BRUNEL BUSINESS SCHOOL COVERSHEET FOR ONLINE COURSEWORK SUBMISSIONS Module Code MG2138 Module Title Marketing Channel and Logistics Module leader Des Doran Student ID number Student name Degree Programme (e.g. Business and Management (General)) I understand that the School does not tolerate plagiarism. Plagiarism is the knowing or reckless presentation of another person’s thoughts, writings, inventions, as one’s own. It includes the incorporation of another person’s work from published or unpublished sources, without indicating that the material is derived from those sources. It includes the use of material obtained from the internet. (Senate Regulations 6.46) By completing the above details, I confirm that I adhere to the School’s Policy on plagiarism. Continue writing your coursework on the next page. Alternatively, if you have already written your coursework in another document, copy and paste the content of your coursework from your document within this file.
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BRUNEL BUSINESS SCHOOL COVERSHEET FOR ONLINE COURSEWORK SUBMISSIONS
Module Code
MG2138
Module Title
Marketing Channel and Logistics
Module leader
Des Doran
Student ID number
Student name
Degree Programme (e.g. Business and
Management (General))
I understand that the School does not tolerate plagiarism. Plagiarism is the knowing or reckless presentation of another person’s thoughts, writings, inventions, as one’s own. It includes the incorporation of another person’s work from published or unpublished sources, without indicating that the material is derived from those sources. It includes the use of material obtained from the internet. (Senate Regulations 6.46)
By completing the above details, I confirm that I adhere to the School’s Policy on plagiarism.
Continue writing your coursework on the next page. Alternatively, if you have already written your coursework in another document, copy and paste the content of your coursework from your document within this file.
i
Executive Summary
The report analyses Dell Corporation’s supply chain management, Dell has recently
improved their market share and lie 2nd in the global PC supplier market, behind leaders
Hewlett-Packard. Dell have a sophisticated network in which they sell directly to customers
and as of late, they have adapted and sell through retail outlets such as Tesco.
A SWOT analysis has identified clear strengths, weaknesses, opportunities and threat’s that
Dell have. The Dell input transformation output model included, shows how Dell have made
use of high quality supplies in order to assemble high quality products for their customers.
Also analysed in this report is how Dell have managed there logistics throughout the entire
process of satisfying orders from getting components from suppliers to creating full finished
goods for customers. Managing logistical activities such as pre and post level customer
service, traffic monitoring, demand forecasting etc throughout the process has enabled Dell to
get products to customers at the right time, price, and quality.
After analysing Dell’s supply chain management through the logistics management model
and input transformation output model, further research showed Dell have had customer
service issues. A major issues identified was Dell pricing a computer system incorrectly, this
was largely due to poorly managed logistics, in particular, information about the product was
not accurate, thus price ended up incorrect all the way through to the customers, Dell refused
to meet orders thus potentially losing customers and reducing their quality reputation.
An analysis of how Dell maintain positive relationship with customers and suppliers has been
identified, Dell make full use of software’s such as database software’s, ProClarity which
also maintains information on suppliers/customers and finally the premier page on the Dell
website also allows Dell to monitor the activities of customers browsing (on Dell.com) and
there buying habits etc.
Porters value chain model has been adapted to show how Dell create value for their
customers through the use of primary activities like inbound and outbound logistics,
operations, marketing/sales and after sales support with secondary activities there to support
the primary activities. Secondary activities include, procurement, technology development,
human resources management and the Dell infrastructure.
Table of Contents
Executive Summary i
Introduction into Dell and its Market Position
Global PC Supplier Market share 1
Perceptual Market Positioning Map 2
Four V’s of Operations Management at Dell 3
Marketing Channels of distribution 4-5
Performance Objectives 5-6
SWOT Analysis 6
Dell Marketing Channel and Logistics Structure and Analysis
Input-Transformation-Output Model 7
Logistic Management Model 8
Analysis of Logistical Activities
o Customer Service
o Demand Forecasting
o Traffic and Transportation
8-10
Marketing Channel/Logistics impact on customer service, relationships
and value creation
Marketing Channels and Logistics impact on customer service 10
Customer and Supplier Relationship Management Analysis 11
Value Creation (Porter’s Value Chain) 12
Conclusion and Recommendation 13
Appendices and References
1 | P a g e
Introduction into Dell and its Market Position
What is marketing and logistics?
