E-BusinessAC omparison of the Dell and Compaq Websites

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E-Business

A comparison of the Websites for

Dell and Compaq Computers




Introduction

e-Business The conduct of business with the assistance of telecommunications equipment and the Internet

e-Commerce The conduct of commerce transactions having the objective of supplying commodities, goods and services on the Internet.

I believe the terms e-Commerce and IBM’s coined term e-Business are interchangeable and mean essentially the same thing. These definitions I believe, will allow the most effective way of analyzing the two business modules I have chosen for this paper.

The two business modules are websites that offer similar products and services namely computers, these sites are

Dell computers http//www.euro.dell.com/countries/uk/enu/gen/default.htm

Hewlett Packard (HP) http//www.hp.com/country/uk/eng/welcome.html

The Market

Marketers need to promote what customers want. However what the customer considers of value from their purchase is the benefit(s) derived from it. These benefits can be wide ranging i.e. do they help the environment, does this company contribute to charities, the after sales service.

Marketing is not just about these things, it entails a much more complex framework and this must include four crucial areas Analysis, Planning, Implementation and Control. Within e-Business, analysis is of great importance, it will show you where an opportunity exists or could exist, appropriates initiation of a new value chain, identifies which segment of the market to target and establish possible tactics of potential competitors. The value chain, being the business model, can be very simple but also very complex.

“The value system can be thought of as the entire ‘chain’ of suppliers, distributors, competitors, buyers, and intermediaries that bring an existing offering to the market”.

(J. F. Rayport & B. J. Jaworski, 001 7)

Market segmentation very rarely rewards companies on their intended objectives because there are different segmentation approaches and each of them must be conducive with the way the company approaches the market. Segmentation consists of many variables geographic; demographic; behavioral; situational; and psychographics to name but a few, and having the right blend could mean success or failure. However with the use of e-Business some of these variables pose less of a problem than they previously did. E-Business reduces the geographic ties with the use of the Internet. Potential consumer information that was previously very difficult to obtain can be acquired from various data information providers such as www.nua.ie/surveys and cr.yp.to/surveys.html. Using the Internet to increase the sales pipeline you must focus on understanding your target audience; have an effective Internet Marketing Strategy; deliver the message on what your product to increase the conversation about your website; and finally analyze your strategy to improve it and, as an on flow of that, improve the Return of Investment (ROI). These aspects overlap and relate to each other.

To achieve a better understanding of the market the use of a SWOT analysis as a framework to help decision-making is favorable. Both Dell and HP need to constantly assess their situation under each of the headings

• Strengths what their advantages are, what do you do well

• Weaknesses what could they improve, what do they do badly, what they should avoid

• Opportunities identify emerging trends and advantageous circumstances’)

• Threats what are the obstacles, where is the competition, is the change in technology threatening their position, could any identified threats harm profits.

By doing this, they should be in a better position to plan for all eventualities and better able to focus activities to where they are strong and where the greatest opportunities lie.

Micro-marketing

Micro-marketing is the process of individualizing marketing, so that the product fits the customer perfectly. Dell does this much more convincingly than HP. However much of the marketing that Dell and HP undertake seems to fit fairly well into this category.

As the Internet companies become more profit-driven and accountable, marketing research must play a role in providing actionable measurements of marketing efforts. Marketers need to develop their research techniques which will provide them with the ability to correlate market spending to resultant returns in sales and profits. The use of databanks will provide marketers with research results which will assist the marketer in thoroughly understanding the relationship that the consumer has with the brand and how that relationship may be optimized from a profit point of view.

Product Life Cycle

To be able to market their product(s) properly, Dell and HP must be aware of the product life cycle of its product(s). The standard product life cycle tends to have five phases

• Development

• Introduction

• Growth

• Maturity

• Decline

It can also be shown graphically. This graph has two lines-one to show the level of profit and one to show the level of sales

Firms will often try to use extension strategies. These are techniques to try to delay the decline stage of the product life cycle. The maturity stage is a good stage for the company in terms of generating cash. The costs of developing the product and establishing it in the market are paid and it tends to then be at a profitable stage. The longer the company can extend this stage the better it will be for them. Dell does not purchase components until a customer has ordered the component; this allows Dell to stay up to date with the changes within technology without worrying too much about the product life cycle.

