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Business 2000
EIGHTH edition
Working in Dell’s Sales and
Support Customer Centre
DIRECTLY FROM DELL
TO THE CUSTOMER
Imagine that you are a member of the Dell sales team. It is a busy day with
lots of calls and email enquiries. A call comes in from a householder who
says he has seen your brochure in the Sunday paper. He is reading from
it and says he is interested in the Dell DimensionTM 2400 desktop. He tells
you that he doesn’t understand any of the mysterious terminology about
processors and so on. The flat screen looks nice and will save space. He
just wants to type letters and keep domestic accounts. Is the product any
good and when can it be delivered? You handle these kinds of calls every
day, offering advice and support. Another sale is made and another
domestic customer is satisfied.
introduction
Dell Inc. is a premier provider of products and services required for customers worldwide to build their
information technology and internet infrastructures.The company supplies PCs to business and domestic
customers across the globe. In addition, Dell supplies a range of IT products and services to businesses,
including powerful servers, storage, workstations, notebooks, and desktops. Dell employs
approximately 47,800 people worldwide.Total sales currently exceed US$43.5bn per annum.
Dell is a truly global company, headquartered in Round Rock,
Texas, USA.The European Manufacturing plant is located in
Limerick. Dell’s advanced, just-in-time, build-to-order
manufacturing system produces computers for customers
throughout Europe, the Middle East, and Africa. Sales and
support centres for small business and domestic customers
are located in a number of centres around Europe
including Bray, Co.Wicklow and Cherrywood Science
and Technology Park, Co. Dublin. Dell also has
The next call is from the manager of a small company. She is thinking of
buying a server. She knows all the technical language but is not sure about
installing the machine on the local network.This requires some specialist
input, so you get advice from a colleague who deals with these types of
questions. Your colleague tells the customer everything she needs to
know.The customer purchases a Dell server. Another business customer
is satisfied.
These are only two of the many daily orders received by Dell sales staff.
The order details are automatically forwarded to the manufacturing plant
in Limerick to be specially made and customers receive their computers
in seven to ten working days. Thousands upon thousands of customers
have made a similar phone call, received advice, and purchased a
computer. They did not have to spend time visiting shops. They have
reaped the benefits of direct marketing.
What is Direct Marketing?
Michael Dell is one of the most
famous business people in the
world. The story of how he
founded Dell in 1984 (with just
$1,000), is well known. A
critical key to success used
from the very start was his
concept of direct marketing.
Most computer companies sell
their products to retailers, who
sell them on to customers
through their shops. This
indirect distribution process
obviously adds cost and the
customer must pay for this.
Dell eliminates this additional
cost by selling directly to the
customer. Furthermore, this
approach brings a number of
other cr itical business
advantages:
◗
By dealing directly with its customers, Dell can find out exactly what
they need and want.This ensures that expectations are met and that
customers are not disappointed. In addition, Dell hears the views of
thousands of individual customers and gains a deep understanding of
their individual requirements.
◗
Each computer is built to order.The customer can specify the features
they want. That particular PC is then built and delivered to that
particular customer. Such a PC is said to be customised.This is a highly
personalised service.
◗
Dell builds computers on a just-in-time (JIT), build-to-order
(BTO) basis. Therefore, if a new technology emerges it can be
included immediately. A company with stocks of ready-made
computers cannot do this.
◗
The JIT/BTO approach also means that Dell does
not have to keep stocks of components or readymade computers. Stock, which is also called
inventory, costs money. Dell does not have these
costs and, therefore, can sell to the customer at a
lower price.
offices in most European countries to serve
the
needs
of
large
corporate
and
government customers.
Dell
is Ireland's largest
exporter* and largest technology
company with approximately 4,300
staff. Overall it is ranked the second
largest company in Ireland.+ In addition,
Dell is considered the largest PC supplier
in Ireland, with about a 35 percent
market share*.You can find out
more about Dell at
www.dell.ie
*
Business 2000
EIGHTH edition
Dell - Directly from Dell to the Customer
Irish Exporter's Association
+
IDC Q4 2003
In the Dell Direct Model, the customer is the beginning and
end of the process. As a result, Dell can deliver high quality
computers to satisfied customers at the best possible prices.
Furthermore, Dell can do this all over the world.
