This paper is done as a part of the undergraduate program at BI Norwegian Business School. This does not entail that BI Norwegian Business School has cleared the methods applied, the results
presented, or the conclusion drawn
Applied Marketing Project (Capstone) – 24100 Bachelor of International Marketing
Student Name: Casandra Svellingen Tutor: Dr Nigel Bairstow University of Technology, Sydney
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Table of Contents:
Executive Summary ... iii
1.0 Internal Analysis ... 1
1.1 Description of company and product line ... 1
1.2 Business Model Canvas ... 1
1.3 Resource Audit ... 2
1.3.1 Human Resources ... 2
1.3.2 Physical Resources ... 3
1.3.3 Financial Resources ... 3
1.3.4 Intangible Resources ... 3
1.4 Value Chain Analysis ... 4
1.4.1 Inbound Logistics ... 4
1.4.2 Operations ... 4
1.4.3 Outbound Logistics ... 5
1.4.4 Marketing & Sales ... 5
1.4.5 Service ... 5
2.0 External Analysis ... 6
2.1 Market Analysis ... 6
2.2 Competitor Analysis ... 8
2.3 Customer Analysis ... 10
2.4 PEST Analysis ... 13
2.4.1 Political Forces ... 13
2.4.2 Economic Forces ... 13
2.4.3 Socio-cultural Forces ... 14
2.4.4 Technological Forces ... 14
2.5 SWOT Analysis ... 15
3.0 Marketing Objectives ... 17
3.1 Sales Objective: ... 17
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3.2 Marketing Objective 1: ... 17
3.3 Marketing Objective 2: ... 18
3.4 Marketing Objective 3: ... 18
4.0 Target Markets and Positioning ... 18
4.1 Segmentation ... 18
4.2 Target Markets ... 19
4.3 Positioning ... 19
4.3.1 Management ... 20
4.3.2 Engineering and architecture ... 20
5.0 Key Strategies ... 21
5.1 Strategy Option 1 ... 21
5.2 Strategy Option 2 ... 21
5.3 Strategy Option 3 ... 22
6.0 Key Recommendations ... 23
7.0 References ... 26
8.0 Appendix ... 32
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Executive Summary
Based on the conducted research, it has been identified three key issues. These issues are important for Dell to maintain a competitive position in the market. The three key issues resulting from the situation analysis are:
- Value proposition is poorly communicated - Weak indirect sales model
- Blurred line between the private and enterprise market
Dell’s indirect sales model only accounts for 14% of Dell product sales, which is weak compared to Dell’s strong direct sales force. The Latitude 2:1 Notebook’s value proposition is not well communicated to the market. The end users do understand the features, but not the benefits of investing in a 2:1 device and what exactly the Latitude can accomplish for them. While Dell is aiming to become a market leader, Microsoft is moving towards small businesses. Which is a threat to Dell’s position in the market.
Based on the issues, it has been developed key strategic options to each of them.
The key strategy options are:
- Strategy 1: Invest in promoting the Latitude products, marketing the products and not just the brand combined with establishing a buying vision.
- Strategy 2: Amplify the position in the high-end business market by emphasizing on what gives Dell competitive advantages.
- Strategy 3: Better align business goals with the resellers.
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1.0 Internal Analysis
1.1 Description of company and product line
Dell is a computer and technology company founded in 1984 by Michael Dell.
Dell technologies consist of seven brands, and they are the world's largest
privately owned technology company (Dell 2017). Operating in 180 countries and bringing in revenue of $72 billion last year, Dell is a considerable force within the technology industry (Dell 2017). However, the company has a low debt to
revenue ratio (Business Insider 2015). The company has gained acknowledgment regarding their supply chain management, and for successfully building e-
commerce with a direct business sales model (CNN 2013). Dell is considered one of the most secure, reliable and manageable technology brands on the market, which has led to a strong brand within the B2B segment. Dell was in the first quarter of 2017 the third largest PC vendor in the world, and as an entrepreneurial company, they have been able to follow market trends and stay relevant within rapid changes in the technology industry (IDC 2017). 2:1 Notebooks are the fastest growing part of Dell Australia. They have introduced three series of 2:1 Notebooks; the Inspiron series which is targeting the mainstream user, the XPS series is targeting power users and creative professionals, and the Latitude series specialized for business (Laptopmag 2017).
1.2 Business Model Canvas
A business model canvas has been constructed to assess how Dell creates, delivers and captures value. These factors are demonstrated through the analysis of the four core areas of the business: customers, offer, infrastructure and financial viability. The core information is covered in the “nine building blocks” as evident in the canvas.
One important aspect to notice is the value propositions; how Dell’s Latitude 2:1 Notebook meet customer needs better than their competitors. These value
propositions are not being communicated in a desirable way.
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* The Latitude 2-in-1 Notebook will not be introduced to the retail market, but JB-Hifi and the retail channels are still mentioned as they play a major role in Dell’s business model.
1.3 Resource Audit
Using a resource audit analysis, Dell can examine their core strengths, assessing human, physical, financial and intangible resources. Each of Dell’s resources that distinguish them from their competitors is a competitive advantage, and this will guide Dell on the way to long-term success (small business 2017).
1.3.1 Human Resources
Through a connected workplace, Dell’s human resources sustain as highly mobile and flexible. Ongoing development through leadership training and skills
development keep the workforce and leads them to achieve their goals (Dell n.a).