The Product/Service

Dell and HP sell basically the same product(s) computers. They sell them to the same market segments at similar prices and with similar benefits. What lies beneath the surface is what makes one company more profitable than the other. After all, profit is the primary focus as you need this in order to continue business, expand and diversify. You need a profit to continue business, to expand and to diversify.

Dell’s Business Model

This is very simple make-to-order, cash is received before the product is built or delivered and produces custom results from standard inputs. Cleverly, they reversed the designing and customizing of the individual systems back out to the customer on the website. This gives the potential customer complete control on the specifications of the product and a higher level of service.

“Dell has a negative cash conversion of five business days, meaning customers pay Dell for their computers, on average, about a week before the money goes out to the suppliers of parts for those very same computers”.

(E. I. Schwartz, 1 118)

HP’s Business Model

Again very simple combine the products, services and partnerships to produce cost-effective systems integrated into their global services and deliver an end-to-end business continuity solution designed to meet everybody’s needs.

Timmers (1) describes a business model as

• An architecture for the project, service and information flows, including a description of the various business actors and their roles; and

• A description of the potential benefits for the various business actors; and

• A description of the sources of revenue.

If you get the business model correct, the harder you work, the more money you make. If you get the business model wrong, no matter how hard you work, you will end up losing more and more money. The Business Model is supplanting, to some extent, the Business Plan. The Business Model is defined as the engine of the business. It is where and how the business acquires money from the customers, how it uses that money by tracking cash streams from customers and throughout the business to the suppliers, how product and services flow from the suppliers and the customers in the reverse direction and finally there is an orthogonal connection dimension that shows how the business connects with its customers.

Dell and HP

What Dell and HP learnt from the burst of the dot.com bubble was that they had to offer something different from all previous suppliers of computers and to do this they developed a value chain which comprises of the following

• Unique websites

• Control of their product line

• Introduction of new products on a regular basis

• Provide a customer-friendly service

• Ensure safe and efficient on-line payment

• Keeping their promise

Soon Dell became not just a company name and logo but a brand which encompassed the customer’s entire experience with the company. The brand ‘Dell’ defines simply the immediate image, emotion, or message experienced when a person thinks of the company and its products. This ‘brand’ has enabled Dell to pioneer the Internet computer sales industry and has allowed them to gain market share and create customer loyalty.

“Dells shares have appreciated more than 0,000-fold since 10”.

(E. I. Schwartz, 1 118)

Creating customer loyalty is very important on the Internet as timescales are short, competition intense and mistakes can be costly. Dell got where it is because they are the most efficient marketer and assembler of other people’s computer and software technology.

“Customer support is the most beneficial�and least applauded�application on the web”.

(P. B. Seybold, 18 47)

One of the causes that made HP re-evaluate their business model was information released to the general public. It was reported in 17 by Business Week that Dell was selling increasingly well via the Internet. So we must ask ourselves how does the Internet transform business models when the processes used by HP and Dell to produce a computer are completely different?

HP Dell

Component forecast Component forecast

Batch Assembly Customer order

Storage at a factory Customized assembly

Customer order Stocks on the “road”

Customized at the reseller Delivered to the end user

Delivered to the user

Internet Population

With the development of their websites getting people to visit it and, once there, make it interesting enough so they stay and make a purchase is something completely different. This is where Dell excels and all the rest are followers.

Dell’s services provide a complete package; from the customer designing the computer they want to solutions based on real world needs. These services can be offered individually or on a company level fully supported by highly qualified support staff located all over the globe. From the moment you visit the website you feel as though it is a one-on-one service where you can track what stage your order is at in construction and feel safe and secure with the customer orientated view they project. HP does follow this methodology where the customer always comes first and offer very similar services but what are the keys to success with e-Business? The two charts below give you an example of the Internet population, favorable language and revenue from Internet products and services.