Marketing is the process of Dell creating ‘value for customers and build strong customer
relationships in order to capture value from customers in return’ (Kotler et al, 2008). In
combination with effective logistics management which is defined by Long, D (2003) as ‘the
part of the supply chain process that plans, implements, and controls the efficient, effective
flow and storage of goods, services and related information from point of origin to point of
consumption in order to meet customer requirements’, customers will get there products
when and where they want it and at the right cost.
Multinational IT firm Dell are computer system and software providers,
Dell operates on a worldwide scale and supplies to consumers, to other
businesses and also supplies to government’s around the world.
Dell offer products ranging from ready-built computer systems to
custom built systems as well as offering individual hardware
components such as hard-drives, monitors, printers etc.
Global PC Supplier Market share
In recent times, operating in such a fast-paced environment where consumer habits and
attitudes change on a frequent basis.
In 2010, Dell moved into 2nd
in the market with a market share in the 2nd
quarter of 2010 of
12.8% (figure 1), Hewlett-Packard dominate the market with a secure 18.1%, with Acer into
third with 12.4%. Dell were the market leaders but quick changing consumer demands has
cost the firm, when dominating the market, prices reflected this as a high specification
computer could cost up to £800, but now with competition so fierce, prices are down to £500.
Figure 1: Global PC Supplier Market Share
Source: iSuppli Market Research Report
2 | P a g e
Figure 2: Dell Perceptual Market Positioning Map
Above, shows where in my opinion, I believe Dell is in the market today. For many years
Dell sell at a high quality products at high prices, HP and Acer offer high quality but at a
lower price and as a result market share has decreased for Dell but competitors have
improved, this could be because of the following problems in the UK:
The UK economy is recovering, as consumer expenses are increasing due to VAT
rises and inflation, consumer attitude towards saving money is increasing and this
conflicts with Dell’s approach in the market to sell at high prices.
When economies are not doing well, inflation/VAT rises force Dell to raise their
selling prices in order to cover the increase in price for their supplies for the computer
models.
Low Price High Price
Low Quality
High Quality
Dell
HP
Acer
Toshiba
3 | P a g e
Figure 3: Four V’s of Operations Management at Dell
The four V’s of operation management helps to show how Dell operate in their market based
on the volume of orders they deal with, variety of products offered to customers, the variation
of demand in the market and also the visibility of the firm to its customers (Stack et al,
2004).
Dell deal with large numbers of orders for not only their computer models, but there
hardware components such as hard disk drives, servers etc. Especially during summer as
teenagers get ready to go back to school in September and schools begin to upgrade their
systems. ‘Today Dell connects with more than 5.4 million customers every day — on the
phone, in person, on Dell.com and, increasingly, through social networking sites’
(Dell.com).
Dell are not known for the wide range of products, however they do have a number of
technological products such as hard disk drives, monitors, servers, keyboard/mouse’s etc. As
they do not deal with foods/drinks, or housing, banking etc., they have a reasonably low
variety of products.
Demand is not so much high on a regular basis; seasonal demand does vary due to Christmas
offers, ‘back to school’ offers for students throughout summer and for public service
companies upgrading their systems.
Much of what Dell do is all ‘behind the scenes’, customers can view their order when they
take the order through the website or if they go and directly purchase from the retail outlets
Dell sells their computer models to. Customers are unaware of the manufacturing process or
distribution system for their order.
Low High Volume
Low High Variety
Low
High
Visibility
Low High Variation in Demand
4 | P a g e
Dell Marketing Channels of distribution
Figure 4: Distribution Channel 1- Direct Channel
The chart above shows how I believe Dell’s distribution channel is; it’s been one that has
been used since Dell began their operations in the PC supplier market. The direct channel
which gets components from suppliers such as Intel/Maxtor, are all assembled at the
manufacturing site which then transfers finished goods to a fulfilment centre, which holds
stock for a small out of time before being delivered to consumers. This method of distribution
have benefited Dell much over the years, below shows a few ways that this direct channel has
made Dell better:
Cost saving- Dell has a ‘build to order’ strategy where they only get components from
suppliers when orders have been made, Dell save money as they only spend money when
they know they will be making returns.
