Dell’s Strategic Marketing in China
Strategic Marketing Dell’s Marketing Strategy in China Name Wei Zhang Group Group of Marketing Subject Strategic Marketing Topic Submit A Business Development Proposal Lecturer Terry Johnson Due Date 20th April 2102 Words limit: 2000 content Introduction3 Dell’s Marketing Plan in China5 Introduction5 SWOT for Dell’s direct selling in China6 Strengths6 Weakness6 Opportunity7 Threats7 Guidelines and recommendations for Dell’s future strategic marketing activities8 Reference10 Introduction In this essay, I will analysis the marketing activities of the famous computer company Dell in China. . Product Condition: As we all know, Dell is one of the Fortune 500 companies whose headquarters is located in Austin, Texas. Its founder Michael Dell holds a very simple philosophy for his company, which is make the computers that the costumers need. And the main way of selling person-to-person sales makes Dell can know what do customers need quite well and efficient, so shorten the time of reply. Through the network marketing, Dell could fully receive the needs and viewpoints from the customers about what kind of a computer does each one wants. From design to production, sales to service.
This kind of business model cut out the middleman, thus cut out the unnecessary cost and time, so that Dell can invest more on technology and advertisement ,which make Dell win more reputation from customers and do make out the computers what the customers really need. 2. Market Condition Even thought Dell achieved good results in the US market by using its direct selling mode. But in China this kind of selling way was not suitable for Chinese market condition, as its competitors, such as Lenovo and HP, all use distribution way of selling, Dell did not sell good when it entered Chinese market.
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After changing its marketing plan in China, the situation got better. Nowadays, in Chinese pc market, Lenove always take the championship that its market share is 28. 7%, Dell and HP occupy 9% and 8. 2% respectively. 3. Competition Condition: The big competitors for Dell in China are HP and Lenovo. HP and Lenovo all have excellent quality, but high price. Dell can always cater what customers need to improve its function. 4. Sales Condition: In China, Dell adopts direct selling model as its main selling way. It mainly includes online selling and through some sales agents to sell, which exclude a large amount of unnecessary cost for middleman. . Macro-environment Condition: With the continuous change of Chinese market environment and the continuous decline of the price of computer raw materials, a series of preferential policies came out, and that boosts the come in of some new kind of jobs and employment. Meanwhile, along the development of global economy, the increasing of world population, and the rising of the per capita net income, so improve the consumption level, the percentage of the cost on entertainment, and the needs for computers. Dell’s Marketing Plan in China
Introduction: Dell entered into Chinese market in 1994, and in Sep. 1999 Dell began its direct selling way in China. When Dell announced to use its unchanged way of selling in China, it was criticized that the selling way did not suitable for China’s actual condition and it would not achieve any success. But the result turns out that even though Dell’s unchanged selling way exist drawbacks, direct selling is still Dell’s edged tool. In China, except using its reputation and brand effect, Dell’s low price also impress a lot of customers.
Produce through bills, “Zero stock”, and abandon middleman all provide good conditions for its low price strategy. Even though Dell has achieved good results in China, but the data report of resent years demonstrates that Dell’s selling is declining, and its gap with Lenovo is widening. This has a big effect with its internal management. Direct selling is the main marketing mode for Dell, but it may not fit for conventional Chinese market. Plus, the particularity of Chinese market makes Dell to face more complicated and difficult problems.
So the unchanged direct selling received a lot of limitation in Chinese market, and way worse than in the US. In the US, Dell rely on its low cost and low price to win customers, but in China, though its price is lower than other foreign brands, higher than many other domestic brands. In some way, Dell loses its superiority on price in Chinese market. And in the US, Dell’s direct selling way is to use the first-tier cities to cover second-tier cities to achieve goals. So when Dell entered into China, the same old routine was still be used.