(http//glreach.com/globstats/)

Worldwide Internet and Intranet Products and Services, 16 and 000

Source International Data Corporation, 17, How big is the Internet/Intranet Market?

Product/Service 16 ($M) 000 ($M) Growth (%)

Internet access ,14 11,00 7.6

Personal computers 5,511 16,00 0.

Network computers 706 15,440 116.

Servers ,47 1,150 55.5

Network equipment ,500 10,00 1.0

Software 16 1,1 1.1

Services ,477 1,770 5.6

Total 18,506 ,81 4.5

(www.december.com/present/ecsize.html)

Key Factors for Success

When an individual decides they need a computer, for what ever reason, they have various options. They could buy a computer magazine; talk with colleagues; visit a local computer store; or, in today’s technological world, log-on to the Internet. So how do Dell and HP make sure that when people ‘search’ the Internet for computers that their sites are the ones that appear in the top ten ‘finds’ when the search is complete? There are various ways of doing this and the easiest way is for them to list their website in hundreds of ‘search engines’ and directories. But it doesn’t stop there, these search engines then have to put your website high up on the ‘search engine’ placement table for you to be noticed. Another method of making yourself more visible is for you to have links from other websites to yours.

Search Engines

Search engine websites are a vital tool in helping to categorize, navigate and display the information which is on the Internet. These engines also assume an important role as a virtual guide for a potential customer to a business. Companies are spending a large proportion of their marketing budget to improve their profile on top ranking search engine sites. For a search engine to recognize a particular website before it recognizes others is mainly down to an unpublished algorithm. This algorithm typically calculates the frequency of a phrase within a web page, the title page and the popularity of that site relative to other pages on the web.

“The term algorithm (pronounced AL-go-rith-um) is a procedure or formula for solving a problem. The word derives from the name of the mathematician, Mohammed ibn-Musa al-Khwarizmi, who was part of the royal court in Baghdad and who lived from about 780 to 850. A computer program can be viewed as an elaborate algorithm”.

(http//searchvb.techtarget.com/sDefinition/0,,sid8_gci11545,00.html)

Webmaster and programmers can write keywords and phrases etc that search engines look for when people do searches. Source codes (sometimes called object codes) and the use of Microsoft® smart tags are other ways to get a website in the top ten on the hit list.

“Microsofts Smart Tags were a proposed feature of Windows XP that would allow Microsoft and its partners to insert their own links into any Web page viewed through its Internet Explorer browser. These links are similar to traditional hyperlinks, but more complex and interactive when the cursor hovers over a Smart Tagged word, a drop-down list appears with a selection of links related to the word”.

(http//searchwin000.techtarget.com/sDefinition/0,,sid1_gci75518,00.html)

“The object code file contains a sequence of instructions that the processor can understand but that is difficult for a human to read or modify”.

(http//searchwebservices.techtarget.com/sDefinition/0,,sid6_gci100,00.html)

If you were to do a search on Google using the keyword ‘computers’ it brings Dell up in second position and HP does not appear in the top forty. Yahoo.com brings Dell up in seventh position with HP in ninth and AltaVista.com brings Dell up in second place with HP nowhere in sight. So you can see, by ensuring that you have the search engine key words/phrases in your source code the algorithm will pick it up and place your company in the top ten search results.

Source code taken from Dell’s website

TITLEDell - EMEA Home Page/TITLE

META NAME=KEYWORDS CONTENT=Custom, Configuration, PCs, Laptops, Portables, Computer, Notebook, Hardware, Build, Value, Technology, Servers, Dell, Online, Order

Source code taken from HP website

titleWelcome to HP United Kingdom/title

meta name=Keywords content=hp, hewlett-packard, compaq, driver, printer, scanner, pc, software, monitor, server, laserjet, deskjet, officejet, scanjet, vectra, pavilion, omnibook, jornada, presario, evo, prosignia, deskpro, armada, ipaq

It is only Dell’s site that includes the word ‘computer’ under its keywords. HP fail to target the more uneducated user of computers, only by knowing a model name would HP be on the same page of results as Dell when searching for a computer on the Internet.

