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Marketing Case Study below: Question:

Describe approaches used by Dell within its site design and promotion to deliver relevant offers for different types of online customers.

Supply: Thinking Like a Seller End of Chapter Problem Jerome is working as an IT consultant. His individual labor supply curve is given in the accompanying graph. Jerome decides to enroll in college and will begin taking classes next semester. Make the appropriate change to the graph to show the most likely effect on Jerome's labor supply curve of his decision to attend college. If Jerome's decision to attend college results in a change in supply. shift the supply curve appropriately, but leave the wage line unchanged. If Jerome's decision to attend college results in a change in quantity supplied, adjust the wage line appropriately, but leave the supply curve unchanged. Jerome's individual labor supply curve Supply age wage Quantily Incorrect Supply: Thinking Like a Seller - End of Chapter Problem During the 1990s, Dell Computer Company adopted a lean production process, a manufacturing process that reduces inefficiencies without reducing production. As a result, Dell became one of the largest PC manufacturers in the world. Consider what impact the adoption of lean production techniques likely had on Dell's supply curve for PCs. Show the impact in the graph below by shifting the supply curve or moving the point along the curve. Market for Dell Computers Supply Price Quantity IncorrectDell is well known as a technology company, offering . We are committed to being environmentally respons a broad range of product categories, including desktop sible in all areas of our business. We have built envi- computer systems, storage, servers and networking ronmental consideration into every stage of the Dell products, mobility products, software and peripher- product lifecycle - from developing and designing als, and services to manage IT Infrastructure for large energy-efficient products, to reducing the footprint of organisations. our manufacturing and operations, to customer use and product recovery. Dell business strategy Dell's vision is to 'strive to provide the best possible Dell's sales and marketing customer experience by offering: superior value; high- Dell sells products and services directly to customers quality, relevant technology; customised systems; through dedicated sales representatives, telephone- superior service and support; and differentiated prod- based sales and online at www.dell.com. Customer ucts and services that are easy to buy and use'. segments include large corporate, government, health- The core elements of the strategy which are evident care and education accounts, as well as small-to- in Dell's marketing communications are: medium businesses and individual consumers. . We simplify information technology for customers. Dell stresses the importance of its direct business Making quality personal computers, servers, storage model in providing direct and continuous feedback from and services affordable is Dell's legacy. We are fo- customers, thereby allowing products and marketing cussed on making information technology affordable programmes to be developed and refined for specific for millions of customers around the world. As a re- customer groups. sult of our direct relationships with customers, or 'cus- In its SEC filing, Dell emphasises how it listens to tomer intimacy', we are best positioned to simplify how customers to develop relevant innovative technology customers implement and maintain Information tech- and services they trust and value. Evidence for using nology and deliver hardware, services and software the participative nature of Web 2.0 is that customers can solutions tailored for their businesses and homes. offer suggestions for current and future Dell products, We offer customers choice. Customers can pur- services and operations on an interactive portion of the chase systems and services from Dell via telephone, Dell website called Dell IdeaStorm. It says: 'This constant kiosks and our website, www.dell.com, where they flow of communication, which is unique to our direct may review, configure and price systems within our business model, also allows us to rapidly gauge customer entire product line; order systems online, and track satisfaction and target now or existing products.' orders from manufacturing through shipping. We For large business and Institutional customers, Dell have recently launched a retail Initiative and plan maintains a field sales force throughout the world. to expand that initiative by adding new distribution Dedicated account teams, which include field-based channels to reach additional consumers and small system engineers and consultants, form long-term businesses through retail partners and value-added relationships to provide our largest customers with resellers globally. a single source of assistance and develop specific Customers can purchase custom-built products tailored solutions for these customers. Dell also and custom-tailored services. Historically our flex- maintains specific sales and marketing programmes ible, build-to-order manufacturing process enabled targeted at federal, state and local governmental us to turn over inventory every five days on average, agencies as well as specific healthcare and educa- thereby reducing inventory levels and rapidly bring tional markets. the latest technology to our customers. The market and our competition has evolved and we are now Dell Premier exploring the utilisation of original design manufactory its large organisational customers, Dell offers turers and new distribution strategies to better meet Premier (http://premier.dell.com), which is a secure. customer needs and reduce product cycle times. Our customisable procurement and support site or extranet goal is to introduce the latest relevant technology designed to save