Dell’s sales promotion strategies are depended on the different type of consumers such as loyal customers, competitor’s customers, Brand switchers, and prize buyers. A repeated purchase which is the sales promotion objective is very important for any company to reach their goal. Dell offers its customers an option to purchase on internet and to contact Dell employees if they have any problems or questions. . Internet is the most efficient and purest sell model of Dell where consumers’ accesses not only buy the products but also get service and support. Recently, the company recruits more than 2.6 million visitors in every week and form online marketing of Dell, company earn more than $40 million in revenue per week. Moreover, Dell sends off coupon, special offers and also eye catching display of new technology to the customers.
Dell’s strategy was built around a number of core elements: build-to-order manufacturing, mass customization, partnerships with suppliers, just-in-time components inventories, direct sales, market segmentation, customer service, and extensive data and information sharing with both supply partners and customers. Through this strategy, the company hoped to achieve what Michael Dell called “virtual integration”—a stitching together of Dell’s business with its supply partners and customers in real time such that all three appeared to be part of the same organizational team. Dell’s promotional strategies include:
1. Direct Sales: Selling Direct to customers gave Dell firsthand information about customer preferences and needs, as well as immediate feedback on design problems and quality glitches. With thousands of phone and fax orders daily, Internet sales, and daily contacts between the field sales force and customers of all types, the company kept its finger on the market pulse, quickly detecting shifts in sales trends and getting prompt feedback on any problems with its products. Management believed Dell’s ability to respond quickly gave it a significant advantage over rivals, particularly over PC makers in Asia that made large production runs and sold standardized products through retail channels. Dell saw its direct sales approach as a totally customer-driven system that allowed quick transitions to new generations of components and PC models.
2. Market segmentation: To make sure that each type of customer was well served, Dell had made speco finer, more homogeneous categories. 90 percent of Dell’s sales were to business or government institutions and of those 70 percent were to large corporate customers who bought at least $1 million in PCs annually. Many of these large customers typically ordered thousands of units at a time. Dell had hundreds of sales representatives calling on large corporate and institutional accounts. Its customer list included Shell Oil, Exxon, MCI, Ford Motor, Toyota, Eastman Chemical, Boeing, Goldman Sachs, Oracle, Microsoft, Michelin, Unilever, Deutsche Bank, Sony and Wal-Mart. However, no one customer represented more than 2 percent of total sales. Because corporate customers tended to buy the most expensive computers, Dell commanded the highest average selling prices in the industry—over $1,600 versus an industry average under $1,400. Dell’s sales to individuals and small businesses were made by telephone, fax, and the Internet. It had a call center in the United States with toll-free lines; customers could talk with a sales representative about specific models, get information faxed or mailed to them, place an order, and pay by credit card.
The call centers were equipped with technology that routed calls from a particular country to a particular call center. Thus, for example, a customer calling from Lisbon, Portugal, was automatically directed to the call center in Montpelier, France, and connected to a Portuguese-speaking sales representative. Dell began Internet sales at its Web site (www.dell.com) in 1995; almost overnight achieving sales of $1 million per day. In 1997 Internet sales reached an average of $3 million daily, hitting $6 million some days during the Christmas shopping period. The fastest growing segment of Dell’s international segment was through Internet Sales. Internet sales were about equally divided between sales to individuals and sales to business customers. 3. Advertising: Michael Dell was a strong believer in the power of advertising and frequently espoused its importance in the company’s strategy. Thus, Dell was the first computer company to use comparative ads, throwing barbs at Compaq’s higher prices.
The company regularly had prominent ads in such leading computer publications as PC Magazine and PC World, as well as in USA Today, The Wall Street Journal, and other business publications. In the spring of 1998, the company debuted a multi-year worldwide TV campaign to strengthen its brand image. Recently, Dell India has launched an integrated marketing campaign for its Inspiron range of laptops. A TVC targeting the youth, created by Grey Worldwide, went on air across entertainment channels. This new campaign is based on stories of ‘personal achievement’. 4. Customer Service: Service became a feature of Dell’s strategy. The company provides a guarantee of free on-site service. Dell contracted with local service providers to handle customer requests for repairs; on-site service was provided on a next-day basis. Dell also provided its customers with technical support via a toll-free number, fax, and e-mail.
Bundled service policies were a major selling point for winning corporate accounts. If a customer preferred to work with his or her own service provider, Dell gave that provider the training and spare parts needed to service the customer’s equipment. Selling direct allowed Dell to keep close track of the purchases of its large global customers, country by country and department by department— the information that customers found valuable. Maintaining its close customer relationships allowed Dell to become quite knowledgeable about its customers’ needs and how their PC network functioned.
Aside from using this information to help customers plan their PC needs and configure their PC networks, Dell used its knowledge to add to the value it delivered to its customers. Corporate customers paid Dell fees to provide support and service.. Dell’s strategy was to manage the flow of information gleaned from customer service activities both to improve product quality and speed execution. In recent months Dell, following Compaq’s lead, had created a capital services group to assist customers with financing their PC networks.
Virtual Integration and information sharing:
But what was unique about Dell’s strategy was how the company was using technology and information-sharing with both supply partners and customers to blur the traditional arm’s-length boundaries in the supplier- manufacturer-customer value chain that characterized Dell’s earlier business model and other direct-sell competitors. Michael Dell referred to this feature of Dell’s strategy as “virtual integration.” On-line communications technology made it easy for Dell to communicate inventory levels and replenishment needs to vendors daily or even hourly. In this regard, a number of Dell’s corporate accounts were large enough to justify dedicated on-site teams of Dell employees. Customers usually welcomed such teams, preferring to focus their time and energy on the core business rather than being distracted by PC purchasing and servicing issues.
5. Regional Forums: Dell had set up a number of regional forums to stimulate the flow of information back and forth with customers. The company formed Platinum Councils composed of its largest customers in the United States, Europe, Japan, and the Asia-Pacific region; regional meetings were held every six to nine months. Customers were provided opportunities to share information and learn from one another as well as exchange ideas with Dell personnel. Dell found that the information gleaned from customers at these meetings assisted in forecasting demand for the company’s product. 6. Customized Intranet sites: Dell had developed customized intranet sites (called Premier Pages) for its largest global customers; these sites gave customer personnel immediate on-line access to purchasing and technical information about the specific configurations of products that their company had purchased from Dell or that were currently authorized for purchase.
Accurate sales forecasts were the key to keeping costs down and minimizing inventories, given the complexity and diversity of the company’s product line. Because Dell worked diligently to maintain a close relationship with its large corporate and institutional customers, and because it sold direct to small customers via telephone and the Internet, it was possible for the company to keep a finger on the pulse of demand—what was selling and what was not. Moreover, the company’s market segmentation strategy paved the way for in-depth understanding of its customers’ evolving requirements and expectations.
Having credible real-time information about what customers were actually buying and having firsthand knowledge of large customers’ buying intentions gave Dell strong capability to forecast demand. Furthermore, Dell passed that knowledge on to suppliers so they could plan their production accordingly. The company worked hard at managing the flow of information it got from the marketplace and seeing that it got to both internal groups and vendors in timely fashion.
Research and Development
Company management believed that it was Dell’s job to sort out all the new technology coming into the marketplace and help steer customers to options and solutions most relevant to their needs. The company talked to its customers frequently about “relevant technology,” listening carefully to customers’ needs and problems and endeavoring to identify the most cost-effective solutions. The company’s R&D unit also studied and implemented ways to control quality and to streamline the assembly process. Much time went into tracking all the new developments in components and software to ascertain how they would prove useful to computer users.