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Communicating
the Dell message
All businesses work hard to ensure that people know who they are and
what they do. Dell works harder than most in this area. It is critical for a
direct marketing business to manage its public communications in a highly
effective manner. How else would customers know what Dell has to offer
since there are no retail outlets where products can be seen or inspected?
Dell’s public communications strategy has three main components:
Advertising
Dell advertises in the national newspapers, computer magazines, on the
Internet and TV and by placing inserts in newspapers and magazines. Most
of us are familiar with these inserts. Dell’s advertising campaigns are designed
with one central objective – to get a potential customer to ring up or go
online and order a computer. Dell measures the impact of each individual
marketing campaign by assessing the volume of calls to sales representatives
and the number of clicks to the Dell website. Dell marketers map the
campaign response to the original costs to measure the return on
investment (ROI). Dell then measures the effectiveness of each campaign,
comparing and ranking campaigns, learning from best results, thus keeping
advertising fresh and most importantly customer responsive. In addition, the
effectiveness of different campaigns can easily be compared.
Direct Mail
Any promotional material sent to customers through the post is known as
direct mail. Direct mail is a widely used advertising process. Dell publishes
various 24-page monthly catalogues, describing available product ranges.
Different catalogues are geared to separate Dell markets – one for the
small businesses and the other for domestic customers. This is sent to a
selected group of customers who are on Dell’s mailing lists.
Online
The Internet offers many advantages to a direct marketing company.
Products can be shown and described in detail on a website. However, the
website is not used for advertising purposes only. In effect, the website is
the Dell shop.
Customers can
browse at their
leisure without
l e av i n g t h e i r
home or office.
In fact, Dell was
one of the first
companies to
use the Internet
for business
purposes and
was the first to
record $1m in online sales. Dell’s e-commerce website, www.dell.com, is
one of the busiest in the world. The site is distributed across 86 countries,
using 28 languages or dialects and 29 different currencies. On the website,
customers can review, configure, and price computer systems for
themselves. They can place an order online and then track the order from
the manufacturing stage to actual delivery.
Business 2000
EIGHth edition
Dell Segments its Market
The market Dell serves from its customer centre in Bray is known as the
Home and Small Business (HSB) market. Sometimes it makes sense to
divide customers into categories if each category shares common
characteristics. This process is called segmentation and each category is
called a segment. A company’s approach to segmentation is a very
important element in its marketing strategy. Each segment must then be
managed in a unique way, probably by using a different marketing mix.
For example, a business customer usually needs all the computers in the
office to be the same and to be easy to upgrade and service. A domestic
customer is more focussed on the latest features and value for money.
Marketing staff in Dell divide their market into two main segments –
consumer (domestic) and small business. In marketing terms a consumer
or home market is known as B2C (business to consumer), while a business
market is known as B2B (business to business). About 1,000 people work
in Dell’s HSB Division.
The Home and Small Business Segments
There are several differences between domestic customers and business
customers.
◗ Businesses often have dedicated budgets for the purchase of computers.
◗ They usually spend more.
◗ They buy at regular intervals and are usually repeat purchasers unlike
domestic customers who often buy just one home computer and
purchase another only when the original one is outdated.
◗ They will normally purchase to an agreed plan. Domestic customers
often purchase for highly personal reasons, e.g., they want to email
family or play games.
◗ Businesses often have a specialist staff member who looks after these
purchases.
◗ They may purchase more complex machines such as servers.
◗ They are focussed on more than just the price – they look at other
factors such as how easy is it to upgrade the computer or to service
it.This is called Total Cost of Ownership (TCO).
In view of these differences, Dell appoints an Account Manager to look after
the interest of a larger business. An Account Manger will build a long-term
relationship with the business customer.The customer will be able to make
contact with their Account Manager to get advice, to solve a problem or to
place an order.
People in different countries have
different preferences
Another approach to segmentation is to consider differences in national
cultures. Dell’s experience shows that different nationalities do, indeed,
have different preferences when buying computers. Customers in France
and Germany tend to use their credit cards less than others. Therefore,
they may be less likely to buy online. People in the Nordic countries are
very willing to buy online. A German customer is more likely to be
interested in all the technical and pricing details. On the other hand, a
Swedish customer likes to make a more spontaneous decision when
talking to the sales person. Customers in the UK and France are very
sensitive to prices. These cultural differences are important because all
advertisements and other promotional material must be designed to suit
each country. This process is called localisation. Dell has an advertising
manager in each country who is consulted about the details of any local
campaign. National differences also influence the type of media used for an
advertisement. For example, in the UK and Spain, there are TV channels
with very large audiences. Accordingly, advertisement on television is used
more frequently in these countries.
