International Marketing: Theory - Essay Example

Running Head: INTERNATIONAL MARKETING APPLICATION OF GENERAL MAREKTING STRATEGY AT DELL INC. Marketing can never be done without making a plan first or doing some paper work before. It always needed a strategy which is then executed properly to get the desired results. We have seen many companies around us who have made their business plans first, incorporated sound and workable marketing strategies and then executed them well so to achieve their goals and objectives. Marketing is an important part of any business. It is more than selling or advertising and its main function is to create value by making those products which satisfy human needs (Keeqan 2007). This is why most experts say that making a better mouse trap over and again can never cater the needs of a customer because needs do differ and they evolve in nature over time. The purpose of laying importance of marketing and marketing plans in the first paragraph was to narrow down the topic towards marketing strategy, its formulation and its purposes for the firm it self. Now when we talk about strategy planning in marketing, we basically tend to make a match between organizational resources and its goals i.e. what an organization can really do by utilizing its resources and what its managers wanted to do (Kotabe 2007). So the strategy basically matches or ties up both ends of the same string so it could be implemented and formulated. If we delve deeper into the topic we see that marketing strategy formulation is of two types; one is based on the General marketing strategy and the other one is based on decision strategy. I have explained them in the next paragraphs to follow. The company I have chosen for this assignment is Dell Inc., and no body can deny its market share, value and prowess up to this date. I will start with the sector analysis and company analysis and then will move on to the marketing strategies. Dell comes under information technology sector. If we see analyze this sector closely we see that information technology sector has shown a remarkable improvement after the dot come crisis which made many of the companies out of business. Many dot com and software companies plunging into quagmire obviously affected the sale of computer related products and peripherals. The situation started to get better after 2001 and showed a great improvement after year 2003 when the average salary of a computer employee was more than double than what other people were getting from their respective professions. The industry labor force also increased from nil to 3.1% which broke the records in the US labor force industry as it was a growth of more than 75% as compared to previous records. Growth in the information technology industry is there because of the demand factors all around the world. The demand factors included the invention of nano-technology as more and more industries are heading towards this technology, emerging markets like India coming into the field with better and more IT products with better software programs, rise in demand of computers in the Asian markets, companies around the world are looking for cutting edge techs which is only possible if more and more sophisticated software and hardware are being made. Emerging markets in central and South America is also one of the reasons for the boom in this sector (Kerin 2008). Apart from this all, another reason for the boom in this sector is the mergers and acquisitions which took place after the dot com crisis. Those mergers and acquisitions compelled companies to pool in their resources and funnel up their energies so to invest in research and development and come up with new products which would give them a competitive edge (Srivastava 2008). This is also a very pertinent cause to explain and relate to the boom in the information technology sector. This rearrangement in the market made suppliers few in numbers which brought major giants on neck n neck competition with each other. This also lowered the switching costs as the products are normally the same but the switching costs remained high when it comes to the selection of high priced and sensitive items like servers and data systems. Dell, as a company has been in business from 1984 with introducing its own personal computer soon after a year named 'turbo' which has a processor 8088 manufactured by Intel. Dell has also subsidiaries which are makes Dell inc. as a whole. They help in designing, marketing and manufacturing different support systems for the computers and other peripherals worldwide. If we see its product range, Dell gives its customers a wide range of personal computers, ultra modem laptops, and leading edge networking products and servers. The network storage and servers have a lot to offer because they also consist of different server systems, storage banks, and storage disks attachable and detachable backups. They also made software for third parties who includes making of different operating systems such as applications for workplaces, anti viruses, software related to entertainment and security related software. Apart from this Dell Inc. also involved in making printers, scanners, digital cameras, flat screen monitors, adapters for different electrical appliances. Dell is also involved in giving financial services and solutions to its clients which ranges up to the asset management services. The clientele of dell is massive because it targets government organizations ranging from public services offices, schools, universities, health care organizations, small and medium business an lastly to the individuals. The way Dell sells its products to its customers is totally different. Most of the sales are made on internet and through telephone followed by sales representatives. As I have earlier discussed that there are two sorts of strategies, which include general marketing strategies and decision area marketing strategy (Kotler 2007). In general marketing strategy we are given basic guidelines of how a specific marketing plan when executed is going to achieve its objective. It includes market expansion, market share, niche marketing and status quo. Dell Inc. falls into market expansion component of the general marketing strategies. In paragraphs to follow, I have delineated the argument with the help taken