Monday, November 30, 2009

Dell: Part 2

Originally there was not going to be a Part 2 to my original pontification of Dell's 54% revenue drop.  But, as if I needed to be proven right, last Tuesday on the Fox Business channels morning show, The Opening Bell, Alexis Glick, Charles Payne, Shibani Joshi and Ashley Webster opined about Dell as they see it.  So what did I hear from the experts on FBN?  All the buzzwords that got Dell into trouble in the first place.



  • Dell may be a one-trick pony - As if this is bad?  As we saw in the last post, Dell was the market leader and highly profitable when it was a one-trick pony.
  • Diversification - What?  They can't be serious.  Dell is diversified.  They sell everything from computers to televisions and almost everything in between yet their revenues dropped 54%.
  • More distribution - Dell does have extended distribution in retail stores; do they need even more?  Maybe they should re-open their mall kiosks since those did so well.
This is a classic case of business management trying to expand the Dell brand to mean more things to more people, when they should be looking at contracting it.  Confucious said, "Man who chases two rabbits catches neither."  How many "rabbits" will Dell continue to chase before they figure it out?

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Friday, November 20, 2009

Dell: A Case Study of MBA Thinking

Yesterday the Wall Street Journal reported Dell's quarterly profit dropped 54%!  Wow, 54%!  Are the automakers even down that much?  But I digress...  So what is Dell's strategy to change this issue?  According to the Wall Street Journal article it is to focus on "profitability at the expense of market share."  While I think this is blatantly ridiculous, clearly it's not working.  So what is Dell's real problem?  Dell's problem is the breaking of a classic branding rule: you can't be all things to all people.  Yet the breaking of this rule is common thinking amongst some so-called business experts and Wall Street analysts.  Dell has lost it's focus of computers to go after the MP3 market, smartphone market, televisions and a recent acquisition of Perot Systems to put them into the tech outsourcing business dominated by companies such as IBM and HP.  Is this a good idea? According to some of these experts...YES!  What is the best way to grow (because that's what business is all about)?  Sell more stuff!  But what happens when you just sell more stuff or try to?  You lose focus.



What Dell needs to do is re-focus.  Dell used to be a highly profitable company, ironically, when they sold less stuff.  Think about it; how did Dell become the company that was #1 in the PC market with the best stock performance on the 500 companies listed on the S&P during the 1990's?  By selling one product, with one distribution method, to one consumer; personal computers direct to businesses.  Then what happened?  Analysts said Dell needs to keep up with their previous level of growth (there's that word again).  Dell listened to the analysts and in 1997 they announced they would go after consumers.  Then in 2003, they dove - pun intended - headfirst into the consumer electronics market.  You can even get a Dell in Walmart and Sears.

What Dell needs to do is simple, but they will never do it.  They are third behind HP and Acer by unit shipments, only have a 1% profit margin in their consumer business, and now they are trying to take on IBM in the service sector.  Is that common sense?  No.  Dell needs to return to their roots; sell off the other businesses and get back to selling one product, one way, to one market.  There is no need to sacrifice market share for profitability.  Dell proved that in their early years, maybe they have forgotten.

Nobody said it better than Al Ries and his 2005 book - Focus: The Future of Your Company Depends On It.

Is your brand focused?

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Friday, November 6, 2009

SEMA Lessons

I was fortunate enough to spend some time this week in Las Vegas at the SEMA Show.  Even with the economy in the shape that it's in, the show was packed and ripe for B2B marketers to make the best of their opportunities. While there were some very nice setups there were some not-so-nice setups as well.  Regardless of space, there are a few things to do to make sure you leave the right impression at tradeshows, consumer shows, or roadshows; and for that matter, any experience marketing environment.



1. Work it - Your staff is an extension of your brand mantra, whatever that might be.  Make sure they look the part and act the part.  Whatever your band is, I'm sure it's attributes are not cold, stale, and un-energetic.  Get your staff up on their feet greeting customers as they walk into and past your booth; inject them with Red Bull and coffee if you have to.  But nothing says "bad" like all of your tradeshow staff sitting around, reading email, updating their Facebook status, and adding apps to their iPhone while potential customers wander aimlessly around your area.

2. Useful Giveaways - Everybody is giving something away at these shows; posters, pens, wristbands, etc.  Whatever it is you choose, make sure it is useful and not just a gimmick.  The best tradeshow giveaway I have received is from Cosworth at SEMA last year.  It was a plastic business card holder with their logo on it.  Very practical and sure to get usage throughout the show as you network.  Every time you exchange cards and pull the cardholder out people notice it.  I didn't get a chance to get by the Cosworth booth this year, but I hope they brought those back.

3. Business Cards - Of all the touchpoints for your brand, maybe the most important one is your business card.  At tradeshows or not, your business card is often all that is left behind once you have given your elevator speech.  What does your card say about your brand?  Here's a test: close your eyes, and feel it.  What does the quality of the stationary say to you?  Is it easily bent or is it thicker and have some strength to it?  What does that say about your brand if it is printed on cheap, thin stationary?  At busy tradeshows like SEMA where you can potentially hand your card to hundreds of people you need to make sure you are handing them the right impression.  Have you reviewed your company's business card lately?  You should.

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