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Dell Case

Dell followed a strategy of direct sales and customization to provide low-cost computers directly to customers. This allowed Dell to cut out middlemen and assemble computers based on individual customer orders. By 2001, Dell had become the largest computer systems company through this approach. Dell's supply chain model involved purchasing components directly from suppliers and assembling computers just-in-time based on customer orders to minimize costs. This direct sales and customization approach enabled Dell to consistently offer lower prices than competitors.

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Tanya Singh
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86 views10 pages

Dell Case

Dell followed a strategy of direct sales and customization to provide low-cost computers directly to customers. This allowed Dell to cut out middlemen and assemble computers based on individual customer orders. By 2001, Dell had become the largest computer systems company through this approach. Dell's supply chain model involved purchasing components directly from suppliers and assembling computers just-in-time based on customer orders to minimize costs. This direct sales and customization approach enabled Dell to consistently offer lower prices than competitors.

Uploaded by

Tanya Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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DELL CASE

SUBMITTED BY:
BHAVYA DUTTA
KOMAL JAIDKA
NAVNEET SINGH BEDI
TANYA SINGH
INTRODUCTION

• Started by Michael Dell (19 at that time) in his dorm room at the University of Texas in 1984
with $1000.

• Its revenue is around US$ 63.07 billion in 2012.

• In 2001, became the No. 1 computer systems company in the world.

• At present (2013), it is the third largest PC vendor in the world after HP and Lenovo.
PRICING OBJECTIVE BEING PURSUED BY
DELL
• Dell followed customary strategy instead focusing on product innovation.
• Purchases components directly from manufacturers
• Assembles them to meet customer’s satisfactions
• Ships the finished products to customers as soon as the order is received
• Dell Inc. follows direct-sales approach and selling via internet.
• Dell’s decision to focus on assembling computer components produced by other
manufacturers has relieved it of the burden of owning assets, investing in research and
development which made a huge difference in pricing.
HOW DO THEY DO IT?

Dell’s success is a combination of:

• Mass customization (end result: Delivers exactly what the customer wants)
• Just-in-time components inventories
• Direct sales
• Customer service
Together these allow for maximum effectiveness with minimum cost.
SUPPLY CHAIN CHART

SUPPLIERS REVOLVERS

Customer places an
Order Dell processes Sends the order to Plants build, test
the order assembly plant & package the
(By phone or through
the Internet on
product
www.dell.com)

Dell typically ship


all orders
Configuration
evaluations Financial
evaluation
(checking the feasibility of a CUSTOMERS
specific technical
configuration)
LONG-TERM IMPACT OF DELL’S PRICING
STRATEGY

• Lowering of prices by the competitors will consequently lower their profit


margins.

• If they still go with lowering of prices, eventually a time would come when
their share value and brand image will be compromised.
DELL - MARKETING MIX
• PRODUCT

 Dell provides customized products to individuals according to their requirements.

 Dell recently have branched out to include a variety of different consumer electronics like
computer hardware peripherals, computer software as well as support services.

• PRICE

 The main objective of Dell is to produce at low price for the customers.

 Due to this, Dell is undercutting competitors in price rapidly and thus gaining market share. Dell
appears to be value for money to customers.

 It is also able to do so by cutting out all costs of manufacturing parts as well as costs associated
with retailers and distributors. 
• PLACE

 Dell uses a direct channel model where it sells its products directly to the customer
without need for a distributor or a middle man.,

 They were the first to adopt advanced technology and use the internet as a direct
channel to sell its products.

 The direct channel model enabled Dell to reduce costs and minimize inventories and so
it has been able to pass these savings to customers in the form of lower prices.

• PROMOTION

 By selling directly via the Internet, catalogs and the telephone, it maintains direct
contact with customers and can regularly gauge their sensitivity to price changes.
PRICING STRATEGY WHILE ENTERING NEW
MARKETS
• Low price strategy: They will sell directly to customers to cut out costly middlemen,
buy components in bulk to get the lowest prices.

• Dell’s supply-chain efficiency allows it to radically undercut rivals' prices.

• Understanding the feasibility of the new product in the market.

• Online selling.

• Satisfying customers and building customer relationships is most important.


THANK YOU

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