Brand Health Check-Jul07

Dell-ving into brand issues

How can brand Dell save itself from its current slump?

Dell has had it hard of late, its financial performances over the last few years more than hints of this - Dell hasn't filed its annual report for the fiscal year ended 2 February choosing instead to release financial figures as news releases.

It has been reported that Dell plans to make as many as 8,000 job cuts in the next year - will this have an affect on how employees view the brand now? With its iconic founder, Michael Dell returning to captain the ship, the company now has a leader who has the brand's best interest at heart. The only question is, which direction can he steer the ship too?

Already Dell has shown signs it may depart from its direct sales business model announcing as part of a limited deal that it would start selling two Dimension desktop computers at Wal-Mart - breaking away from the brand's traditional method of selling directly to consumers instead of through retailers.

PR setbacks have also plagued the brand of late - lawsuits in China and the United States have been highly publicised by the media, which in some cases have led to suggestions that the number of consumers who have filed complaints against Dell in recent years is evidence of a growing frustration amongst consumers who feel the brand has been deceptive towards them in certain cases.

Is Dell set for a major overhaul of brand strategy or is slight tweaking simply needed? Our brand experts have their say.

The Diagnosis

Jenny Lewis
Brand Strategy Director

Bonsey Design Partnership

Dell = Dull; and all their problems begin here.  A company that started as a pioneer and innovator with great brand potential has ended up without a distinct personality and no emotional connection to the brand. Nor do they have a reputation for innovation, great technology or service.  All that is left is a ‘no frills' brand sold on price.

Dell's business model appears to have not progressed. A Dell is customisable, their original differentiator, the computer is made when ordered. You have to know exactly what you want, order direct and then wait five days to get it.

This works in more sophisticated markets where you might be buying your third or forth computer. But in many parts of Asia, where people are buying their first computer, it's a big ask. Combined with no retail experience means getting a Dell is not as easy as from the ubiquitous suppliers down the road.

Reliant upon direct response advertising with a product in a generic grey box everything they communicate seems so ‘uncreative'.  Let's face it Dell is just not cool but it's far from unredeemable and Dell has potential.

The Cure

• Redefine the brand in the context of what consumers want today
• Based upon your new brand foundations implement a coordinated marketing strategy: develop a concerted PR plan with serious media relations, use sponsorship, events, brand ambassadors, get the technical bods and boffins who write the reviews onside. Introduce CRM programmes, use design, sell through retail outlets and get credible partners such as SingTel

The Diagnosis

Andrew Martschenko

Director, Brand Strategy

Interbrand

HP's continued success in cutting costs and growing share compounded by Dell's entrance into traditional retail channels may be the hallmarks of a perfect storm.

The brand is only as strong as its people. The return of Michael Dell and acknowledgement that "the direct model has been a revolution, but is not a religion" is a necessary first step. Dell must focus and re-energise its employees, particularly after announcing an 8,000 reduction in headcount.

A brand cannot be all things to all people. Dell must determine which customers and channels to invest in. Consumer and retail sales account for only 15% of Dell's overall business and their decision to sell into competitively priced channels such as Wal-Mart and Sam's Club could potentially hurt Dell's brand image in SME and large enterprise segments.  

Successful brands are built around end-user needs. For years, the Dell brand has had mixed success with diversifying across product categories. The new Dell brand needs to return to its core business and understand where it adds value. It is known for process innovation but the challenge will be in shifting the brand from a seller of computer boxes to one that understands and simplifies user environments.

The Cure

• The brand is only as strong as its people
• A brand cannot be all things to all people
• Successful brands are built around end-user needs