter of 2007, the stocks lowered by about 15 per cent (“Dell Vows to Fight Decline With $10B Stock Buyback,” 2007). Thus, the company swears to fight such with a $10 billion dollars buyback. Dell would also now need to utilize their most recent “acquisition” EqualLogic for $1.4 billion in cash. Another aspect that the company is considering involves a change of strategy. Although Dell has been noted for the direct selling approach, there is a need to rethink its approach. Dell had been into direct selling for almost all its life. But with the current “downfall” it is experiencing, it is not a surprise that the company is opening up its business to retail stores. Initially, Dell has been engaged in direct selling to consumers but is now open to other retail stores including Best Buy and Wal-mart stores. Before the Christmas season Dell has transported the units to the largest electronics retailers in the U.S. As the company expands business, they also incorporated the same new strategy to the new branches. The company is now offering its products to China and Russia. This would supplement their earnings by letting consumers view their products before it arrives at their door steps or if they opt to buy it there (Nichols, S., 2007). Although the use of “middle men” or retailers seems to be a good step for Dell, this also posts a threat to the Customer Relationship Management. When Dell is selling its products on the Web, e-commerce, and then the customers feels free in choosing what they want and what they need. Over the phone, Dell consumers are dealing with front liners from Dell, they are responsible for the products they sell. On the other hand, having retail stores that do not focus on Dell products only, there are several biases that should also be considered. These may include the retailer personnel’s’ attitude towards the product, or the personnel’s attitude as a whole. Dell Computers must make sure that they would be able to train and induct these sellers on the highlights of their products. The most important facet of the new changes should always remain; it is the core value of keeping their customers happy and secured. Emergence of Dell and HP as Virtual Organizations and How their Businesses have Continued to Evolve Since the HP-Compaq merger in 2001, there are several innovations on both ends. However, these changes were not easy; the company has to adjust to the merging market and consumers, as well as staffs. HP has just started joining the blogging community. Recently, Eric Kintz, Vice President for Global Marketing Strategy and Excellence for HP, established a blog network focusing on Marketing Excellence. The company believes that the conversation with their consumers, and their own employees generate their feedbacks as well as their future outlook of the company. HP expresses that the blog network would be able to answer the questions from the company’s perspective. The company would also be able to solicit the other area offices’ take on several of their decisions. This would also offset the difference of time zones especially from their offices abroad. HP’s blogs includes conversations ranging from technology to sales, to overall perception of the company (“Biz Blog Profile Series: HP Blog Programs,” 2006). HP is recently assessed by vendors; they were able to give a strong positive review for the company. The company has recently extended an outsourcing to maximize the sales, which is now paying off. From the original web sales of a different vendor, HP will now be offering direct sales. CEO Mark Hurd has been giving much attention to recruiting more sales staffs, especially around North America, for their support and sales support. Their global partners which handles whether sales, advance technical and product support are giving them much profit. The direct business model for HP also works best since it has been generating profits as compared to Dell. The consumers have been giving high marks for the company’s efforts to always being there for them. They are now utilizing the “E” for support, in all aspects, whether e-sales, e-(technical) support (Vendor Rating: HP, Gartner RAS Core Research, 2006). Dell on the other hand, is going on the other way. From being a mainly virtual organization, Dell is now reaching to retailers. The company is expanding their visibility on the market by exposing their product line to places that people frequent. They are combining the exposure of the products to be seen everywhere and the ease of ordering the items that consumers see everywhere. Now the company would be able to choose the time and place to see the units. They may ask questions that they have, even if they are just shopping around. When the more exposure of the products are met, they would be able to attract more. They would be able to interact with persons if they have questions. How Dell can Create Economic Value (the gap between price and cost) by Exploiting Opportunities within the ‘Value System’ and the Supply Chain As mentioned earlier, Dell Computers waged the PC price war which actually cut their inventory level to almost thirds as compared to its competitors. Since the market craved for the technology of computer, the company took advantage in giving in what they want, a low-priced computer that would be able to suit their needs. Dell was one of the first companies to have a below $1000 computers. This would create a great deal of demand for the consumers. The company does not really concern itself of the low supply that they might have, or the inventory as long as they are able to move out their equipments. On the other hand, the company is aware of the fact that they would not be able to access the PC development and technology innovation part of the business because they know they would need to charge a higher price for this, like in the case of the WebPC. It is also worth mentioning that at the early age of computer development, Asia was also able to offer ceiling price on component parts of the computers. Although, the Asian market states that they would not be able to keep it up once the demand for these components are abundant. The absence of retailers is also essential that the company was able price its own computers and consequently the lower prices. The exclusivity of the units also brings the warranty of original parts because these units are directly from Dell’s warehouses. The latest business move actually compromises this security because some units