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1.0 Executive Summary

An integrated marketing communications audit was performed on Dell Inc. The auditdetermined that Dell Inc. had successfully moved away from the mass media approach tomarketing through the implementation of a direct marketing to the consumer strategy. Theaudit determined further that Dell Inc. could improve its marketing effort by building on thesuccessful direct marketing to consumer program to develop and Integrated MarketingCommunications Plan. The elements of such a plan were recommended, and a plan forimplementing the recommendations was provided.

2.0 Company Description

Dell Inc. is the global market leader in personal computers (PCs). The company offers a fullline of desktop and notebook PCs designed for consumers, network servers, workstations,storage systems, and Ethernet switches. The company also sells handheld computers, and itmarkets third-party software and peripherals.

Dell Inc.'s mission is to provide high-quality personal computers to business and homecomputer users through a direct marketing strategy. The three essential elements of thecompany'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 eachglobal region on-line over the Internet. Several of the Company's global regions are notmeeting 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 generatedsales 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 Dellto increase such sales at a faster rate.

Another important objective of Dell Inc. is to attain a market share ranking of no lower thansecond in each of the Company's global markets. Although the company is the globalmarket leader, it is not the leader in all regional markets.

Dell Inc. functions, effectively, as a virtual corporation. The basis for a virtual corporation isthe concept of the virtual product or virtual service produced quickly in response tocustomer demand. Dell Inc. performs effectively in this context. Two important advantagesof the virtual corporation concept are focus and specialization. These two factors tend todrive virtual corporations. Another advantage of the virtual corporation concept is the abilityto reduce the cycle-time of production. Global competitiveness is forcing companies of allsizes to go to ever-greater lengths to improve customer satisfaction. Organizations can bothdecrease delivery time and improve quality, thereby creating a more satisfied customer. Anorganization's total business-cycle time is measured from the time a customer's need isidentified 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 aperspective that focused on conditions in developed economies. While IMC strategies have




a role in all marketing endeavors, they are not as relevant in some developing markets arethey 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 mostappropriate mix of the application of the elements of the IMC channel set is influenced to agreat extent by more traditional considerations of market segmentation and target marketdefinition for specific products (Belch & Belch, 2004).

The current marketing communications situation at Dell Inc. focuses heavily on the directmarketing approach pioneered by the company in the PC market. The direct-sales model forcomputers applied by Dell Inc. focuses on the elimination of intermediate elements of themarketing channel to allow the Company to sell directly to end users. This approach hasproved 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 customersatisfaction.

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 theuse of direct mail advertising and email advertising. The direct marketing program at DellInc. was among the first in the personal computer industry, and it has proved to be by farthe most successful.

The precise targeting that is the key to the success of the direct marketing program at DellInc. is based on two types of information. The first type of information is drawn from theCompany's own customer records. The Company has achieved significant success in the saleof new models to the purchasers of its own earlier computer models.

Early in the 1990s, Dell Inc. extended its direct marketing program to Europe. TheCompany'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 reductionin costs throughout the operation chain and the compression of time within the supply chainmake it possible for Dell Inc. to gain competitive advantages in (a) price, (b) productinnovation, and (c) service.

Dell Inc. avoided many of the problems associated with the use of mass communicationswhen the Company implemented its direct sales model. Mass communications are oftenwasteful and rarely speak to the needs of specific target groups. In contrast, direct marketingto 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 usesmultiple media to generate measurable responses and transactions. Examples of directmarketing include direct response advertising, direct mail, personal selling, telemarketing,and trade shows. The direct marketing to consumer strategy at Dell Inc. focuses on directmail advertising, targeted email advertising, and direct response advertising throughpromotions in newspapers.

A direct communication contains three specific elements. The three elements are as follows:




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 traditionalmarketing methods. Direct marketing consumers, however, also is characterized by some

disadvantages. The major advantages and disadvantages of direct marketing to consumersare as follows:

1. Advantages:

a. Response-driven. Including a reply device allows prospects to respond to a company'sdirect communication.

b. Measurability. Response rates can be quantitatively measured (e.g., responsesreceived/communications sent). Various media plans, creative executions, offers, and soforth, thus, can be tested and modified over time.

c. Precision targeting. Where general advertising is a mass medium, direct marketing is atargeted medium that focuses on communicating with pre-selected targets. Targets selectedto receive a direct offer should be determined by their likelihood to respond to a specificalternative. This likelihood can be based on such profile data as demographic, behavioral, orpsychographic characteristics. As a consequence, the selective distribution of directcommunications results in a more efficient allocation of relatively scarce promotionalresources.