Dell provides opportunities to develop their employees; therefore the need to hire new employees for new projects is small. The company currently has 145,000 team members including a market leading direct sales force, and 30,000 full-time customer service team members delivering best of breed customer service and support (Dell 2017).
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1.3.2 Physical Resources
Dell outdoes other 2:1 Notebooks on performance. Hardware reliability,
consistency in performance and replacement parts availability has led to effective support and loyal Dell customers (‘Dell Notebooks are the most reliable according to Customer Satisfaction Research’ 2015). Dell is considered one of the most secure, reliable and manageable technology brands on the market. Their successful direct online sales model sets the company apart from their competition, and 2:1 Notebooks are the fastest growing part of Dell on the
Australian market (Dell 2017). The total cost of ownership (TCO) is an important factor for the customer satisfaction of 2:1 Notebooks (‘Dell Notebooks are the most reliable according to Customer Satisfaction Research’ 2015).
1.3.3 Financial Resources
DELL reported $72 billion in revenue in the year 2016 (DELL 2017). The balance of profitability and growth is driven by strategic investments in areas that deliver long-term results (Dell 2016). Despite Dell’s revenue, their debt is considerably high mainly due to the $67 billion acquisition of EMC (Nytimes 2016). The benefits of the made to order business model creates low risk of inventory damage and maintenance cost, and contributes significantly to DELL’s financial
performance. However, the market maturity drives down margins for
commoditized lines of business (DELL 2017). A $12.7 billion investment in R&D the last three years, and $4.5 billion R&D investment annually going forward is indicating a commitment to delivering new and better solutions and continuing to be a leader in technology innovations (DELL 2017). Nevertheless, Dell does not have high R&D investment regarding their revenue, compared to their competitors (Cnet n.a).
1.3.4 Intangible Resources
In over 25 years in local Australian operations, Dell has managed to maintain a position as a leader in technology and achieves a higher satisfaction score than the average notebook market in the quarterly customer satisfaction (CSAT) studies (‘Dell notebooks are the most reliable according to Customer Satisfaction Research’ 2015). Dell has a strong business model in place for the B2B market.
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Their corporate customers can “try and buy” Dell products, meaning they can lease the products for a certain amount of time with no commitment. The is one of the reasons they hold a strong brand name in the B2B segment, especially in the education and certain commercial segments. Dell’s company culture decides how the company builds their products, work with their suppliers and sustain
operations.
1.4 Value Chain Analysis
To find Dell’s competitive advantages, Porter’s Generic Value Chain is utilized to examine all of the company’s activities and how they are connected to each other (Porter and Millar, 1985). A value chain is a set of operations carried out by a firm to create value. By looking at how the supporting activities affect each of the primary activities we seek to understand where Dell is creating value, and where it can increase its investments to create more value to increase its competitiveness.
1.4.1 Inbound Logistics
Inbound logistics are the processes concerning storing, receiving and distributing inputs within the company, and Dell’s relationships with suppliers play an especially important role. Dell has focused on supplier development to empower sustainable growth in the supply chain. (Dell 2016). Materials for the production are shipped within 2 hours after receiving an order. This procedure is possible due to dual order placements between both Dell and its suppliers simultaneously. Dell order every part they need from suppliers, and then assembles everything
themselves, which creates competitive advantages for them by withholding private information. In addition to this Dell utilize a Just-in-time philosophy.
Proper management of these procedures creates value for Dell with cost
leadership for most of its products and services, as well as low inventory costs and maintenance cost.
1.4.2 Operations
By assembling parts, Dell can offer their customers a high level of product customization, which is one of their major competitive advantages. For the 2:1 Notebooks, the operation process consists of three stages; assembly of standard parts, installation of custom parts, such as the different processors, and installation
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of software. All the steps are tested to check if configured correctly. It is essential with excellent expertise in the entire process, to make products of the highest quality, can see and fix product defects, be efficient and innovative. This is an advantage for Dell, as their employees are highly educated, are up to date on technology and are specialized in their field. This will also cut down the technology costs of the assembling process.
1.4.3 Outbound Logistics
Once the devices are assembled, they are sorted based on destinations. The
devices are stored in a logistics hub and shipped either directly to the customer, or indirectly through wholesalers like Dicker Data, Ingram Micro and their resellers (ARN 2017). Due to the efficient mass customization Dell can be punctual, and shorten the time between the order and delivery. The short lead time between ordering and receiving a 2:1 Notebook, adds value to the end users.
1.4.4 Marketing & Sales
Dell is focusing more on branding than marketing of their products. They are not investing heavily into the promotion of a single product category but emphasizes solution-based positioning. Due to the importance of creating and preserving customer relationships, Dell’s network and HRM activities help cut down marketing costs. Dell is spending 3% less than Microsoft on marketing communication (Dell 2017).
1.4.5 Service
Pre-and post-customer support is another of Dell’s competitive advantages. Dell is the market leader when it comes to supporting and after-sales service options for the business. They offer 24x7 support and 4 hours’ service level agreements.
Dell’s employees take approximately 50,000 phone calls each day from their customers, logging everything in solid CRM systems. These systems are sent to managers for further handling. Dell is one of the biggest providers of security and blocked 2.17 billion IP attacks in 2015 (Dell 2016). Significant amounts of resources are being allocated to pre-and post-support and are handled by Dell’s exceptionally well-trained employees.
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2.0 External Analysis
2.1 Market Analysis
The following section consists of a market analysis. This analysis includes an overview of the industry, Dell’s 2:1 Notebook target market, projections for the business, and necessary regulations for Dell to consider.
