1.0 Executive Summary
An integrated marketing communications audit was performed on Dell Inc. The audit
determined that Dell Inc. had successfully moved away from the mass media approach to
marketing through the implementation of a direct marketing to the consumer strategy. The
audit determined further that Dell Inc. could improve its marketing effort by building on the
successful direct marketing to consumer program to develop and Integrated Marketing
Communications Plan. The elements of such a plan were recommended, and a plan for
implementing the recommendations was provided.
2.0 Company Description
Dell Inc. is the global market leader in personal computers (PCs). The company offers a full
line of desktop and notebook PCs designed for consumers, network servers, workstations,
storage systems, and Ethernet switches. The company also sells handheld computers, and it
markets third-party software and peripherals.
Dell Inc.'s mission is to provide high-quality personal computers to business and home
computer users through a direct marketing strategy. The three essential elements of the
company's strategy in pursuit of this mission are as follows:
Minimize inventory [build to customer order]
Obtain information directly from customers and heed customers' wishes
Do not sell indirectly
Globally, an important objective of Dell Inc. is to generate 50 percent of its sales in each
global region on-line over the Internet. Several of the Company's global regions are not
meeting the objective. Mainland China is one region that is not meeting this objective.
Because of the nature of the Chinese market, the Company objective for on-line generated
sales in mainland China was 15 percent by the end of 2004. The reluctance of larger
business firms in mainland China to commit to on-line sales impinged on the ability of Dell
to increase such sales at a faster rate.
Another important objective of Dell Inc. is to attain a market share ranking of no lower than
second in each of the Company's global markets. Although the company is the global
market leader, it is not the leader in all regional markets.
Dell Inc. functions, effectively, as a virtual corporation. The basis for a virtual corporation is
the concept of the virtual product or virtual service produced quickly in response to
customer demand. Dell Inc. performs effectively in this context. Two important advantages
of the virtual corporation concept are focus and specialization. These two factors tend to
drive virtual corporations. Another advantage of the virtual corporation concept is the ability
to reduce the cycle-time of production. Global competitiveness is forcing companies of all
sizes to go to ever-greater lengths to improve customer satisfaction. Organizations can both
decrease delivery time and improve quality, thereby creating a more satisfied customer. An
organization's total business-cycle time is measured from the time a customer's need is
identified to receipt of payment from that customer for the finished product.
3.0 Current Integrated Marketing Communication Analysis
This section examines the current status of integrated marketing communications (IMC)
strategies at Dell Inc. IMC strategies are highly complex and were created primarily from a
perspective that focused on conditions in developed economies. While IMC strategies have
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a role in all marketing endeavors, they are not as relevant in some developing markets are
they are in developed markets in developed economies.
An IMC strategy envisions the use of media advertising, direct marketing,
interactive/Internet marketing, sales promotion, and publicity/public relations. The most
appropriate mix of the application of the elements of the IMC channel set is influenced to a
great extent by more traditional considerations of market segmentation and target market
definition for specific products (Belch & Belch, 2004).
The current marketing communications situation at Dell Inc. focuses heavily on the direct
marketing approach pioneered by the company in the PC market. The direct-sales model for
computers applied by Dell Inc. focuses on the elimination of intermediate elements of the
marketing channel to allow the Company to sell directly to end users. This approach has
proved to be highly cost-effective for Dell Inc.
Dell Inc.'s marketing strategy is based on a build-to-order concept that lowers inventories,
lower costs, and improves profits, while simultaneously boosting levels of customer
satisfaction.
Thus, the centerpiece of Dell Inc.'s current marketing strategy is direct marketing to the end-
user. The direct marketing program at Dell Inc. relies heavily on precise targeting and the
use of direct mail advertising and email advertising. The direct marketing program at Dell
Inc. was among the first in the personal computer industry, and it has proved to be by far
the most successful.
The precise targeting that is the key to the success of the direct marketing program at Dell
Inc. is based on two types of information. The first type of information is drawn from the
Company's own customer records. The Company has achieved significant success in the sale
of new models to the purchasers of its own earlier computer models.
Early in the 1990s, Dell Inc. extended its direct marketing program to Europe. The
Company's direct marketing program in Europe was widely predicted to fail, because the
marketing environment in Europe was held to be not receptive to such a strategy. Instead,
however, the direct marketing program of Dell Inc. in Europe has attained a high level of
success.
Dell Inc.'s direct marketing model is highly effective in most global markets. The reduction
in costs throughout the operation chain and the compression of time within the supply chain
make it possible for Dell Inc. to gain competitive advantages in (a) price, (b) product
innovation, and (c) service.
