READING FOR DELL
Dell Inc. is the world?s number one direct-sale computer vendor and competes with Hewlett-Packard in that segment. Dell offers network servers, workstations, storage systems, and Ethernet switches for enterprise customers, in addition to a full line of desktop and notebook PCs designed for consumers. It also sells handheld computers and markets third-party software and peripherals. Dell?s growing services unit provides systems integration, support, and training.
Michael Dell, the flamboyant founder and chairman of Dell, started college at the University of Texas as a pre-med student but found time to establish a business selling random-access memory (RAM) chips and disk drives for IBM PCs. Dell bought products at cost from IBM dealers, who were required at the time to order large monthly quotas of PCs from IBM. Dell then resold his stock through newspapers and computer magazines at 10 to 15 percent below retail. By April 1984, Dell was grossing about $80,000 a month enough to persuade him to drop out of college. Soon he started making and selling IBM clones under the brand name PC?s Limited. Dell sold his machines directly to consumers, rather than through retail outlets as most other manufacturers did. By eliminating the retail markup, Dell could sell PCs at about 40 percent of the price of an IBM.
Michael Dell renamed his company Dell Computer and added international sales offices in 1987. In 1988, the company started selling to larger customers, including government agencies. That year Dell Computer went public. In 1996, Dell started selling PCs and notebook computers through its Web site. This channel of order confirmation and shipping and handling is still the bread-and-butter means of addressing Dell?s consumer and enterprise customers? requirements. In 1997, Dell entered the market for workstations and strengthened its consumer business by separating it from its small-business unit and launching a leasing program for consumers. In order to diversify its revenue sources, in 2001 Dell expanded its storage offerings when it agreed to resell systems from EMC. To grow its services unit, Dell acquired Microsoft software support specialist Plural in 2002.
Despite its success at grabbing PC market share, Dell continues to attack new markets. It has put increasing emphasis on server computers and storage devices for enterprises. Furthering its push beyond PCs, Dell has introduced a handheld computer, a line of Ethernet switches, and consumer electronics such as digital music players Lexmark to develop a line of Dell-branded printers, and it has formed additional partnerships to quickly grow its printing line. On the services front, Dell has mirrored its straightforward approach to hardware sales, embracing a fixed-price model for offerings such as data migration and storage systems implementation. Dell is currently looking to international revenue to supplant sales in the PC-saturated U.S. market. Sales inside the United States were about 53 percent of consolidated net revenue in fiscal 2008.
Dell has thrived as downward-spiraling prices and commoditization washed over the PC industry, benefiting the company?s customers and bashing its competitors. Instead of battling the tide by attempting to erect proprietary systems,as HP and IBM often did, Dell used its low-cost, direct-sales model to ride the wave. In 2008, Dell announced PartnerDirect, a global program that brought their existing partner initiatives under one umbrella. Dell intends to expand the program globally. Continuing their strategy and efforts of better meeting customers? needs and demands, they began offering select products in retail stores in several countries in the Americas, Europe, and Asia during fiscal 2008. These actions represent the first steps in their retail strategy, which will allow them to extend their business model to reach customers that they have not been able to reach directly.
Of late, with all the brand equity Dell has built up, Dell Inc. is pushing into consumer products. Dell has recently made a move into manufacturing flat-screen TVs. With TVs that use the newest technology, Dell is now diversifying even further. The latest battle in the PC business isn?t in computers but in printers. Dell is now waging war on HP?s vaunted imaging and printing division, which produces some 70 percent of HP?s operating profit. In the case of printers, the printer cartridges is where HP has the biggest margins, and Dell seems to be focused on making inroads into this market, over which HP has had a strong hold.
With such an intense competition for market share and customer patronage, Dell is conducting a survey of recent purchasers of Dell PCs and notebooks. Dell wants to understand their consumers? primary usage of their computers for Internet and other usage. Based on that, Dell wants to understand the satisfaction that their consumers are deriving from Dell products. Dell wants to estimate their customers? probability of repeat buying of Dell products and the extent to which their current customers will recommend Dell to their friends and family. Finally, Dell wants to understand if there is any correlation on any of these identified usage factors and the underlying demographic aspects of the classification of their customer
1) Identify the psychological characteristics of consumers that are likely to influence Dell consumer behavior
2) Develop a focus group discussion guide for understanding the consumer decision-making process for personal computer purchases
3) Can Dell make use of the observation method to determine consumer’s preferences for PC and notebook computers? If yes, which observation method would you recommend and why?