Industry description and outlook: “According to the research consultancy IDC, the global information technology (IT) industry market, encompassing hardware, software, services, and telecommunications, was expected to reach $3.8 trillion in 2016, up from $3.7 trillion in 2015.” (CompTIA 2016; Appendix 5). In the global IT market, IT hardware, software, and services account for 59%. In the computer industry, it is becoming increasingly more important to invest in areas such as IT support, software development, cybersecurity, data analytics, and related skills.
“Many organizations view the further development of tech talent in-house as a strategic imperative.” (CompTIA 2016). One of the major technological trends is the emphasis on security, and companies tend to focus towards this emerging trend. This can be seen as a result of the adoption of new technology and reliance on digital data (CompTIA 2016). Considering the emergence of IT, attacks from hackers has now shifted from individuals to businesses of all sizes.
The computer industry involves several products, and looking at 2:1 Notebooks it is particularly necessary to note that desktops/laptops have a 36% potential to underperform, 59% potential to perform as expected and 5% potential to over perform (Appendix 6). For 2016, the IT industry growth rate is estimated at a rate of 4.9% in current dollars, with upside potential of 7.1% and a downside of 2.7%
(CompTIA 2016). As mentioned previously focus lies in the cloud applications, cloud infrastructure, and security. However, the global industry is expected to add about $100 billion in revenue in 2016, which will involve a mix of foundational product categories, such as PC’s or servers (CompTIA 2016).
Dell has less than 10% market share in the 2:1 Notebook market in Australia (Dell 2017). However, it is hard to estimate an accurate market share, because of the 2:1
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market is in the early phase of its product lifecycle. Microsoft is spending large amounts of capital in order to drive adaptation in the market and is looking to move beyond the chasm between early adopters and the early majority (Rogers 2003). Convertible Notebooks are the fastest growing part of the Australian client market (Dell 2017). Sales are estimated to triple from more than 500,000 this year to nearly 1.5 million in 2017 (Telsyte 2017). Telsyte expects Windows-based tablets and 2:1 Notebook will grow to around a third of the market by 2017. “The latest findings show that Australians are moving significantly away from sub- premium (or low-cost) tablets. According to Telsyte’s Australian Digital
Consumer Study 2017, around 40% of Australians are willing to pay more for ‘top quality electronics’ as digital devices become central to the consumer lifestyle”
(Telsyte 2017).
The market for desktop computers and laptops has had another tough year.
Overall shipments of PCs dropped 5.7% year-over-year (Fortune 2017). However, Dell was ranked third regarding units shipped in 2016 (40.7 million) below
Lenovo (55.5 million) and HP (54.2 million). Lenovo had a 3% decline, but Dell, however, had a 4.3% increase from the previous year (Fortune 2017). Lenovo operated with a market share of approximately 21% in 2016, HP with 21% and Dell with 16% (IDC 2016). Despite shipments declining in 2016, IDC said that overall fourth-quarter shipments results indicate a possible PC market rebound in the New Year (Fortune 2017). The PC market has declined over the last years, but recently it has been a positive trend, due to users wanting to update products and systems.
With two consecutive quarters of strong market growth, it is believed that the strong market performance is mostly driven by an increased appetite from the channel for inventory, not strengthened demand (IDC 2016). The convertible Notebook market can still be seen as unexplored. It is essential to understand that customers must feel the need for buying a 2:1 Notebook.
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2.2 Competitor Analysis
In order to determine how competition can impact Dell, a competitor analysis, and industry analysis has to be conducted (Porter 2008). The threat of new entrants is low because of high barriers to entry, incumbents have created big brands, and there is a high level of brand loyalty. However, the line between the private and the enterprise markets have recently become blurred. This trend enhances competition between players in the industry, independent of whether they
primarily sell to individual consumers or to the commercial market. The threat of substitute products is high because new products are constantly being developed and introduced to the market, similar to how 2:1 Notebooks were introduced as a combination of the laptop and tablet. The suppliers bargaining power is relatively low, as a result of Dell being able to negotiate on prices with different
manufacturers. Unless strong relationships are established, the switching cost is low. Customers have high bargaining power because they have easy access to information about products in the market and their specific attributes. This challenge the companies to offer customers the best quality possible at a
competitive price. There could be high switching costs due to brand loyalty, and operating systems can affect the way in which customers are willing to change.
Purchasing a 2:1 Latitude from Dell and learning how to use Windows instead of MacOS creates a high switching cost, if the client has been using an Apple MacBook previously.
The IT industry is highly competitive, because of constant change and
development in technology. This causes innovation, lower production costs, and better products because companies depend on high performance in these areas in order to stay competitive. Not all of Dell’s competitors focus on the 2:1
Notebooks to the same extent because one of the main drivers in the industry is currently cloud applications. However, market share in this segment is still
important. Each of Dell’s products can be customized, and they are more powerful than their competitors’. This is particularly relevant for the identified segments because different occupations need different levels of power.
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Competitive information from the primary research:
Based on a survey answered by end users, Microsoft is the “top of mind” brand when it comes to 2:1 Notebooks, along with DELL, Lenovo, and HP (Appendix 7). The analysis also shows that many consumers associate 2:1 Notebooks with Apple even though they do not produce 2:1’s. Apple’s iPads can be seen as substitutes to the 2:1 Notebooks but does not possess the same power and software system as a 2:1 device. Based the primary research and secondary data, Microsoft is proven to be the market leader in the 2:1 Notebook market, while companies like Dell, Lenovo, and HP maintain a rather small piece of the pie.