organisations time and money through more quickly and to rapidly pass on component cost all phases of I/T product ownership. The main benefits savings to a broader set of our customers worldwide. of Dell Premier are described as:Easy ordering - a custom online store ensures . free upgrades (e.g. memory); access to your products at your price. . free accessories; Easy tracking - view real-time order status, online . finance offers; invoices and purchase history details. service upgrades. . Easy control - custom access groups define what users can see and do within Premier. The presenter also noted how, across Europe, the promotional mix has to vary to reflect the differences Marketing communications in buying psychology. He summarised the main differ- Dell markets its products and services to small-to- ences between customers as follows: medium businesses and consumers primarily by adver- . UK - all about price; tising on television and the Internet, advertising in a . CH - add value over price; variety of print media and by mailing a broad range of . DE - all about high-end products in mix; direct marketing publications, such as promotional . IT - design is important (!); pieces, catalogues and customer newsletters. In certain . DK - cheap is good; locations Dell also operate stores or kiosks, typically . NO - added value is key; located within shopping centres, that allow customers . FR - tailored for France. to view its products in person and purchase online with the assistance of a Dell expert. Dell's use of digital media channels The main digital media channels used by Dell.com In Dell online communications Europe are: The management of the consumer site was presented to . Paid search through programmes such as Google EConsultancy (2008). Dell has a three-stage order funnel: AdWords, which are used to promote value through marketing communications execution measured by time-limited offers related to the phrase searched site visits; upon. For example, a Google search for 'cheapest site merchandising measured by consideration% Dell' displays an ad: 'Discount Dell Laptops www. site visits to e-store visits); dell.co.uk/laptop - Save up to 2300 on selected Dell store merchandising measured by conversion% Laptops from $329. Buy online now!" (e-store visits to e-receipts). Display advertising - for example, advertising on The presenter explained how Dell aims to understand technology websites - is particularly Important for and act on customer behaviour based on identifica- the corporate market. tion of a series of consideration drivers - for example, Affiliate marketing - used to protect the Dell brand by the quality of online advertising: path quality through enabling affiliates to bid on terms such as 'Dell lap- site; merchandising/offers - and conversion drivers - tops' and to target niche audiences such as owners for example, configurator 'ease of use'; accessibility of gaming machines. of decision support tools and consistency of message . Email marketing - an e-newsletter is used to keep in through the entire path. touch with existing customers and deliver targeted Dell will invest in strategic improvements to the site offers when their hardware may be renewed. to improve these levers - examples mentioned included new merchandising approaches such as customer How Dell use social media marketing ratings and reviews, videos, major 'path' or customer Cory Edwards, director of social media and reputation journey changes created through decision support tools team (SMART) at Dell has explained Dell's approach to to 'Help me choose'. There are also more tactical initia- social media marketing. He stresses the importance of lives to help deliver the right message to each customer commitment from senior managers which is exemplified Including customisation/personalisation, real estate for Dell by CEO Michael Dell, who frequently emphas optimisation and message balancing. sises the importance of social media marketing to Dell. More tactical persuasion of site visitors is based on Edwards (2011) contains this quote from Michael Dell: price moves/optimised price position to market and the Engaging in honest, direct conversations with mix of product features. A wide range of different offers customers and stakeholders is a part of who we are, need to be managed. Tactical promotions which are who we've always been. The social web amplifies our driven by promotional 'end dates' which are weekly or opportunity to listen and learn and Invest ourselves in bi-weekly include varying: a two-way dialogue, enabling us to become a better * free shipping: company with more to offer the people who depend money-off discounts; on us.346 Part 2 Digital marketing strategy development Edwards simply says, "If content is king, then listening will encourage your customers to interact and will is queen'. inspire them. Dell has clear goals around a number As an indication of the importance of social media of financial and non-financial measures. They look at listening to Dell, Dell has created a Social Media measures including operational savings through paid Listening Command Centre which has six wall moni- search and support savings and boosting customer tors tracking what Dell's most influential customers are loyalty measured through the Net Promoter Score. saying, trending topics relating to Dell, market perfor- When customers interact with Dell, their experi- mance including share of voice and ratings of senti- ences are shared via their social graph of followers or ment expressed about Dell. Around 25,000 posts in 11 fans, so there is this viral effect which helps customer languages are monitored daily by Dell's 'Ground Control acquisition. Team'. Convert: Here Dell is trying to leverage initial interac- Dell has a social media governance workflow which tion to go through into real value of leads or sales. At reviews the potential importance of these customer a practical level, Dell