But the problem is Dell did not consider that China’s actual condition is quite different, and many suburbs and countryside do not have internet, but the core for pc products is shifting to these markets. After then, Dell began to change its selling way and on the road to distribution. SWOT for Dell’s direct selling in China Strengths 1. Along with Dell’s international brand reputation in China, an increasing number of individual customers would love to trust direct selling mode. A survey shows that customers choose Dell because it has convenient and fast urchase process and good price. 2. Direct selling would let customers know Dell’s products more directly, and they can get better price and more convenient purchase. 3. On the other side, the communication between Dell and customers will be more efficient. Dell can receive the feedback from customers in first, based on what do customers need to improve the products. Meanwhile, shorten the distance between Dell and customers. 4. “Zero stock” for the products make Dell has no estimated risk and loss on price falling.
And the excellent supply chain management creates value for customers, all the orders are what the customers really need but not estimated, so it will not has any estimated risk. 5. No unnecessary profit for any dealers, agencies, or middleman. 6. Dell has a developed and advanced ERP enterprise management software and excellent domestic management which including top-ranking infrastructure, scientific and standard working process, and modularized products management, informationalized domestic management. 7. Construct strategic alliances with the suppliers.
Dell regards the suppliers as one of the system of the company to maintain the supplier relationship intensely. 8. High-class sales service, which include before sales, selling, and after sales. Weakness: 1. For conventional Chinese market, some customers doubt about direct selling, because they think for IT products like computer they should see what they will buy. 2. Dell’s “enemy No. 1” Lenovo owns a very powerful and perfect agent sales channel and they are developing the direct sales business to the big client as well. Compared with Lenovo, Dell has no superiority on price and market occupancy. . Unchanged selling way make Dell’s distribution channel quite simple, lack of market coverage. Opportunity: 1. With the coming of the “direct sale law” in China, it can not only play a role in standardizing the market to boost the growth of Dell’s direct selling, but make Dell develops a business platform of Virtual integration in a rather wide area. 2. Since China joins into WTO, it will create more opportunities for Dell in Chinese market. 3. As owning a professional and big global direct sales system, Dell will not only satisfied with selling pc roducts, but produce and sell more IT products. Dell’s business scope will be widened. 4. With the enlarging of network coverage in China, computers become common and popular. PCs have a good developing future. Threats: 1. Dell’s classic selling mode is widely used among its competitors. 2. Economic situation is gloomy, some corporate clients cut the demand for computers purchase. 3. Competitors adjust their marketing plan for occupying more market shares. 4. Competition is becoming intense, Guidelines and recommendations for Dell’s future strategic marketing activities: 1.
Stick on the direct selling, and do not compete with the strongest in the area. Dell should use its own brand advantages and product line features, combining with Chinese market situation and regard the “cooperative business operation” as its core strategy, building a new direct selling mode of “Dell store” in the wide two levels market. This kind of mode can solve the following problems: A. Cut some direct selling branches, strengthen the function of channels on the basis of direct sales, which is still stick on the current marketing strategy, and extend Dell’s distribution channels as well. B.
Solve the problems of the logistics transmission of two levels market, make sure the market is always sufficient for products and deliver to customers in a very convenient way. C. Solve the problems of the service after sales in local market. D. Use the powerful ability of product line producing to solve the problem of channel conflict. E. Different with its competitors, emphasize its “excellent products with low price”. 2. Adjustment for human resource strategy, build the talents select system that promote talents from domestic company, and especially advocate to promote young people to be the backbones of sales. . Repositioning the consumer group of home computer users and the marketing strategies of Dell. Aiming at the direct sales, confirm the target of consumer group, and ensure which market will be Dell’s highlight target. Then put together its strength force in some part of the markets, let the competitive edge emerges, then make the resources be usage maximization. 4. Confirm the marketing strategy route of home computer users. 5. Dell should invest more on advertising and general publicity expense.
At the selling place of the agent, held some relevant activities to advertise the products, such as sponsor road shows. 6. Through optimize and contract each links in operation to improve efficiency, the response speed for market and customers, and sales. Thus it can save the cost to lower the price of the products, make customers benefit from their purchase. 7. Dell should take more time and energy on localization, such as localized its brand, spread mode, and brand culture. Thus Dell can hold the main stream of the computer consume group, and make the customers have higher praise for Dell.
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