Microsoft was the first company to launch a 2:1 Notebook. They have spent a high amount of money on developing, growing and adapting the market further, and has maintained a good reputation and strong brand loyalty. Their 2:1
Notebook Microsoft Surface Pro is easy to use with a powerful Intel chipset and Windows software. Furthermore, the Microsoft Surface Pro is their best-selling product. Microsoft is a global business with a strong consumer brand and user sentiment. They invest significant capital and attention to marketing and
promotion in order to drive customer perception of the Surface Pro and to drive adaptation of the 2:1 Notebook market. Microsoft is globally known for its excellent software system, and this specialty gives them a major competitive advantage. However, they are not a great hardware company and spends
significant resources on R&D and hardware manufacturing. Microsoft and their Surface Pro has long been positioned for retail and small business consumers being attractive for individual customers to purchase and use these products at work. Microsoft´s entry into the commercial market creates a major threat for Dell which is aiming to become the leader in this market.
Lenovo is usually ranked number 2 or 3 in the Australian market for client devices based on a quarterly cycle. They are aggressive in the channel business with eroding margins across the industry. Lenovo is very agile and is willing to pursue
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market share (Dell 2017). Design, support, and innovation are some of Lenovo’s main strengths. Seen as an enterprise, Lenovo is price aggressive because they pursue their market share goals. They follow disruptive strategies to generate stronger traction in channel markets. Like Dell, Lenovo has a consistent presence in government and education markets (Dell 2017). Weaknesses for Lenovo are that customers have mixed feelings about detachable 2:1 Notebooks and
customers are not impressed by the features offered. Lenovo covers almost all the major niches of laptops (Dell 2017). However, Lenovo’s 2:1 products do not provide the same range of performance ability as Dell (Lenovo 2017).
HP is ranked number 1 in the Australia and New Zealand (ANZ) market for client devices. They operate with a strong channel business and emphasizes marketing and promotion heavily. Marketing of individual products is a major advantage for HP compared to Dell – which primarily focuses on brand marketing. HP is number 1 in server sales in the ANZ market, operates with a strong storage and networking business, and has a strong channel presence and reseller networks (Dell 2017). However, HP has poor acquisition decisions. They are heavily dependent on computer and printer sales, and the decline in computer sales internationally is expected to wallop HP.
2.3 Customer Analysis
Due to Dell’s strong brand in the B2B segment, they find customer relationships important. To identify potential segments in this market, primary research consisting of interviews with wholesalers and resellers, and an end-user survey with 166 respondents have been conducted. This resulted in the identification of four main customer segments for Dell’s 2:1 Notebook range in the Australian market. The segments are created based on respondents’ occupations, if they found a 2:1 Notebook beneficial, and if they would purchase a 2:1 Notebook in the future. The segmentation is based on the assumption that the needs and preferences are homogeneous within the occupations and heterogeneous between the professions.
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Segment 1: Business and Financial Operations
The largest segment that has been identified is Business and Financial Operations, and the majority is students between the age of 18 and 24. It is necessary to focus on students within this segment because they can be more innovative, modern and can contribute to changing the attitudes towards digital devices. This segment acknowledges features such as a keyboard, data security and a long-lasting device as the most important when using their digital devices at work. Quality hardware is also highly valued, and they are willing to pay extra for quality (Appendix 11).
The segment can be perceived as less price sensitive, and follow trends rather than sales offers (Appendix 10). The 2:1 Notebook market is still in the early stages, but trends indicate that the detachable devices have an immense potential for growth. 10 out of the total of 27 respondents (37.03%) in this segment perceived the 2:1 Notebook as beneficial. In addition to this, 11 out of the total of 27
(40.74%) are neutral (Appendix 8). Seeing that the product and the market are still in the early stages gives Dell considerable potential. If Dell target this market, they can emphasize the need and the benefits, and make customers understand the usefulness of a 2:1 Notebook.
Segment 2: Management
The Management segment is second largest, with the majority being between the age of 45 and 54. The management occupation is growing correspondingly with the growth of new businesses and is, therefore, an important occupation for Dell to target with their 2:1 Latitude series. One key characteristic of this segment is that consumers travel more between locations such as meetings, business travels, etc. (Appendix 12). They also value good quality, data security, long lasting products, keyboard and touch screen, in which the Latitude series possess. 9 out of 23 respondents (39.13%) would prefer a detachable screen, while 8 (34.78%) remains neutral (Appendix 11). Therefore, the segment has potential if Dell can
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convince neutral respondents of the benefits of using a 2:1 Notebook. 13 out of 23 respondents (56.52%) find it beneficial to use a 2:1 Notebook in their work
situation (Appendix 8) and the survey shows that the majority of this segment would consider buying one (Appendix 9). Respondents in this segment value quality over price, and does not usually buy devices on sale. In addition, the respondents do not necessarily follow trends (Appendix 10). This segment can benefit from portability, flexibility, and high quality because of the majority travel on a daily or weekly basis.
