Austin, Texas-based Dell, which is expected to post a $75-85-million loss in the second quarter just ended, will try to segment its market for the first time as it attempts to redefine its niche. Competitors have taken up the mantle in the price wars Dell helped create with its aggressive and heavily advertised discount strategy, leaving the computer company without a distinguishing selling point. The change will force GMO to produce more varied and targeted ads, run on a more complex media schedule. 'What motivates someone in a Fortune 1,000 company to buy PCs as nodes in a network is different than what motivates a hacker who's buying a PC for his individual use,' said Mike Massaro, coo at GMO and management supervisor on the Dell account.
The segmentation, which will distinguish customers by types such as corporate users or first-time buyers for the home, is a significant departure from the industry's traditional approach - a one-size-fits-all notion that cuts up the market by price or distribution channel.
'IBM and Compaq redefined the market last year by cutting prices,' said Jeffrey Henning, a senior analyst with BIS Strategic Decisions, a consulting firm in Norwell, Mass. 'Dell's old strategy was no longer enough. This is a necessary next step.'
Media placement will also become more targeted. For instance, the network-ready machines will be featured in such publications as Computerworld and PC Week, which attract corporate computer managers. Similarly, performance-based machines will be featured in publications such as BYTE, which attracts technology enthusiasts. GMO is also looking at a variety of vertical business publications in specific industries such as finance and real estate.
Dell director of marketing Alan Reisberg confirmed that the company plans a 50% increase in ad spending, but declined to disclose specifics on the budget. Adscope, a Goldendale, Wash.-based service that tracks high-tech advertising, estimates Dell's 1992 spending was in excess of $20 million.
Copyright Adweek L.P. (1993)