from Now discussing and relating dells case over here we see that Dell expanded its market with its existing products and its new products. In market expansion what happens is that you create such a product which is bought by consumers. Then you bring innovation in that product by attracting potential customers which also includes those customers who are planning or they have yet to buy and lastly exploring new markets (Kotler 2007). Experts hold their opinion that targeting the consumer needs and wants in an efficient way was the major weapon used by Dell in expanding its market. When the dell started its business way back in 1984, most of the consumers were facing the same problem from pc vendors that they do not get what they have ordered according to their demands precisely. This notoriety by those vendors irked a lot of customers who were in search of a company who can deliver according to the particular specifications specified by them. Michael Dell, who is the chief executive officer (CEO), took this golden opportunity and laid down the basis of his business model on targeting price conscious and product conscious customers. He used a direct marketing method in which message was delivered right to the customer through newspapers and computer magazine advertisements which ended up at giving users a toll free number (Sernovitz 2008). As Dell Inc. established a direct relationship with the customer, it avoided all those unnecessary costs related to the retailers and distributors. This gave Dell an advantage over others as it made Dell much cheaper than others. Other thing which made Dell as success is that it delivered what is required by the customer through UPS which made sure that the product goes into right hands. One great success of this direct sale model which increased the sales and played a vital role in the expansion of Dell's product was that customers were not forced to choose with a give set of products i.e. they were free to choose by comparing different options. After sales services offered by Dell rose its value in the eyes of customers because previously after sales services were not being given by any other computer vendor which was a main problem for the consumers as they have to fix things themselves by taking help of another computer expert who used to charge hefty amounts for rectifying the technical glitch in the system. When it comes to grow internationally, Dell also made quite sensible moves and widen its market by exporting first to Europe. Market expansion in Europe was difficult as buyers were really hesitant to buy computers which were considered to be the high ticket items for them, on the phone but Dell used its aggressive marketing tactics and created its trust among its customers which earned it so much loyalty that after wards more than 40% of revenues were accounted from Europe. Recently, Dell announced its market expansion plan in China to counter Chinese brand Lenovo by making Dell's presence in more than thousand places than in just forty five places in which it has a strong foothold (Root 1998). The decision was taken under the light of the market growth opportunities which is see in the Asian and Far East Asian countries. Countries which are being targeted under this expansion phase include China, India Malaysia and Indonesia. This market expansion approach started to get intimidated late in 1990's which put Dell in some problems but this proved to be an opportunity for Dell which took benefit of it by taking things online as internet was spreading fast into the community. Now the customer can order online and this approach made Dell earn over more than $1.5 billion. This reduced its inventory costs which made Dell computers more cheaper which gave them an advantage over all other competitors. Another part of market expansion is the growth of sales through new products. Dell before indulging into it made its PC sales growth so strong that it made others recognized Dell as a brand. After getting it recognized, Dell entered into the market and but not as an innovator but as a technology follower i.e. making a product in a better way which already existed. Company apart from having a wide range of laptops, desktop computers and note pads also introduced storage products which consist of different server systems, storage banks, and storage disks attachable and detachable backups. In short they have enlarged their product line which will reap them benefits in time to come for example the PDAs' which were introduced in 2002. Those PDAs' were sold like hotcakes and they took the prices of other PDAs' also down. Lately, it introduced its printer which sent shock waves in the market. Dell is going to rebrand their printers, which are basically from its trading partner known as Lexmark. These printers were proved to be of high quality and will be competing head on with Hewlet Packard. It would be interesting to view this whole debate through the prism of Porter's generic strategy model because it fits exactly to market expansion model I have explained so for. According to Michael Porter, a firm may be involved in two sorts of strategies to gain the competitive edge in market. One is cost leadership and the other one is differentiation strategy. In cost leadership strategy what happens is that a producer gets into producing goods which are cheap in cost terms and in this way they gain leadership over other brands in the market. The firm then sells the product at a price which is below the industry average and in this way the firm reaps huge profits as compared to its rivals. Even if the competitors come in head on head in price war then also a firm can reduce its margin but still can reap profits in the long term as compared to rivals. One thing to note over here is that cost leadership strategy is basically made for a market whose nature is broad i.e. firm is competing with a lot of products of same generic for example in computers and its accessories. In this way the firm reaps three pronged benefits. One is barriers to entry. But how; well in barriers to entry the firm invests too much capital on its assets that it gives it economies of scale and keeps competitors out of business. Similarly, another benefit is efficient and low cost manufacturing of products and the lat one is having low cost in distribution