Dell's Differentiation Strategy

Paper Summary:

This paper analyzes Dell's differentiation strategy in areas of direct selling, developing new technologies and meeting customers' expectation. The author describes how Dell differentiated itself from other competitors in the computer industry such as Cisco Systems, Compaq and IBM.

From the Paper:

"A differentiation strategy incorporates the development of a product or service so it can offer a customer perceived uniqueness in the marketplace that seems to be better than or different from the products of the competition. Because of the product's unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily. Dell was founded in 1984 on a simple direct-to-consumer model, which was their differentiation strategy. The idea behind selling computer systems directly to customers was that could better understand customer needs, and efficiently and effectively provide the most compelling computing solutions to meet those needs. This direct business model, according to Dell, eliminates retailers that add unnecessary time and cost. They can also diminish Dell's understanding of customer expectations. The way they differentiated themselves form the market was that Dell builds every system to order and offers their customers powerful, richly-configured systems at competitive prices. Dell also introduces the latest relevant technology much more quickly than companies with slower-moving, indirect retail channels of distribution, thusly being able to turn inventory over every four days on average. Dell's thrive to market leadership results from the company's goal to sell computing products and services that measure up to industry-standard technology, directly to customers."

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