The absence of any brand loyalty means Dell is ripe for reinvention
For those people trying to find a reliable computer at an affordable price, and who were more interested in performance than design, Dell tended to be the PC of choice.
Its direct-sales model - taking orders straight from customers via the phone and the internet - meant it could get products to users faster and at a lower cost.
The brand, however, appears to have fallen badly behind the times, missing the shift in consumer tech spend toward mobile computing. Its latest quarterly results, released in November, showed operating profits had fallen by 48% year on year, as more consumers turned to smartphones and tablets to get their technology fix.
Dell has also struggled to hold its own in the face of competition from cheaper rivals, including China's Lenovo. Having fallen from top spot, it is now only the world's third-biggest PC manufacturer by shipments, having been overtaken by HP and Lenovo.
Earlier this month, entrepreneur Michael Dell announced that he would buy back the business he founded in 1984, for $24.4bn (£15.5bn), taking the company off the Nasdaq stock exchange after 25 years. He also pledged to stick to the firm's strategy of diversifying away from personal computers.
Taking the business private will mean less scrutiny for the brand, but what can it do to reinvent itself and appeal to mobile-savvy consumers? We asked Paul Roberts, creative director at Mulberry Advertising, who was in charge of the Dell advertising account at CDP Travis Sully, and Geoff Gower, managing partner, creative, at AIS London, who works with technology brands Logitech and Sony.
-11%: Slump in Dell's revenues year on year*
70%: Proportion of Dell's sales generated from PCs
Source: Dell *quarterly results Aug-Oct 2012
BRAND HEALTH CHECK DIAGNOSIS
Paul Roberts, Creative director, Mulberry Advertising
I worked on, and was responsible for, growing the Dell account at CDP Travis Sully from a £2m spend to £4m between 1998 and 2002.
In that time, Dell in the UK went from being the number-four PC manufacturer to number two. Although sales were excellent, it was not interested in building the brand.
Dell's belief was simple: cut out the middleman. It could have been selling soap powder, which is fine, as long as you beat everyone else for power, speed or value.
Dell is now competing in a market where tablets and smartphones are taking over from desktop PCs and laptops - Michael Dell is a brilliant businessman, but he faces a big challenge.
- There was a missed opportunity to build the brand values; we have only to look at Apple to see the value of a superbrand.
- Dell has a blank sheet to work from. No brand loyalty and an ageing product portfolio mean it needs to reinvent itself.
- Create a brand that means something to people today.
Geoff Gower, managing partner, creative, AIS London
The struggles at Dell are no different from those at HMV, Game and Blockbuster: the market has changed quickly, but, unfortunately, the brand could not change quickly enough.
It is not all doom and gloom though; the consumer PC business may have imploded but the enterprise and data-centre side is thriving, and Dell's long-term focus on this is paying off.
However, gradual evolution is a luxury it cannot afford. The key for Dell is to learn from the mistakes of others around it and cut off the dead wood quickly. The consumer PC business will not stop shrinking, and HP and BlackBerry have already proved that launching a tablet device is an expensive suicide mission.
- Sell what is left of the consumer PC business as soon as possible and focus efforts and investment on building a strong reputation on the data-centre side.
- Use the brand's heritage to promote Dell as the safe, trusted choice for B2B.
- Follow IBM's precedent. The message should be: 'No one ever got fired for choosing...'
This article was first published on marketingmagazine.co.uk
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