would now be coming from the retailers. Dell’s Current Performance and Assessment of Whether a Proactive Management Style Could have Mitigated any Problems Identified With the current performance of Dell, it is evident that they are pursuing the best possible efforts to get to the bottom of the setback. As mentioned at the early part of this paper, it is efficient to go down to the sellers and induct them of Dell’s product line. Another important aspect that Dell should address involves furthering their consumer relations. As mentioned in Haughton’s (2002) book, in order to sustain the fast movers’ advantage one should stay close to their customers. The book also recommends owning and exploiting one’s competitive advantage. This is what Dell is widely known for, thus they should not forget to own this advantage and promote their customer’s relations. E-business that works for Dell is the best possible way to strengthen what is getting delicate. As the strategies of the company are already established what is needed is its rejuvenation. The company would benefit on a proactive management style. Since Dell has been hearing from their consumers, they should also consider hearing from all the corners of the organization. With this, a proactive management style would definitely be competent. A more hands-on approach would be able to freshen up the perspective of the company. The company is moving to have retailers at the front of their customers; they should be able to nurture the “personal touch” of the company which they had during the direct selling approach. Dell would benefit from having the products closer to people but it would also be detrimental for the established direct approach of the company. So they should be able to maintain the connection they had with their long time and new customers. Synthesis of the Findings to Provide an Analysis of the Key E-business Elements In continuing with the e-business strategy of Dell, they should be able to get feedbacks from their end users. They can check for problems encountered, vague statements or even unclear interface. The company should be able to directly address the problems as well as improve on the out of date aspects. Their e-business style should also be the integrated with a “personal touch” that would be able to create a more special treatment to all customers. In acting on the e-business world, there are several factors that need to be considered. One would be the accessibilities of the company, aside from advertising the products, companies should be able to advertise where they can ask for help or where they can buy the products. This includes where phone numbers or websites are placed. Two, the speed of the relief sought. There should be a fast action to solve the problem. Three, the company should be able to avoid the problems that has already occurred so that the negative feedbacks will not be repeated and retained in the mind of the consumers. Four, the security of the logistics used. The company should also be able to focus on their long-time customers who have had first-class experience in using Dell’s product lines and how long the customers have trusted the brand. To counteract the rivals’ measures, the company should be able to rekindle the trust they had from their old customers and possibly attract more. Another factor that needs to be looked at includes the innovation of their products. Summary/Conclusion In order to achieve competitive advantage Dell is using Internet to sell or promote their computers. They were able to increase sales without additional staff or building more structures. Before exploiting New Markets, there is a need to review first the past marketing strategy, and the present approach to undertake by the company as well as its competitors. Dell should focus on excellent customer service, response times on the telephone, quality of the products, valuable features or ease of experience in using the product. In order to compete with others, they should change their strategy. Dell computers should make sure that they would be able to train and induct sellers on the highlights of their products. The company should maintain connections they had with their long time as well as new customers. They should be able to get feedbacks from their customers. They should be able to check the problems encountered and directly address the problems as well as improve on the out of date aspects. Their E-business should be integrated with personal touch in order to address the needs of their customers. In acting on E-business several factors should be considered such as: 1) accessibility of the company. Aside from advertising the products, they should also inform the customers on were to ask for help or were one can buy the products; 2) the speed of relief sought, meaning there should be past actions to solve the problem; 3) the company should avoid the previous problems encountered to avoid negative feedback; and 4) security of the logistics used. In addition to that, the company should focus their attention on their long-time customers and in order to counteract the rivals’ measures, the company should be able to rekindle the trust they had from their old customers and possibly attract more. The company should also focus their attention to product innovation. Reference List ‘Biz Blog Profile Series: HP Blog Programs,’ 2006, 1 May http://bloombergmarketing.blogs.com/bloomberg_marketing/2006/05/biz_blog_profil.html Burton, Graeme, 2001, ‘HP-Compaq Merger: The Analysts’ Verdict,’ Information Age Magazine, 05 September, http://www.information-age.com/article/2001/september/hp-compaq_merger_the_analysts_and_rsquo_verdict. ‘Dell Computer Corp-Impact of the Internet,’ 2008, Net Industries, http://ecommerce.hostip.info/pages/305/Dell-Computer-Corp-IMPACT-INTERNET.html ‘Dell Vows to Fight Decline With $10B Stock Buyback,’ 2007, Copyright 2007 Reuters, 5 December, http://www.internetnews.com/breakingnews/article.php/3714741 Haughton, L. and Jennings, J., 2002, ‘It's not the BIG and eats the SMALL... it's the FAST that eats the SLOW,’ 1st ed. Fist Harper Collins Publisher, Inc., Cited at: http://www.1000ventures.com/business_guide/crosscuttings/change_speedmoving.html Nichols, S., 2007, ‘Dell Retail Push Targets Emerging Markets. 25 September, http://www.computing.co.uk/vnunet/news/2199377/dell-furthers-retail-push Vendor Rating: HP, Gartner RAS Core Research, 2006, June, http://www.hp.com/hpinfo/newsroom/awards/hp2354.pdf Read More