Technology / Computer Information Technology
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Autor: anton 30 October 2010
Words: 1126 | Pages: 5
Technological changes are growing faster than ever and hardware companies that sell technology products have had to adapt to these rapid changes . Success relies heavily on getting products sold without carrying excess inventoryâ€”inventory that devaluates quickly and becomes obsolete once newer technologies appear in the marketplace. Although there is a current upswing in IT hardware spending companies can wait longer before upgrading their hardware during lean times .
As technologies advance existing stock becomes obsolete or is reduced to standard issue items. And along with this obsolescence reductions in consumer prices ensue. Consumers will purchase the newest technologies while the oldest items remain on the self and, hence, will not command the original asking price. In February 2004 a 27â€ LCD TV sold for approximately $2K. Today a comparable set is selling for around $900 and a larger 37â€ LCD TV can be purchased for around $1600 . As production costs decline for the most popular technology products manufacturers enhance their product linesâ€”in this case by increasing the screen size or resolution. Rules of supply and demand apply as consumers purchase more of most popular items. Computer components such as graphics cards, hard disk drives, and CPUs follow the same price declines. Usually such price declines occur when newer technologies and changing consumer demands warrant such declines.
Dell Computers emphasis on supply chain management has given them an edge over their competitors. Dell minimizes its inventory by building computers after the consumer has customized a system and purchased it on-line. This eliminates the need to warehouse systems that steadily depreciate as newer systems render them obsolete. Dell has stayed away from retail outlets that have failed for other PC makers such as Gateway .
Dellâ€™s marketing strategy focuses on market sectors, which they have defined, based upon their market research. Each sector has a focused web site that is directly geared towards each respective consumer sector. Dell has a site for education, one for government, another for home users, and sites for small and large businesses.
One of Dellâ€™s successful marketing strategies involved the use of a Decision Support System (DSS). In Dellâ€™s case data was gathered through their marketing campaigns that involved the retrieval of customer data through their web sites and direct mailings. Dell then started focusing on specific classifications of customers like, server, large businesses, government, schools. From these classifications they then targeted the decision makers within those groups .
Dell modeled their web site using their extensive market research and customized the site to meet the needs of their target markets sector. Dellâ€™s web site will immediately route potential customers to pages focused on predefined market sectors . These sectors include home/home office, gaming, small business, medium/large business, and government/education/healthcare. The later is further divided into more granular sectors such as, federal government, state and local government, K-12 education, and higher education. It has been Dellâ€™s focus on these specific sectors which allows them to target each sector with distinctly different marketing campaigns . Within these market sectors Dell further targets even more granular sectors. For instance, after selecting the Federal Government link another link is displayed that is specifically focused on Homeland Security.
Dell ships systems world-wide and has an extensive customer base. With the current expected life-cycle of a computer estimated at three years, Dell should be able to maintain sales for some time to come . Given their market share of computers and servers they may potentially grow their share using better marketing approaches than their competitors. To continue their leadership role, within a market saturated with competitors, Dell is using other strategies for customer retention and sales growth.
Dell is currently offering recycling programsâ€”either paid when the customer ships or prepaid with the purchase of a new system. Dell also offers promotional deals that waive the recycling fee with new systems. Another goodwill offering from Dell is acceptance of older computers for donation to underprivileged children. There are minimum requirements these systems must meet, but this is another means of recycling computers that have some salvageable value .
Profits margins on some consumer electronics exceed the margins on most computer systemsâ€”anywhere from 25% to 40% . Also, customers often will want the add-ons at the time of purchase that enhance their computer experience. MP3 players, PDAâ€™s, Flat screen TVâ€™s, and digital cameras are intrinsically digital and fit directly into computing. This convergence of technologies makes the sale of consumer electronics a perfect fit as add-ons with the sale of personal computers. Such digital devices rely heavily on the ability to connect to a personal computer. For instance, MP3 files are stored digitally on magnetic and flash drives. These file formats are played on most current operating systems and easily transferred between portable devices such as MP3 players, cellular phones, and PDA devices. These portable devices allow consumers to take their music and video files with them wherever they go.
Dellâ€™s ability to set market prices by its just-in-time manufacturing model gives them a definite market advantage over their competitors. However, companies like Apple Inc. are capturing a large market share of these add-on digital devices. Given the phenomenal success of Apple iTunes and their download service , Dell must use other content providers, like MusicMatch, to provide the digital content necessary for the consumer. This content will also include video media, which still has yet to find the right market niche.
It has yet to be seen if Dellâ€™s manufacturing strategy will work well with the consumer electronics market. Stores are full of these devices and competition is growing as the Chinese manufactures are aggressively pursuing their share in this space. Consumers may wait to receive their personal computers, but might not want to wait for the consumer devices readily available at many retail outlets. Also, consumers know what to expect with most personal computers; however, esthetics, size, visual quality and feel of consumer devices may not translate as successfully to online purchases. Given the name recognition that Dell maintains it may be wise for Dell to team with one of the retail consumer electronics chains, e.g., Best Buy, Circuit City, to allow customers to sample products.
As technological advances have changed so rapidly in the past few years Dellâ€™s future in the computer hardware industry cannot be accurately forecast. Their business model may need to change as consumer demands change, but they are doing something right at this moment in time.
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