Dell Direct and Not-So-Direct - Case Study Example

As a result Dell began to form alliances with retailers around the world to sell Dell products at their stores. Key Marketing Issues Branding – Dell was able to build a strong brand value in the United States, but the company has not been as effective at marketing its brand in other parts of the world. Dell was forced to change its business model to allow retailers to sell its products at retail outlets worldwide. Brand loyalty – The brand loyalty of the company is weak outside of the United States.

Dell should increase its spending in advertising and marketing to solidify the brand value of the business entity. Channels of Distribution – Dell was effective at being the sole channel of distribution for its products for many years. As the business matured the company realized that further business growth required increasing its distribution channels. Retailers – Dell is now using retailers as a permanent strategy to achieve growth in market share. The firm has to identify the top retailers that can bring the company the maximum amount of sales.

Wholesalers – Dell is using the wholesaling strategy to penetrate the market for business computers as well as governmental contracts. The firm has to adequately identify the required volume of sales and price per lot to ensure the firm maintains profitability. Personal Case Analysis Dell Computers was one of the biggest success stories in the high tech industry during the 1990’s and early part of the 21st century. The direct selling method was innovative because it allowed the customers the ability to customize their computers.

The business model was helping the company achieve higher profit margins, while offering very competitive prices due to the fact that Dell eliminated the intermediaries. The strategy was tremendous, but it had an inert flaw that eventually caught up to the company. The strategy was not effective at attracting international clients. Once Dell reached the maturity stage the firm had to seek expansion outside the United States. It became cheaper for Dell to outsource the selling function to retailers than to sell directly to customers in foreign countries because the company did not have the marketing expertise to target customers outside the United States.

Case Questions 1. Is Dell using intensive, selective or exclusive distribution for its market coverage? Dell is using selective distribution is its market coverage of different parts of the world. The company has identified specific retailers they have targeted as business partners. The company has control over which retailers sell the firm’s products. Some of the retailers Dell has selected for distribution of its products include: Wal-Mart, Carphone Warehouse’s U.K. Stores, Bic Camara Japanese Stores, and Gome’s Chinese Store. 2. How does dell's preference for direct channels affect its decisions about physical distribution?

The preference of Dell of selling directly to customers positively influenced the entire supply chain of the company. Dell was able to centralize its warehouses in strategic positions in the United States to be able to deliver the final product to its customers as fast as possible. The direct sale approach saved the company money because the firm had a lower obsolesce rate than other competitors. 3. What issues in channel conflict might arise from Dell's current distribution arrangements? The new channel approach Dell is using could cause