Dell is a company that operates in many diversified products and their categories but in this paper we would only discuss Dell’s laptops. We will focus on the laptops that Dell manufactures and how the distribution works. Basically Dell offers its customers to buy the laptops directly from the Dell’s outlet, Dell’s website or from a retailer (Rolnicki, 1998). Dell currently is at a high position in the laptop market though it can’t be called the market leader but it is competing with brands like Sony, Compaq, IBM and etc.
Dell has a diversified target market but it has some distinctive characteristics like they are catering the middle class and all the classes that are above the middle class. They are targeting people working independently or students that need laptops for their studies. Dell currently positions itself as offering a powerful laptop at a very nominal price (Dell and Fredman, 2006). Dell sells its laptops in different ways, which were mentioned above that is from Dell’s own outlet, from the website and from a retailer.
Dell has a specific strategy of analyzing the location where it would sell its products. It formulates a feasibility report of whether to open an outlet or choose a retailer at a certain location, while enabling the customers that don’t want to waste time buy their laptops directly from the website. Dells distribution design is very efficient and effective and appropriate according to its desired service output levels. Dell has a just in time inventory system that enables them to meet the high demand levels very easily.
Dell has an added advantage of using retailers to sell their products. Using retailers’ enables Dell to save costs of opening an outlet at places where opening an outlet might be costly and dangerous with respect to different factors (Kotler and Armstrong, 2007). Dell uses a just in time inventory and makes sure that the whole supply chain from the raw material provider to the retailer work in a sequence. They have formed an alliance with most of their suppliers and retailers making sure they keep up with Dell in terms of technology and other aspects.
Dell selects members of the supply chain very cautiously evaluating mutual benefits that might come up with a relationship. Dell also helps the supply chain members in keeping up with Dell for example providing the latest technology to the suppliers and retailers (Ross, 2003). Implementing a vertical or horizontal marketing system might not be very beneficial for Dell as they already have diversified in a huge line of products. This would only lead to an increase in the costs of Dell. Apart from this Dell does consider options whenever it is feasible of applying a vertical or horizontal marketing system.
This sort of a system is more feasible when the suppliers or retailers have a major identity in the market and can cause an increase in the sales of a business (Kogan, 2008). The distribution system that Dell follows can cause a problem in their inventory systems. A simple problem can arise by a mistake in the demand forecast, which can cause a bullwhip effect through out the supply chain. To avoid this kind of conflict Dell should put in great focus on their forecasting models. A simple error in the forecasting can cause big blunders and high costs.
An accurate forecasting model that keeps in mind all the factors that might affect the demand should be used. Reference Dell M. and Fredman C. (2006) Direct from Dell: Strategies that Revolutionized an Industry, Collins Business. Kogan J. D. (2008) Distribution Channels: Understanding and Managing Channels to Market, Kotler P. and Armstrong G. (2007) Principles of Marketing, 12th Edition Prentice Hall. Page. Rolnicki K. (1998) Managing Channels of Distribution: The Marketing Executive’s Complete Guide, AMACOM. Ross D. F. (2003) Distribution Planning and Control: Managing in the Era of Supply Chain Management, 2nd edition. Springer.