European Campaigns
are managed from Ireland
Glossary
Configure: To arrange the components in a computer.A
PC contains various components such as memory and a
hard disk. When customers choose the size and mix of
these components they are configuring their computers.
Promotional materials are produced in-house by Dell staff. They produce
the adverts for national press, computer magazines, and faxes. The place
they work in is called the Marcoms (Marketing Communications) Studio.The
costs associated with campaigns are very high and it is extremely important
to control them.The Studio was put
in place to do this and has been
very successful. The staff use their
knowledge of different customer
and country profiles to design and
manage highly successful campaigns
across Europe, the Middle East, and
Africa. Flexibility and speed are key
factors in this success story. For
example, if Dell introduces a new product or decides to promote a new price
offer, it can design a new campaign immediately to communicate the changes
to the customers.
Build-to-Order: A customer can specify the
components and features they want included – the
computer is specially built to their requirements.
creative marketing brings
value to the customer
Servers: Computers used in networks to store files etc,
for use by other PCs on the network.
Dell is one of the most successful companies in the world. This study
concentrates on the HSB market but it should be mentioned that the
company also serves the largest industries worldwide.The Dell combination
of direct marketing and just-in-time, build-to-order manufacturing brings the
benefits of low cost and high quality to each and every customer.This focus
on customer value is responsible for Dell’s market leadership position.
Work and Dell
Dell are publicly committed to offering value to all stakeholders - suppliers,
customers, shareholders, and employees alike. As discussed in the study,
Dell serves customers across many different national cultures. Accordingly,
Dell values diversity in the workforce. People of many different
personalities, nationalities, skills and qualifications work in Dell.Anyone who
would like to work at Dell would certainly need to possess a mix of skills,
especially analytical and interpersonal skills.
Just in Time (JIT)
Dell’s manufacturing plant in Limerick is among the most advanced in the
world. Raw materials and components are delivered just in time through forty
dock doors on one side of the building. Computers are manufactured in cells
by teams and rigorously tested.The finished products are then dispatched via
another forty doors on the other side of the building, destined for direct
delivery to customers' offices
and homes throughout Europe,
Raw materials
the Middle East, and Africa.
Computers for
Limerick
and components
delivery to Europe,
Usually no component is in the
delivered by
Photo
Middle East & Africa
suppliers
factory for more than three
days.
E-commerce: To carry out business transactions (for
example, to place an order) by electronic means usually
via the Internet.
Just-in-Time (JIT): A manufacturing system where
products are only produced as they are needed and raw
materials are only delivered as they are required. This
eliminates the costs associated with keeping stocks of
finished goods or stocks of raw materials.
Marketing Mix: Any combination of the various
elements of marketing.The most famous mix is the 4Ps –
product, price, place, and promotion.The term media mix
applies to any mix of media used for advertising or
promotion, e.g., television, radio, newspapers etc.
Storage: Any device that can store computer data, for
example a hard disk. Businesses often use specialised highcapacity storage systems.
TASKS & ACTIVITIES
Business
1 Identify the advantages of direct marketing for the
business and for the customer. Can you think of any
disadvantages?
2 What are the benefits to the business of a JIT/BTO
system?
3 If you were selling CDs online, what media mix would
you choose to advertise your services?
4 If you were responsible for promoting a football
match, how would you segment your market?
5 Identify some of the differences between customers’
buying behaviour in the B2B and B2C markets.
www.dell.ie
www.business2000.ie
©2004 Dell Inc. Dell, the Dell logo and Dimension are registered trademarks or trademarks of Dell Inc. Other trademarks or trade names may be used in this document to refer to either the entities claiming the marks and names of
their products. Dell disclaims proprietary interest in the marks and names of others. Dell Products, c/o Boghall Road, Bray, Co.Wicklow, Ireland.While every effort has been made to ensure the accuracy of information contained
in this case study, no liability shall attach to either The Irish Times Ltd. or Woodgrange Technologies Ltd. for any errors or omissions in this case study.
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