has a clearance channel, Dell comments and identifies those it is worth following up Outlet, that it uses to sell through Twitter. It may also with. The Ground Control Team is tightly integrated with offer promotional coupons through social media like the@DellCares Twitter team who engage around 1000 Groupon or deals sites to encourage sales. customers per week. Their role is to reach out to people . Engage: This is the big challenge with social media: complaining about Dell on Twitter. Edwards notes that how to keep customers engaged. For Dell, engage- the team has a 30 per cent rate of converting ranters to ment occurs on several platforms, but in particular ravers. within community forums, which are user-to-user As well as responding to negative mentions as part of support postings where topics range from support customer service, Dell has created an Online Influencer to pre-purchase or enthusiast discussions. There Relations Program. This is managed by identifying influ- are millions of members with tens of thousands of ancers across business unit, region or topic area. Key discussions and accepted solutions each week. The influencers are identified using a Conversation tracker, Direct2Dell Network is also used for B2B customers which is part of Dell's social media listening tool Radian with separate blogs for Enterprise IT, Small Business, 6. Influencers are provided with content and products Education, Investors, etc. They encourage guest which they may review or share. Dell has gone beyond Influencers to join the discussion. Finally, another virtual relationships introducing Dell Customer Advisory big part of engagement for Dell is IdeaStorm - one of Panel (CAP) which Edwards describes as "a ranters and the best examples of crowdsourcing through social ravers event'. Invitees are prioritised based on size of media, which encourages ideas, feedback, innova- social media reach and their affinity with Dell. tion and dialogue. Over tens of thousands of ideas Relationship owners are designated and involved have been generated, with around 100,000 com- with ongoing efforts to build advocates, Within CAP ments added, and a viral effect occurring through days, Dell not only listens, but gives feedback on how a Facebook app. Only several hundred ideas have problems are addressed. For example, Dell heard that been implemented, but the secret is that Dell closes there were too many dropped calls and unnecessary the loop by feeding back to customers what has transfers, so it explained how ePhone CRM software worked and what hasn't. Is being launched across sites, which will improve reporting capability to track telecom issues and queue Source: 2011 SEC Filing Econsultancy (2004): Dell case study: Online Marketing Masterclass, presented at the Royal Institute of mergers to eliminate certain types of transfer. British Architects, November 2008. Edwards (201 1): Tacking corporate The reputation management we have described is reputation with social media, presentation by Cory Edwards, director of social media and reputation team (SMART) February 2011, avaleble to only part of the social media marketing activities. If we view onine at www.slideshare.not/KerryatDall/dell-social-media- review these activities according to the RACE frame- nima-event-london-v2-feb-2011 See also: www.slideshare.net /KerryatDoll/dells-social-media-journey-econsultancy-master- work (Chapter 1), we can see that Dell is involved In classes-november-2009 http://content.dell.com/us/en/corp social media marketing activities across the customer four-story-company-timeline.aspx lifecycle: . Reach: Research, network and advertise to reach and interact with customers and prospects on the Question social outposts, communities and blogs relevant to Describe approaches used by Dell within its site your audience. design and promotion to deliver relevant offers for . (Inter) Act: This Involves determining your goals different types of online customers. and then working out the engagement tools thatName: Year Market Dell HP 30% 26% 47% 7 15 -54 3 18 -14 15 -22 -15 7 -14 2 -28 10 -18 40 7 26 42 17 -10 30 -23 9 -3 -32 -4 10 38 28 75 a) Calculate the expected average rate of return and the standard deviation on each of the two alternatives: Dell and HP, in addition to the market index. b) Calculate the coefficient of Correlation between Dell and HP. c) Suppose you created a 2-stock portfolio by investing $75,000 in Dell and $25,000 in HP, calculate the expected return, the standard deviation, and the coefficient of variation (CVp) for this portfolio. d) Use the previously calculated standard deviations for Dell, HP and the market in question (a) to estimate Dell's and HP's betas e) If the risk free rate equals 4%, and the expected rate on the market equals 9% find the required rate of return on Dell and HP. f) Would you purchase Dell and/or HP? Why? g) Suppose you form a portfolio with $1.4 million in Dell and $0.6 million in HP, what is the Required Return on the Portfolio?Question (1): Answer the following Questions: a Complete the following sentences based on your understanding: (4 marks) 1- ( ) deals with the distribution of goods from several points of supply (sources) to a number of points of demand (destinations). 2- ( ) problems can be approached with LP from two perspectives: Maximize audience exposure or minimize advertising costs. b Solve the following problem: (10 marks) Dell computers Company is promoting to its products with 3 types of advertisements (Billboards, Morning news, and Radio). Dell computers company wants to have at least 5 advertisements per day, but spend no more than $ 50 000 as the company budgeted up. The Company wants to maximize the audience exposure. Formulate using Linear Programming. The following Data are given: Ad Type Estimated Audience Cost per Ad Maximum Ads \\ reached with each other. week ' Billboards $ 3000 $ 5000 10 Mo ' g $ 4000 $ 7000 6 news Radio 55 75 000 $ 100 000 2