Speed- Getting the product made and sent out to customers is a lot quicker because as
soon as orders become finished goods, they are sent out to customers straight away and
not stored for a long time.
Figure 5: Distribution Channel 2- Inclusion of retailers
‘Although Dell is still one of the world’s largest pc manufacturers, its sales via phone and
the internet have begun to shift as more consumers prefer to visit retail stores to try out
new gadgets and features’ (Kurtz, D. 2008). Figure 5 shows how Dell have changed their
direct method to customers, and now sell their products via retail outlets such as Wal Mart,
Tesco, PC World, Curry’s etc., these of course are not custom made orders for specific
customers, thus costs do increase as not every computer is suited to customers, as a result
stock can be wasted.
Dell are competing with competitors to manufacture computer systems, in doing so they need
to get the best quality hardware and software, as a result, they have high quality suppliers
such as Intel who produce micro-chips for the systems and Maxtor to create hard drives etc.
This is all shipped to the main Dell manufacturing site where microchips, hard-drives,
monitors etc for the system are assembled, then transferred to a fulfilment centre where it is
Suppliers
(Other components)
Suppliers (Intel)
(Microchips)
Suppliers (Maxtor)
(Hard Drives)
Manufacturing
Site
Fulfilment
Centre Customers
Suppliers
(Other components)
Suppliers (Intel)
(Microchips)
Suppliers (Maxtor)
(Hard Drives)
Manufacturing
Site
Fulfilment
Centre
Retail
Outlets Customers
5 | P a g e
stores until sent out to retail outlets such as Wal Mart, Tesco, PC World etc, these firms will
be responsible for selling to customers.
Figure 6: Dell Performance Objectives
Flexibility
Dell has a built-to-order system which is a key competitive advantage against HP and Acer.
This is how they differentiate themselves from the competition and are always keen to ensure
that they perfect the system to ensure customer satisfaction remains high. Dell also tries to
keep with the times and market changes to continue to meet consumer needs. Allowing
customers to customize their desired system ensures flexibility, something which competitors
find it difficult to match Dell on.
Speed
Dell has a direct channel of distribution ensuring quick order fulfilment and good customer
satisfaction. Selling to retailers increases availability and speed for customers to products.
Dell is likely to have sophisticated logistical systems in place such as traffic control to ensure
drivers avoid traffic area’s to prevent delayed deliveries. Having online support and
downloads allows customers with quick access to information and assistance.
Dependability
It’s vital for customers to know where there products are and if it’ll be delivered when and
where expected. Dell has a strong delivery service record, with track and trace utilities
allowing customers to monitor their delivery and be aware of any delays.
Cost
Dependability Speed
Quality Flexibility
6 | P a g e
Key aspects of improvements
Cost
High pricing is something customers such as students and businesses are looking to avoid
in order to keep expenses low, thus they are likely to go to HP or Acer.
Not too many discounts offered by the company on its products, perhaps because supplier
costs are reasonably high.
Dell Swot Analysis
Figure 7: Swot Analysis of Dell Corporation
Strength
o Good relationship with suppliers
o Dell Direct channel of distribution
o Build-to-order
o Finance
o Strong brand and reputation
Weaknesses
o Targeting education institutions has been
poor. Only 5% of sales revenue is from
education.
o Can’t physically touch the customised
computers until delivered.
o Competitors have more market and sales
knowledge than Dell as they’ve sold to
retailers longer.
Opportunity
o Improve price strategy
o Sell more through retailers as customers
want to physically see and touch what
they buy.
o Improve relationships with education
institutions
Threats
o UK economic recession
o Low customer confidence
o Fierce competition in a highly volatile
market environment
7 | P a g e
Dell’s Input-Transformation-Output Model
Dell makes use of a number of inputs in order to transform them into outputs. Much of the
inputs involve resources required to complete the output which for Dell is customer custom-
designed computer systems.
Figure 8, below, shows how I believe Dell use inputs and transform them to outputs to