The positions on the search result for ‘computers’ are excellent for Dell, however Dell does not limit its online marketing strategy to search engines. Another online marketing strategy they use is a banner exchange affiliate program for their web hosting services. Dell’s customers get monetary benefits by placing advertising banners on their own sites if a click-through results in a sale, the affiliate gets a reward.

“Depending on how its used, a banner is either a graphic image that announces the name or identity of a site and often is spread across the width of the web page or is an advertising image”.

(http//searchwebservices.techtarget.com/sDefinition/0,,sid6_gci1165,00.html)

Because of the continual advancements in search engine development the search engines used by Dell and HP require continual attention.

XML (Extensible Markup Language) & HTML (Hypertext Markup Language)

For information to be shared on the web, intranets and elsewhere a common creative information format must be utilized. This format is called XML. Once computer makers agree on a standard or a common way to describe the information about a computer product they would then describe this information format with XML. This then enables users to send an intelligent agent (a program) to each manufacturer’s website, groups, individuals and companies that want to share information in a consistent way. XML, recommended by the World Wide Web Consortium (WC) is very similar to today’s language of web pages HTML. HTML contains markup symbols which describe the contents of a web page or file. The downside is that HTML describes the contents only in terms of how it is to be displayed, how it should look when printed and how it can be interacted with.

Once a potential customer accesses the website, ease of use becomes a major factor. Too many ‘clicks’ to too many pages could deter people from purchasing. In this regard, Dell has an advantage in that once you have chosen the model you want, you then have only one page to visit where you can configure to your requirements. The HP website has substantial listings of pre-configured models for you to choose from and if you want to configure to your specifications then you require an additional software program (Adobe® Acrobat® Reader®. Adobe® Acrobat® Reader®) which is available as a free download to view your options, something which can be more of a deterrent than an ease of use interface. Once a decision has been made on the product, the purchasing process on-line becomes the next logical step.

EDI (Electronic Data Interchange)

An EDI message contains data elements such as a price, model number etc and this string is called a data element. One or more of these data elements, together with a header or trailer, are called a transaction set which in EDI language is called a message. This message would usually be construed as something equivalent to a business document. This means that when two parties exchange these EDI’s we would refer to it as trading partners.

“The main benefit of computerized transaction processing is increased administrative efficiency”.

(E. G. C. Collins & M. A. Devanna, 14 175)

The Internet is a powerful customer service tool because companies can use it to provide 4/7 product and service information and develop customer relationships all at relatively low cost. For Dell and HP this allows customers to browse products, configure to their liking and then pay on-line. However Kalakota and Whinston (16) see the Internet as a threat, particularly to brands, making brands weaker than before. Hagel & Armstrong (17) argue that virtual community members focus less on the brand and more on the product and service features. If this is the case, then Dell has focused on the latter aspect in terms of services they offer.

Value

The information received by a customer on-line depends mainly on how the Internet/website responds. The Internet allows customer communication in two ways firstly, the communication depends on customer choice and secondly with potential for collective customer action. But it wasn’t always like that.

One �to � many communications





(Hoffman and Novak, 16)

The above illustration demonstrates that the firm (F) can communicate to the customers (c) only. No interaction between the customer and the firm is possible. A good example of this would be TV, radio, billboards etc.

Many-to-many Communication



(Hoffman and Novak, 16)

This illustration employs the technology of the medium (Internet) to allow communications both ways. Both the medium and customer become senders and receivers. These simple models show how communication advancements have addressed the potential for conversation and intimacy.

Timmers (1) lists the key features of the Internet 4/7 availability, ubiquity, global yet local, digitization, multimedia, interactivity, one�to�one communication, network effects and externalities, and information integration.

The value of being able to conduct business on a one�to�one basis becomes immeasurable to all who conduct business via the Internet. These values are forever changing traditional marketing by providing segmentation information, a targeting instrument, a source of market research while also augmenting the areas of traditional marketing promotion; distribution; product; and price.