Segment 3: Architecture and Engineering
This segment was identified due to a positive result from the survey, in addition to affirmative information from the interviews. Most respondents in the survey values features like the keyboard, high quality, long-lasting products, design, security, and software (Appendix 11). Similarly, to the other segments, these respondents would pay more for quality and tends to ignore sales offers
(Appendix 10). Out of 13 respondents, 8 (61.53%) acknowledge the 2:1 device as beneficial in their work situation (Appendix 8). Even though the numbers of respondents in this segment are low, the majority would consider buying a 2:1 Notebook and some already own a device. Several resellers identified
Architecture and Engineering as an important segment, and one can, therefore, assume that a larger number of respondents in the survey would result in a similar outcome. This segment requires a device that can provide exceptional
performance, such as the ability to perform heavy graphical tasks with optimal resolution.
Segment 4: Education, Training and Library
Based on the information gathered from resellers there is a high demand for 2:1 Notebooks in the Education, Training and Library segment (appendix 2). Our survey indicates a considerable variation in age among the respondents. The software is one of the most important features these respondents look for in a computer. In addition to this, data security, detachable screen, and high quality are essential features. This segment prefers the “best of both” worlds; they value both touchscreen and keyboard, and this would make a 2:1 Notebook the optimal
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device for them (Appendix 11). However, this is an interesting segment, because the majority of the respondents think the 2:1 Notebook is beneficial (Appendix 8), but there is an equal number of people who would not buy it (7 out of 14
respondents) and those who does consider buying (Appendix 9). Some of them already own a 2:1 device and it is believed that this segment has potential.
Because the survey has a low number of respondents in this segment and with supporting information from resellers, it can be assumed that with a larger number of respondents, the results would have matched the current outcome. This segment can benefit from a flexible 2:1 Notebook and a good selection of ports and slots.
2.4 PEST Analysis
Several wider uncontrollable forces in the external environment could affect Dell.
In order to scan and analyze the external macro environment, we have utilized a PEST analysis. This way Dell can recognize where there are potential
opportunities and threats in the environment that Dell should be considering.
2.4.1 Political Forces
There are many political forces can impact Dell’s operations in Australia. There are several tax policies, trade restrictions and tariffs on import and export which the Australian government has set to protect the national economy (Australian Trade and Investment Commission 2017). The Australian Government is, however, stable and is regarded as a liberal capitalist democracy. There is a low threat of terror (Trading Economies, 2017). One can, therefore, conclude that the political factor strongly impacts how Dell operates in Australia, but due to the stability, this can be categorized as a minor threat.
2.4.2 Economic Forces
Australia is one of the largest capitalist economies in the world. It is also as mentioned protected to a high degree. The economy has a stable inflation rate of 2-4%, a stable and increasing GDP and a low unemployment rate of 5.7%. The interest rate is held steady at a record low of 1.5% which impacts Dell positively because it encourages people to spend more money on purchases usually viewed as non-essential. This creates a major opportunity for Dell. People are generally
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prepared and willing to buy devices like 2:1 Notebooks (Trading Economies, 2017).
2.4.3 Socio-cultural Forces
The socio-cultural factors are highly relevant forces for Dell to consider regarding the 2:1 Notebooks. Australia has a current population of 24,588,774 people according to the estimates done by United Nations (Worldometers RTS algorithm 2017). Whereas 89,3% is considered as urban, and this high ratio of urbanization affects the socio-cultural factors and trends (Worldometers RTS algorithm 2017).
People tend to move toward the big cities to work, and the increased social mobility and centralization creates opportunities for utilization. These factors are relevant because it affects the lifestyle of people, and demands a more flexible and on-the-go working situation. Australians tend to be well educated and up to date on trends. There is an increased focus on corporate social responsibility (CSR), and Dell should respond to this force by emphasizing their devotion to CSR. The cultural, vibrant lifestyle and high standards of living increase the emphasis on design, brand and how the attributes of technological devices can improve the work routine. The trends of urbanization and the changes in work lifestyle is an opportunity Dell has taken advantage of when introducing the Latitude 2:1
Notebook. Seeing that branding is becoming increasingly important, this trend can be a threat for those not being the preferred brand in the market or are not
responding well to people’s buying patterns.
2.4.4 Technological Forces
Dell is operating in the IT industry, and hence the technological forces are highly important to acknowledge. The emerging technologies is an ongoing dynamic process of a digital revolution, a complex mechanism and uncertain in a long-term perspective. This continuous movement has a high innovation potential, where competing technology development accelerates. This tendency has led to a decrease in the product lifecycle for many products in the IT industry. This drift puts a lot of pressure regarding R&D activity, and the need of having patents that keep up with the maturity of the technology is highly significant for companies like Dell. These major technological trends intensify the emphasis on security and
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protecting sensitive data of intellectual property for businesses. Another trend is the importance of up-to-date devices in the workplace, especially among
millennials. A ratio of 42% of millennials is likely to quit their job if their
expectations are not met (Dell, 2017). Keeping up with the technological trends in the environment is important for Dell to take into consideration, and the
technological forces can, therefore, be seen as a major threat for Dell.
2.5 SWOT Analysis
Consumers are becoming less concerned with customization and standardized models sell cheaper and quicker. The hybrid business model combining direct and retail sales that has been developed, considers these emerging customer needs (Insight 2007).
Strengths
Dell has over the years developed a strong brand in the commercial market. In this market, they have a loyal customer and partner base. This tendency might be leveraged to reach potential customers for the 2:1 Latitude Notebook. The offering of exceptionally secure devices is what distinguishes Dell's 2:1
Notebooks from their competitors. The secure access and data security make the Latitude 2:1 Notebook especially attractive for B2B consumers. All potential segments identified in the primary research perceived security as one of the most important attributes of a computer device used in a work situation. Dell offers
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their customers excellent support and after-sales service for commercial clients.