d. Personalized messages. Precision targeting means communications can be tailored to thespecific needs of targeted audiences. Personalized communications will both increaseresponse rates and help position organizations in a market. Aspects of the directcommunication that could be personalized include the prospect's name/organization,advertising appeals (e.g., price-oriented vs. quality-oriented), motives (e.g., productfeatures), and so forth. It should be noted, however, that cost-benefit trade-offs must beexamined over time to determine whether additional revenues from personalization exceedcosts.

e. Competitive exclusivity and invisibility. Direct mail has less competition than other formsof communication. Although it is true that clutter also exists in the mailbox, it is much lessthan 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 forcompetitors to monitor the tactics and retaliate in a timely fashion.

f. Developing proprietary databases. By using direct marketing, companies obtain a uniquecompetitive advantage through database management. Specifically, those subjects whorespond become part of an on-going and proprietary database. The value of this database isconsiderable, 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 thanby using traditional advertising methods. Compensating for the increased cost per contact,however, is a lower cost per qualified contact.




b. Developing brand image. With its focus on generating a response, direct marketing hastraditionally not been an image-generating medium. Image-generation may becomeincreasingly important in the personal computer market as the basic products moves towardcommodity status.

c. Junk mail perceptions. Direct communications are not usually requested by theirrecipients, and unless the offers are appropriately targeted, they are perceived as irritating asis junk mail and as are telemarketing calls. Other sources of irritation could be poorproduction 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 acomprehensive plan that evaluates the strategic roles of a variety of communicationdisciplines and combines these disciplines to provide clarity, consistency, and maximumcommunications impact (Swain, 2004). The development of an IMC plan for Dell Inc. musttake into consideration the unique status of the Company within the PC industry. It wasnoted 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. isnot a typical manufacturing organization. Dell Inc. focuses on made-to-order productswithin the framework of a mass customization strategy. Dell Inc. does not manufacture thecomponents of the PCs it sells. Rather, the Company buys quality computer componentsfrom 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 toconsumers strategy. An IMC plan for Dell Inc., therefore, also must embrace the company'smass customization strategy.

Mass customization is a business strategy that, while appearing to be a contradiction interms, is a rational evolution in competition and marketing theory. In effect, the term masscustomization refers to a practice of mobilizing technological innovations in

communications, information systems, and production processes to mass produce productsthat are designed to satisfy the demands of a particular market segment as opposed to beingdesigned to satisfy an assumed universal demand. Dell Inc. has refined to masscustomization concept to a made-to-order strategy.

Mass customization is "making products tailor-made for each individual buyer, but whereinproduction levels provide economies of scale" (Westbrook & Williamson, 1993, p. 38).Mass production, by contrast is the production in high volumes of standardized productsunder conditions of design and process change stability.

The emergence of the mass customization concept stems from the dynamism of the globalmarket place. Dell Inc. embraced globalization. Further, the company has applied its refinedapproach 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 customerbase for most firms becomes both more diverse and more demanding. A mass customizationstrategy is a customer-oriented strategy. It is a strategy wherein customer satisfaction is theparamount objective.

Mass customization strategies are highly dependent upon production, inventory, anddistribution systems, in addition to sophisticated information systems. An IMC plan for DellInc. must be designed to complement the mass customization strategy pursued by theCompany.




Both a mass customization strategy and an IMC plan for Dell Inc. depend on an informationsystem network that connects all members of the supply chain and that connects thecompany with its targeted consumer markets. A continuous stream of information isrequired to enable all parties to provide superior customer service.

In an IMC for Dell Inc. the marketing communications will focus on the customer, asopposed 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 communicationswill 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 anelement of a customer's cost structure for the satisfaction of a specific need, however, maybe perceived as quite reasonable. The message will not focus on place (where the consumercan find the product). Rather, the IMC message will focus on customer convenience. ForDell Inc., the IMC message will focus on (a) the selection and purchase of the productonline from the convenience of the customer's home or office, and (b) the delivery of theproduct to the location of customer choice. The IMC message from Dell Inc. to thecustomer will not promote a product. Rather, the IMC message will provide the consumerwith 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 mediaare 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 willcontinue to be an important element of the Company's IMC plan. Equally prominent in theCompany's IMC Plan, however, will be the use of interactive/Internet-based marketing. DellInc. has an Internet marketing program; however, this program must be enhanced with theobjective 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



6.0 Evaluation and Control

Dell Inc. will formalize a monitoring protocol to collect the information required to evaluatethe effectiveness if the IMC Plan and the effectiveness of the IMC Plan in allowing theCompany to meet sales objectives. Monthly evaluation reports will provide informationcomparing performance with objectives. Quarterly control reviews will determine necessarymodifications to the IMC Plan and provide directions for the implementation of suchmodifications.

7.0 References

Belch, G. E., & Belch, M. A. (2003). Advertising and promotion: An integrated marketingcommunications 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 atthe 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 inenhancing supply chain relationships in B2C e-commerce markets. Journal of electronicCommerce Research, 1(2), 45-52.

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