Both Dell and HP offer all of the above benefits associated with the Internet however. One-to-one communication with providers is the key and it is a great motivator when a successful transaction is carried out. A person’s self esteem can be raised and the ‘feel good’ factor kicks in, this in itself produces customer loyalty. It would only be also fair to say that personal experience with both companies/websites would provide the answer to whom does it better.

Implementation

There are many ways of connecting to the Internet. This diagram illustrates a few but not all methods however, the more time and effort invested in research to determine the more reliable and secure media is paramount.

The stages of e-Business usually have to start with two questions

1. What business processes touch the customers?

. How can we improve those customers facing processes with web technology?

The first mode of attack for implementing an e-Business is the development of a simple but effective website. Secondly, enable the website to facilitate transactions, if people cannot complete the whole process in one go they would probably go to a website which is enabled to do so. Thirdly, streamline the internal business operations, this will allow the processing of the web transaction to be handled more efficiently. Finally, personalize the website to build loyalty and community. However these four start-up points are there for you to create a presence and further requirements are needed to ensure success. Identifying potential partners with whom you can implement a business process must also be achieved remembering that one of the major draw backs with websites can be access, this could be due to over subscription to the Internet Service Provider (ISP) resulting in heavy traffic or the technology used by the website being antiquated, careful selection of the providers and equipment is crucial. Having the state�of�the�art hardware and software is high on the list of importance because this is the backbone of you company, should it fail then the business fails. The interface allowing for transactions, viewing, and printing has to be compatible with the operating systems in use within the general public, failing to allow someone to conduct e-Business defeats the object. Having an understand of how the Internet works is beneficial and by using this knowledge you have to determine the messaging and transport requirements as these could dictate or influence your requirements. The Internet is becoming more and more accessible and requires a secure environment, hence when using the on�line transactions facility security is of paramount importance to ensure that bank or credit card details sent over the Internet are safe from interception and malicious use. Levels of security are flexible because of different partners and business processes however a minimum of 18 � bit encryption is recommended.

“Encryption is the conversion of data into a form called a ciphertext that cannot be easily understood by unauthorized people”.

(http//searchsecurity.techtarget.com/sDefinition/0,,sid14_gci106,00.html)

The experience gathered from a pilot-planning phase will increase the confidence and reduce risk in the implementation. Integration and interdependence with other departments within the company is required while success in converting a prospect to a potential buyer still requires efforts from a sales force. Integration of Internet marketing with offline marketing efforts and business processes will result in a competitive advantage in a crowded market of similar offerings.

Conclusion

Internet marketing is evolving into the next phase of a mix of direct selling and influencing one-on-one via a broad platform approach. New low cost marketing techniques enable personalized communications with consumers, however, it also enable consumers to play a more proactive role as the consumer can now solicit information, share information in communities, specify their products and even propose prices. This move of power to the consumer can be seen on the Dell and HP websites radically changing the nature of marketing.

Dell and HP have successfully captured the attention of the computer communities and have very successful websites. The more rewarding of the websites has to be Dell’s because of the ease of use and no requirement for additional software. Dell has successfully understood the core market principles and defined the character of their marketing strategy. These principles carry forward the actual implementation of various efforts and ensure a linkage back to their initial beliefs. Finally, a key competitive element is recognizing that Internet marketing is not a standalone activity and should be integrated within the existing processes and Information Technology systems.

Bibliography

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Dell’s source code, available at (http//www.dell.co.uk), Tool bar�view�source

Encryption (http//searchsecurity.techtarget.com/sDefinition/0,,sid14_gci106,00.html

Hagel, John and Armstrong, Arthur G. (17), Net Gain, Boston, Harvard Business School Press

Hoffman, Donna L. and Novak, Thomas P. (15), Project 000 Research Program on Marketing in Computer � Mediated Environments, Working Paper No.1 (Revised July 11, 15)

HP’s source code, available at (http//www.hp.co.uk), Tool bar�view�source

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Smart Tags (http//searchwin000.techtarget.com/sDefinition/0,,sid1_gci75518,00.html)

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