Dell's formula is simple: sell PCs directly to customers, offering a package of good price and service. The marketer's efficiency allows it to offer attractive prices, but the focus on service has set it apart.
ADVANTAGE OF VALUE APPROACH
The value approach has made Dell No. 1 in sales of desktop PCs to medium and large businesses in the U.S.; in PC sales to the federal government; and in sales to educational institutions of PCs based on Microsoft Corp.'s Windows 95.
Dell's U.S. PC shipments rocketed 74% in the third quarter, as its market share shot up to 10.3%, from 7.2% a year earlier, according to market researcher Dataquest.
The marketer now trails only Compaq Computer Corp., which has a 19.1% U.S. share. Worldwide, Dell is No. 3 behind Compaq and IBM Corp.
But Dell's share of the U.S. consumer market is just 2%, said Kevin Hause, senior analyst with International Data Corp.
That's sure to grow: Dell in late August set up a division to go after the home market, focusing on experienced PC users.
"There's a lot of low-hanging fruit in the consumer market," Mr. Hause said.
$1 BIL IN HOME COMPUTER SALES
Even before the new consumer initiative, Dell's U.S. home PC sales accounted for about $1 billion of the company's annualized $10 billion in revenues.
Dell is also going on the marketing offensive to fend off rivals.
The company, which spends about $60 million on U.S. advertising via Goldberg Moser O'Neill, San Francisco, is counting on an incremental $70 million global brand campaign to reach a broader audience.
Dell is believed to be assigning that business to J. Walter Thompson USA, Chicago. The company is counting on that campaign to build a consistent image worldwide.
"Dell's gotten to the point where our financial and market performance far exceed our perception in the market," said Kevin Rollins, president of Dell