This reflects their overall corporate value in creating and preserving customer relationships.
Weaknesses
Dell has a market leading direct sales force. However, the indirect sales model is weak and only accounts for 14% of Dell product sales. This could be due to the lack of control over the product sold through resellers, for example, the reseller's sales technique and promotion activities. Despite a high revenue, Dell has more debt regarding the industry standard. Compared to their competitors with high revenue and low debt, they spend less capital and attention to R&D. The Latitude 2:1 Notebook’s value proposition is not well communicated to the market. The Latitude is a long lasting premium device with corresponding price points, but the end users do not understand the benefits of investing in this device.
Opportunities
The 2:1 Notebook market is a new and rapidly growing market full of potential.
Dell’s strong brand within the B2B segment creates an opportunity for further expansion within this segment for 2:1 Notebooks, along with a low-interest rate in Australia of 1.5% that encourages consumption. When introducing the Latitude to the market, Dell has an opportunity to consider a new marketing strategy to better communicate the value proposition of the Latitude 2:1 Notebook. They can for example tailor a marketing communication approach and dig deeper into their reseller's sales techniques to monitor how the devices are being sold through the indirect channel. An opportunity for Dell is that most businesses need to have an up-to-date technology and keep track of the market trends and innovations to maintain efficiency within the firms. This tendency creates a demand for technology that can cover this need of well operating, practical and secure devices.
Threats
The line between the private and the enterprise market have become more blurred, and Microsoft and their Surface Pro have started targeting small businesses. Since
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Dell is aiming to become the market leader in the commercial 2:1 Notebook market, this is a major threat. Over the last few years, the computer market has experienced a decline. However, an evolving trend has recently emerged because of users wanting to update to the latest technological advances. This threatens Dell regarding their limited investments in R&D, and their ability to deliver innovative products to an evolving market. The accelerated changes in customer demands lead to a shorter product life cycles. This can be a threat for Dell because they constantly have to develop new innovative products and invest heavily in R&D.
Even though Dell produces long lasting products with high quality, customers might experience different needs more often, because of the rapid technological change.
3.0 Marketing Objectives
To help Dell address the key issues, increase profit and maintain a competitive advantage in the B2B market, one overall sales objective and three marketing objectives have been set for the forthcoming 12 months starting from June 2017.
3.1 Sales Objective:
The overall aim is to increase the market penetration rate of the Latitude products with 10% by the end of June 2018. From 2016 to 2017 the sales for 2:1
Notebooks was estimated to triple from more than 500,000 to nearly 1.5 million in 2017 (Telsyte 2017). Since the 2:1 Notebook market is relatively new to the fastest growing market in Australia (Dell 2017) it can be assumed that the sales will increase even more in 2018. Therefore, the opportunity is great. If Dell can achieve this objective, it will result in 200,000 products sold, which will help Dell to increase its profit. It can be useful to have three marketing objectives to achieve the overall goal better, which can contribute to accomplishing the increased penetration rate.
3.2 Marketing Objective 1:
Issue: Dell’s value proposition is poorly communicated.
Objective: To increase awareness towards the Latitude 2:1 range among targeted consumers in the market within the 1st quarter.
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As a result of the customer analysis, the end users do not understand the benefit of investing in a Latitude device. The Latitude is a long lasting premium device with corresponding price points, and it is therefore important to ensure that the
customers understand and believe in Dell’s proposition.
3.3 Marketing Objective 2:
Issue: Blurred line between the private and enterprise market
Objective: Strengthen the Latitude’s position in the commercial market within the 2nd quarter.
Dell is aiming to become the market leader in the commercial 2:1 Notebook market, but Microsoft and their Surface Pro is starting to threaten Dell’s position by targeting small businesses. Microsoft is one of Dell’s main competitors and have maintained a good reputation and built strong brand loyalty. For Dell to become the market leader, it is crucial to strengthen their position in the market by establishing a clearer position.
3.4 Marketing Objective 3:
Issue: Dell has a weak indirect sales model.
Objective: Increase sales with 5% through Dell’s indirect distribution channel within the 3rd quarter.
Dell has a market leading direct sales force, but indirect sales only account for 14% of Dell’s product sales. Increased indirect sales will result in attracting more partners and selling more products, which will further increase the profit for the company.
4.0 Target Markets and Positioning
4.1 Segmentation
Based on the customer analysis, four segments have been identified. These segments are identified because of their potential to provide Dell with advantages in the commercial market and to direct Dell to attract the right customers.
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4.2 Target Markets
Considering the identified segments and the conducted research, the markets that will be most effective and efficient to target are educational institutions,
organizations, and companies within the Architecture and Engineering segment addition with people who spend a significant amount of time traveling between locations within the management segment. Architecture and Engineering had a positive result from both survey and interview with resellers and Management was the second largest occupation from the primary research. These are the most profitable target markets, and will presumably give focused marketing approach and a successful market penetration.
4.3 Positioning
It is crucial for Dell to positioning the Latitude products towards the different characteristics that the customer values to increase their level of satisfaction.
Understanding the customer needs can provide with the right message being delivered, which is essential for creating a healthy and vigorous relationship with the customer. To be the first choice when buying a 2:1 Notebook, it is necessary for Dell to focus on the benefits the product provides to the target market. Having the right position, Dell can strengthen its brand in the mind of its customers against the competitors. The different target markets have various primary needs that need to be met. Furthermore, it is essential to position their Latitude products correctly to avoid the customer to prefer other options.
