Using any information in Case Study #9-1 regarding Dell Computer, discuss how to

Question

Using any information in Case Study #9-1 regarding Dell Computer, discuss how to improve the Performance of Dell's current distribution channel system after considering how to help target customers create their value-in-use during the consumption poriod. In 1983. 18-year-old Michael dell left college to work full-time for the company he founded as a freshman providing hard-drive upgrades to corporate customers. In a year's time, dell's venture had $6 million, in an annual sales. In 1985, Dell changed his strategy to begin offering built-to-order computers. That year the company generated $70 million sales. Five years later, revenues had climbed to $500 million, and by the end Of 2000. Dell's revenues had topped an astounding $25 billion, The meteoric rise of Dell Computers was largly due to innovations in supply chain and manufacturing. but also due to the implementaion of a novel distribution strategy. By carefully enalyzing and meking strategic changes in the personal computer value chain, and by setting on emerging market trends. Dell Inc. grew to dominate the PC market in less time than than it takes many companies to launch their first product.

Explanation / Answer

Customer value models are based on assessments of the cost and benefits of a given market offering in a particular customer application. Customer value models are not easy to develop. Value in business markets is the growth in the monetary terms of the technical, economic, service and social benefits a customer company receives in exchange for the price it pays for a market offering. Value is what a customer gets in exchange of the price it pays. Any market has two elemental characteristics – its value and its price. Thus raising or lowering the price of a market offering does not change the value that such an offering provides to customer. The difference between value and price equals the customer’s incentive to purchase. The customer’s incentive to purchase a supplier’s offering must exceed its incentive to purse the next best alternative.

Field value assessments are the most commonly used and the most accurate method for building customer value models. Suppliers can create customers value by making their offerings superior on few elements that matters most to target customers, demonstrating and documenting the value of the superior performance and communicating in a way that conveys a sophisticated understanding of the customer’s business priorities.

In the case study as given Michael Dell left the college to work full time and at that time the company’s annual sales venture had $6million and by changing the strategy the company generated $70 million in sales and at the end of 2000 it has topped an astounding $25 million because of Innovation not only in supply chain and manufacturing but also due to the implementation of a novel distribution strategy. It avoided any middleman and must have integrated online order status updates and other technical support into their customer facing operations. Important benefit of internet based direct sales are that it generates a wealth of market data , forecast demand trends, segmentation strategies. These data drives the company’s product development efforts. The other novel strategy is virtual integration. By developing long term relationship with select name-brand PC component manufacturers and delivering the components on a short notice. To sustain a customer relationship two essential characters are trust and commitment. Understanding value in the business market and doing business based on value delivered gives suppliers the means to get an equitable return for their efforts.

Deleting a middleman in the distribution chain is a risky move, but can result in a substantial reduction in operating costs and can improve margins. Process and operations innovation improves efficiency. Sales and feedback data are always helpful in discovering new ways to enhance customers value. It is essential always to reveal emerging trends. By foregoing retail route margins can be improved and customers value can be enhanced by giving customers a chance to configure PCs according to their specific computing needs.

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