Dell is all set to reach buyers at every nook and corner of India with its multi-channel marketing strategy. The company is still clinging to its original marketing methodology of catering to customers directly from the company. However, it has adopted a strategy of creating as many channels as possible to reach purchasers – not only in metros but also in all remote places.
The company has planned for uniform pricing of products all over the country, with full opportunity for product customization, on-site service even at remotest regions, warranty programmes spanning several time frames, and toward passing on the (central) tax benefits to the customers.
This article is based on my recent discussion with Mahesh Bhalla, Director, Dell India. It focuses on Why, What and How of Dell’s marketing plan in India.
Background
Through customers’ feedbacks over a period of time, Dell realizes the need for providing buyers the opportunity for touching and feeling their products – before making purchase decisions.
The PC manufacturer also notes that – in this country, organized retail is still at a very nascent stage. The consumer PCs are being sold in an unorganized way.
The company finds that buying PCs from local Resellers or System Integrators (SIs) has some advantages for customers, like – getting the products within geographical reach, immediate (post-sale) problem fixing at doorstep, better service and price because of the existing customers influence etc.
From its survey of the existing Indian IT channel, Dell observes that most vendors operate here with a volume-based incentive scheme, i.e. buy more quantity and take more benefit’. The result is – the partners who garner a large volume of stock, are invariably able to offer a better price to customers, and outcast the small resellers. It is leading to a kind of disparity in the channel – everybody is not able to offer the best possible price at one point of time.
The other drawback in the existing channel system that Dell finds is – to be a successful player, a reseller needs a large amount of capital. If the reseller does not buy a lot of products he/she cannot be competitive in the market. So, there is a huge entry barrier for the new venturers too.
Thus, the PC vendor is now adopting a new strategy. The evolved marketing plan is being referred to as the Direct-plus strategy.
Direct-plus strategy
In the words of Bhalla, “We planned – the model that we frame for India should combine the strength of the channel, the strength of the Dell’s direct model and still stays away from the challenges to the healthy business, like volume-based business, huge investment in inventory etc. We believe we have found the game-changer, which can address all of these issues.”
The Direct-plus plan is being implemented in multiple ways. In March-end this year, Dell set up its shop-in-shop in Tata Croma, Malad, Mumbai. The company will shortly establish more such outlets in other Croma branches nationally. Any buyer can walk in to the Tata Croma outlet, he/she can see the whole brand of products displayed there, compare and select a Dell model with preferred colour, weight, memory size etc., based on his/her budget. The Dell-trained sales representatives are there to understand the customer’s need, and guide him/her to the right purchase decision.
However, the customer has to order his customized PC. Then the product will be manufactured (at Dell’s factory in Sriperumbudur, Tamilnadu) and directly home-delivered. Bhalla informs, “In the case of Tata Croma, what we have done is – the shop-in-shop is manned by Dell. If you go to that outlet you do not get a Croma Bill. You get a Dell invoice. It is purely a display and a sales point.”
Sales-affiliate programme
Dell has planned to appoint its affiliates out of large cities, especially, in the towns where the population is only 50,000 to 1 lakh. The Sales-affiliate programme empowers SIs, resellers and shop owners across the country to offer Dell products to their customers – without having to make huge investment, to take risk of price drop, to bother about the volume-based incentive, to worry that there is a next-door shopkeeper who will give a better discount.
“We have 20 Master Sales-affiliates across the country. They help customers buying Dell’s products by placing orders online. They may have a couple of products on display, however, the ultimate dealing is being managed directly by the company,” states Bhalla.
The win-win situation
All the Dell’s programmes are based on flat incentive or margin structure. The sales-affiliates need not even directly handle the products. Bhalla says, “We are letting them focus on what they do the best – sales. They just need to advise customers on the right products, and simply place the order online.”
According to him, this system also brings huge benefit to the customers. They get the freshest technology, pay less for lower supply chain cost, get tax benefit and deal directly with the manufacturer.
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