Dial-a-computer
In1994, around one million corporate and individual users in America purchased computers by placing their orders on telephone. The two direct marketing firms who have benefited most from this trend are Dell Computer Corporation and Gateway 2000 Incorporated.
Due to their long experience and established reputation in direct marketing, both have together cornered around 15-20 per cent of the US$ 45 billion PC business in the USA.
In the 1980s, Apple, Compaq and IBM created quite a flutter in the market when they decided to sell their PCs directly in phone.
Most observers believed that customers would flock to the big brands and smaller guys like Dell and Gateway would soon be run over by the biggies. But somehow, it happened the other way round.
Due to their lack of experience in direct marketing, the big brothers were unable to manage the new mode of retailing properly and gradually pulled out of the sticky direct marketing business.
This now leaves Dell and Gateway with a 47 percent combined share of the total mail order PC business in the USA. Many market analysts estimate their combined share to be70-80 percent by 1998.
This amply demonstrates that no firm can win the marketing game solely on the strength of its product’s image. The total marketing strategy matters most.
It is also interesting to note that Dell and Gateway both made their debut in the computer business at lower end of the market. They started with taking orders on telephone and delivering the ‘values for money’ hone PCs directly at customer’s door.
But the scenario has now changed and mail order is a preferred mode of shopping for the best quality products. Dell’s average customers spend around US$2,700 as compared to US$ 2,400 spent by Compaq’s customers.
Direct marketers assemble components into custom-configurated computers as and when phone calls come in, and therefore carry far as the 10 percent dealer margin does not have to be paid.
As a result, when the PC market in the USA is growing at 15 percent per annum, these two firms are targeting a growth rate of 35-40 percent.
Meanwhile, Gateway has also opener showrooms in Paris and Frankfurt to acquaint the European shoppers with their product range. But both remain committed to marketing directly.