Computer Information Technology

Summary

Technological changes are growing faster than ever and hardware companies that sell technology products have had to adapt to these rapid changes [5]. Success relies heavily on getting products sold without carrying excess inventory--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 [9].

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 27" LCD TV sold for approximately $2K. Today a comparable set is selling for around $900 and a larger 37" LCD TV can be purchased for around $1600 [3]. As production costs decline for the most popular technology products manufacturers enhance their product lines--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 [1].

Dell'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 Dell's successful marketing strategies involved the use of a Decision Support System (DSS). In Dell'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 [1].

Dell modeled their web site using their extensive market research and customized the site to meet the needs of their target markets sector. Dell's web site will immediately route potential customers to pages focused on predefined market sectors [1]. 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 Dell's focus on these specific sectors which allows them to target each sector with distinctly different marketing campaigns [3]. 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 [8]. 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 programs--either paid when the customer ships or prepaid with the purchase of a new system. Dell also offers promotional deals that waive the