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4.3.1 Management
To reach the Management segment, Dell’s Latitude products should be perceived as a 2:1 Notebook with the appropriate design and features that can meet their needs. Management is growing correspondingly with the growth of new businesses and has 13 % share of total new jobs from five years to November 2015 (Australian jobs 2016). Management sector can benefit from portability, flexibility, and high quality because of the majority travel on a daily or weekly basis. To differentiate themselves from the competitors, Dell needs to convey their Latitude products with having the ability to handle moving between locations and as a problem solver.
4.3.2 Engineering and architecture
To attract the Engineering and Architecture segment, Dell should position their Latitude range as a 2:1 device with performance consistency, as a highly reliable product and highlight the availability of replacement parts. This segment requires a device that can provide exceptional performance, such as the ability to perform heavy graphical tasks with optimal resolution and need to be able to rely on their devices. Consistent performance is a leading indicator of overall customer satisfaction (‘Dell Notebooks are the most reliable according to Customer Satisfaction Research’ 2015) and can enhance customers trust towards the Latitude products. The segment values feature such as high quality, long-lasting products and security (Appendix 11), this indicates that having quality and a reliable product is essential to maintain customer loyalty. If a failure occurs, the customer needs to know that Dell has available replacement parts to minimize their downtime. As identified in the customer analysis, the Engineering and Architecture segment are willing to pay more for a high-quality product (Appendix 10). It can, therefore, be ideal to position their Latitude 7000 series towards this target market, because it is designed with superior performance and premium features (Dell 2017), which is corresponding to the needs and interests of this target market. Moreover, they need to convince this group that Latitude products are the right solution for them.
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5.0 Key Strategies
5.1 Strategy Option 1
Issue: Dell’s value proposition is poorly communicated.
Objective: To increase awareness towards the Latitude 2:1 range among targeted consumers in the market within the 1st quarter.
Strategy 1: Invest in promoting the Latitude products, marketing the products, not just the brand.
To create awareness towards the Latitude products it is necessary to market the product. The customer needs to be aware of the product and how it is different from the competitor’s product, to consider buying it.
Strategy 2: Establish a buying vision.
Make the customer wanting the product, and understand how the Latitude product can be the solution for their problem. Dell needs to be equipped to respond to the problems that the customers don’t realize they have. Customer value is the key.
Strategy 3: Develop an IMC plan to support the marketing of the Latitude products.
Developing, implementing and controlling an IMC plan, brings the channel and the message together and can effectively communicate the message of the
Latitude products, which is vital in this highly competitive market (Waller 2012).
5.2 Strategy Option 2
Issue: Blurred line between the private and enterprise market
Objective: Strengthen the Latitude’s position in the commercial market within the 2nd quarter.
Strategy 1: Emphasize differentiation in the target segments.
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Focusing on differentiating the products from the competitor and address important buying criteria. Scarcity is highly valued by the customer and by identifying buying criteria it will highlight where to compete effectively.
Strategy 2: Amplify the position in the high-end business market by emphasizing on what gives Dell competitive advantages.
Leveraging competitive advantage in the high-end business market will provide with high-performance level. Furthermore, it will give Dell a clearer position, which can reduce the threat of Microsoft targeting small business market.
5.3 Strategy Option 3
Issue: Dell has a weak indirect sales model.
Objective: Increase sales with 5% through Dell’s indirect distribution channel within the 3rd quarter.
Strategy 1: To better align business goals with the resellers.
In the B2B market it important to have personal relationships and to both identify and solve problems, communication is essential to building loyalty. To continue growing it is important that all the parties involved are making a profit.
Strategy 2: Develop incentives program to keep the resellers motivated.
It is important to keep the resellers motivated and getting the distributors to invest in selling Latitude products personally. By giving them incentives and a specific goal to achieve, they often become more dedicated.
Strategy 3: Focus more on direct sales forces to demonstrate and educate the products.
Direct sales give high level of influence on the customer and a better
understanding of what the customer wants. Selling direct will increase awareness towards the customers and can result in increased sales within the indirect sales force, as the customer will be more educated on the products.
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6.0 Key Recommendations
Invest in promoting the Latitude products + Establish a buying vision
It is highly recommended to start improving the value proposition by investing in the promotion of the Latitude products itself combined with establishing a buying vision. It is important to ensure that the customers understand and believe in Dell’s proposition, as it is the most important element of the marketing because it has the power to attract the customer towards Dell’s Latitude products. To attract customer towards the Latitude products, the customers need to clearly understand the benefits of investing in this device and how exactly it can contribute to their needs. To correctly communicate the benefits of using Latitude products, Dell needs to focus more on promoting the products and not just focusing on promoting the brand. It is significant to send the message loud and clear to the audience with different promotional techniques, to differentiate themselves from their competitors. Together with promotion, Dell needs to listen to what the customers want. It is just as important to understand the target audience’s industry.
By investing in promotion and establishing a buying vision, Dell can connect with their target audience, which will increase the customer traffic, sales and profit.
The Latitude is a long lasting premium device with a corresponding price point, and if the customer does not see the value of investing a Latitude, they do not have any reason to choose Dell over the competitors. In the commercial market, it is crucial to be in the positioning of addressing relevancy, quantified value, and differentiation, because that is the factors that prevent the customer from choosing
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to buy from the competitors. Without customer value, it is impossible to sell the products.
