How Dell Computer Corporation Dominates the pc Market

At the age of 37, Michael Dell is already an elder statesman of the high-technology industry. He founded his company, Dell Computer Corporation, while still a student at the University of Texas in Austin. The principles underlying the business were relatively straightforward. In a fast-changing business like computing, it did not seem sensible to follow the traditional pattern of manufacturing products, finding a distributor and attempting to sell them in the marketplace. Rapid innovations in PC components meant that unsold stock quickly contained out-of-date parts, making it unattractive to the market unless it was steeply discounted. Dell came up with the ingenious idea of making computers to order. Customers selected from a menu of options on hardware and software, and telephoned their orders. This approach also meant that Dell was paid for its products in advance, which was an enormous help to the growing company. Business and personal buyers then received a machine that was customized to their needs and the 'make-to-order' model allowed for the inclusion of the very latest components, if desired. But Dell has also worked hard on producing these high-value products efficiently by streamlining manufacturing and coordinating the supply chain. Whereas there are 130 'touches' or interventions by staff involved on a standard PC assembly line, Dell has reduced this to just 60. The just-in-time (JIT) delivery of supplies and finished products also generates major savings in terms of inventory and storage costs. Furthermore, the make-to-order model was ideally suited to the Internet and over half of Dell's US$30 billion-plus sales are now online. The virtual integration of the supply chain has reduced co-ordination and communication costs, and increased the speed with which orders can be processed. Dell's growth has been staggering. Its share price was the top-performing, big-company stock of the 1990s rising by an amazing 29,600 per cent between 1990 and 1998, which is a rise from 23 cents to US$68. Michael Dell's 16 per cent stake in the company has made him one of the high-tech industry's super-rich.

Delivering customer value

As well as being a philosophy that puts the customer at the centre of the business, marketing is also a business function that encompasses the variety of activities that must be conducted in order to deliver customer value. These include conducting marketing research to understand customer needs and their behaviour, segmenting markets into submarkets to be targeted by the company, developing products and brands, and positioning these in the marketplace, making pricing decisions, deciding on a promotional mix, selling and distributing products, and marketing planning and management. These are the kinds of issues that will be the focus of later chapters in this book. Markets and marketing are constantly changing, and new methods of delivering value-such as customer relationship management (CRM) - are being developed. These new tech­niques, along with issues of importance to the marketing profession such as marketing ethics, will also be discussed throughout this book.

Marketing, therefore, is an exciting and multi-faceted profession. Marketing managers are responsible for ensuring that the organization delivers value to customers; but in doing so they may avail themselves of the services of researchers, salespeople, communication specialists, advertising agencies and retail specialists. The wide range of careers that fall within the realm of marketing is outlined in Appendix 1.1 at the end of this chapter.