Dell Inc. avoided many of the problems associated with the use of mass communications
when the Company implemented its direct sales model. Mass communications are often
wasteful and rarely speak to the needs of specific target groups. In contrast, direct marketing
to consumers allows companies to target their messages precisely in an efficient, effective,
and measurable fashion.
Direct marketing to consumers at Dell Inc. is an interactive system of marketing that uses
multiple media to generate measurable responses and transactions. Examples of direct
marketing include direct response advertising, direct mail, personal selling, telemarketing,
and trade shows. The direct marketing to consumer strategy at Dell Inc. focuses on direct
mail advertising, targeted email advertising, and direct response advertising through
promotions in newspapers.
A direct communication contains three specific elements. The three elements are as follows:
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A definite offer
The information necessary for the targeted consumer to make the decision, and
Specific directions for responding to the offer directly to the Company
Direct marketing to consumers offers significant advantages over the use of traditional
marketing methods. Direct marketing consumers, however, also is characterized by some
disadvantages. The major advantages and disadvantages of direct marketing to consumers
are as follows:
1. Advantages:
a. Response-driven. Including a reply device allows prospects to respond to a company's
direct communication.
b. Measurability. Response rates can be quantitatively measured (e.g., responses
received/communications sent). Various media plans, creative executions, offers, and so
forth, thus, can be tested and modified over time.
c. Precision targeting. Where general advertising is a mass medium, direct marketing is a
targeted medium that focuses on communicating with pre-selected targets. Targets selected
to receive a direct offer should be determined by their likelihood to respond to a specific
alternative. This likelihood can be based on such profile data as demographic, behavioral, or
psychographic characteristics. As a consequence, the selective distribution of direct
communications results in a more efficient allocation of relatively scarce promotional
resources.
d. Personalized messages. Precision targeting means communications can be tailored to the
specific needs of targeted audiences. Personalized communications will both increase
response rates and help position organizations in a market. Aspects of the direct
communication that could be personalized include the prospect's name/organization,
advertising appeals (e.g., price-oriented vs. quality-oriented), motives (e.g., product
features), and so forth. It should be noted, however, that cost-benefit trade-offs must be
examined over time to determine whether additional revenues from personalization exceed
costs.
e. Competitive exclusivity and invisibility. Direct mail has less competition than other forms
of communication. Although it is true that clutter also exists in the mailbox, it is much less
than the hundreds of other advertisements individuals are exposed to on a daily basis.
Further, because the company can control who receives a communication, it is difficult for
competitors to monitor the tactics and retaliate in a timely fashion.
f. Developing proprietary databases. By using direct marketing, companies obtain a unique
competitive advantage through database management. Specifically, those subjects who
respond become part of an on-going and proprietary database. The value of this database is
considerable, given that loyal customers can be considered a company's most valuable asset.
2. Disadvantages:
a. Cost per contact. The cost of reaching an individual is higher with direct marketing than
by using traditional advertising methods. Compensating for the increased cost per contact,
however, is a lower cost per qualified contact.
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b. Developing brand image. With its focus on generating a response, direct marketing has
traditionally not been an image-generating medium. Image-generation may become
increasingly important in the personal computer market as the basic products moves toward
commodity status.
c. Junk mail perceptions. Direct communications are not usually requested by their
recipients, and unless the offers are appropriately targeted, they are perceived as irritating as
is junk mail and as are telemarketing calls. Other sources of irritation could be poor
production quality or ineffective targeting.
4.0 Recommendation for Improved Integrated Marketing Communication Plan
IMC is a concept of marketing communications planning that recognizes the value of a
comprehensive plan that evaluates the strategic roles of a variety of communication
disciplines and combines these disciplines to provide clarity, consistency, and maximum
communications impact (Swain, 2004). The development of an IMC plan for Dell Inc. must
take into consideration the unique status of the Company within the PC industry. It was
noted earlier in this paper that Dell Inc. functions in many ways as a virtual company.
Within this context and within the context of the company's marketing strategy, Dell Inc. is
not a typical manufacturing organization. Dell Inc. focuses on made-to-order products
within the framework of a mass customization strategy. Dell Inc. does not manufacture the
components of the PCs it sells. Rather, the Company buys quality computer components
from quality vendors and assembles made-to-order PCs (Warkentin, Bapna, & Sugumaran,
2000).
The mass customization strategy is a central to the Company's direct marketing to
consumers strategy. An IMC plan for Dell Inc., therefore, also must embrace the company's
mass customization strategy.