Better align business goals and customer service with the resellers When Dell have succeeded in delivering the right message and the needs are accurately understood, it is important to build trust and inform the customer about why the Latitude products are the right solution for them. But, to accomplish that it is essential for Dell to tackle the indirect distribution and align its business goals and customer service with the resellers to improve their cooperation with them. In the commercial market, it is vital for the customer to interact with the resellers, because it is one of the most important elements of whom they choose. Selling through resellers, Dell does not have directly contact with the customer nor any control over the actions that the resellers are performing. It is crucial that the partners are communicating well, to make sure that the resellers are working in Dell’s best interests to keep the customer satisfied. For the resellers to do that, they need to believe that Dell has the best products for the clients.
To implement this strategy is highly significant because of resellers ability to influence the marketing of the products and help to grow the business. If Dell can better align its business goals and customer service with their partners, they will have the ability to achieve a broader market more quickly and build a good relationship with the customer segments. Furthermore, it can lead to increased sales within the indirect sales model, which will result in increased revenue and profitability.
Amplify the position in the high-end business market by emphasizing Dell’s competitive advantages.
After the first strategies are implemented, Dell will be better equipped to amplifying their position in the high-end business market. It will be easier to establish a strong position in the market when the customers are aware of the Latitude products and the buying vision; it will allow Dell to maintain their level of customization. Since the second strategy will take the longest time to
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implement, it can be optimal to start implementing the last strategy
simultaneously with the second strategy. When Dell’s value proposition is better communicated, and the customer sees the value of the Latitude products, Dell can use their competitive advantages to strengthen their position in the marketplace.
For example, the “try and buy” principle, which leads to Dell holding a strong brand name in the B2B market, or Dell’s replacement parts availability, which was ranked highest in rolling six-month mean satisfaction (‘Dell Notebooks are the most reliable according to Customer Satisfaction Research’ 2015). By
focusing on what Dell are doing better than its competitors and offering the target audience the right product for them, will differentiate them in the market and strengthen their position. Competitive advantages build loyalty and are the route to long-term success.
Microsoft is positioning their surface device at an extremely sharp price point and even selling below their cost, but with a strong value proposition and a strong and clear position, Dell does not have to play that dangerous game and can continue to target the high-end customers.
Monitoring and control
It is believed that if Dell can successfully implement the strategies that are recommended, they will further succeed in achieving the objectives, which will solve the issues Dell are facing. However, to make sure Dell is getting the added value of their marketing investment, it is necessary to measure the result of the marketing activities. Furthermore, Dell needs to see if the activities give them the best return and look for any misunderstanding, technical problems of mismatches.
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8.0 Appendix
Appendix 1: Questions to Wholesalers
• Are you a Dell distributor? Why/why not?
• What products do you stock?
• Will you stock the 2:1 Latitude Notebook?
• Which 2:1 Notebooks are the best sellers?
• Do you stock any other notebooks? Which brands?
• Can you give us some price points? What is the recommended retail price?
• Do you think the 2:1 notebook market has potential? (Do you see any potential for Dell’s 2:1 Latitude series?)
• What customers are buying 2:1 Notebooks?
• Who is the market leader for 2:1 Notebooks?
• Which resellers do you sell 2:1 Notebooks to?
Appendix 2; Questions to Resellers
• What brands do you stock in the 2:1 product range?
• Which brand is the most popular?
• Which 2:1 notebook is the best-seller?
• Do you sell your notebooks to specific businesses? If so, which ones?
• What are the primary target markets for 2:1 Notebooks? (What kind of customer segments (vertical markets)?)
• What is the general consumer feedback for the 2:1´s?
• Why do current consumers choose 2:1 Notebooks?
• Would you say that there is an increase in demand for 2:1 notebooks directed towards businesses?
• Are there any specific attributes/features that are perceived as important?
Appendix 3: Questions to Microsoft
We are doing some market research for the 2:1 Notebook market here in
Australia, and we were wondering if we could talk to someone about the market?
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• Why do consumers choose 2:1 Notebook? What attributes and features are important?
• Do you sell 2:1 notebook mostly to individuals for private use or businesses for business services? Why do you think businesses are / are not interested in a 2:1?
• Is there any particular occupations that want/needs 2:1 notebooks/or that you recommend a Surface Pro to?
• Will you say that it is an increasing demand for 2:1 notebooks, directed towards business?
• How do you think 2:1 Notebooks can compete with tablets?
• Do you have any numbers on the size of the 2:1 market? How many % of that market is Surface Pro’s market share?
Appendix 4: Questionnaire
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If a person answered yes on the previous question:
If a person answered no on the previous question:
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Appendix 5: The Global Information Technology Industry
Appendix 6: Product Performance
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Appendix 7: “Top of Mind” Brand recognition
Appendix 8: Occupation and Beneficial
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Appendix 9: Occupation and Buying 2:1 Notebook
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Appendix 10: Occupation and Statements
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Appendix 11: Occupation and Features
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Appendix 12: Occupation and travel between locations
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Appendix 13: Issues and timeline for objectives
Quarter 1st 2nd 3rd 4th
Issue: Marketing
objective 1:
Marketing objective 2:
Marketing objective 3:
Sales objective
Dell’s value proposition is poorly
communicated.
Blurred line between the private and enterprise market
Dell has a weak indirect sales model.
= Overall objective
Appendix 14: Share of total new jobs, five years to November 2015 (%)
