Segmenting and Targeting Markets of dell computer inc.

market  is  people  or  organizations  with  needs  or  wants  and  the  ability  and  willingness  to  buy.  and  market  segment  is  a  subgroup  of  people  or  organizations  sharing  one  or  more  characteristics  that  cause  them  to  have  similar  product  needs.

market  segmentation  is  the  process  of  dividing  a  marketinto  meaningful,  relatively  similar,  and  identiable  segments  or  groups.

target  market  is  a  group of  people  or  organizations  for  which  an  organization  designs,  implements,  and  maintains  a  marketing  mix  intended  to  meet  the  needs  of   that  group,  resulting  in  mutually  satisfying  exchanges.

Segmentation is not only the domain of consumer products. Segmentation is also fundamental to business-to-business operations as the following Dell case history illustrates.

As 1995 approached, Dell Computer was the world's number one direct pc marketer and fourth largest computer vendor in the world. Dell was a strong player in the business pc market. Its direct distribution and custom built units that meant no inventory gave it a price advantage against the larger Compaq and IBM in the business market. Dell also planned to attract the medium-sized business market. These are companies with 100 to 2,500 employees that represent $11 billion in sales. This segment is purchases primarily IBM and Compaq computers. This despite the fact that these firms put little marketing effort into attracting the mid-sized firm. Indeed, large computer companies focused attention on the Fortune 2000 in the business segment and Dell had historically considered the medium-sized business segment as part of the consumer segment.

Focus groups conducted with decision-makers in mid-size firms indicated that they viewed Dell as a brand for the home and large business market. Respondents were management information system people who wanted technical information presented in an easy to understand manner. They needed substantial attention but did not have the purchase volume to command the attention they needed.

To attract this segment, Dell developed a mailing that used "DELL IS" as the headline. The mailing directly confronted mid-size company managers' beliefs that Dell was a home computer vendor. This was achieved by describing how the lessons learned from servicing America's largest businesses would be applied to mid-sized concerns. The mailing also confronted the concern that as a direct sales company, Dell's sustaining power over the long haul was in question. Dell advised skeptics to check its stock on the NASDAQ.

Dell recognized that the home and mid-size business market were separate segments that required unique approaches. Whereas consumers were interested in custom pcs by phone, mid size businesses had longer term servicing issues that they wanted assurance their vendor would address successfully. Dell's segmentation effort resulted in an earnings increase of over 160% on a 44% increase in sales during 1995 and helped propel it to a market share second only to Compaq in the business segment.