Mass customization is a business strategy that, while appearing to be a contradiction in
terms, is a rational evolution in competition and marketing theory. In effect, the term mass
customization refers to a practice of mobilizing technological innovations in
communications, information systems, and production processes to mass produce products
that are designed to satisfy the demands of a particular market segment as opposed to being
designed to satisfy an assumed universal demand. Dell Inc. has refined to mass
customization concept to a made-to-order strategy.
Mass customization is \"making products tailor-made for each individual buyer, but wherein
production levels provide economies of scale\" (Westbrook & Williamson, 1993, p. 38).
Mass production, by contrast is the production in high volumes of standardized products
under conditions of design and process change stability.
The emergence of the mass customization concept stems from the dynamism of the global
market place. Dell Inc. embraced globalization. Further, the company has applied its refined
approach to mass customization to become the global leader in the PC market.
The delivery of high levels of customer service is becoming more difficult, as the customer
base for most firms becomes both more diverse and more demanding. A mass customization
strategy is a customer-oriented strategy. It is a strategy wherein customer satisfaction is the
paramount objective.
Mass customization strategies are highly dependent upon production, inventory, and
distribution systems, in addition to sophisticated information systems. An IMC plan for Dell
Inc. must be designed to complement the mass customization strategy pursued by the
Company.
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Both a mass customization strategy and an IMC plan for Dell Inc. depend on an information
system network that connects all members of the supply chain and that connects the
company with its targeted consumer markets. A continuous stream of information is
required to enable all parties to provide superior customer service.
In an IMC for Dell Inc. the marketing communications will focus on the customer, as
opposed to the product. The message will not be on what the product can do specifically.
Rather, the message will focus on how the product can solve the customers' problems. The
message will not focus on the price of the product. Rather, the marketing communications
will focus on the cost to the consumer to satisfy a specific requirement or need. The price of
a product considered in isolation may appear to be high. The price of a product as an
element of a customer's cost structure for the satisfaction of a specific need, however, may
be perceived as quite reasonable. The message will not focus on place (where the consumer
can find the product). Rather, the IMC message will focus on customer convenience. For
Dell Inc., the IMC message will focus on (a) the selection and purchase of the product
online from the convenience of the customer's home or office, and (b) the delivery of the
product to the location of customer choice. The IMC message from Dell Inc. to the
customer will not promote a product. Rather, the IMC message will provide the consumer
with the relevant information required (a) to make an informed decision and (b) to
efficiently act on that decision (Cornelissen, 2003).
5.0 Implementation Plan
An IMC plan evaluates the strategic roles of several communications media. These media
are as follows (Kliatchko, 2005):
Media advertising
Direct marketing
Interactive/internet marketing
Sales promotion
Publicity/Public relations
Personal selling
Dell Inc. has had great success with its direct marketing strategy. Thus, direct marketing will
continue to be an important element of the Company's IMC plan. Equally prominent in the
Company's IMC Plan, however, will be the use of interactive/Internet-based marketing. Dell
Inc. has an Internet marketing program; however, this program must be enhanced with the
objective of securing 75 percent of the company's orders by 2012. The Company's Internet
marketing initiative will fulfill the following roles in the IMC Plan for Dell Inc.:
Customer communication medium
Direct product sales to customers
Information collector for the Company's IMC database
Customer service
Customer technical support
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6.0 Evaluation and Control
Dell Inc. will formalize a monitoring protocol to collect the information required to evaluate
the effectiveness if the IMC Plan and the effectiveness of the IMC Plan in allowing the
Company to meet sales objectives. Monthly evaluation reports will provide information
comparing performance with objectives. Quarterly control reviews will determine necessary
modifications to the IMC Plan and provide directions for the implementation of such
modifications.
7.0 References
Belch, G. E., & Belch, M. A. (2003). Advertising and promotion: An integrated marketing
communications perspective. (6th ed.). New York: McGraw-Hill College.
Cornelissen, J. P. (2003, December). Change, continuity and progress: The concept of
integrated marketing communications and marketing communications practice. Journal of
Strategic Marketing, 11(4), 217-234.
Kliatchko, J. (2005). Towards a new definition of Integrated Marketing Communications
(IMC). International Journal of Advertising, 24(1), 7-34.
Swain, W. N. (2004, March). Perceptions of IMC after a decade of development: Who's at
the wheel, and how can we measure success? Journal of Advertising Research, 44(1), 46-
65.
Warkentin, M. Bapna, R., & Sugumaran, V. (2000). The role of mass customization in
enhancing supply chain relationships in B2C e-commerce markets. Journal of electronic
Commerce Research, 1(2), 45-52.
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