systems as every part of the system is integrated. Applying this model on Dell Inc., we see that Dell Inc. follows cost leadership strategy. what Dell Inc. does is that it waits and waits and does not enters the market with a new or innovative product as it is a technology follower not a technology innovator like 3M. When the new product enters into the market and people get familiar and learn to use it, then Dell Inc. introduces its product who has a low cost as compared to industry average because the firm follows just in time (JIT) techniques which reduces inventory costs (Lamb 2007). In differentiation strategy a firm basically does something different which no body is doing at the moment. In this way a firm clearly makes its self stand out of the league of other firms. Differentiation can be done in terms of product or service. The differentiation makes a firm placing its own price tag because its services do not match rivals services. Differentiation can only be possible if the firm has a good research and development department which can make give a firm a competitive edge over other markets. Applying this model on Dell Inc., we see that dell has a direct model which is responsible for all its sales and profits. Dell Inc. over the years made it certain to its customers that it has a differentiated service and a service on which they can rely on. They have made their image that the product which will be delivered to the customer will be according to the specifications. They have come up with better ordering techniques like through internet and after sales services which also includes improving and upgrading existing systems. If we come to the next part of the essay which is decision marketing strategy, it is important because general marketing strategies are being guided by the decision marketing strategies which include product, place, price, promotion, segmenting and targeting. In market segmentation what happens is that a market is broken down into different groups who share the same need and have the same necessities and requirements. The benefit of segmentation is that a company basically alters its marketing plan for different segments and tries to meet their needs effectively. Now when these segments are being established, a firm can target those segments according to their business plan. They can either target all of the segments or choose one of them (Singh 2007). Applying Dell's example over here, Dell always targeted medium sized business markets. The computer market is segmented into large, public, medium size and small market. In large size market, companies and firms who have more than 2000 employees come into their domain and they are being targeted by Compaq and IBM. This large size industry also includes military organization and large public institutions. These two giants, IBM and Compaq never saw any charm in the attracting the mid sized and small market which includes small corporations and individuals users who buy for their home usage. In the beginning Dell used the same strategy for both of the markets, mid sized and small but later Dell has to separate its marketing strategy as both the target markets have different sort of needs. Dell also came up with a global segmentation strategy which was introduced recently (Williams 2008). Global segmentation policy was being launched because there has been increase in demand world wide for Dell's products and it proved it self second to non in areas of supply chain management and product competitiveness. This segmentation policy, Dell believes, will make it more vibrant as it will bring innovation in the system which would naturally drive competitiveness in the market. At the end, I would like to say that Dell over the time have devised and implemented a perfect marketing strategy which reaped it dividends over the time. It followed market expansion strategy of the general marketing strategy followed by decision are strategy in which it finely segmented its markets and then targeted it with a perfect marketing plan. In the essay, I have also applied Michael Porter's generic model which made it easier for us to understand the expansion model applied by Dell by introducing different products under the cost leadership and differentiation strategy. Most of the companies apply either cost leadership or differentiation strategy but Dell applied both of them because if Dell only relied on differentiation, it would have become expensive as the market matured and if it would have been towing the cost leadership strategy only, Chinese products would have drowned it in the global arena. So Dell has to apply both strategies to be in the market and enlarge it so it can get more customers and can effectively compete with its rivals. It is also pertinent to mention that the direct model Dell applies is also plays and important role in increasing its market share. Also it also keeps a strong vigilance over customer's behaviors and patters which give it a clear idea over what the customer wants and requires. State of the art customer relationship management also earns customer loyalty which plays a part in increasing its sales. References Kerin, R (2008).Marketing. 9th ed. : McGraw-Hill/Irwin. 344-365. Keeqan, W (2007).Global Marketing (5th Edition) (Paperback). : Prentice Hall. 54-87. Kotabe, M (2007).Global Marketing Management (Paperback). 4th ed. : Wiley. 78-98. Kotler, P (2007).Principles of Marketing, 12th Edition (Hardcover). 12th ed. : Prentice Hall. 156-198. Lamb,C (2007).Marketing (Hardcover). 9th ed. : South-Western College Pub. 455-476. Root, F ( 1998).Entry Strategies for International Markets (Paperback). Jossey-Bass: . 145-176. Sernovitz, A (2008).Word of Mouth Marketing: How Smart Companies Get People Talking, Revised Edition (Hardcover). : Kaplan Publishing. 56-87. Singh, J. (2007). Strategic Change Implementation and Performance Loss in the Front Lines.Journal of Marketing. 71 (4), 56-78. Srivastava, R. (2008). Financial Value of Brands in Mergers and Acquisitions: Is Value in the Eye of the Beholder .Journal of Marketing. 72 (6), 56-98. Williams, R. (2008).Dell Globalizes Business Groups Around Major Customer Segments.Available: http://www.dell.com/content/topics/global.aspx/corp/pressoffice/en/2008/2008_12_31_rr_000c=us&l=en&s=corp. Last accessed 15 Jan 2009. Read More